Getting Ready for GST

Some people let problems lead to another problem while others create opportunity from their problems. According to De Bono (Serious Creativity), a problem is like a headache or a stone in your shoe. You know it is there. A problem is provided by the world around you (government regulations, currency changes, disasters, ecological difficulties), by your competitors, or by a breakdown in your own systems (machinery, computers, labor relations). You do not have to go looking for problems, there are always problems.

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Thinking out of the box enables one to view a problem as an opportunity, a chance to open up new ways of looking at, and responding to, the difficulties being faced. Problems are not necessarily the result of external factors or to be perceived as negative or “bad” events. Sometimes problem created to us or by us, so that we can open for new opportunities and you will challenge yourself to bring new challenges that demand a solution from you.

Problems demand attention. Crises have to be survived. Improvement is often undertaken as part of a cost-cutting exercise. The design of opportunities requires creative thinking. The creation of new value requires new concepts. The “out of the blue” crafting opportunities to occur, you will be one of the crowd. If you put in some creativity ability you can be ahead of the crowd. Opportunities ideas do not lie around waiting to be discovered. Such ideas need to be produced. (De Bono, Serious Creativity)

Problem solving has always been a traditional area for the use of creative thinking. If the standard approaches cannot provide a solution then there is a need to use creative thinking.

GUIDELINES FOR PROBLEM SOLVING

These guidelines will give some structure to the various problem-solving activities you encounter and will help you analyze, define and solve problems in orderly way. In problem solving, you may continually go back and forth between steps and repeat some steps as it is a recursive process. This can best be viewed as a problem-solving cycle, whereby each process can feed into another process through feedback and correction. This cycle are shown in the graphic below.

The problem-solving cycle.

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There is another effective solution to a problem by using six steps, as shown in figure below. These steps can be broken down into smaller steps to better enable you to carry out the problem-solving process.

 The six steps in problem solving and decision making

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GREATEST SUCCESS STORIES

 Colonel Sanders’ Entrepreneurial Drive

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The Sanders Court & Café catered mainly to travelers on their way to Florida through the town of Corbin, Kentucky. However, in the early 1950’s, a new interstate was in the works that would cause a great loss in business, forcing Sanders to retire and sell his restaurant. His problem started when he sold of his restaurant but he believes there was an opportunity to market his chicken to restaurant owner across the U.S.

In his travels, he was rejected on many occasions, laughed at about his attire of his starched white shirt and white pants. However, Sanders persevered, and after a little over 1,000 visits, he finally persuaded Pete Harman in South Salt Lake, Utah to partner with him. They launched the first “Kentucky Fried Chicken” site in 1952.

In the early 1960’s there were over 600 franchised locations in the U.S. and Canada selling the delectable chicken. Subsequently, in 1964 Sanders sold the franchising operation for $2 million. The franchise has been sold three other times since then and continues to be a well-known successful business.

Everybody Can Fly

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He was sent overseas to study when he was 12 and found that he had to fend for himself from the time he arrived at Heathrow, and says “The great thing about being thrown into the deep end is you either sink or swim”.  Even then his interests were music and F1 cars, and he has built those likes into businesses. When he wanted to come home during half-term, flying was too expensive to be affordable, so he set out to make it possible for ‘everyone to fly’. Air Asia was born from that and next Tony is determined to enable people in the Indian sub-continent to afford to fly cheaply instead of spending days travelling from one city to another. “You have only one life; live out your dream” he says. (http://atheneumgroup.net). Tan Sri Tony Fernandez experience the hard time to go back home as it was too expensive, it was a problem to him but courage and determination gives him the opportunity to build a business that can help other people that is to fly with affordable price.

Steve Jobs, Oprah, J.K Rowling and Anthony Robbins (just to name a few), are successful people who ‘thinks out of the box’ and created opportunity from problems. Most successful people succeed because they have ‘the out of the box’ way of thinking, they did not succeed overnight. The different between successful people and the ordinary is that, they sees problems as opportunities and challenge themselves to create solutions.

