FMM president Soh Thian Lai said the reduction of the tax, which is one of several measures it is mooting, would boost business conditions.

Under the SST, which was reintroduced in 2018, goods are taxed between 5% and 10% and services at 6%.

“This will lead to higher investments and employment opportunities as well as higher disposable income for the rakyat,” he said in a statement urging the government to expedite the introduction of a stimulus package.

Given the weak external environment, FMM, Soh said, shared the government’s concern on the need to have a reduction in the prices of goods and services for the end consumer.

Soh also suggested that sales tax exemption be granted on all inputs for the manufacture of non-taxable goods as it would assist companies to lower production costs and remain competitive.

To support businesses that might be affected due to a slowdown, FMM is also calling for electricity and gas tariffs to be reduced for the next one year to help lower business costs and sustain operations.

“We are also proposing for banks to extend payment terms to affected companies by declassifying non-performing loans from three months to six months.”

Soh said to boost domestic consumption, the government could reduce the employees’ contribution to the Employees Provident Fund (EPF) by three percentage points. He said, this was done in 2016.

“This will put more cash in the rakyat’s pocket, thereby increasing consumer spending which can further stimulate the economy.”

Putrajaya, Soh said, should intensify the promotion of made-in-Malaysia products to boost exports and sustain domestic demand for locally manufactured products.

The country, he added, should conclude the Regional Comprehensive Partnership Agreement (RCEP) and implement free trade agreements (FTAs) which it had signed on to.

“This is to provide market access for Malaysian exporters.”