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Uncertainty about general election and global economy affecting Malaysian consumer sentiment [08-10-2012]  
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Industry observers are cautiously optimistic about the performance of the local retail industry for the fourth quarter despite hopes of bonuses and year-end promotions.

This is primarily due to the uncertainty created by the timing of impending general election and less-than-stellar global economic conditions.

“The local retail industry is cyclical, depending on whether it's a festive or non-festive season,” said Building Management Association of Malaysia national committee member Richard Chan, who is also past president of the Malaysian Association for Shopping and Highrise Complex Management.

“In November and December, it usually picks up,” he told StarBiz.

Chan said the local retail industry usually benefitted from the nationwide year-end sale when shopping complexes had promotions and discounts.

“In Malaysia, domestic demand is still strong and going shopping is considered one of the most affordable family outings,” he said, adding that the year-end was also a period when big films were released which would draw in crowds to shopping complexes that had cinemas.

“It (the retail industry) should grow right up to Chinese New Year (early next year).”

Chan, however, said there was still a sense of cautious sentiment among Malaysian consumers in light of the uncertainty in the timing of the general election.

“People are still wondering if anything could happen at the general election and whether the status quo will remain. So there's a lot of wait-and-see attitude out there.”

Meanwhile, property consultancy Khong and Jaafar managing director Elvin Fernandez said shopping mall rental rates were expected to maintain for the time being.

“Rental rates for shopping centres at best will hold steady and may soften, but only slightly, in a worst-case scenario.”

An analyst said she was optimistically cautious about retail industry growth for the remainder of 2012.

“The end of the year is usually a time when shopping malls have promotions and year-end sales. It's also a period when employees get their bonuses.

“All of this will help boost spending. However, there is still a lot of uneasiness about the global economic environment,” she said.

Earlier this year, Retail Group Malaysia has forecast the retail industry to expand by 5.5% in the fourth quarter.

“Malaysian consumers will still remain cautious in their retail spending. They are uncertain of their prospects due to the impending general election. Their confidence level may improve after the Budget 2013 announcement,” it said in its latest Malaysia Retail Industry Report.

Malaysia's retail industry recorded sales growth of 6.9% in the first quarter of this year, boosted by various incentives introduced by the Government since late last year, according to Retail Group Malaysia.

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