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Eugene Mahalingam

The Star

Publication Date : 29-01-2013

Industry observers are cautiously optimistic that the Malaysian retail industry will see good growth in the first quarter of the year, boosted by promotional activities in conjunction with the upcoming Chinese New Year (CNY) festival.

“The retail segment is cyclical. It will pick up leading up to Chinese New Year and then will taper off after that,” said Malaysian Association for Shopping and Highrise Complex Management past president Richard Chan.

“After Chinese New Year, in March or April, things usually slow down,” he added.

Chan noted that the food and beverage (F&B) and entertainment outlets were still doing well.

“The F&B sector is thriving, while the cinemas and karaoke outlets in shopping centres are also doing well,” he said.

Chan dismissed the possibility that the upcoming general election (GE) would cause a slowdown in the local retail sector.

“Some say that people are holding their purchases back due to the upcoming GE.

“However, I don't think people will stop spending because of that.”

He said some big-ticket retail sectors had been seeing a slight slowdown.

“For some, securing a car loan is still difficult, mainly due to the lending guidelines.”

Following Bank Negara's responsible lending guidelines, which came into effect on Jan 1, 2011, loans are now approved based on net income compared with gross income previously.

The guidelines were intended to help manage the household debt in Malaysia to reasonable levels.

Chan, however, said the big-ticket retail businesses that promoted property were still doing well.

An analyst also said he expected a “pick up” in the local retail sector in the first half of the year.

“The Chinese New Year period is one of the biggest events of the year for the local retail sector,” he said.

According to the latest Malaysia Retail Industry Report, Retail Group Malaysia is maintaining its earlier growth forecast for the industry at 6 per cent this year, noting that it will enjoy better sales during the first quarter of this year when the Government hands out cash under the second round of its Bantuan Rakyat 1Malaysia from January.

It expects electrical and electronics retailers to benefit from the 200 ringgit (US$65.09) rebate on smartphones for those aged between 21 and 30 with a monthly income of not more than 3,000 ringgit.

It added that bookstores would also be getting a big boost in sales when the 250 ringgit 1Malaysia Book Voucher is distributed to all private and public university students from next month.

According to the report, the local retail industry grew 6.9 per cent, 5.9 per cent and 4.8 per cent in the first, second and third quarters of 2012, respectively. It expected a growth of 5.7 per cent in the fourth quarter.

One industry observer, on the other hand, expected a slowdown in the retail industry this year.

“We are maintaining a cautious outlook for 2013. Elections will pose some uncertainty but they won't cause consumers to stop spending.

“It also depends on how the global economic health is, and how it will have an impact on sentiments locally,” the observer said.

*US$1=3.07 ringgit