The figure will be better in the coming months following the partial easing of lockdown measures during the CMCO and under RMCO
by NUR HAZIQAH A MALEK/ pic by HUSSEIN SHAHARUDDIN
WHOLESALE, retail trade sales and industrial output fell more than 30% in April 2020, as economic activities grounded to a near-complete halt under pandemic containment measures.
Data from the Department of Statistics Malaysia (DoSM) showed that sales of wholesale and retail trade fell 36.6% year-on-year (YoY) in April — the biggest drop ever in history, after declining 5.7% in March.
“However, in April 2020, online retail sales continued to record a significant increase at 28.9%. This portrays the expansion of e-commerce activities,” DoSM chief statistician Datuk Seri Dr Mohd Uzir Mahidin said in a statement yesterday.
“In the brick-and-mortar business environment, it is estimated that sales of wholesale and retail trade in April 2020 fell RM45 billion.”
Sales from the motor vehicles segment plummeted 93.2% during the month due to a 93.7% plunge in motor vehicle sales, as car dealerships’ centres and showrooms were not allowed to operate during the Movement Control Order (MCO).
The MCO, which came into effect on March 18, restricted all non-essential business activities to curb the spread of the Covid-19 pandemic.
Other industries in the segment that recorded a significant drop were parts and accessories (-91.4%), repair and maintenance (-93.6%), and sales and repair of parts and accessories of motorcycles (-94.9%).
Retail trade sales shrank 32.4% YoY, as the MCO resulted in negative growth in most retail activities.
“The main declines were observed in retail sales for specialist stores (-56.8%), retail sales of automotive fuel (-56.3%), retail sales of cultural and recreation goods (-53.2%) and retail sales of household equipment (-48.3%),” Mohd Uzir said.
However, retail sales of food, beverages and tobacco grew by 1.9%. Wholesale trade sank 26.3% within the same period due to disruption in the overall supply and demand chain, both domestically and globally due to Covid-19, although industries related to food posted marginal growth. In terms of volume index, wholesale and retail trade slumped 38.6% and 33.6% respectively versus March 2020.
Motor vehicles (-93.6%), retail trade (-36%) and wholesale trade (-27.5%) drove the decline.
For May and the coming months, wholesale retail and trade should perform better following the partial easing of lockdown measures during the Conditional MCO (CMCO) and under the Recovery MCO (RMCO), Mohd Uzir said.
“Sales also are expected to rise due to delayed purchase from April 2020. This, coupled with various stimulus packages by the government to mitigate the impact of Covid-19 through financing, tax measures, cash handouts and wage subsidies, will increase the purchasing power of consumers and thus boost the wholesale and retail trade sector.
“The shift in consumer behaviour towards digital and more convenient methods of purchasing and payment will likely continue and act as a catalyst for rapid growth in retail sales,” he said.
Meanwhile, the Industrial Production Index (IPI), which measures manufacturing, mining and electricity output, slipped 32% YoY in April, and the drop was attributed to the restrictions on business operations under the MCO.
“Deterioration of the IPI in April 2020 was due to the significant decline in all indices, namely manufacturing (-37.2%), mining (-19.6%) and electricity (-19.2%),” Mohd Uzir said.
Manufacturing output contracted 37.2% after falling 4.1% in March 2020, mainly dragged by non-metallic mineral products, basic metal and fabricated metal products (-62.7%), electrical and electronics (E&E) products (-34.1%), and petroleum, chemical, rubber and plastic products (-21.4%).
The sharp decrease in the manufacturing index was also due to the significant decline in the non-essential services industry and low capacity utilisation of below 50%.
The drop in export-oriented industries mainly weighed down the decline in the manufacturing sector. Mining output slid 19.6% in April because of the crude oil and condensate index (-20.2%) and natural gas index (-19%). Electricity output decreased by 19.2%.
“Malaysia’s IPI is expected to improve in the coming months, as the government allows more industries to resume operations in May 2020,” Mohd Uzir said.
Separately, foreign direct investment (FDI) into Malaysia rose 3.1% to RM31.7 billion in 2019 from RM30.7 billion the year prior.
The higher FDI was mainly due to injection of equity from Japan particularly in the health activity, Mohd Uzir said.
Japan contributed the most at RM10.4 billion or 32.9% of overall FDI last year, followed by Hong Kong (RM8.6 billion or 27.2%) and the Netherlands (RM3.9 billion or 12.3%).
Foreign inflows were mainly channelled into the services sector, particularly in the health, real estate and financial activities.
Direct investment abroad (DIA) jumped 26.5% to RM26.1 billion in 2019 from RM20.6 billion the previous year, after declining continuously since 2015 due to global uncertainty and subdued crude oil prices.
For the first time, Brazil became the top country for DIA particularly in the oil and gas industry with RM5.9 billion or 22.6% of overall funds, followed by Canada (RM2.7 billion or 10.3%) and Australia (RM2.6 billion or 10%).
Malaysian firms also largely invested in the financial sector, and manufacturing of E&E and non-metallic mineral products.
Amid the Covid-19 pandemic, FDI is expected to be subdued in 2020, Mohd Uzir said, although there is an opportunity for expansion in the healthcare, pharmaceutical, medical and e-commerce-related sectors.