Candour trumps optimism.
According to the latest report compiled by Retail Group Malaysia (RGM), the Malaysian retail industry’s growth rate has dropped 1.2 per cent during the first quarter of 2017 due to weak Chinese New Year sales.
“This latest quarterly result was again below market expectation,” writes the report. “It was lower than the estimate made by members of Malaysia Retailers Association (0.9%), as well as projection made by Retail Group Malaysia (1.5%) in March 2017.”
Meanwhile, MRCA’s president Gerry Chua believes that retail sales will recover and see a growth of 4.5 per cent by the end of 2017, brought on by tourism. A new tourism tax has been introduced by Tourism Malaysia which charges guests at any rented accommodation, including hotels, airbnb, homestay, etc., a tax of RM2.50 to RM20 per room night, depending on star rating.
The tax was initially meant to be implemented on 1 August, however, the government, after a voting session in Parliament, will be introducing the tourism tax starting 1 July.
RGM is concerned with the rest of the year’s forecast, saying that retail goods prices have risen while the ringgit continues to fall. Furthermore, fuel prices has gone up. Despite such inflation, private consumptions grew by 6.6 per cent during the first quarter.
“Members of the retailers’ association are hopeful that their businesses will pick up by 2Q17. They project an average growth rate of 4.8 per cent,” writes RGM.
Performing well and to expectations is the supermarket segment, which will see a growth rate of 6.1 per cent during 2Q17. Pharmacy and personal care sub-sector are also seeing improved sales, reaching a growth rate of 4.9 per cent during 2Q17.
RGM maintains its forecast for retail sales in Malaysia at 3.9 per cent, well below MRCA’s prediction.
“The poor retail sales result during the first quarter will be offset by the higher projection of the second quarter (4.8%),” said RGM. “The recovery of retail sales is highly dependent on external economic demand and ringgit performance for the rest of the year.”