Economists Warn Sst On Imported Fruits May Raise Local Prices Burden B40

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Economists and consumer groups have raised concerns that the government’s move to expand the sales and service tax (SST) on imported fruits may have unintended consequences.
They said the tax expansion could result in an unintentional spike in local fruit prices that would ultimately affect low-income households, despite Putrajaya’s assurance that the effect will be minimal on the B40 group as they are not major consumers of imported produce.
Kingsley Strategic Institute (KSI) economic adviser Anthony Dass said the implications go beyond direct consumption.
“Although imported fruits are not the primary choice for the B40 group, this move still needs to be carefully studied, as some urban B40 households still buy cheaper imported fruits, especially when local fruit prices rise or supplies are disrupted.
“It can also have an indirect impact. For example, when other groups switch to local fruits, the price of local fruits increases, which then puts pressure back on the B40,” he told Malaysiakini.
He noted that while B40 households typically purchase local fruits and only occasionally opt for imported ones, such as during promotions or in specific circumstances, they remain vulnerable to the long-term effects of market shifts.
“If the M40 and T20 shift to local fruits because imported ones become more expensive, demand will rise, and eventually, so will the price of local fruits.
“This will reduce choices for the B40 and force them to cut back on fruit consumption overall,” said Anthony.
He also criticised the blanket implementation of the SST, saying it overlooks important distinctions in fruit grades and sales channels.
“It is unfair to label all imported fruits as luxury items and impose the same SST rate across the board,” he said.
As an example, Anthony cited bananas, which he described as a common staple fruit that should not be taxed at all.
Touching on apples and oranges, Anthony stressed that both come in a wide range of types, from premium-priced varieties to bulk purchases sold in night markets.
“This distinction needs to be made,” he added.
‘Nonsensical’ move
Malaysiakini previously reported business tycoon Ameer Ali Mydin’s dissatisfaction over the tax.
The Mydin Mohamed Holdings Bhd managing director described the SST on imported fruits as “nonsensical”.
Business tycoon Ameer Ali MydinContrary to the perception that imported fruits cater only to the wealthy, Ameer argued that items such as apples, oranges, and even bananas are part of the daily diet of lower-income Malaysians.
“These are also typically brought as gifts when visiting someone who is unwell in the hospital, showing how essential such agricultural products are to society,” he said.
Health and economic concerns
Federation of Malaysian Consumers Associations (Fomca) president Marimuthu Nadason echoed Ameer’s views, calling the move inappropriate and counterproductive to national health campaigns.
He questioned how the government could advocate for healthier eating habits while imposing taxes that make fruits less affordable.
“The government action appears misguided and possibly not backed by thorough studies, as it contradicts Health Ministry campaigns encouraging fruit consumption to balance dietary habits.
“But if fruit prices keep rising, how can people follow that advice? When they can’t afford fruits, people will turn to unhealthy food alternatives.
“If fruits become too expensive for the public, they may shift to imbalanced diets.
“As a result, health risks increase, and this could ultimately drive up national healthcare costs,” he warned.
Local industry opportunity?
Universiti Sains Islam Malaysia (Usim) senior lecturer Iqmal Hisham Kamaruddin said that while the SST may lead to short-term price hikes, it could also present long-term opportunities.
“If we look at it, since imported fruit prices are expected to rise in the near future, this might create opportunities to boost local fruit production moving forward.
“This is because, when imported fruit prices go up, it opens up space for us to support local fruit output and reduce dependency on previously imported products,” said Iqmal, who is also deputy director of Usim’s Community Engagement and Industry Network Centre.
He cautioned, however, that the market may face temporary disruptions, which would in turn impact household spending.
Drawing parallels with the recent rice supply shortage, he urged the government to implement proper controls to avoid similar outcomes.
“When we imposed charges on imported rice and controlled local rice prices, there was widespread abuse and eventually, a shortage of supply in the market.
“I fear the same impact could happen with staple fruits,” he said.
In defending the SST expansion, Prime Minister Anwar Ibrahim, who is also finance minister, previously cited avocados as an example of a luxury fruit typically consumed by high-income earners. - Mkini

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