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NEWS UPDATES Asean Affairs    28 August  2012

Malaysia's Q1 retail sales below forecast


Malaysia's retail industry recorded sales growth of 6.9 per cent in the first quarter of this year, which was lower than retailers' initial forecast of 12.1 per cent, according to Retail Group Malaysia.

“The retail result of the first three months of this year was positive because of several incentives introduced by the Government since late last year,” Retail Group Malaysia managing director Tan Hai Hsin said in the latest Malaysia Retail Industry Report.

He noted that about 1.2 million government servants enjoyed higher salaries this year.

“The 100 ringgit (US$32.06) and 200 ringgit book vouchers that were given to school students by the Government had boosted sales in bookstores nationwide for the first quarter of this year.

“The government had also released a one-off 500 ringgit aid under the Bantuan Rakyat 1Malaysia (BR1M) to close to four million households with income less than 3,000 ringgit per month from the month of March. All these had increased retail spending from the masses during the early part of this year,” Tan said.

An analyst from a bank-backed brokerage concurred that the various initiatives by the government helped boost consumer spending in the first quarter.

“The various government measures such as the BR1M scheme, the Skim Amanah Rakyat 1Malaysia (SARA 1Malaysia) scheme and the salary hike for civil servants all helped to boost the disposable income and purchasing power of Malaysians in the first quarter,” he said.

Tan noted that despite the encouraging first quarter result, retailers still needed to absorb the rising cost of goods and offer attractive discounts to attract shoppers to buy at the same time.

“Profit margin growth during this period was poor,” he said.

As for the second quarter, Tan said members of the retailers' association remained optimistic of their businesses during the period.

“They expect their sales to rise by 11.7 per cent compared with the same period in 2011.

“However, Retail Group Malaysia is expecting a lower growth rate of 5.5 per cent only.

“This is due to poor economic prospects during the second quarter as well as higher base achieved in 2011 at 9.1 per cent.”

Another analyst said he expected flat growth in the second quarter of this year.

“This is mainly because there was a lack of major festive holidays in the second quarter which would have driven consumer spending.

“We expect better growth in the third quarter, due to the Hari Raya (also known as Eid-ul-Fitr, the Islamic festival marking the end of fasting month of Ramadan) holidays,” she said.

For the second quarter, Retail Group Malaysia said it is lowering its estimate to 5.5 per cent instead of 11.7 per cent.

“During this period, the European crisis did not turn positive, the US economy was also not recovering at a sustainable pace and China experienced slowing export and declining domestic demand.

“All these led to Malaysian consumers remaining cautious in their spending. Retail sales had slowed down slightly.”

For the third quarter, Tan said the growth rate is estimated at 6 per cent due to Hari Raya celebration.

“Furthermore, 1.25 million civil servants received half-month bonus with a minimum payment of 500 ringgit recently (while) 657,000 government pensioners have also benefited with 500 ringgit special payment.”

Retail Group Malaysia is forecasting the retail industry to expand by 5.5 per cent in the fourth quarter of 2012.

“Malaysian consumers will still remain cautious in their retail spending. They are uncertain of their prospects due to the impending general election. Their confidence level may improve after the Budget 2013 announcement in end-September,” said Tan.

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