The wholesale and retail industry is expected to contribute RM45.2 billion to GNI, and create 226,000 additional jobs by 2020.
The wholesale and retail industry continues to account for a significant share of Malaysia’s economy, contributing 12.7% to the country’s GDP.
As at 2Q 2014, the wholesale and retail industry registered a year-on-year growth of 8.88%. Since the start of the Economic Transformation Programme (ETP), the volume index of wholesale trade has risen from 99.8 points at end-2009 to 132.2 points at end-2013, while retail trade grew from 103.6 points to 132.3 points over the same period. In 2013, the sales value of wholesale and retail rose by 43% to RM13.3 billion from RM9.3 billion in 2009.
According to the ETP Annual Report 2014, the Wholesale and Retail National Key Economic Area (NKEA) met all its key performing indicators (KPIs) for 2014 despite a challenging landscape for domestic consumption due to an increase in the petrol price and a 25 basis point hike in the interest rate to contain inflationary pressures. The tragedies of MH370 and MH17 also caused a detrimental impact on tourism receipts, thus affecting consumer spending during the year.
The report forecasted the wholesale and retail trade to grow by 7.1% in 2015, supported by strong domestic consumption and higher tourist arrivals. “Domestic consumption may, however, be tempered with the introduction of the Goods and Services Tax (GST). Any increase of the Overnight Policy Rate (OPR) will also increase pressure on households to deleverage household debt, thus reducing domestic consumption.”
Ministry of Domestic Trade, Co-operatives and Consumerism Dato’ Sri Hasan Malek in his foreword said that the NKEA has achieved commendable progress since the implementation of the ETP in 2010 and is well-placed to account for a larger share of GDP going forward.
“The Wholesale and Retail sector has continued to grow and contribute significantly to the Malaysian economy. Aside from serving domestic demand, the NKEA has also grown in importance in contributing to tourist spend, with the country recognised as a top shopping destination globally,” he said.
Hasan said the NKEA will continue focusing on putting in place a supportive environment for private sector participation, encouraging the private sector to improve and increase their offerings. “We will also explore new avenues for growth to complement existing, traditional offerings, such as through the establishment of wellness resorts and Makan Bazaars, which provide a wealth of offerings to consumers under one roof.”
He noted that while a slowdown in consumption may emerge as consumers adjust to the newly implemented tax regime, domestic consumption will not remain suppressed over the longer term.
“On the supply side, although many companies will have to adjust their processes in line with the new system, we believe the Government has provided sufficient support and training to the private sector to implement the GST. We, therefore, do not foresee any disruption to wholesale and retail businesses,” he added.
AT Kearney: Malaysian market strong and stable
AT Kearney ranked Malaysia 9th in its 2014 Global Retail Development Index, up four places from 2013 and its highest ranking since 2007, before the start of the ETP. The Malaysian market was also described as strong and stable due to its high income per capita and young population, despite its overall population being relatively small. The country’s ranking puts it among the 10 most attractive countries for retailers and makes it the only other Asian country, apart from China, in the top 10.
As noted by the World Economic Forum’s Global Competitiveness Index 2014-2015, Malaysia’s major competitive challenge is in increasing its technological readiness. In terms of the wholesale and retail industry, this limitation may become apparent in implementing systems to prepare for the GST which came into effect in April 2015. Nonetheless, the industry derives strength from robust private sector participation in the Wholesale and Retail EPPs, and is expected to continue charting significant growth in GNI and jobs leading towards its 2020 targets.
Together with baseline growth, the wholesale and retail industry is expected to contribute RM45.2 billion to GNI, and create 226,000 additional jobs by 2020.
