Comment by SHEILA SINGAM

The Government must look for a strategy to stimulate domestic demand while making Malaysia attractive to foreign visitors.

MIXED messages are part and parcel of Malaysian life. Mostly, this is due to Malaysians’ proclivity for dissecting and analysing information over copious amounts of teh tarik, throwing in their two bits’ worth, flavouring it with a large dose of scepticism, then disseminating it to equally cynical listeners.

The hot topic these days that is doing the rounds at mamak shops hinges around the vital question: “Is our economy on the road to recovery or is the Government trying to get us to look at it through rose-tinted glasses?”

“Even if we manage to coast through this downturn, we will emerge with an economy that has failed to gear itself up to the demands of the global economy, fallen yet further behind the developmental path and locked ourselves tighter into a pattern of low growth,” he said ominously.

Gloomy declarations like these are the basis upon which many Malaysians are building their perceptions about the economy. For some, this is supported by real figures that do nothing to dispel the pessimistic outlook.

Restaurateur Yim Sie Chong, proprietor of the popular La La Chong Seafood Restaurant Group, has also noticed a 20% dip in business over the past year.

“Many of my customers are going for ‘economy’ dishes these days,” he commented.

He added that beer sales at his outlets have also dropped by some 30% as people with lower disposable income were finding beer less affordable. He also noticed that the lower income group was turning to cheaper forms of alcohol available at liquor outlets.

Consumer Research and Resource Centre chief executive officer Paul Selva Raj echoed the entrepreneurs’ observations on lowered spending.

“There is a tendency for consumers to be conservative about spending that stems largely from feelings of uncertainty and insecurity about the future,” he said.

Selva Raj added that the centre’s research amongst hypermarket operators showed that although the same number of people were patronising their stores, they were spending less and were only buying essential items.

A recent Consumer Confidence study by The Nielsen Company Malaysia reveals that 84% of consumers surveyed are slashing back on shopping. The most affected areas are impulse and big ticket items as well as “out of home dining”.

Price increases in food products have not done much to alleviate the pessimism of Malaysian consumers regarding the economy.

“The Malaysian consumer is used to a certain lifestyle and doesn’t want to change. The Government has been cushioning us against price hikes through subsidies, so consumers have not really been educated on how to handle price increases,” Selva Raj said.

He added that the Government needed to be more discriminating in applying the subsidy mechanism to ensure that only the low-income group benefited, so that taxes could be used in areas of priority like health, transportation and education.

All is not doom and gloom, however. Despite comments about a general slowing down in business, there appears to be some positive news on the horizon.

The latest gross domestic product (GDP) figures released by Bank Negara show that the Malaysian economy beat market expectations with the GDP contracting 3.9% in the second quarter of this year versus a consensus forecast by private economists of minus 5.1%.

The smaller than expected contraction was a major improvement over the country’s Q1 shrinkage of 6.2%.

Bank Negara governor Tan Sri Zeti Akhtar Aziz has expressed expectations of a gradual recovery. International Trade and Industry Minister Datuk Mustapa Mohamad had previously stated that the economy was showing signs of recovery and might return to sustained growth after picking up in the fourth quarter of this year, although the growth would be “nowhere near the good old days”.

Richard Chan, advisor to the Malaysian Association for Shopping and Highrise Complex Management, echoed these positive sentiments.

“Overall, I have not heard of a dip in the turnover of shopping centres,” he said, attributing this to retailers’ strategy in reducing prices to attract shoppers.

However, he said that shopping centres could be more successful and Malaysia could be turned into a premier shopping destination in the region if more incentives were given to centre owners and retailers.

“Kuala Lumpur is one of the most affordable cities in Asia. However inconsistent policies such as closing hours, moves to ban alcohol in certain areas, enforcement and opening hours can deter those wanting to open leisure outlets as well as tourists,” he said.

He said that efforts should also be made to attract more tourism dollars through the retail industry. Revenue derived from shopping last year comprised RM13.28bil, or 27% from the RM49.56bil total tourism receipts.

Another step would be a reduction on tax for imported goods as well as F&B items, which would put them on par with other countries in terms of pricing and bring them within the range of more local shoppers.

Clearly, if Malaysia is to become the premier tourist destination in the region, there has to be an integrated effort between industry players and the Government to provide affordable amenities and services.

It is also imperative that the local populace should also be allowed to indulge responsibly in their pastimes after work hours without it making a huge hole in their pockets.

Source: http://thestar.com.my/news/story.asp?file=/2009/10/21/nation/4941195&sec=nation#