Is the economy really that bad?

By Jason Chin

For many years now, we have heard certain quarters alleging that Malaysia is heading towards bankruptcy, and that the economy is at an all-time low. Some have gone as far as to label Malaysia as the next Greece.

It is baffling to witness how shallow and ill-informed some people are, more so when erroneous statements are made by politicians who are supposed to be “informed” leaders.

The social media post by DAP’s Dyana Sofya on the state of financial affairs in Malaysia has made her a laughing stock among internet users. Amateurish at best, we are fortunate that she did not make it as a parliamentarian. We have enough jokers from both sides of the political divide already; we do not need another.

We often come across retailers complaining of poor business and frequently see others winding up. Although irresponsible individuals claim the poor sales are because the public has no money to spend, this is an utterly bullish conclusion. This phenomenon is occurring on a global scale and there is a reason for it.

Numerous articles have been written on this occurrence, which the Western world terms the “retail apocalypse”. Even developed nations like the US are facing a tough time. Big brands like Guess, Bebe, Macy, Michael Kors, Toys R Us and Payless are shutting down stores across the country, citing poor sales.

Quite frankly, the sky is not falling. Instead, the sector is evolving. A combination of factors including the rise of e-commerce, over-supply of malls and the surprising effects of restaurant renaissance are contributing in one way or another to the meltdown of retail stores.

Online merchant Lazada raked in RM1 billion in gross merchandise value during its month-long online revolution sale in December last year.

The Lazada Malaysia CEO said the pool of online shoppers was growing annually at an exponential rate across all geographical locations.

Lazada is only one of the merchants out there. There are so many online shopping portals – Amazon, Wish, Shopee, Alibaba, 11Street to name a few. The number of merchants is increasing, which tells us that demand is huge and it is a lucrative and profitable venture.

AirAsia X’s revenue in the last quarter of 2017 was its highest ever. The number of flights to various destinations increases by the day. How are these numbers obtained if people have no money to spend?

The truth is, people’s needs have become extravagant. Everyone wants to own the latest mobile phone model even if the previous one was purchased just six months ago. The majority want to be trendy with the most recent seasonal fashions.

As recently as one generation ago, money was spent purchasing items that were truly needed. People today splash cash on the “nice to have”, hence financial burdens are on the rise. No amount of income can quench the spending thirst of people nowadays.

Such occurrences are the sequelae of modernisation, as Malaysia is rapidly growing into a developed nation. The government cannot lay claim on the growth of e-commerce purchases, nor can the opposition spin facts and say that the economy is terrible.

Malaysia is not heading towards bankruptcy. In fact, this notion has been recycled for decades. During the late 1970s, Lim Kit Siang claimed that Malaysia was going bankrupt and would be a failed state soon in a book titled “Time bombs in Malaysia”.

Over time, the retail apocalypse is expected to grow. Charles Darwin’s theory that only the fittest survive applies to the retail world as well. It is best that we don’t be naive and listen to every word spewed by politicians as we head towards the election.