Starting the country on a Goods and Services Tax (GST) of 6 percent is high as compared to the region, for example Singapore, that had started its GST at 3 percent.

The Federation of Malaysian Manufacturers (FMM) in a statement said yesterday the rate announced in Prime Minister Najib Razak's Budget 2014 this week was "higher than anticipated".

NONEThe group call for the government to ensure that this rate would therefore not be raised for at least five years from the date of implementation.

"We note that regional countries with (currently) higher rates of GST had increased their rates incrementally over a period of time, for example Singapore took nine years to increase their GST rate from 3 percent to 4 percent, and another four years to 7 percent," said FMM.

The federation also cautioned that as the feedback they receive from the manufacturing sector indicates that the may be "some slowing down of economic activities at company level" initiatives like the GST may not realise its goals.

NONE"FMM maintains that this will impose a heavy compliance burden on manufacturers especially the SMEs that constitute 98.percent of businesses.

Given the thousands of companies involved, FMM is concerned about the implementation capacity of government agencies to disburse GST-related facilities and grants to SMEs.

The group also asked for "greater clarity and certainty about the planned mechanisms for timely refunds on input GST, which remain a main concern for exporters".

As speculated by many, Najib announced the highly criticised GST in his Budget 2014 speech this week despite many questioning the government's move to fill its cash coffers without any visible moves to rein in the government's spendthrift ways.