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Banning sales on Facebook, Instagram will hurt incomes, say online traders

For Ruby Subramaniam, social media is the only way she can viably market her creative products without the burden of paying overheads.

So news of Putrajaya's move to regulate the sale of items on social media has surprised her as well as other budding business owners, who say it will dampen both their incomes from such sales as well as their entrepreneurial spirit.

Ruby, a freelance artist and digital marketer, said she depended on social media networks and online applications such as Facebook, Instagram, Twitter and Pinterest to promote and sell her doodle art pieces, to supplement her income.

She said social media was also useful for her to promote her work and interact with interested buyers regionally and internationally.

The government’s ruling that online traders must now register themselves with the Companies Commission of Malaysia (CCM) or their sales would be deemed illegal, would only curb entrepreneurial drive and business expansion.

"There is not much help given to local artists, so these little opportunities of using free platforms go a long way for us,” Ruby, 25, told The Malaysian Insider.

"I have to pay between RM100 to RM400 per weekend if I book a booth in a mall to promote and sell my artwork, and if I don't sell anything, I lose out.

"But I don't have that pressure to sell on Facebook," she said, adding that her online artwork business supplemented her income by about 30%.

She said the nature of the Internet was such that when attempts were made to suppress it, users would always look for other platforms and loopholes to continue to operate.

The Domestic Trade, Cooperatives and Consumerism ministry said on Wednesday that any one selling items online directly via Facebook or Instagram must register themselves with the CCM, otherwise such sale would be deemed illegal.

Deputy minister Datuk Seri Ahmad Bashah Md Hanipah had said the move was being done to protect consumers from being cheated.

But PKR Youth secretary-general Nor Hizwan Ahmad said a seller's personal information would be enough to act on in case of fraud or any wrongdoing.

A 28-year-old Kuala Lumpur-based journalist who declined to be named felt it was not necessary for small businesses like hers to be registered, saying it was a needless hassle.

She said she only made about RM150 a month selling women's clothes, bags and beauty products on Instagram and Carousell, a small business she started two years ago.

"So why should I register," she said.

College student Tascha Khosroo says she will register her online business to avoid any problems later. – The Malaysian Insider pic, December 19, 2014.
College student Tascha Khosroo says she will register her online business to avoid any problems later. – The Malaysian Insider pic, December 19, 2014.

For Tascha Khosroo, 22, and her two friends, selling nail art products on Facebook is a means to earn some extra pocket money while studying in college. They began selling nail art bought in bulk from China in February last year and still have some 65% of stock to finish.

Tasha said she was shocked to learn from a friend the news that small online businesses like hers now had to register with the CCM.

"We earn a very small income from it as we sell it for really cheap, I feel we are being penalised for being proactive in trying to source for some additional income," she said.

She said that operating the business had taught her and her partners a lot and expanded their minds and creativity, adding that this should be seen as positive for the Malaysian economy as the country aspired to achieve high-income status.

Tasha said she would not take any chances and intends to register the business before the end of the year, but added that this extra step would likely diminish the enthusiasm of other young people in attempting business start-ups online.

The only plus points, she said, was a boost in credibility for customers who had trust issues when making online purchases, and the fact that registering with CCM would only cost RM30.

PKR's Hizwani, however, has questioned whether the move was a ploy by the government to earn more in additional taxes.

He said mandatory registration would also harm people like students and housewives who were trying to boost incomes in an already tough economic climate.

"The subsystem of online sales involves students and housewives who only take a small commission from promoting the products of other manufacturers," he said in a statement.

"In light of the current economic conditions which Putrajaya has failed to control, a spirit of entrepreneurship should not be declared illegal.

"Putrajaya should instead encourage the development of such businesses as the cost of starting up is relatively minimal without much expenditure," he added.

Meanwhile, some social media users were miffed by the regulation, calling it nonsensical.

Twitter user Pradeesh using the handle @prasys tweeted: “Our minister's (sic) are once again..., want to stop Instagram/Facebook shop (sic)? Why? Cannot collect GST kah?”

In response to his tweet, @raafikaziz posted:"@prasys is it because the online business thingy are not paying tax? Sounds nonsense.”

Pradeesh @prasys replied: “@raafikaziz its more about regulation, IMHO gov should help to expand these small time business and not to say it’s illegal.”

Another Twitter user shuji @shujiokishima had this to say of the ruling: "Afraid of free market". – December 19, 2014.