Malaysia: Tourist arrivals to boost consumer sector

PETALING JAYA: The increase in tourist arrivals will have a positive impact on the consumer sector, supported by stronger domestic demand as the labour market remains stable, says MIDF Research.

The research house said the reopening of most countries’ borders would further enhance Malaysia’s retail sales due to more tourist arrivals, especially those from China. Higher contribution from domestic spending is also expected following the various incentives and income tax reductions under the revised Budget 2023.

Raw material prices for beverage manufacturers have seen a drop on a yearly basis as the average price of polyethylene terephthalate (PET resin) fell by 13.5% year-on-year (y-o-y) due to lower Brent crude oil prices.

This could be beneficial for beverage producers as the demand for ready-to-drink beverages is expected to rise due to an increase in tourist traffic.

Sugar, wheat and crude palm oil (CPO) prices have increased significantly, due to insufficient supply as well as Indonesia’s ongoing export ban on CPO.

However, the research house said the effect of higher raw sugar prices would be manageable for food producers as last year’s pricing adjustments could cover the majority of the costs.

On poultry costs, the average chicken price in January remained high at RM10.30 per kg compared with RM9.48 per kg for the previous year. Meanwhile, chicken eggs saw a highest yearly increase for its Grade B eggs at 9.6% y-o-y, followed by Grade C eggs with 8.2% and Grade A eggs with 6.8% on a yearly basis.

This could be due to the increasing animal feed costs in which corn price increased 2.5% y-o-y and soybean meal price increased over 25.1% y-o-y due to global supply reduction, the research house said.