SMEs to benefit from Malaysia’s strong retail sales

KUCHING: Malaysia’s retail sales are expected to remain strong and this should bode well for small medium enterprises (SMEs) involved in the sector, analysts observed.

The research arm of AmInvestment Bank Bhd (AmInvestment) pointed out that in Malaysia, retail sales continued its double-digit growth for the fifth consecutive month.

It added, in July retail sales accelerated by 14.1 per cent yearon-year (y-o-y) from 13.9 per cent y-o-y in June.

At the same time, wholesale trade expanded by 9.2 per cent yo-y from 8.4 per cent y-o-y in June while motor vehicle sales surged 9.8 per cent in July, a leap from minus 4.8 per cent y-o-y recorded in June.

“We expect retail sales to remain strong supported by tourism, government investments, better consumer sentiments, online sales where many international retailers operate apart from shops, and mobile wallets and related financial services between Alibaba’s financial affiliate, Ant Financial Services Group and Malaysian bank CIMB.

“Additional booster will come from the festive seasons,” it said.

“Hence, we feel this should bode well for SMEs involved in this segment of the business, contributing about 62 per cent of the total SME services sector which in turn accounts for about 59 per cent of its GDP. It is important to take note that most of the businesses in Malaysia are SMEs.

“We project the SME GDP to grow around 6.1 to 6.3 per cent in 2017 with Malaysia’s GDP targeted at 5.7 to 5.9 per cent,” the research team opined.

Meanwhile, MIDF Amanah Investment Bank Bhd’s research arm ( MIDF Research) pointed out that Malaysia’s retail sales’s 14.1 per cent y- o-y growth is the highest growth seen. Overall, it pointed out that Malaysia’s distributive trade is at its highest in three years.

“Distributive trade rose strongly by 11.1 per cent y-o-y in July 2017, fastest growth since March 2014. The solid growth in distributive trade was contributed by robust expansion in sales of motor vehicles, wholesale trade and retail trade.

“For instance, sales of motor vehicles soar up by 9.8 per cent y- o-y during the month, fastest expansion in two years.

“As for retail trade, the subcomponent of distributive trade registered a new record with growth momentum stood at 14.1 per cent y- o-y,” MIDF Research said. — Bernama