The Malaysian government has announced an expansion of its Sales and Services Tax (SST), which will include a 5% tax on all imported fruits starting 1 July 2025. According to AsiaFruit, this policy aims to encourage the consumption of locally produced agricultural goods and enhance national food security.
The decision has raised concerns among fruit importers, retailers, and consumers. Malaysia remains a net fruit importer, as its tropical climate limits the domestic cultivation of many popular varieties, particularly temperate and seasonal fruits. As a result, imports are essential to meet consumer demand for a broad range of fruit options.
Malaysia ranked 31st globally in fruit imports in 2024, with a total import value exceeding US$1 billion, according to EastFruit. Within Southeast Asia, only Vietnam, Hong Kong, Indonesia, and Thailand imported more. Over the past five years, the value of Malaysia's fruit imports has increased by 30%, reflecting both expanding consumer demand and a growing market.
In 2024, Malaysia imported approximately 640,000 tons of fresh fruit, a 20% increase compared to 2020. This growth has supported not only consumer access to a wider variety of fruits but also the development of sectors such as logistics and cold chain infrastructure. Many businesses involved in imports also contribute to export activities, forming part of a larger agri-food trade ecosystem.
The upcoming tax is expected to raise the retail prices of imported fruits, which may lead to reduced purchasing frequency, especially for higher-priced categories such as berries, avocados, cherries, and stone fruit. These products already carry higher costs due to perishability and logistics requirements, and additional taxes may further limit accessibility for price-sensitive consumers.
The measure is not expected to significantly benefit domestic fruit producers, as many of the affected fruits, such as apples, grapes, and certain citrus varieties, are not widely grown in Malaysia due to climatic limitations. Even for local produce, imports often supplement the domestic supply during off-seasons.
Malaysia also serves as a key destination for fruit exporters from countries such as China, Egypt, Australia, and the United States. With the added tax potentially reducing the competitiveness of imported products, these exporters may shift focus to alternative Southeast Asian markets with more favorable conditions. This could result in decreased trade activity and fewer business opportunities for both local importers and international suppliers.
Source: EastFruit