Mydin: Strong GDP but people don't have money

The country may be seeing rosy gross domestic product growth but consumers don't seem to have enough money to spend on groceries, said Ameer Ali Mydin, managing director of popular hypermarket chain Mydin.

In an interview with radio station BFM today, Ameer said this could be noticed as hypermarket sales have been seeing a continued contraction.

"I am not saying there's no growth, of course the numbers are there. But in a normal country, what you see is that growth is (fuelled by) domestic consumption.

"For domestic consumption, the basic is good. But hypermarkets and supermarkets (in Malaysia) which control 50 percent of the grocery market are (seeing) negative (growth).

"I think people just don't have the money," he was quoted as saying.

Ameer said that in the first quarter last year, Malaysia's GDP grew by 5.6 percent but retails sales shrunk by 1.2 percent and hypermarket sales contracted by 4.8 percent.

"That makes you wonder, how can a country grow but hypermarkets growth, which is the real basic consumption in the country, is negative.

"In the third quarter last year, Malaysia's retail industry contracted 1.1 percent. Hypermarket business dropped by five percent.

“For the fourth quarter, the numbers are not out but I can tell you retail sales will not be more than three percent and hypermarkets' numbers are going to be negative three to four percent," he said.

Ameer said based on Mydin's data, the prices of good have gone up by 14 to 15 percent in the last five years.

"When you look at individual items, it's scary. Cabbage, Cameron cabbage, it has gone up in total, my goodness, 29 percent in the last five years.

"Ikan kembung hitam, 19.5 percent. Maggi brand chilli sauce, and they claim they never increase their prices, 38.8 percent. Ayam brand sardine, they have gone up by 30.6 percent.

"And you can say six percent may be because of the Goods and Services Tax," he told BFM.

Ameer said whether an average increase of 14 to 15 percent in five years was significant depended on how much increments in salary consumers have seen in the same period.

"Prices have gone up, so in totality, the numbers of sales are not really going up, there is negative (growth)," he said.

A silver lining, he added, was the strengthening of the ringgit against the US dollar which if sustained may see prices going down in the long run.

Mydin said businesses have also suffered from the anti-profiteering measures which were initially intended for the early days of the GST but have since been extended.

"You see the government always has noble intentions. It is a good government but they tend to use what we call an axe to come at one miserable fly," he said.

Mydin said the government, however, has been responsive about the over-regulation of prices and was now focussed on key basic items. - Mkini