Malaysian consumers are optimistic about the country’s economic outlook and they perceive the recent initiatives announced by the government, such as the reduction of goods and services tax (GST), as being good for consumers, according to a survey conducted by Nielsen Malaysia.
The survey, which polled more than 1000 Malaysians between the ages of 18-64 from Peninsular Malaysia, Sabah and Sarawak, found that a vast majority of consumers (4 out of 5) believed that the economy will change for the better following the recent reduction of GST to 0% on 1 June 2018.
Our June 2018 Nielsen survey follows similar research that we conducted in 2015 which found that attitudes toward the introduction of GST were less optimistic – the 2015 survey found just over half of Malaysians (58%) believed the tax would be good for the economy.
“While Malaysians were initially tentative toward the introduction of GST three years ago when the tax was first announced, having experienced the effects of the GST over the past three years, they appear to welcome the move to effectively eliminate the tax, perhaps due to the gradual increase in the cost of goods and services that has occurred since its implementation as reflected in the Consumer Price Index (CPI),” observes Raphael Pereda, Managing Director of Nielsen Malaysia.
Indeed, our survey showed that over half of consumers (57%) expect the price of goods and services to decrease following the ‘zerorization’ of GST, while one-third (33%) believe that prices will remain at current levels.
According to Pereda, this optimism of Malaysian consumers could mean good news for manufacturers and retailers, with consumer spending intentions likely to rise, which could result in increased sales. The data showed that two out of three consumers (69%) expect their purchase habits to change following the reduction of GST, with close to one-third (30%) saying that they would spend more money on essential items such as apparel and clothing, perishable foods, non-perishable foods and baby products.
Malaysians also showed a willingness to increase their spending on non-essential purchases such as holidays or leisure trips (33%), new property (27%) and out-of-home entertainment (26%). One in four consumers (25%) also said that they will be able to channel their money toward paying off debts once the GST is zero-rated.
Pereda believes Malaysian retailers are capturing the overall post-election optimism in Malaysia, saying: “Many retailers have been providing consumers with discounts even before the zero-rated GST was officially implemented to encourage consumers not to postpone their festive spending to after 1 June 2018. If these value-for-money promotions continue, we can expect to see an increase in sales volume compared to previous years.”
Our survey also showed that three out of four consumers (77%) viewed the government’s initiative to fix the price of fuel as being “good for consumers”. When asked what they believed the government would do about road tolls in Malaysia, an overwhelming majority (more than 9 out of 10) believed that tolls would either be removed or reduced.
“It is clear that the recent policy announcements made by the government have gained the approval of a vast majority of Malaysians,” said Pereda. “We are eager to see if this post-election optimism translates into actual consumer spending, which we will be able to determine over time through our retail data.”
Pereda continued: “Malaysians are currently enjoying a three-month tax holiday, before the SST is implemented on 1 September. This may encourage spending now in anticipation of the impending SST, and we will be working closely with our manufacturer and retailer clients to measure consumer sentiment and assess any impact on consumer spending over the coming months as details on this new tax are released.”