Small retailers now prefer not to sell mobile prepaid coupons or cards after being rained with insults from buyers.

 

By refusing to sell mobile prepaid cards, the retailers also spare themselves from losses following the Goods And Services Tax (GST), which came into force on April 1.

 

However their move has led to a shortage of prepaid cards in the market.

 

Malaysiakini ’s checks found that this situation largely involves small retailers which do not meet the threshold of RM500,000 to qualify them to register for GST.

 

Telecommunications companies have added the six percent tax on the card when selling them to small retailers, but the retailers cannot claim this back from the government because they do not meet the threshold to register for GST.

 

But passing it on to consumers would earn consumer umbrage, as the government earlier announced that the price of prepaid cards will remain the same after GST.

 

“We are not registered for GST so we cannot charge customers GST, but our suppliers charge GST,” sundry shop owner Shamsuddin Moidutty ( above ) said.

 

Shamsuddin, 55, said charging customers extra to make up the extra costs has driven him into verbal matches with his customers his shop at Bukit Taman Angkasa, Kerinchi.

 

Kerinchi and nearby Pantai Dalam are mostly made up of middle to lower income earners, which make up the bulk of mobile prepaid card users.

 

Tiny profit margin gone

 

Echoing Shamsuddin, small trader Amin Mohd Saman said his profit margin for prepaid cards worth RM10 before the implementation of GST was only one percent.

 

“So with GST, I actually have to foot the cost of the tax and make zero profit.

 

“I don’t lose anything if people don’t buy prepaids from me. I’m tired of arguing with customers so I just told them to buy it from (a 24-hour convenience store),” he said.

 

Amin, 49, said he had sold prepaid cards before despite the dismal margins to attract customers to his store.

 

“There’s hardly any profit, but I’m just selling off the existing stock of cards I bought before GST. Who knows how long it will last [...]

 

“Usually, when customers come here to buy prepaid cards they will buy other things as well as it helps promote the store,” he said when met at his shop in Pantai Dalam.

 

Prepaid card distributor Hanif Abdullah meanwhile has ceased selling the cards to small retailers given confusing government announcements.

 

“Before April 1, we were told that prepaid card will not have GST but later he government said it does.

 

“With GST, the price of prepaid cards will be RM10.60 but the telcos said they will add call airtime and text message credit.

 

“But sundry shop owners only read the news [later] and not on April 1 so they accuse us of taking advantage of GST to jack up the price.

 

“So now I decided that it’s better not to sell to them,” said Hanif, 32, who had been distributing prepaid cards for three years.

 

Forced to absorb cost

 

He added that since his business is also too small to be registered under the GST scheme, he, too has to absorb the cost of GST incurred on the cards when he purchases them from telcos.

 

“Before GST, we got RM9.70 and we sold the cards to retailers at RM9.90, so retailers can sell for RM10 and get 10 sen profit.

 

“Now, I can’t sell anymore because neither the sundry shops nor I are GST-registered,” he said.

 

Prepaid cards before April 1 were levied a service tax of six percent, but this was absorbed by the telcos.

 

Since GST replaces sales tax at the same rate, the government told consumers the price of prepaid cards would remain the same.

 

However, instead of absorbing the GST like it did the sales tax, telcos incorporated the six percent into their own profit, in a move that consumer NGOs said amounts to price-fixing .

 

They then charged an additional six percent GST onto the prepaid cards, bumping final prices up by six percent.

 

In response to the deluge of complaints, the government said telcos will compensate prepaid card buyers with the same value of call airtime and text message credit.

 

However, a transition period will be three months from April 3.