I believe what we have today invented from a problem. The problem of busy people, they want to cook as fast as they can, microwave then invented. Washing clothes may need more time and energy, this was a problem but now we have washing machine.

THINK OUT OF THE BOX

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Andrew Rossi, MBooth’s creative director, is responsible for making the agency a hub of innovation.  Rossi started researching how creativity works and overhauled MBooth’s creative process, earning an award for ‘2012 Creative Agency of the Year’ from the Holmes Report. Here are three tips shared by Rossi to help your company to with original ways to reach your business goals:

1.  Set parameters to focus your ideas.

As you brainstorm, focus your thinking by asking specific questions. Play with a variety of prompts and write down whatever comes to mind, no matter how loosely associated.

2.  Search for random inspiration.

To think outside the box, you need to trigger your brain to make connections it normally wouldn’t make. Look for inspiration that seems entirely unrelated to the problem.

3   Aim for quantity, not quality.

While you’re generating ideas, turn off your internal editor. Exhaust your good ideas and start throwing out suggestions that seem absurd or wrong. You can always make a bad idea better after the fact. Rossi finds that speed and friendly competition help people churn out ideas without judgment.

GOODS AND SERVICES TAX (GST)

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Goods and Services Tax or GST is a consumption tax based on the value-added concept and it will be replace the present consumption tax comprising the sales tax and the service tax (SST).

More than 160 countries worldwide have already introduced GST (known as VAT in European countries) and more than 90% of countries have some form of GST exposure. Malaysia will be implementing GST effective from 1 April 2015.

Currently under the Sales Tax and Service Tax rates are 10% and 6% respectively but GST rate is fixed at 6% for all goods and services, companies in Malaysia are preparing themselves in reference to their internal processes. GST is a charged and collected on all taxable goods and services produced in the country including imports. Businesses registered under GST can charge and collect GST and the collected GST must be remitted to the government.

For businesses, the GST is not a cost to business as the GST paid on the business inputs can be claimed as tax credit. As such, it is estimated that the cost of doing business will decrease by an amount of RM4.3 billion inclusive of a saving of RM1.4 billion by exporters on their business inputs. The reduction in the business cost will make the local products and services more competitive in the domestic and international markets. In addition, the GST is expected to improve tax compliance and is easier to administer due to its self-policing feature. With GST, bureaucracy in the government’s delivery system will be significantly reduced.

According to the Royal Malaysian Customs FAQ on GST, based on a GST rate of 4%, it is expected that there will be a price reduction between 0.08% to 2.71% in respect of eight components of goods and services. This will benefit the low and middle income generally and Malaysian particularly.

The government will ensure that the businesses do not take advantage of GST implementation to increase prices of goods to make excessive profits. Measures to be taken by the government include introducing the Anti Profiteering Act, intensifying enforcements action through the National Pricing Council, distribution of Shopper’s Guide, as well as making the hypermarkets act as price setters. Heavier fines and penalties will be imposed to make sure that the businesses comply with the rules and procedures formulated. These measures are aimed at changing the profit-centered attitude and unethical practices of the businesses.

The government will ensure that the implementation of the GST will not result in negative impact on the development of SMEs. In its effort to assist the SMEs, the government will conduct comprehensive training and education for all SMEs nationwide. It will be conducted jointly by the Ministry of Finance and SME Corp. The government is also planning to provide GST accounting software packages in CD form to SMEs that do not have their own accounting systems.

To ensure smooth GST implementation, the government will give ample time for businesses to be ready. Awareness and education programmes will be conducted on an on-going basis until the GST is implemented. The government already set up Customs call center which will be operated at Kelana Jaya, Selangor.

Government machinery such as the Ministry of Finance, the Custom Department, the Ministry of Domestic Trade, Co-operative and Consumerism has taken steps to prepare the requirements for the GST implementation comprising the legislation, computer system development, logistics and infrastructure preparation, training and publicity including reorganization.

THE PROBLEMS AND APPROACH

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There is misconception about GST and lack of understanding on the new tax has drawn critics from the public, including consumer and businesses. These wrong perceptions about GST have been reported in the media and these reports have been a problem to consumers and producers in Malaysia even before GST implemented.

