Prepaid mobile users to pay 6pc service tax Read more: Prepaid mobile users to pay 6pc service tax

KUALA LUMPUR: Come Sept 15, prepaid mobile users will need to pay a six per cent service tax whenever they buy a starter pack or reloads.
This means, a customer will need to pay RM10.60 for a RM10 prepaid reload.

"Service tax is a consumption tax and chargeable to the customer, as provided for in the service tax laws.

"The Service Tax Act 1975 requires telecommunication companies to levy service tax at the prevailing rate on telecommunication services, including mobile prepaid services.
"This is similar to the service tax levied on food and beverage purchases from restaurants and hotels," said mobile service providers in a joint statement yesterday.

Since the launch of mobile prepaid services in 1998, mobile operators have been absorbing the service tax.

According to mobile operators, the move was to ensure mobile prepaid services remained competitive compared with postpaid.

"With prepaid rates progressively reduced over the years, it is currently offered at very competitive rates," they said.

Telecommunications analysts view the news as "generally positive" for mobile operators, with DiGi.Com Bhd seen as the biggest beneficiary and Maxis Bhd benefiting the least.

As at June 30 this year, 83 per cent of DiGi's customer base comprised prepaid users. In contrast, about 75 per cent of Maxis' customers were prepaid users.

Today, prepaid users are spending about RM36 to RM51 a month.

Analysts believe the implementation of the service tax is unlikely to reduce prepaid users spending significantly.


Taken from New Straits Times Online

IWK to be privatised to 1MDB

KUALA LUMPUR, Sept 8 — Indah Water Konsortium (IWK) is expected to be privatised soon to a consortium led by strategic investment agency 1MDB, some 11 years after the government was forced to bail out the national sewerage company from financial difficulties under its previous owners, according to sources in the Finance Ministry. The sources told The Malaysian Insider that the 1MDB-led consortium will include water distribution company Puncak Niaga, and that the deal has been given the nod by the Economic Council chaired by Prime Minister Datuk Seri Najib Razak. However, it is understood that some ministry officials are still scrutinising the deal because of concerns about its feasibility and worries that the government could once again be forced to bail out the company if the latest plan fails. Under the proposed deal, the 1MDB consortium will acquire IWK for RM1 and take over its debts which include more than RM1.5 billion in loans still owed to the ministry. The consortium is seeking a 60-year concession from the government and will only pay back the principal amount and interest on the loan over the long term. It also has plans to link sewerage charges to water usage. The plan could spark a new round of controversy because of the lack of transparency surrounding negotiations, with consumers still wary about deals involving IWK. From Day One, IWK has had problems convincing a sceptical public to pay for separate sewerage charges which had previously been part of the water bill. In 2000, Tun Dr Mahathir Mohamad’s administration paid nearly RM200 million to nationalise IWK to “safeguard public interest and to avoid service disruptions.” The nationalisation of IWK was to tackle the company’s debt then of nearly RM700 million. IWK’s bailout in 2000 exemplified the pitfalls of Dr Mahathir’s privatisation policy in which government-owned assets or resources were allocated or sold to private investors in the hopes of generating profits. The IWK story began in 1993 when businessman Tan Sri Vincent Tan convinced the government to let a consortium of private interests led by him to take over the ownership, operation and maintenance of more than 2,800 state-owned sewage-treatment plants nationwide. But IWK subsequently found that many of the treatment plants it inherited from the government were not functioning and costs began escalating. A nationwide furore also ensued, with many consumers and businesses complaining bitterly about IWK. Maintaining the plants and staying profitable proved impossible for IWK. Under pressure, the government also forced the company to reduce its charges. By 2000 Dr Mahathir’s government then decided to nationalise IWK. The Najib government’s new plan could attract similar criticisms because it involves 1MDB and Puncak Niaga, a company that is seen as politically connected to Putrajaya.

 Taken from Malaysian Insider