This article first appeared in The Edge Financial Daily on June 8, 2017 - June 14, 2017

KUALA LUMPUR: The Malaysia Retail Chain Association (MRCA) expects the country’s overall retail sales to grow at 4.5% in 2017, according to its president Datuk Garry Chua.

“I believe retail sales [growth] will be at about 4.5% this year, driven mostly by [high levels] of tourists that will be coming into the country,” Chua told the media briefing on the MRCA Retail Conference and Malaysia International Retail & Franchise (MIRF) Exhibition yesterday.

Earlier this year, Retail Group Malaysia trimmed its retail sales forecast down to 3.9% from 5% for the year, after weak sales in the fourth quarter of 2016. The annual retail sales growth came in at 3.8% in 2016.

Chua pointed out that having a small population is a restrictive factor when it comes to consumer spending. Hence, the country also needs to count on tourism to boost consumer spending.

Chua added that a major boon to the industry is the government’s efforts in growing Malaysia’s tourism industry, particularly with tourists from China, and the creation of the Digital Free Trade Zone, which is the first e-hub outside China aimed at providing small and medium enterprises with access to global markets.

In March last year, the government introduced the Electronic Travel Registration and Information and e-visa facilities for Chinese tourists, and saw an influx of up to 2.2 million tourists between March and December last year, compared with 1.2 million in the same period in 2015, according to earlier reports.

“Malaysia’s increased tourism numbers will augur well [for the retail sector this year], as there will be an influx of tourists not only from China, but also from the US and Europe,” Chua said, adding that the weak ringgit is a big draw for overseas visitors.

“Tourism from China is increasing all over the globe, so it is really a matter of how much bigger a pie Malaysia can get,” Chua said.

Chua added that despite general weakened consumer sentiment, there is still demand seen from the middle-income segment of society.

“There is still a propensity to spend among the middle-income group of consumers in Malaysia, depending on [the value] they can get from the products,” he added.

Meanwhile, regarding the current political crisis in the Middle East where nine Middle Eastern nations have cut diplomatic ties with Qatar, Chua believes that it will not affect Malaysia’s retail industry.

“I do not see a big impact because [the effect is restricted to] mainly the Qatar area, so I do not believe it will have an adverse effect on our retail industry,” Chua explained.

The MRCA Retail Conference and MIRF Exhibition will be held at the Gardens Hotel on July 12, whereby MRCA will highlight major economic transformations through the Digital Retail Initiatives it has introduced.