Due to the sudden crash in the global oil price and the weakening ringgit, Prime Minister Najib Razak last week announced several measures to spur consumption to boost economic growth.

 

Among the measures were increasing shopping mall hours and the frequency of mega sales, as well as promoting tourism through the waiver of the visa fee for tourists from China - one of the country’s major tourist market - as well as offering competitive air fares.

 

In economic terms, spending power depends on money left over after all expenses have been met, or what is generally called disposable income.

 

According to Najib, given the significant reduction in pump prices, there will be greater disposable income and this will help consumers make bigger value purchases.

 

However, the Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM) national council member Koong Lin Loong pointed out that the disposable income of ordinary Malaysians has gradually been declining due the price increases of essential goods in recent months.

 

He said the increase of prices was due to two major reasons - the announcement of the Goods and Services Tax (GST), which induced businesses to hike prices even before its April 1 implementation date, and the unexpected weakening of the ringgit’s value.

 

“Therefore, despite the oil prices going down, the increase in prices of essential goods will have an impact on spending power.

 

“If the household disposable income is low, it cannot spur consumption even though there are many mega sales or big discounts,” Koong told Malaysiakini when contacted.

 

Asked on how to increase household disposable income, Koong said it mostly depends on the taxation system and the salaries of the workers.

 

“The government needs to reduce taxes and also create a business-friendly environment to help the entrepreneurs to improve gross profit so that they can increase workers’ salaries,” said Koong.

 

Extended hours not needed

 

Meanwhile, Malaysia Shopping Malls Association adviser Chan Hoi Choy said local consumer sentiments dipped last year and this is expected to remain low this year.

 

“Generally, local shopping malls target to achieve a turnover growth of between 5 percent and 10 percent each year, but last year we just managed to achieve 3 percent to 5 percent growth,” explained Chan.

 

Chan does not see any need to lengthen the shopping mall hours and increase the frequency of mega sales because both were adequate at present.

 

“We already have three mega sales each year, which mainly happen in March, June and September, and they last up to a month each time.

 

“For us, it is enough. We hope the government can help us to promote these three mega sales domestically and abroad,” urged Chan.

 

On the waiver of visa fee for tourists from China to Malaysia, Malaysia-Chinese Tourism Association president Paul Paw does not see it bringing major benefits to the tourism industry.

 

Instead, he said it was a case of “closing the barn door after the horse has bolted” since the government will implement the GST in April.

 

“The government wants to boost the tourism industry, but on the other hand, it also implements GST, which will increase the spending costs of tourists and also of tourism players. This seems self-contradictory,” said Paw.

 

He said although the visa fee has been exempted, tourists from China still need to pay some other procedural fees when applying for a visa through a travel agency, and also pay for transport fees for those who live far from the Malaysian embassy.

 

“If you however exempt visa for them instead, then these tourists can fly directly from China to Malaysia after purchasing their flight tickets. This would eliminate all the troublesome visa formalities.”