Malaysia’s Goods and Services Tax (GST) a boon to IT firms

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Malaysia’s new consumption tax is a boon to IT companies that stand to win infrastructure contracts and fees – provided they can convince people to switch to electronic payments in a country where 91% of transactions are in cash.

The 6% goods and services tax (GST) that Prime Minister Datuk Seri Najib Abdul Razak announced in his budget speech last Friday is aimed at narrowing a budget gap that is expected to hit 4% of gross domestic product this year.

Cash payments are harder for tax collectors to track, so the government is encouraging e-payments as a way to reduce costs and improve efficiency.

For companies such as Censof Holdings Bhd and GHL Systems Bhd that specialise in creating electronic payment and software systems, the initial benefit will likely come well before the tax is implemented in April 2015.

These companies, along with privately held Brilliance Information Sdn Bhd and Revenue Harvest Sdn Bhd, are seen as front-runners for government contracts to build the necessary infrastructure, because Malaysia has a procurement policy that favours local companies.

That potential has caught investors’ attention. Censof’s shares are up 64% in the year to date while GHL’s have jumped more than 160%, both out stripping the broader market’s 7.7% gain.

“To impose GST, you need to capture sales accurately and it needs to be done electronically. You need payment infrastructure in place,” said Raj Lorenz, group CEO at GHL, Malaysia’s largest e-payment firm by market share.

“The business is very bright but there are a lot of people using cash, so they (the government) have to make them all use e-payment. In the end, the only guys who can get away with it are those in the night markets,” he said.

Censof executive director Ameer Shaik Mydin concurs, adding that all his company’s systems are GST-ready and waiting to be implemented on clients’ sites.

“We’ve done it in Singapore and Australia. It definitely has to be electronic. If not, I have to say it’ll not work,” he said.

Accounting for GST is especially tricky in a cash economy. Businesses might understate sales to lower the tax bill. But for cash-only companies, making the switch will be costly.

“Big boys can afford it but what about eateries and sundry shops? Do you expect them to pay for such machines and issue receipts (on GST)?” said Kuala Lumpur-based business consultant John Yong.

“If they don’t buy and issue receipts, then the 6% GST is not going to be remitted to the government. Some industries are just not ready for GST,” he added. – Reuters/theSun

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NSA secretly hacks, intercepts Google, Yahoo daily

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The United States’ National Security Agency has secretly broken into the main communications links that connect Yahoo and Google data centers worldwide. That’s according to documents released by former NSA contractor, Edward Snowden, The Washington Post reports.

Video: NSA intercepts Google, Yahoo traffic overseas report | The Nationalhttp://www.thenational.ae/article/2013110
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According to the documents, the agency and its British counterpart GCHQ, through a project called MUSCULAR, collected data stored on Google and Yahoo servers. That allowed both governments access to hundreds of millions of user accounts from individuals worldwide.

“From undisclosed interception points, the NSA and GCHQ are copying entire data flows across fiber-optic cables that carry information between the data centers of the Silicon Valley giants,” RT cites the Post’s Barton Gellman and Ashkan Soltani.

A January 9th document says that in the preceding 30 days, collectors had processed over 181 million pieces of information, including both metadata and the actual contents of communications.

The government can already request information from phone or data through the FISA Amendments Act but this data collection would ostensibly take place without Google and Yahoo even being aware of it.

When you send email or store files with an internet company, that data is regularly shared among servers around the world, in order to ensure quick access to your information from wherever you happen to be. Google and Yahoo run customized private networks to shuttle that information around, passing between and within countries, as the Post indicates in a graphic. To move that information, the companies use fiber optic connections, light-speed networks running over thin glass cables. According to the Post, it’s those connections that the NSA is able to monitor. None of Yahoo’s inter-server traffic is encrypted. Not all of Google’s is either.

The MUSCULAR program, according to Wednesday’s leak, involves a process in which the NSA and GCHQ intercept communications overseas, where lax restrictions and oversight allow the agencies access to intelligence with ease.

“NSA documents about the effort refer directly to ‘full take,’ ‘bulk access’ and ‘high volume’ operations on Yahoo and Google networks,” the Post reported. “Such large-scale collection of Internet content would be illegal in the United States, but the operations take place overseas, where the NSA is allowed to presume that anyone using a foreign data link is a foreigner”.

The Post points out that company staffers were surprised and angry to hear that their their networks had been compromised. Google said that it was “troubled by allegations of the government intercepting traffic between our data centers”.

The report comes amid a storm of protest about NSA surveillance both at home and overseas of phone and Internet communications.

On Tuesday, US officials said reports that American spy agencies snooped on millions of Europeans were false.

Alexander told lawmakers that in many cases European spy agencies had turned over phone records and shared them with US intelligence.

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