Will the 2015 GST affect luxury brands?

Asia has been all the rave in recent years, especially with its regional tourism campaign to attract power spender and international visitors.

According to the latest figures out from the UN’s World Tourism Organisation, Asia has become the destination of choice for globe trotters with a seven percent increase; 12% in Southeast Asia alone.

To no surprise, a whopping percentage of these spenders are from China – surpassing the US and Germany as the largest spender of international tourism by eight-folds since 2000.

Tie that in with Kuala Lumpur, Malaysia ranking fourth the past two years as voted by CNN Travel as one of the world’s best shopping destinations, which has vastly contributed to the growth of luxury brands coming into the country as well as the boom in tourism marketing spend.

Managing director Tan Sri Francis Yeoh of YTL Corp told reporters during a pre-event press conference A Journey through Time that the implementation of the GST could have an impact on the tourism industry, as Malaysia is well known as a duty-free shopping haven.

“The government should think out of the box and not only do it (tax refund for tourists) at the airport but also in other designated places,” Yeoh says and further adds that there’s still time to think ahead and plan properly before implementing the GST in April of 2015 so that the country would remain competitive in attractive tourists.

Tourism attracts luxury brands. In this global digital war zone where brands from locally produced goods to international household names are allocating their budget to effectively target their consumers, it now has to consider investment into a country where the shoppers experience may be compromised due to the implementation of a new law.

While it seems counter intuitive as Tourism Malaysia aggressively pushes for Visit Malaysia 2014 and its latest campaign declaring 2015 as the Year of Festival in the nation, the early announcement of the GST implementation may actually work out.

Yeoh compares the early announcement to London’s consumption tax saying that London is one of the most expensive but also most awesome shopping places in the world because its value-added tax was “implemented in a friendly, fair and efficient manner.”

Luxury brands do not show a decline of interest in expanding its presence in Malaysia, despite the 2015 goods and services tax – in fact, Louis Vuitton will be tripling from its original size from 5,000 sq ft to 15,000 sq ft while Christian Dior doubles to 10,000 sq ft in the Starhill Gallery.

London has ranked third while Japan came in second and New York holding onto the number one spot on the CNN Travel ranking.