KUALA LUMPUR (Jan 1): While many Malaysian consumers are planning to maintain or decrease their expenses due to concerns about rising inflation, they are more optimistic about the economic situation compared to the region, with about two in three respondents expecting themselves to be financially better off by June 2024, according to UOB’s Asean Consumer Sentiment Study (ACSS) 2023.
Although three in four respondents felt that Malaysia will likely face an economic downturn within the next six to 12 months, this downcast sentiment has softened compared to last year, the findings revealed.
"With this optimism, about 30% of Malaysian consumers plan to increase their allocation for savings, investment and insurance. While spending on insurance tops Baby Boomers’ list, Gen Z and Y are more focused on increasing their savings. Gen X, on the other hand, prioritises their investments," said Ronnie Lim, the managing director and country head of personal financial services of UOB Malaysia, said in a statement.
Baby Boomers are those between 57 and 65 years old; Gen X are aged between 41 and 56; Gen Y, also known as millennials, are those from 25 to 40 years old; and Gen Z refers to anyone between 18 and 24 years old.
In its fourth year, the ACSS is UOB’s regional flagship study analysing consumer trends and sentiments in Singapore, Malaysia, Thailand, Indonesia and Vietnam. The study was conducted from June 1 to 26, 2023, and surveyed 3,400 respondents online across the five countries, including 600 respondents in Malaysia. This is also the first time UOB partnered with global management consulting firm Boston Consulting Group on the study.
Similar to the region, three out of four Malaysian consumers surveyed are increasingly more concerned about their finances, specifically due to rising inflation, increased household expenses, and a decline in savings/wealth holdings. Meanwhile, 37% surveyed indicated they had increased spending on essentials such as groceries, with another 35% had spent more on utilities. Consequently, Malaysian consumers are most worried about having the ability to set aside money for saving (34%), ability to afford essential items (30%), and ability to maintain current lifestyles (26%). Separately, on discretionary spending, consumers are cutting back spending on jewellery (36%), vacation (35%) and dining out (34%).
The study also showed that Malaysian consumers have a strong preference to adopt digital banking channels. A total of 54% of Malaysians surveyed consider mobile banking apps as the most trusted banking channel, followed by internet banking through web browsers (43%). This correlates with the increase in usage of mobile banking apps by 44% and internet banking by 34%.
According to UOB, one in three Malaysians surveyed prefer to apply for simple products (38%), such as purchasing insurance (32%) and investment products (36%) online. On the other hand, most still prefer to use offline channels for more complex transactions, including bank loans or refinancing of loans (37%), conduct high-value transactions (38%), and open new bank accounts (43%), said UOB.
More Malaysian consumers are also increasingly adopting sustainable practices by reusing bags (39%), reducing water usage (32%), recycling waste (32%), and using energy efficient lighting (29%). Two in three Malaysians will choose to buy local produce or brands that support local communities, support brands with sustainable practices, and prefer green-certified companies. Generally, three in four consumers are likely to spend more on sustainable products and services related to their daily needs, with the Baby Boomers more likely to do so.
"Following the trend in Asean, Malaysian consumers have a strong interest in sustainable investing. A total of 29% of consumers have already included sustainable investments in their wealth building portfolio, and another 58% are interested in exploring sustainable investments," said UOB.