PETALING JAYA: The increase in the country’s minimum wage next year is expected to spur the local consumer sector.
From Feb 1, 2025 Malaysia will raise the national minimum wage from RM1,500 to RM1,700 a month.
UOB Kay Hian (UOBKH) Research said increased wages should buffer consumer spending, more than offsetting the cost of the subsidy rationalisation.
“The increase in the minimum wage to RM1,700 and civil servant salary adjustments are expected to spread RM20.4bil across 6.05 million individuals.
“With the additional RM5bil from the Employees Provident Fund Account 3 withdrawal scheme, this significant boost to disposable income could drive household spending, especially among lower-income groups.”
UOBKH Research said retailers like 99 Speed Mart Retail Holdings Bhd and MR DIY Group (M) Bhd
, which are popular among consumers, stand to benefit.
Other retailers such as Senheng New Retail Bhd, Padini Holdings Bhd and MyNews Holdings Bhd could benefit as well.
Separately, UOBKH Research noted that the government plans to roll back petrol subsidies in mid-2025.
The research house noted that the rationalisation should save the government RM8bil a year.
Meanwhile, the research house said consumer stocks reported muted sales during the recently concluded financial reporting season for the third quarter of 2024 (3Q24).
“The sector’s 3Q24 sales were flattish at minus 0.2% year-on-year (minus 0.1% quarter-on-quarter). Had it not been for Nestle (M) Bhd’s contraction (of 18.4%) year-on-year, sector sales would have grown 3.6% year-on-year (or 0.8% quarter-on-quarter).
“Growth was lifted by heavyweights such as QL Resources Bhd (10.8%), 99 Speed Mart (8.8%) and MR DIY (6.4%).”
