Chaos Expected as Manufacturers Rush to ‘GST-Ready’ their ERP System

As the April 1, 2015 deadline looms, Malaysian manufacturers are only starting to realise the daunting efforts to overhaul their most critical IT system – the ERP, to be GST-ready

KUALA LUMPUR, 4 March, 2014 – iContro Software Sdn Bhd (‘iContro’), the leading 100% local Enterprise Resource Planning (ERP) brand and provider, which has been closely involved in the local ERP scene over a decade, foresees that due to the government’s final resolve to implement the 6% GST to replace the current sales and services tax – businesses across all sectors, particularly the hugely-ERP reliant Manufacturing Sector, will be launched into a “…chaotic period as never seen before, in rushing to replace their unworkable legacy ERP systems.”

Its CEO Frank Lee, says that a handful of manufacturers are beginning to realise how little time they have left but, “When it finally dawns upon the majority of Malaysian manufacturers that their ERP system are simply too old to be upgraded to be GST-compliant, that is when there will be a mad scramble by top management to put ERP overhaul as the priority of their IT budgets.”

An April 2012 survey by the Federation of Malaysian Manufacturers (FMM), coincidently shows that over 60% of businesses responded that they were ready to implement GST, while 40% indicated that only basic preparations such as attending seminars and training to familiarise themselves with the GST scheme, have been made.

Deloitte Malaysia more closely estimates that less than 5% of businesses have started getting themselves ready.

Greater Complications for Manufacturing
According to Lee, there will be imminent chaos that will hit the local manufacturing scene – starting as early as the first quarter of 2014 , and carrying on until the last minute prior to the nation’s Goods and Services Tax (GST) implementation deadline on 1st April, 2015.

Furthermore, the introduction of GST is even more complicated for Malaysia’s manufacturing sector because the ERP system will need to accurately identify and capture the tax imposed or exempted details at the various raw material processing stages of the finished goods being manufactured.

Lee says, “Currently we know of over 270 items that will be exempted from GST, and not even including the various state, zone or incentive tax inclusions or exemption that apply to specific manufacturing businesses operating in Malaysia.”
“With no prior experience or local business knowledge in implementing a GST-compliant system for a core IT systems as massive as the ERP, many foreign IT brands will be challenged to supporting their base of manufacturers customers,” says Lee.

He says that there confusion and frustration in swapping over to newer ERP alternatives as many of the large US and European ERP brands will face significant problems to assist their IT budget-strapped manufacturing customers to have a working and proven GST-compliant ERP system.

For the record, today there are over 150 countries worldwide that have already adopted GST.  For a quick comparison, Singapore adopted GST in 1994  and Australia in 2000.

In trying to learn from experience, Australia emulated Singapore in GST adoption and implementation. And despite Australia having a much more mature and organized business culture compared to Malaysia, they took almost 3 years to finally stabilise a workable model.

“This is why Malaysian businesses, especially those in the manufacturing sector that have the gigantic ERP that is heavily ‘system-affected’ by GST,  need to wake up now to the enormous work at hand. The best advice is to start making crucial decisions on your ERP system NOW,” ends Lee.

制造业廠商趕緊为其企業資源計劃 (Enterprise Resource Planning ，‘ERP’)系統准备就緒

隨著2015年4月1日的最後期限臨近，馬來西亞製造商才開始意識到全面改革  ERP系統为商品及服務稅实施做准备的 艱鉅努力

吉隆坡，2014年3月04日 -  iContro軟件有限公司（iContro Software Sdn Bhd ，’iContro'），100％自產自銷的馬來西亞企業資源規劃系统供應商，預测6％的消費稅实施以取代目前的銷售及服務稅将导致些许混亂如所有部門，特別是现采用ERP系统的製造業赶着更換其不可行的原有ERP系統。

李俊輝，iContro总监表示大多數馬來西亞製造商，他們的ERP系統都太舊而無法升級為GST兼容，也就是說ERP升级将成为科技預算的優先順序。

在2012年4月馬來西亞製造商聯合會的調查下，巧合表明，超過60％的受訪企業业者說他們準備實施商品及服務稅，而40％的人表示只做着基本的準備工作，如參加研討會和培訓，與熟悉商品及服務稅方案。

馬來西亞Deloitte更緊密地估計，不到5％的企業以開始準備就绪。

製造业具较大的挑战

據李某，迫在眉睫的混亂將打擊本地生產业 - 首發早在2014年的第一季度并持续直到全國的商品及服務稅（GST），實施期限於4月1日，2015年的最後一刻之前。

此外，馬來西亞的製造業商品及服務税实施更是複雜，，因為ERP系統將需要準確地識別並捕獲在成品所製造的各種原材料加工階段的稅收徵收或免徵的細節。

李說，“目前我們知道超過270項目將为消費稅免除，甚至不包括適用於在馬來西亞經營特定製造業務的區域或激勵性的稅收夾雜物或豁免。”

