Every report we read nowadays would tell us that Goods and Services Tax (GST) is going to affect the retail sector. Let’s skip property market for this time. It said the reason for the drop in retail sales is based on the experience of other countries which has implemented GST, the retail would be down as soon as GST starts. Is the real reason due to GST or due to the uncertainty about how the market would be? Would it be because of cautiousness of the consumer? When confidence is down, they stop buying. Retail down, surely to be followed by property down as well?
Looking at this objectively, do we believe that GST would cause retail to be down forever? If yes, then good luck to you because in every country that has implemented GST thus far, no such situations have occurred beyond the usual 6 – 9 months. After that, everything would follow how the economy moves. In fact do we really expect everyone who wants to buy a new smartphone or that new watch to stop buying forever? Looking at just needs and not wants and based on just the current working population in Malaysia, we can see clearly that this sentiment is not going to last. There’s just too much demand because everyone is at the right age and materialism is alive and kicking.
Today, I went to the baby fair in Mid Valley. The situation was chaotic and the crowd was overflowing. Those who buy were buying as if there’s no tomorrow. Now, imagine the same baby fair happening AFTER GST. Tell me the situation would be different and I can safely tell you that you must be joking. Retail consumption can be stimulated IF it is indeed simply due to the cautious sentiment. If the economy itself is going down, then no matter how the shopping centres try, the demand will go down. If you thought only the baby fair garnered the main attention, well, I had to queue up for 15 minutes to pay for a new running shoe in Jusco. Then, when I went past the kids section, the queue was much longer. Again, I smiled and I told my wife, ‘I am not sure what would be the predictions of the awesome analysts but if I am in baby / kids business, GST meant nothing to me at all for many more years to come.’
Oh yeah, rest assured, there would be lots of GST hiccups soon but do not let that cloud whatever judgement you may have on the property or the stock market. For the blue chips, except for another crisis, it will be business as usual BUT because of negative sentiment, some of the counters would now be cheaper to buy. As for the properties, happy buying no matter from developers who would increase price because of GST or absorb the GST. As soon as the whole market quiets down, the retailers would try to stimulate it. They would do lots of stuffs and perhaps by then GST should be known as just ‘GREAT SALE TOMORROW.’ Happy buying.
written on 28 Mar 2015
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