SERC: Consumers cautious, but economic prospects look positive


THE Socio-economic Research Centre (SERC) is predicting consumer spending to remain cautious this year, particularly on necessities.

SERC ED Lee Heng Guie said this is despite the labour market expected to maintain full employment conditions with an unemployment rate of 3.3% in 2024 and real wage is expected to grow by 5%.

“You have the low-value goods tax if you purchase items below RM500 online from overseas.

“There will also be a high-value goods tax of between 5% and 10% starting in May this year, so that will impact the high-end retail market spending,” he said during a media briefing on Malaysia’s quarterly economy tracker and outlook for 2024 on Jan 11.

Despite this cautious consumer sentiment, SERC maintains a measured optimism regarding Malaysia’s economic prospects in 2024.

The organisation projects a GDP growth of 4.5%, buoyed by the ongoing expansion in domestic demand and a rebound in exports.

Malaysia also recorded a GDP growth of 3.9% in the first nine months of 2023 (9M23).

In regards to Malaysia’s consumer spending rate, Lee said consumers are becoming more cautious with discretionary spending, adding the increasing cost of living, inflation risk, service tax scope expanded with a rate increase to 8% from 6%, and other factors.

He added that consumer spending could be increased when the government provides the targeted subsidy rationalisation via the Central Database Hub (Padu) while noting its decrease in the recent quarter.

He also noted the economic landscape of Iskandar Malaysia which is emerging as a tapestry woven with diverse sectors and strategic collaborations, setting the stage for robust development and sustainable growth.

The collaboration between Malaysia and Singapore takes centre stage with the establishment of the Johor-Singapore Special Economic Zone (JS-SEZ).

Lee highlighted the joint efforts of both nations to attract domestic and foreign investments, enhance cross-border flows and fortify the business ecosystem.

The JS-SEZ’s strategic positioning at the heart of Asia, coupled with its sizeable land, large population and government support, positions it as a key player in the region.

Iskandar Malaysia, a focal point in the economic strategy, emerges as a vibrant hub with 35 identified sectors and investors.

Lee stressed the importance of establishing a clear regulatory framework to attract foreign investors.

“We hope for a very effective regulation on the 3C policy — clarity, consistency and certainty. Investor’s protection is also important,” he said.

Renowned manufacturing companies like Seagate Technology Holdings plc, Dyson Ltd, Panasonic Holdings Corp, and data centre giants like Nvidia Corp, contribute to the region’s economic dynamism.

The inclusion of Legoland for tourism, Columbia Asia Iskandar and Tebrau in the healthcare sector, and Educity in education, reflects a well-rounded economic landscape.

Lee also shed light on the nine key sectors promoted for Iskandar Malaysia’s development, from electrical and electronics (E&E) to petrochemicals and oleochemicals, food and agro-processing to logistics, tourism, and financial and business services.

The emphasis on healthcare, creative services and education further solidifies its commitment to holistic development.