Here are four main problems published in the media on how GST will affect our country and approach as opportunity that might help.

PROBLEMS THAT MIGHT OCCUR

AFFECTED FOR BUSINESSES

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Businesses may face additional paperwork. They will be obliged to maintain payment records in order to qualify for input tax credits as well as file returns on a regular basis. As a result, they may face compliance cost related to GST implementation. (Kinibiz.com, Oct 1, 2013).

Businesses having an annual sales turnover of less than RM500,000 are not liable to be registered under the GST. However, such businesses can apply voluntary registration. This is to ensure that the small businesses are GST-free and are not required to bear the cost of registration (start-up cost and compliance cost) under the GST. GST requires a good IT infrastructure and training as all sales need to be captured accurately and it needs to be done electronically, for this reason, businesses need professionals to provide the support in term of technical and industry expertise. Businesses may need to bear the cost of the financial consultancy and IT consultancy to get “GST ready”.

APPROACH FOR PROBLEM : OPPORTUNITY FOR FINANCIAL AND IT CONSULTANCY

The implementation of GST by companies will sees increasing business in the Financial Consultancy Firms and IT Consultancy. There will be a good market for those who have experience in implementing GST. This will open up opportunity to IT graduates to be in business.

“There has been a significant increase/surge in request for proposals (RFP) from current clients and non-clients since the announcement of the GST implementation date in Budget 2014,” global tax, audit and consultancy firm Ernst & Young (EY) Advisory Services SdnBhd tax partner Bernard Yap told The Malaysian Reserve (TMR). “In view of the surge of demand for our services, we have also reached out to our global offices within the EY network to provide us with support in terms of technical and industry expertise, and these resources will be seconded to Malaysia for the necessary period of time,” Yap said. (http://themalaysianreserve.com, Jan 10, 2014)

PROBLEM  : HIKE OF ELECTRICITY TARIFF

The problem is the implementation process is too aggressive. Economics experts do not blindly agree against the government’s subsidy rationalization and the GST implementation. Particularly, it seems that the government’s economy policy is still being monopolized by some interest groups, such as the government allowed high profit-making Tenaga Nasional Bhd to increase electricity tariffs and highway concessionaires to increase.

In fact, in the face of the current wind of price hikes which is getting almost out of control, not only members of the general public are suffering, but small businesses and traders are also bearing a strong pressure” (http://news.malaysia.msn.com, 22 Jan 2014). Consumers especially the lower and middle income feel the pinch following the hike of petrol and diesel prices and recently the increase of the electricity cost.

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APPROACH FOR PROBLEM  : SOLAR POWER RESOURCES

Malaysian Government should start thinking on ‘green environment’. Sure enough Tenaga Nasional needs the additional revenue to sustain its operations. Houses, schools, factories, overall all buildings consume electricity. It is time to get power load such as wind and solar power resources in this country. This might need big amount of money to have a solar system but this will benefit Malaysia in the long run.

Using solar energy has numerous advantages, and that’s why many countries have decided to use more renewable energy rather than rely on other forms of energy that are running out. Solar energy is much cheaper and not as harmful to the environment since it doesn’t produce pollution like other forms of power do. One of the main factors that prompted several countries to convert to using solar power is the fact that the energy, which comes from the sun, is completely renewable. As a result, there will never be any fear of a lack of energy throughout the country. (http://planetsave.com).

 PROBLEM  : IMPACT ON CONSUMER PRICES

The possibilities on the increases of price in goods and services have burdened the consumers. The implementation of GST might cause more increases, the people will be suffered with the high cost of living. It was also reported in the media that individual earning below RM3,000 a month and not paying income tax would now have to pay tax under GST. If this is true, the consumers will be burden with paying income tax. What measures does government take to ensure businesses do not take advantage of the GST implementation? Negative reports in the media get the attention from readers especially consumers and this will gives wrong impression on GST.

