KUALA LUMPUR (June 22): Retail sales might have grown an encouraging 18.3% year-on-year in the first quarter of 2022, but Malaysia Retailers Association (MRA) has cautioned that the industry is not out of the woods yet as more challenges lie ahead.
Apart from rising global inflation, the association pointed out that local retailers are also facing a perfect storm of weakening ringgit coupled with cost increases due to the hike in minimum wage and labour shortages.
Its president Datuk Andrew Lim Tatt Keong has called on Bank Negara Malaysia (BNM) to "actively manage" the ringgit so that it trades at the 4 to 4.1 level against the greenback to reduce imported inflation because of the puny local unit.
"Weak ringgit is a double-edged sword. On one hand, it makes our exports more competitive, and it also makes international tourism more lucrative. But on the other hand, it is also a contributing factor to inflation because we import a lot of things. [Hence,] we are urging BNM to recalibrate our Malaysian ringgit vis a vis all the international currencies to a level that doesn't affect Malaysian consumers badly.
"MRA is at the ground level with the rakyat (people). We are the ones working with all of you as consumers for your needs. So the ringgit must be allowed to be floating upwards vis a vis the US dollar, back to where it was, when we were comfortable, at RM4 or RM4.1 against the US dollar.
"A lot of us are suffering economic deprivation due to rising costs and prices. So that is why we hope for the government and BNM [to take action] because they are experts and can manage the exchange rate of the ringgit higher so that the imported inflation is not an issue to Malaysians," Lim said at a press conference on Wednesday (June 22) in conjunction with MRA's conference themed "Retail Forward".
MRA urged the government to delay re-implementing the goods and services tax (GST) for two years until the economy recovers to full strength.
"We need at least two years for the economy to come back in [full] strength… [Therefore] we have urged the government not to reimpose GST for at least two years. [When] our economy is robust and people are making money, international tourism is back to normal then only re-impose GST," said Lim.
MRA is also proposing that GST be pegged at a lower rate of 3% as a starting point or half of the 2015 implementation rate of 6%, and that personal and corporate income taxes be correspondingly reduced by 3% in tandem with the reinstatement of GST to be more acceptable to the public and companies.
On the increase in minimum wage, Lim said the hike of 25% effective May 1, 2022 has not helped address the labour shortage in retail, as the sector continues to face an acute shortage.
Over and above the compulsory minimum wage increase imposed across the board, Lim said the retail industry has to also address "compression wage adjustments for those earning at the borderline RM1,500 and above".
“All these are added costs to the industry which will have to be reflected and passed on to Malaysian consumers who are already suffering severe inflation costs of all sorts," he stressed.
MRA advocated that the minimum wage rate be assessed and determined by "zones" given the different costs of living throughout the country.
The association noted that as a result of the minimum wage increase across the board, many Malaysian workers are better off going back to their hometowns (where the cost of living is lower) as they will enjoy the same wages due to the standardised minimum wage rate hike.
To tide over the labour shortage, especially in the Klang Valley, MRA urged the government to consider allowing the industry to recruit foreign workers for frontline as well as for back office work.