他說，许多大型美國和歐洲的ERP品牌將在如何協助有科技預算拮据问题的製造業业者实施消費稅兼容的ERP系統面臨顯著的問題。

記錄在案，今天全球有超過150個國家已經採用GST。對於一個快速的比較，新加坡在1994年通過消費稅和澳洲在2000年。

試圖從經驗中學習，澳大利亞效仿新加坡消費稅採用和實施。儘管澳大利亞有一個更加成熟和有組織性的商業文化相比，他們用了近3年来稳住一個可行的商品及服務稅模式。

“這就是為什麼馬來西亞的企業，特別是那些在製造業采用大量ERP系统的公司需要马上着手開始针對商品及服務稅为ERP系統作出重要決定，” 李結尾。

Dismal level of ERP ‘Computerisation’ in Local Manufacturing Sector

Enterprise Resource Planning (ERP) specialist iContro reveals largest challenge faced by process-based manufacturers in Malaysia and region

KUALA LUMPUR, 26 November, 2013 – iContro Software Sdn Bhd (‘iContro’), 100% homegrown, Malaysia-based ERP provider, today shared its recent findings on the current state of computerisation in the Manufacturing sector, the 2nd largest economic industry in the country.

Frank Lee, CEO of iContro, says that despite the great progress in other ICT areas such as mobility, digital media, Big Data and cloud computing; the advancements in the biggest enterprise system – the Enterprise Resource Planning (ERP), is still sadly lacking.

“The behemoth ERP system is the core of all large enterprises and business operations whether in the public sector, telco, financial and retail. Yet, the advancements and technological upgrades within the ERP is one of the slowest and most painful.”

Lee particularly singles out the state of ERP systems in Process-based manufacturers, which he deduced is still ‘…at a very basic level of computerisation and automation’.

“As a significant portion of local manufacturers are process-based, it is not far-fetched to assume that this is currently one of the least automated sectors in the country, despite it being a top economic activity for Malaysia.”

In addition to the ERP systems of process-based manufacturers being the least ‘computerised’ or ‘automated’ of all other manufacturers, iContro estimates that less than one third of Malaysia-based process manufacturers even deploy an ERP system for their operations.

“The main reason for this dismal ERP phenomenon in Malaysia and the region, is because most ERP systems available cannot cope with the highly complex nature of  process-based manufacturing.

Even if they have some kind of ERP system, they are mostly limited to handle the manufacturers’ financials, distribution or HR functions only instead of being optimised to integrate and automate the actual and entire process manufacturing operations,” explains Lee.

iContro Dominates in Paints
Over the last 18 years, iContro has been focusing on developing and providing ERP systems for complex business operations. The company today offers a comprehensive suite of ERP solutions across sectors, but hold current dominance of paint manufacturers (which are in the category of process-based manufacturing).

“Most of the paint manufacturers in Malaysia today use iContro as their default ERP – simply because it works extremely well to support all the complexities in their niche operations, and is much more affordable than other international ERP brands in the market,” shares Lee.

Besides continual upgrades to these existing manufacturing clients, he says that iContro is getting interest from players in other sectors such as Building Materials related, Oil & Gas and Property.

 “The ERP market in Malaysia is slowly but surely undergoing a transformation as companies scrutinize that the capabilities of their IT purchases can actually perform what the business requires, in the face of ever growing competition in the Market Place” he ends.

本地製造業的企業資源計劃 “電腦化”趋势慘淡

企業資源規劃（Enterprise Resource Planning，ERP）專科iContro揭示在馬來西亞和区域基於流程的製造商的最大挑戰

吉隆坡， 26日讯 -  iContro軟件有限公司（“iContro'），100％自產自銷的馬來西亞企業資源規劃系统供應商，今天分享了其最近对本地第二大的經濟体系製造業进行的調查，以揭发其现電腦化的状态。

李俊輝，iContro总监表示，儘管其他科技通信領域，如流动科技，电子媒體，大數據和雲端計算都有显著的進步，企業内最大的系统- 企業資源規劃（ERP）的升级仍然欠奇缺。

說明注：製造業一般分為兩種類型 - 過程和離散，即早期是非常複雜的，因為它涉及的產品，一旦產生就不能再被分解成它的組成部分。工藝製造的實例包括化學品，原料物質，石油和天然氣燃料，醫藥品和生物工程。

“由於本地基於過程的製造商占大部分，并不难假設，這是目前一個在國內最少自動化的行業，儘管它是馬來西亞頂級的經濟活動。”

iContro主宰油漆市场
在過去的18年内，iContro一直專注於開發和提供ERP系統的複雜業務。該公司今天提供了一整套跨部門的ERP解決方案，并保持當前在塗料製造业（這是基於流程的製造類）的霸主地位。

在馬來西亞大多數的塗料製造商今天使用iContro作為其ERP的选择 - 只是因為它的系统非常好，比其他在市場上的國際系统， 更能支持他們的利基業務的所有複雜性，“李俊輝表示.

“馬來西亞的ERP市場緩慢， 但正穩步地經歷著一場蛻變為企業審查其科技化的採購能力，實際上它能進行什麼樣的業務需要，以面对在市場上日益增長的競爭面前”，他結束。