KUALA LUMPUR, June 1 — The Association of Accredited Advertising Agents Malaysia (4As Malaysia) has today sought Putrajaya’s intervention to help save its members’ livelihood, proposing 10 measures for the government’s consideration.
One of them included exemption from the Sales and Service Tax (SST) on advertising services, with 4As Malaysia chief executive Khairudin Rahim said the “unprecedented initiative” is crucial, given the volatile times currently.
“It is designed to help the government to spur our economy into recovery mode, help advertisers facilitate an increase in advertising budgets, help manufacturing companies, the advertising industry,media owners and business community to safeguard and prevent further job losses/business closures via increased operations,” it said in a statement.
The top item on the group’s proposal is for a waiver of SST on all advertisement creation, production and placement by Malaysian companies until December 31, 2020 or until the second quarter of 2021.
Khairudin said that the memorandum was, prepared in consultation with the Commercial Radio Malaysia, Malaysian Media Specialists Association, Malaysian Advertisers Association, Malaysian Newspaper Publishers Association and Outdoor Advertising Association of Malaysia, and was submitted by the 4As to the government through the Ministry of Finance, Ministry of International Trade and Industry, and the Ministry of Communications and Multimedia.
“In the last four months, only 80 per cent or less of businesses were operating at full capacity, while some temporarily suspended operations.
“This led to many advertisers cancelling or rescheduling campaigns and slashing budgets as they used their advertising expenditure to shore up employee salaries and defray accumulated debts,” he said.
He added that this has also led to a 20 per cent decline in advertising spending in the first five months of 2020, on the back of decreased revenue streams ranging between 20 per cent and 50 per cent .
Khairudin said that based on estimations, advertising spending is forecasted to drop by 20 per cent, year-on-year by the end 2020, while revenues are expected to flatline.
“It is also estimated that most of the industry’s creative and media agencies, including some media owners, have experienced pay cuts ranging from 10 per cent to 30 per cent, while an estimated five per cent to 10 per cent employees have been laid off,” he said.
He said another 20 per cent of the industry members are expected to downsize or close down altogether if business conditions do not improve.
