Malaysian consumers expect economy to improve with zero GST: Survey

KUALA LUMPUR: Malaysian consumers are optimistic about the country's economic outlook after the zero rating of the Goods and Services Tax (GST), with 82% of them opining that the economy will improve in the next 12 months, according to a survey conducted by Nielsen Malaysia.
More than 1,000 Malaysians between the ages of 18 and 64 from Peninsular Malaysia, Sabah and Sarawak participated in the June survey.
Nielsen said this latest survey follows similar research conducted in 2015, which found that attitudes toward the introduction of GST were less optimistic as only 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)," said Nielsen Malaysia managing director Raphael Pereda.
Some 57% of consumers expect price of goods and services to drop while 33% believe prices will stay at current levels.
Pereda said the optimism level could mean good news for manufacturers and retailers, with consumer spending intentions likely to rise.
"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 June 1, 2018. If these value-for-money promotions continue, we can expect to see an increase in sales volume compared to previous years."
The survey showed that two out of three consumers (69%) expect their purchase habits to change following the reduction of GST, with 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%). A quarter of them said they will be able to channel their money towards paying off debts once the GST is zero-rated.
Meanwhile, 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, more than 90% believed tolls would either be removed or reduced.
"It is clear the recent policy announcements made by the government have gained the approval of a vast majority of Malaysians. 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," said Pereda.