SHOPPING malls are sprouting across Malaysia but consumers are spending less due to rising inflation, living and business costs, the Malaysia Shopping Mall Association said.

This has led to less disposable income for discretionary purchases after expending on essentials, the group said. 

Its president Teo Chiang Kok said the input costs have gone up significantly from the cost of goods, electricity, wages and compliance costs.

“Especially statutory fees and licenses, increasing bureaucracy and regulatory applications and approvals tantamount to micro-managing.”

He said the retail industry has been experiencing encouraging signs of recovery after their last industry survey in December 2022 showed the average occupancy for malls was 87%.

Teo said they should see faster growth of shopping malls in the key areas of Kuala Lumpur, Petaling Jaya, Putrajaya, Penang and Johor.

“There are a few malls scheduled for opening by the end of 2023 – The Exchange TRX (November) and Sunshine Mall in Penang. Others scheduled for opening in 2024 include 118 Mall, 168 Selayang Park and KL Metropolis,” he said.

The Pavilion Damansara Heights Mall opened this week. It introduced a selection of specialty stores, diverse dining experiences and lifestyle services, with 100 shops set to greet visitors by the end of this month.

Teo said to address the issue Putrajaya should quickly increase tourism arrivals including introducing visa-free or visa-on-arrival facilities.

“Visa-on-arrival is currently available if coming from a third country but not from the home country.

“The effect of this is that Malaysia becomes a secondary destination from impromptu visits.”

He said traditionally footfall to malls will increase with year end festivities and a whole host of events organised by the malls themselves as well as sales by retailers.

“However, the real boost can only come with more tourist arrivals, especially with Chinese tourists allowed to travel recently.

“Our neighbours have rolled out their welcome mat with the immediate introduction of visa-free travel.”

Abolish luxury tax

As for Budget 2024, Teo said the luxury tax that was announced, which does not apply to foreign visitors, is yet to be seen whether it will impact negatively on the industry and the definition of what “luxury” is.

He said that among their suggestions is for the government not to introduce the luxury tax.

Teo also said that there should be a cap or control on malls’ operating expenditures such as electricity, water and other utilities.

“There should be a moratorium on new licensing fees such as internal advertisements and other payments.

“It is crucial that our government also take a holistic look at facilitating businesses including retail, F&B and entertainment operations.”

As for crafting any tax and duty, he said it is imperative that the overall scope of revenue collections be evaluated.

This, he said, was from the negative impact on all spinoffs and multiplier revenue that may be generated by foregoing a proposed tax such as the proposed luxury tax.

Teo said that changes in trends and fashion are increasing in speed and it is important local retailers and shopping malls quickly adapt and update to such new concepts.

“This requires more frequent renovations and fit-out of premises to remain attractive and relevant.

“The current tax regulations should be updated to allow costs of such renovation and fit-out to be charged as expense instead of being required to be capitalised.”

Teo added that in the era of fast-fashion and rapid change of consumer expectations, tax regulations must be reviewed to accommodate these fast changes so that the retail industry can remain fresh and relevant. – October 17, 2023.