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APPROACH FOR PROBLEM : BACK TO BASIC

We are not sure if how GST will impact consumers and businesses, but we only assume and prepare for the best. According to Datuk Kamariah Hussain, Finance Ministry’s GST Implementation Office Tax Adviser, it is a misconception that the goods and service tax (GST) will increase the burden of the people especially those in the low and middle-income group. She said the GST model took into consideration the welfare of the people, especially the low-income group. Kamariah added that a shoppers’ guide would be distributed three months prior to be implementation to inform consumers on price changes before and after implementation. With this shoppers’ guide, consumers can do their budget and spend wisely.
As human, it is natural to get or buy something that we don’t even need, so when prices hike our problems arise. One of the solutions we can get from this is to go ‘back to basic’. This is the time that we need to go green, plant vegetables and fruits, this will not only safe your money from buying in the market but you can also sell what you produce. This is the time we can start the healthy style of living. Less or no more fast food, learn to cook healthy food and start to bring food from home.

PROBLEM  : ADMINISTER OF THE GST

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Surprisingly the government has decided that the Royal Malaysian Customs Department (RMC) manages and administers the GST to be implemented in Malaysia. Media reported that there are doubt if the Royal Malaysian Customs Department (RMC) able to handle the GST, as their have so many responsibility and task given.

Will the Royal Malaysian Customs Department be able to handle the administrative of GST? Do they have enough officers and are they ready for this task? Do they have enough resources? These are just few questions that have been brought up in the media.

SOLUTIONS FOR PROBLEM : RECRUIT NEW OFFICERS

The Royal Malaysian Custom may need to recruits new officer to ensure the machinery is enough to assist in the GST implementation. This will create job opportunity because they will need manpower on the GST implementation comprising the legislation, computer system development, logistics and infrastructure preparation, training and publicity including reorganization.

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I my opinion, GST might have problems especially in the first years but I believe once it implemented, it will go smooth sailing. The Government has come with an idea of implementing the GST in April 2015 replacing the Sales Tax and Service Tax (SST) with hope that this will help to ease the burden of the people.

According to Finance Ministry’s GST implementation office tax adviser, Datuk Kamariah Hussain (NST, 7 November 2013) GST was part of the government’s tax reform programme to find a more effective and business-friendly way of generating a more stable source of revenue. She added that it is efficient as the GST is self-policing, enhances tax compliance and is transparent. Consumer know what type of taxes they are paying for and how much.

GST or Goods and Services Tax is a consumption tax based on the value-added concept. The difference between GST and the present consumption tax is in terms of its scope of charge which is more comprehensive, inclusive of the manufacturing and distribution stages as well as providing a tax credit claim for GST paid on business inputs.

GST is more comprehensive, effective, transparent, and business friendly tax system. It can also overcome the various weaknesses inherent in the present consumption tax system and is expected to increase tax compliance and is easier to administer in view of documents relating to the relevant transaction are required to be kept in the business premises for audit by the GST auditor.

There will be cheaper goods and services such as clothing and footwear, basic food, communication, furnishings, hardware and maintenance, transport, housing, water, electricity, gas and fuel. This will benefit Malaysian especially the lower and middle income groups. Various basic needs such as rice, sugar, flour, cooking oil, vegetables, fish, meat, eggs, and essential services such as public transport, private education and health, residential properties and agricultural land are not subject to GST.

GST took into consideration the welfare of the people, especially the low-income group. Basic needs, such as staple foods, water and the first 200 units of electricity are zero-rated for domestic users, while mass public transport, education, health, tolls, residential property and financial services are exempted from GST.

Malaysian Association of Tax Accountants (Mata) president Abd Aziz Abu Bakar suggested an introductory GST rate not surpassing the existing 6% service tax, as it will be easier for retailers and customers to adapt. Anything higher, he says, might have an adverse social and political effect. “Even third world countries worst than Malaysia implement the GST. It is an economic tool used towards achieving high income status for the nation. “There will never be a perfect time. If not now, then when?” he added.

We assume something we are not sure about and the fact that we are afraid of changes. Looking back the successful people, they are successful today because they created opportunity from the problem they faced.

Government is implementing GST to help the people, to ease burden and if there is problem arise, I believe we can find solution in approaching the issues. Blaming government if it goes will only make matter worse.

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