Festive seasons in Malaysia are an integral part of the country’s diversified traditions. Despite being a symbol of diversified traditions, these seasons has affected the country’s economy. The massive increase in spending, government subsidies, a boost in production and various other elements all impacted the Malaysian economy.
Larger Spending Power
Based on Retail Group Malaysia (RGM) report in 2017 and 2018, the retail industry enjoyed the biggest surge during the Hari Raya Aidilfitri festival which is celebrated by 60% of the population. For example, in second quarter of 2017, Malaysia’s national economy recorded a growth of 5.6% in retail sales compared to 4.9% in the previous quarter. Hypermarkets and supermarkets even recorded a 0.8% growth despite the price slash which affected the retailers’ profit margin. This growth can be attributed to people buying more ready-cooked food during the festive season, new clothing items, as well as buying healthcare and beauty products, which experienced a growth of 7.2% during the same period.
The 2018 Aidilfitri festive season has recorded high sales of electronic and electrical products such as television, fridge and phone. Retail sales increased by 30% as consumers took advantage of the abolishment of the Goods and Services Tax (GST) on 1st June 2018 after the 14th Malaysian General Election. The festive seasons are also good news for car salesmen as the sales of cars often spike at these times. Total vehicle sales jumped more than 40% to 60,780 units in May of 2019 compared to 42,977 units during the corresponding year. A research conducted by AmInvestment Bank Research further supports this report.
Government Subsidies
The Malaysian government often rolls out subsidies during the festive seasons in order to help ease the financial strain on Malaysians. One such subsidy is the petrol subsidy, which allows Malaysians to buy petrol at a lower price. The petrol subsidy was given during the recent Hari Raya Aidilfitri 2019 celebration.
Another popular scheme provided by the government as a subsidy for the people is the price control scheme. The 30-day scheme allows consumers to enjoy regulated prices. This year, during the Aidilfitri season, several items such as groundnuts and dried chillies, which are ingredients for some of the popular foods served during these times, were among those subsidised. Such subsidies allow Malaysians to have more money to spend on other things. Coupled with a more liberal mood for spending among consumers during the festive seasons has contributed to the increase in sales during this time.
Boost in Production
During the holiday seasons, production for a variety of items also increases. The food and beverage industries in Malaysia are where the boost is most prevalent. Even the fasting month, which heralds the Aidilfitri festive season, is no exception. The promotions during this period such as Ramadan buffets and food bazaars had enticed consumers to spend money on food. In addition, religious and cultural festivals in Malaysia are the time when people wear their best new clothing is a must. Therefore, the fashion industry also sees a production boost in the run-up to the festive seasons.
According to The Malaysian Reserve, small entrepreneurs in the market, such as tailors and bakers also see an increase in their production to meet the customers’ demand. Not only is there a growing demand for cookies and snacks during the festive seasons, but there is also a demand for ready-cooked and catered food, especially during the open-house season. There is also a demand during the festive seasons for gift hampers. In recent years, more exclusive hampers such as handmade chocolate and cookies, which have more personalised appeal than store-bought hampers have made an appearance.
Economic Benefit
Malaysia has a variety of festive seasons and consumers typically spend more during these periods. We cannot rule out the economic benefits brought during these festive seasons. Government incentives and a boost in production in the festive seasons do affect the country’s economy as these encourage the public to increase spending. This help boosts the economy as money re-enters into the ecosystem.
