Retail industry tipped to grow 8% this year

KUALA LUMPUR: Malaysia’s RM60bil retail industry may grow 8% this year as an expanding economy, rising stocks and a strengthening currency encourage spending, said Retail Group Malaysia.  

“Broad-based economic growth, not just specific sectors such as primary commodities, oil and gas, telecommunication, will help to improve the spending power of consumers,” said Tan Hai Hsin, managing director of Retail Group, which conducts quarterly retail surveys for the Malaysian Retailers Association.  

Sales at retailers in Malaysia including Aeon Co (M) Bhd and Isetan of Japan Sdn Bhd probably rose 7.5% last year to RM58.98bil after growing 6.2% in 2005, according to a survey by the Malaysian Retailers Association released in October. The association has not released its latest estimate for 2006 sales.  

The Government said in September it expects the economy to grow 5.8% in 2006 and to expand 6%this year.  

“The recent strong performance of the Kuala Lumpur Composite Index as well as the strengthening of the ringgit should make Malaysian consumers feel good about future prospects for themselves, their jobs and their country,” Tan said. “Hopefully, this will start to encourage them to be willing to spend more.”  

Still, rising living and business costs may affect consumer spending and profit margins at retailers, Tan said.  

“Consumers will continue to tighten their purse strings,” said Wong Lai Yee, an economist at TA Securities Holdings Bhd.  

The Malaysian Institute of Economic Research’s retail trade index rose 4.2 points to 99.2 in the fourth quarter from the previous three months, the think tank said last month. Still, it was the fourth quarter the index was below the 100-point mark.  

“Market conditions remain weak,” the institute said in a report. “A moderating economy, intense retailer competition, high interest rates and cautious consumption spending should continue to cast a pall on the retail sector.”  

Malaysia’s economic growth may slow to 5.2% this year from 5.9% in 2006, the institute said. Exports grew a less-than-expected 6.2% in December as overseas demand for the nation’s products faltered amid easing US growth.  

Malaysia should follow China and Singapore in cutting fuel charges “as soon as possible,” which would ease the burden of most consumers, Tan said. – Bloomberg

For latest Bursa Malaysia indices, charts and other information click here


Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 1
Cxense type: free
User access status: 3
Subscribe now to our Premium Plan for an ad-free and unlimited reading experience!

Next In Business News

BNM grants MBSB extension until Jan 5 to conclude talks with PNB for MIDF acquisition
Bursa Malaysia publicly reprimands, fines Brem Holdings directors
ASNB declares income distribution of 3.75 sen per unit for ASM 3
UEM Edgenta to strengthen presence in Saudi Arabia with 60% investment in MEEM
Duopharma, govt execute agreement for insulin worth RM375.17mil via direct negotiation
Malaysia's inaugural RM4.5bil sustainability MGII oversubscribed by 2.38 times
Mudajaya secures RM56.93mil job for Senari Port project
DPI explores stake purchase in Australian aerosols manufacturer
Bursa ends flat with key index down on last trading day of 3Q
BNM updates FCA list to include three new schemes

Others Also Read