Entry Point Projects (EPPs) under the Wholesale and Retail NKEA
- EPP 1: Increasing the number of large format stores
- EPP 2: Modernising via the Small Retailer Transformation Programme (TUKAR)
- EPP 4: Transforming automotive workshops (ATOM)
- EPP 5: Developing Makan Bazaars
- EPP 6: 1Malaysia malls
- EPP 7: Virtual malls
- EPP 8: Facilitating local businesses to acquire stakes in foreign retail businesses
- EPP 9: Making Malaysia duty-free
- EPP 10: Setting up wellness resorts
- EPP 11: Organising unified Malaysia sales
- EPP 12: Transforming KLIA into a retail hub
- EPP 13: Big Box Boulevards
Below are some of the highlights of the EPPs’ developments in 2014
EPP 1: Increasing the number of large format stores
Five new hypermarkets and six superstores were set up throughout Malaysia by foreign and local players under this EPP in 2014.
EPP 2: Modernising via the Small Retailer Transformation Programme (TUKAR)
As at 31 December 2014, 305 sundry shops were transformed nationwide, bringing the total number of stores transformed by the TUKAR programme to 1,914 since its launch in 2011. During the year, greater focus was given on training the TUKAR participants to prepare the store owners for GST implementation. A total of 20 training sessions over two phases were conducted throughout Malaysia by the Ministry of Domestic Trade, Cooperatives & Consumerism. Over 1,500 people attended these sessions.
EPP 4: Transforming automotive workshops (ATOM)
As at 31 December 2014, 208 automotive workshops were transformed nationwide, exceeding the revised target of 200 for the year. This brings the total number of stores transformed by the ATOM programme to 577 since its launch in 2011.
A review of the programme’s conditions and requirements are currently underway to better enhance the programme and meet the needs of workshop owners.
EPP 5: Developing Makan Bazaars
The second Makan Bazaar – after Mall of Medini, Nusajaya – has been developed by Brunsfield International.
The Oasis Square Makan Bazaar in Ara Damansara, Selangor, has dedicated 97,996 sq ft to retail F&B space from the development’s total net leasable area of 141,567 sq ft. This joint has experienced tremendous organic growth over the past year and currently comprises more than 300,000 sq ft of F&B space (on top of the dedicated space of 97,996 sq ft) ranging from famous local cuisine to international cuisine.
EPP 7: Virtual malls
The online shopping market is expected to have grown to RM5 billion in 2014, with the majority of purchases made on local websites. However, the internet shopping trend in Malaysia remains steadfast to shopping websites with limited focus product categories, for example, Zalora focusing on retail fashion and Lazada on electronic goods.
PEMANDU and the Ministry of Domestic Trade, Co-operatives and Consumerism are currently in the process of reviewing this EPP to suit market trends of single/few focus product categories as well as to consider potential government initiatives required to encourage private sector involvement in the online retail market.
EPP 9: Making Malaysia duty-free
The CIF value of the 328 goods that have been made duty-free since January 2011 amounted to RM6.972 billion as at December 2014. This was driven by a continued increase in the strength of domestic consumption.
With the introduction of GST in 2015, the EPP expects the flow of goods into the country to experience a slight decrease before normalising to pre-GST figures
EPP 11: Organising unified Malaysia sales
Coordination efforts by the DMO saw 60 subsectors collectively organise the 1Malaysia Unified Sale in 2014, up from 55 in 2013. The sale period was from 28 June 2014 to 1 September 2014. Some 942 companies and 8,702 outlets participated in the sale.
Figures provided by Bank Negara Malaysia’s Electronic Payments Report showed expenditure of RM18.6 billion and RM2.5 billion in credit and debit card transactions, respectively, during the sale period. This was an increase of 9% and 25%, respectively, from the corresponding period in 2013.
EPP 12: Transforming KLIA into a retail hub
Following the commencement of operations of KLIA2 in May 2014, the utilisation rate of the KLIA2 and [email protected] */]]> retail spaces reached 98% and 76%, respectively. This EPP is poised to benefit from the footfalls of passengers at KLIA and KLIA2, which have a total capacity of 70 million passengers per annum. As at end-September 2014, KLIA recorded passenger growth of 5% while utilisation of KLIA2 at its launch amounted to 25 million passengers.