THE retail market is expected to see a growth of 5% to 6% in the second and third quarters of this year, thanks to the zero-rating of the goods and services tax, said the Malaysian Retail Association.

“Many were waiting for it (zero-rated GST) to buy high-ticket items, such as jewellery, luxury watches and even vehicles,” said its president, James Loke.

“This is the holiday tax (period) before the sales and service tax (SST) comes into play. In the last two weekends, sales have gone up.”

Loke said that the expected growth in sales was a welcome about-turn for the dismal retail market, which has suffered over the past few years due to the GST and overall weak economic sentiments.

Last year, the retail market grew by 4.9% in the second quarter before plunging to -1.1% growth from July to September the same year.

He also attributed the glut of shopping malls, especially in the Klang Valley, for the stunted growth of the retail market.

Loke said that he told the Council of Eminent Persons during a meeting last week that, according to the MRA 2017 report, there are more than 600 shopping malls nationwide, with another 40 expected to be built over the next two years.

“There must be certain controls for shopping malls, because an oversupply doesn’t help the market,” he told The Malaysian Insight.

Loke said he appealed to the council to gather major retail stakeholders to come up with policies and guidelines to tackle this issue.

As for the SST, Loke said that all its members supported the government’s initiative.

“We have spent millions on point-of-sales systems, price tagging and manpower for GST, so it will be a huge task for retailers to (implement) SST.

“(But) we need to support the government, so we will comply. Come September 1, the SST will come into the picture. We don’t know the rate yet.

“If the rate is high, it will affect cost price and change prices again,” he said.

Retail Group Malaysia managing director Tan Hai Hsin said it was too soon to gauge if sales had risen since the June 1 zero-rating of GST, but its members were hopeful that their businesses would recover by the second quarter of this year.

“They projected an average growth rate of 6%. The change in ruling party after the general election on May 9 is expected to boost consumers’ confidence levels and increase their willingness to spend,” he said.

“At the same time, the largest festival in Malaysia, Hari Raya, is being celebrated.”

Tan said while scrapping the GST benefits retailers, consumer spending patterns after the implementation of the SST would be hard to predict.

“So many changes happened immediately after the general election. It is difficult to predict what will happen in the next few months.” – June 14, 2018.