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Malaysia's new GST will benefit enterprise application market, IDC says

AvantiKumar | June 17, 2014
With an initial rate of 6%, the new Goods and Services Tax will replace the existing SST model on 1 April 2015, said the Malaysian PM Datuk Seri Najib Tun Razak.

Wong Yih-Khai, Market Analyst, Software, IDC Malaysia modified 

Photo - Wong Yih-Khai, Market Analyst, Software, IDC Malaysia


IDC's latest enterprise software forecast suggests that the forthcoming 6 percent Goods and Services [GST] implementation on 1 April 2015 is one of the key drivers for growth in the Malaysian Enterprise Application (EA) market and IDC expects 2014 to be a much better year compared to 2013.

First announced by the Malaysian prime minister Datuk Seri Najib Tun Razak in his 2014 Budget, the GST at an initial rate of 6 percent will replace the existing Sales and Services  [SST] model  [10 percent and 6 percent respectively totalling 16 percent], and has also been welcomed by industry organisations including the National ICT Association of Malaysia.

IDC Malaysia market analyst, software, Wong Yih-Khai said GST will be a boost to many EA vendors as this forces business to either upgrade or replace their legacy system with a system that is GST compliant.

"With GST coming into effect in the early part of 2015, we predict there will be a scramble from the businesses to be fully GST ready in line with government regulations and the implementation will be one of the catalysts for growth in Malaysian EA market for 2014 and possibly in 2015 as well," said Wong.

He said the latest forecast published in IDC's Asia/Pacific Semiannual Enterprise Applications Tracker for 2H2013 (second half of 2013) showed the purchasing pattern for Malaysian EA market generally peaks during the second half of the year and 2013 did not prove to be an exception with the market bouncing back from a slow first half due to the uncertainty that surrounded General Election [GE] 13 in May of last year.

Wong said that Malaysian EA market did indeed grow slightly in the later part of 2013 (3.2 percent revenue growth compared to the first half of 2013), but the total revenue for 2013 was slightly lower compared to the total revenue for 2012 (0.4 percent decline year on year).

Total revenue in the second half of 2013 for Malaysian EA market was RM382,725 (US$118.7), representing 50.8 percent of the total revenue generated in the whole of 2013, he said.

"This shows that there were some key deals that were closed towards the latter half of 2013, showing a positive sign for the Malaysian EA market. In terms of total revenue in the Malaysian EA market, manufacturing continues to be the biggest contributor followed by retail, communications and media," said Wong.

He added that IDC expected a 6-8% of total revenue growth for Malaysian EA market in 2014 compared to the previous year.


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