GST: Do not underestimate consumers buying power

In reality, the market is now highly competitive as stronger local and regional players are coming in with quality products, subsequently giving consumers a wide range of choice.

An obvious example is the coffee segment.

A few years ago, the the choice was limited to Nestle's Nescafe, and now, it had expanded into an entire aisle with more than 30 brands, just for coffee alone.

Nestle (Malaysia) Bhd Managing Director, Alois Hofbauer said consumers should not worry too much about the GST implementation because retailers would take advantage of this fear.

"Nevertheless, no retailer nor manufacturer will increase the price of their products higher than the market because they know consumers will go for the cheaper alternatives," he told BERNAMA.

In walking the talk, Nestle is one of the first companies here which took a proactive step in offering consumers a price reduction of between eight per cent and 33 per cent with the launch of its 'Lebih Nilai, Lagi Hebat' promotional campaign last month.

However, Hofbauer said it was important to note that savings derived from the price reduction would be passed on to its retail partners, as Nestle did not sell its products directly to consumers.

"At the end of the day, the retailers are the ones who will set the prices for consumers," he added.

Malaysia was actually a bit late in implementing the GST as others had done it much earlier in the 90s. However, there were no other countries in the world which had implemented the GST in a way Malaysia planned to do, given its long list of zero-rated and exempted supplies.

On the external front, the GST or value-added tax (VAT) in certain countries, had successfully increased government revenue in the large majority of countries that had implemented it.