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Friday, December 23, 2016

Malaysia’s ‘gain’ and Singapore’s ‘loss’

With the falling ringgit and GST difference, more and more Singaporeans are moving their shopping to JB, hurting Singapore businesses nearer to the causeway.
PETALING JAYA: An extensive study by the National University of Singapore’s Business School between 2010 and 2012 showed a significant difference in the spending habits of Singaporeans, between those who lived closer to the Malaysian border and those further away, The New Paper reported today.
With Singapore’s GDP growth falling below original estimates this year and cut backs in forecast for 2017, two academics in the island republic believe there will be even more Singaporeans crossing the border for their day-to-day shopping needs, The New Paper reported today.
They supported this theory with data that showed the trend among Singaporeans making day to day purchases from Johor compared with other high-end products.
NUS visiting professor Sumit Agarwal and associate professor of finance Qian Wenlan reported some of their findings in the Singapore daily, stating that for the period of the survey, 48,000 Singapore nationals participated, half living in the north, near the Malaysian border, and the other half much further away.
“First, we studied credit card transactions. We ensured that both sets of individuals were comparable in income and demographics.
“We found those living near the border had significantly lower credit card spending (32% less) within Singapore than those living further from the border, for products that were substitutable, like supermarket purchases, apparel and dining.
“In contrast, credit card expenditure on non-substitutable products like utilities, government services, medical services and education was the same.”
The two academics added that other indicators, such as usage of debit cards, ATM withdrawal levels and online banking transactions were also on par between those near and far from the border.
They naturally concluded that the main attraction to shopping in Malaysia was the “continuously weakening ringgit”.
“However,for the period of the survey, the push factor in driving Singaporeans to Johor was also the fact that Singapore had a 7% GST in place.
“The Malaysian government only introduced a similar GST in April last year at a rate of 6%. Until then, Singaporeans enjoyed a 7% tax advantage when shopping in Johor,” the academics said.
They, however, did not believe that the implementation of the 6% GST by Malaysia would make much of a difference to the result of their study.
The concern, however, should be for retailers in Singapore, the professors said.
“A separate study involving retail outlets in Singapore was carried out. Data was collected on sales of snacks, soft drinks and detergent.
“Across all three product categories, shops in areas that were close to JB had much lower sales per capita, corroborating our earlier findings,” Sumit and Qian said, adding that cigarettes were also popular among Singapore shoppers in Johor.
The study concluded that with the ringgit’s ever-weakening value and Singapore’s slowing economy, more and more Singaporeans will be happy for the savings they will make across the causeway. -FMT

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