Consumer Purchase Intention and Cross-Border Shopping: Implementation of Goods and Services Tax (GST)

Abstract

Goods and services tax (GST), also called value-added tax (VAT), is an after-sales tax imposed on goods and services. The implementation of GST in Malaysia have significant economic, social, marketing, and political impact, and thus, has recently become one of the hottest discussion topics among consumers in Malaysia. From the marketing perspective, it will affect consumer purchase intention and spending patterns. Consumer purchases intention behavior will become more difficult to predict because it is directly influenced by GST. Past studies showed that consumers will likely cross to neighboring countries for shopping after the implementation of GST. This study compares consumer purchase intention before and after the scheduled implementation of the goods and services tax (GST) and to examine the consumer cross-border shopping intention. A total of 100 shoppers were interviewed in four major shopping centers in Klang Valley. Results show that most of the consumers are “likely” to purchase products before GST implementation and “very unlikely” to purchase within the first three months after GST implementation in Malaysia. However, consumers are “neutral” with regard to cross-border shopping intention. One-way ANOVA analysis shows that higher-income groups are less influenced by GST than lower-income groups. The sample size in this study could be considered relatively small for consumer studies. Thus, future studies should increase the sample size and use the longitudinal method.