On the Beat | By Wong Chun Wai

Sales tax on PDA will widen digital divide

Telecom operators, universities, fast-food operators,
shopping malls and private companies are investing in hotspots to enable PDA
users with Wifi and Bluetooth (wireless connections) to remain online.

Even our police have started using PDAs on a trial basis
to access data. I am told that at least 1,000 PDAs are being used by
enforcement agencies for surveillance. That's Information Technology for

But not everything is that rosy. PDA users are grumbling,
mostly in cyberspace, about an absurd decision by the Customs Department to
impose a 10% sales tax on PDAs with wireless connectivity built-in. In short,
it will cost Malaysian consumers up to RM300 more for each PDA.

You can get them cheaper by crossing over to Singapore
and helping the businessmen in Orchard Road.

If you are an honest bloke, you can follow the rules and
declare the newly purchased PDA at the Malaysian Customs on returning home. But
since the device is so small, you can just walk past the officer.

Unless the officer does a body search, there is no way he
can detect the device.

If your PDA is flawed, you need only go to a Malaysian
distributor to get it repaired for free – at the expense of the local

For the rest of us who buy these devices in Malaysia,
we would have to pay more.

That's how baffling the situation has become – all
because someone at the Customs Department is unsure whether the wireless PDA is
a computer, a mobile telephone or a media player.

The impact is immediate: the consumer pays more, the
local distributor earns less, Malaysia
loses its shopping status, and profit-oriented traders take the opportunity to
sell parallel or "underwater" imports.

The IT world is changing so fast that many prefer to talk
about the convergence of IT and embracing it instead of wasting time trying to
draw a line to differentiate between computer equipment and telecommunications

Why impose the sales tax? IT equipment, whether they be
PDA or notebook, should be made cheaper if we wish to make more Malaysians
computer literate. Price is a major factor in the buying of computer equipment.

The Customs Department decision runs contrary to what has
been said by their boss – Prime Minister and Finance Minister Datuk Seri
Abdullah Ahmad Badawi – that the entry point for Malaysians to adopt ICT must
be lowered as a way to bridge the "digital divide", especially the
socio-economic gap between those with access to ICT and those without.

Speaking at the 8th annual meeting of the Multimedia
Super Corridor's International Advisory Panel in Cyberjaya in September, he
said ICT should not be elitist but should touch the lives of every individual.

In a nutshell, IT is for all and it should be made
affordable. Imposing taxes is surely one way to kill enthusiasm and

This is not the first time the Customs Department has
reacted strangely. In 1999, it slapped a 10% sales tax on palm computers,
saying they were electronic organisers and therefore not eligible for the 1996
tax abolition on computers. When it was pointed out that IBM Corp's Workload
had the same operating system and features, the tax was lifted the following

PDA users believe that Customs officials could possibly
be misguided by the decision to impose tax because of their failure to grasp IT
development. After all, wireless connectivity was already available in other
devices such as notebooks and projectors that are not taxed.

Another possibility is that the Customs Department wants
to increase revenue but taxing IT devices certainly runs against government
efforts to promote IT.

If it's all about increasing revenue, then it should
focus on expensive imported cigars, branded goods, golf apparel, horse-riding
gear, luxury cars and cosmetics.

As a PDA user, I urge the Prime Minister and Second
Finance Minister Tan Sri Nor Mohamed Yakcop to please review the decision of
the Customs Department.