Sales of luxury goods to pick up before tax kicks in

GEORGE TOWN: Luxury goods outlet operators are anticipating a boost in business by the end of the year ahead of the implementation of the High Value Goods Tax (HVGT) on May 1. They expect that luxury goods buyers will start searching for their favorite products before the Chinese New Year festivities. Shop owner Adriana Lim believes that the prices of branded bags, whether new or preloved, will skyrocket once the tax comes into effect. She stated, “With the luxury goods tax starting in May, the public will want to capitalize on the opportunity to purchase branded items before prices escalate further.” Lim, who has been in the industry for over 15 years, noted that despite the annual price increases, luxury brand lovers and collectors continue to make purchases. She added, “Prices of bags such as Louis Vuitton, Chanel, Hermes, Prada, and other brands have been rising two to three times each year, but there are still individuals willing to spend.” Lim believes that the middle class and working professionals who typically purchase second-hand luxury goods within the range of RM4,000 to RM5,000 will be affected by the new tax.

Watch specialist Vincent Wong raised concerns about the potential impact of the new luxury goods tax on local sales, especially since Malaysia did not previously have such a tax. “In the short term, some people may have second thoughts about buying branded goods due to the tax, but in the long term, they will adjust, particularly collectors,” he noted. Wong, who has been in the industry for more than 20 years, predicts a surge in business during the Christmas and Chinese New Year seasons in anticipation of the tax implementation. He also suggested that foreigners might refrain from buying luxury watches in Malaysia once the new tax is in place.

A businesswoman known as Anne expressed her intention to reduce her future bag purchases. “I anticipate that branded bags will become significantly more expensive, and I might have to stop buying them next year,” she said. However, she added that she might consider purchasing pre-loved bags if they are exempt from the tax. Meanwhile, sales at jewelry stores were sluggish, possibly due to the high price of gold. At the time of press, the price of gold was RM298 per gram, while the trade-in price was RM267 per gram.