PETALING JAYA: The local retail sector is expected to register a modest growth of between 5% and 6% this year, underpinned by sustained consumer sentiment from improved consumer spending and stability in the market.
Malaysian Association for Shopping and High-Rise Complex Management past president Richard Chan said the local retail sector should grow “more than 5%” this year, buoyed by the three-month tax holiday and the anticipated pick-up in spending towards the year-end.
“The usual trend is that the retail sector generally picks up in the third and fourth quarters of the year. Even though Hari Raya has passed, it will slowly pick up leading into Christmas and the Chinese New Year early next year,” he told StarBiz.
Meanwhile, an industry observer said the three-month tax holiday from June 1, where the goods and services tax was zero-rated, was a boon for the local retail sector.
“The tax holiday would boost growth this year a little bit,” he said.
“The end of the year is usually when hypermarkets and malls have promotions and (year-end) sale. It’s also a time when employees get their bonuses. All of this would help to push sales and I forecast growth this year to be around 6%,” he said.
Retail Group Malaysia (RGM) has revised its 2018 retail sales growth rate forecast to 4.1% from 5.3% previously, based on its latest quarterly adjustments.
In its latest Malaysia Retail Industry Report, RGM said it had revised the retail sales growth rate for the third quarter of the year from 6.8% to 6.1%.
“This revision took into consideration the remaining two months of the tax break before the sales and service tax (SST) was re-introduced from Sept 1,” it said, adding that the bulk of the purchases were made during the last week of August.
“This was especially so for high value-added retail goods. Malaysian consumers rushed to retail stores to buy more in order to save more. For September, many retailers maintained their prices to attract shoppers.”
For the last quarter of the year, RGM said the retail growth rate has been revised upwards from 3.5% to 4.3%.
“This higher adjustment took into consideration the shopping behaviour and patterns during the three-month tax holiday and the current economic environment.”
Meanwhile, Chan said sentiment had also improved since the general election in May.
“There was a lot of uncertainty leading up to the elections. Since then, the new government has been fulfilling its pledges and this has created a feel-good atmosphere with buyers.
“The implementation of the SST would also benefit the lower-income group,” he said.
According to reports, an estimated 6.58 million sq ft of net lettable space from 10 malls is expected to enter the Klang Valley retail market in the second half of the year.
Did you find this article insightful?