The Malaysian Reserve

Mara Digital Mall attempts to step away from ‘Bumiputera’ label

The MDM, dubbed as Low Yat 2.0, has not been able to emulate the traffic and business of the thriving original in downtown Bukit Bintang area (Pic by Ismail Che Rus)

The mall is not exclusively for Bumiputera and the company is open to applications from all businesses as long as they meet the requirements

By AFIQ AZIZ / Pic By ISMAIL CHE RUS

The Mara Digital Mall (MDM), a copy of Kuala Lumpur’s (KL) iconic information and communications technology (ICT) market Low Yat Plaza, has never lived up to its billing even in the best of times, but is now at a crossroad of its existence.

The mall’s creation was an affirmative action by the previous Barisan Nasional government through Bumiputera champion Majlis Amanah Rakyat (Mara) or a serious attempt by the same government to provide shoppers with goods that are guaranteed to be authentic. It depends on who you ask.

For many, the MDM was a direct reaction to an incident three years ago at its alter ego, the Low Yat Plaza in Bukit Bintang.

In that incident, a young man was accosted by Low Yat employees after being accused of running off with a phone from one of the vendors in the mall without paying.

In the ensuing melee, the young man claimed he was assaulted by the time police arrived. He was subsequently arrested for theft. The man in turn alleged that trouble began when he was sold a counterfeit handphone by the Low Yat shop.

Shortly after the incident, the then Rural and Regional Development Minister Datuk Seri Ismail Sabri Yaakob announced that Mara would set up a rival mall which guarantees genuine merchandise for sale to be housed at the Mara building in KL.

Despite Ismail Sabri’s announcement, the MDM is widely seen as a Bumiputera equivalent to Low Yat plaza, which is seen to be dominated by ethnic Chinese.

The MDM has since been dubbed as Low Yat 2.0, but it has not been able to emulate the traffic and business of the thriving original in downtown Bukit Bintang area.

Sluggish sales and low footfall numbers are being addressed by its main tenant WGN Scan Sdn Bhd, and part of the strategy is to distance the mall’s reputation as being a Bumiputera-only business.

In a recent interview, WGN Scan ED Wan Mohamad Zaffuan Wan Mohamad Zain said, although lost amid the controversy of the 2015 incident, the main purpose of establishing the MDM is to provide an outlet for legitimate ICT suppliers and nothing else.

“When the former minister raised the initiative, he made it clear that the mall was to promote original products, which are supplied by authorised original equipment manufacturers (OEMs).

“However, somehow along the way, the place is more famous as Bumiputera business place because of the Low Yat dispute,” Wan Mohamad Zaffuan said.

Wan Mohamad Zaffuan said the mall is not exclusively for Bumiputera and the company is open to applications from all businesses as long as they meet the requirements.

“The priority would be given to Bumiputera, but it does not mean that we will reject any other applications. We have always been open,” he said.

Wan Mohamad Zaffuan, who has invested RM3.5 million to refurbish the 18,000 sq ft mall, said, however, the vendors are all Bumiputera at the moment.

“It was a huge investment on a new venture. We were aware of the risk, but when I looked at the business model and also the location, I thought it was doable.

“We are currently looking at recouping our investment by 2021, even though I must admit that it is more challenging to attract people to the mall compared to Low Yat plaza due to the location.

In its first two years, the mall has consistently recorded an average annual turnover of about RM19 million.

Late last year, vendors were complaining about the lack of visitors to the mall and blamed lack of promotion activities.

One salesman had also accused WGN Scan of monopolising the supply chain as the retailers will be charged 1.5% fee if they want to obtain their stocks elsewhere, which resulted in reducing the choices for consumers.

However, Wan Mohamad Zaffuan said there was never such condition imposed on retailers who are free to source their supply and instead, the 1.5% charge was imposed by WGN Scan as verification fee if the retailers bought supplies from unauthorised suppliers.

“It is the ‘product verification fee’ for WGN Scan as we are using our resources to check those items,” he said.

“We need to ensure that all products here are original and authentic to uphold the mall’s credentials.” Wan Mohamad Zaffuan explained that it was also not true that tenants cannot make a profit, pointing out that most make between RM200 and RM300 from every sale of a computer and the fact that only four kiosks in the mall are empty is a testament of its competitiveness.

“The standalone shop, which houses our principal brands of smartphones, telecommunications provider and computers such as Acer, Oppo, Hewlett Packard and DiGi is fully occupied,” he added.

Moving forward, he said, WGN Scan is introducing new big names, including an information technology hyperstore that will sell more than 300 original computer components.

In order to attract more traffic to its ICT outlets, the company had opened a restaurant on its fourth floor last month.

Both projects are expected to add RM1 million in sales per month, on top of the current RM1.5 million monthly revenue, and increase foot traffic at the complex.

An industry expert told The Malaysian Reserve that the challenges of MDM are the same for many similar physical vendors because consumers have gone to the convenience of online shopping.

“Mall also cannot survive alone on just computer products and devices.

“They must be complemented with the other offerings like eateries, entertainments, supermarkets, shops and even children playground to attract greater traffic,” he said.

Wan Mohamad Zaffuan said Mara is also expected to encourage their entrepreneurs to set up in the mall and sell other products, including electronic games and sports equipment.

“We are also planning a tour to promote our mall to all the 80,000 of students who are studying at Mara’s institutions from schools to universities,” he said.

The mall expects 50% slower traffic and sales this year as WGN Scan is taking a step back to study its business model and performance to find the right way moving forward.

“Hopefully, after multiplying our investment and marketing strategy, this mall will continuously grow and I foresee it will not be closed down,” Wan Mohamad Zaffuan said.

As of now, three other MDMs operate in Pahang, Melaka and Johor with 110 entrepreneurs as tenants.

On industry update, ICT contribution to the GDP had grown 8.5% to RM164.9 billion in 2016, compared to RM152.1 billion in the previous year.

The industry employed 1.07 million people in 2016, which grew 0.7% from 2015 and contributed 7.6% of the total employment in the country.