The Malaysian government’s recent decision to expand the scope of its Sales and Services Tax (SST) is poised to significantly impact the country’s fruit import sector. As reported by AsiaFruit, starting July 1, 2025, a 5% sales tax will be imposed on all imported fruits. This policy shift is intended to “encourage the consumption of local agricultural products and strengthen the nation’s food security”.
However, this move has sparked considerable concern among fruit importers, retailers, and consumers. Malaysia is a net importer of fruits, and its tropical climate limits the domestic cultivation of many popular fruit varieties. As a result, the country relies heavily on imports to meet consumer demand for a diverse range of fruits, particularly temperate and off-season varieties.
According to EastFruit, Malaysia ranked as the 31st largest fruit importer globally in 2024, with imports exceeding $1 billion. Within Southeast Asia, only Vietnam, Hong Kong, Indonesia, and Thailand imported more. Over the past five years, Malaysia’s fruit import value surged by 30%, reflecting growing consumer demand and a rapidly developing market.
In volume terms, Malaysia imported 640,000 tonnes of fresh fruit in 2024 – an increase of 20% compared to 2020. This growth has not only boosted domestic fruit consumption but also stimulated the development of related sectors such as logistics and cold chain infrastructure. Moreover, many companies involved in fruit imports also engage in exports, creating a synergistic effect that supports Malaysia’s broader agri-food trade ecosystem.
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The introduction of the new tax threatens to disrupt Malaysia’s strong momentum in fruit imports. By raising the cost of imported fruits, the policy is likely to reduce consumer purchasing frequency, particularly for premium categories such as berries, avocados, cherries, and stone fruits – already relatively expensive due to their perishability and transport costs. As these fruits become less affordable, demand may decline, especially among middle-income consumers, potentially reversing the sector’s recent growth.
Moreover, the tax is unlikely to significantly benefit local growers, as many of the taxed fruits – like apples, grapes, and some citrus fruits – are not grown at scale domestically due to climatic constraints. Even for locally grown fruits, imports often fill seasonal gaps. Malaysia has also become an important market for global exporters from countries such as China, Egypt, Australia, the USA, etc. The new tax could reduce this appeal, redirecting trade flows to more favorable markets in Southeast Asia and resulting in lost opportunities for both Malaysian businesses and international partners.
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