KUALA LUMPUR: The reduced taxable income bracket and a one-off e-wallet credit in the 2023 Budget will increase disposable income and encourage retail spending, Hektar Real Estate Investment Trust (Hektar Reit) said.
Hektar Reit executive director and chief executive officer Johari Shukri Jamil said the company's assets under management comprised five established neighbourhood-focused malls and one regional shopping mall, which played a key role in serving as a community hub.
"The consumer demographics around our catchment area cater more towards non-discretionary spending.
"Therefore, all the subsidies and initiatives introduced by the government in the 2023 Budget will help further improve the overall sales at our shopping malls.
"As of June 30 2022, most of our tenants had recovered to more than 90 per cent of their pre-pandemic sales, helping them to reduce their occupancy costs and strengthen their cash flow positions," he told the New Straits Times.
Hektar Reit malls are Subang Parade here, Mahkota Parade in Melaka, Wetex Parade and Segamat Central in Johor, Central Square and Kulim Central in Kedah.
Finance Minister Tengku Zafrul Tengku Abdul Aziz, when tabling the 2023 Budget, said the government had introduced several tax cuts namely 19 per cent from 21 per cent for taxable income brackets of RM70,001 to RM100,000 and 11 per cent from 13 per cent for taxable income brackets of RM50,001 to RM70,000.
There is also an allocation of RM400 million for one-off e-wallet credit worth RM100 for the M40 group with an annual income below RM100,000 and e-wallet credit worth RM200 for 18-to-20-year-olds and full-time students above age 21.
Johari said retail space was becoming vibrant once again as shoppers returned to pre-pandemic levels, boosting tenants' confidence to open outlets at the popular neighbourhood or regional shopping malls.
With some of the above initiatives by the government in the 2023 Budget, Johari said new retailers would have better access to retail space.
Furthermore, the existing retailers will also see this as an opportunity to expand their current businesses, especially since they are now more confident than last year.
Under the 2023 Budget, the government announced several aids to encourage new retailers and existing retailers to enter the retail industry and expand their business.
These include the Semarak Niaga programme, which is directly involved in the financing, with an allocation of RM45.0 billion including direct loans, alternative financing, and financing guarantees.
A RM235 million in financing will be available for women under the Semarak-Nita BSN Scheme, Tekunita TEKUN, DanaNITA MARA, and Bank Rakyat's Biz Lady to encourage more women to increase their business capacity and improve marketing strategies.
To encourage more young people to do business, RM305 million will be made available as a special loan facility for youths through SME Bank, TEKUN, MARA, BSN and Agrobank.
The government also announced RM1.7 billion as micro-loan funds and business facilities to benefit small businesses.
For Bumiputera entrepreneurs, the government, via TERAJU with a fund of RM135 million, will provide financing facilities (including under the Bumiputera Prosperity Fund).
The government will provide a total of RM200 million under Perbadanan Usahawan Nasional Bhd (PUNB) for financing and entrepreneurship development programmes for Bumiputeras in the retail and distribution trade sectors.
Johari said Hektar Reit was communicating with several prospects across its portfolio to provide competitive and attractive rates to these retailers to bring the best retail experience to loyal customers and shoppers.
"We believe shopping malls have evolved into lifestyle-centric places for people to meet, socialise, interact and learn. We are confident and believe that they will remain the preferred destinations for entertainment, social activities and shopping among Malaysians as long as the malls stay relevant," he said.
Johari also noted that the government was targeting the arrival of more than 15 million tourists with an income value of RM47.6 billion in 2023.
This would see a boost in sales similar to what was experienced when the government reopened the international borders after the relaxation of government restrictions on curbing Covid-19.
"In totality, the government has introduced various measures and initiatives to help and support the recovery of the people so that they can contribute positively to society and encourage continued economic growth," Johari said.
According to the Malaysia Retail Industry Report for September 2022, the country's retail industry recorded a growth rate of 62.5 per cent in retail sales in the second half (Q2) of 2022 versus 18.3 per cent in the first quarter (Q1) of 2022.
This strong growth momentum is forecasted to continue, with a projected average growth rate of 61.7 per cent for the next three months.
The country's economy posted a growth of 8.9 per cent for Q2 of 2022, according to Bank Negara Malaysia.
All retail subsectors enjoyed growth in the Q2 ended June 30 2022 for the first time since the pandemic, surpassing market expectations.
Johari said that overall, the projection for the retail sector this year was quite optimistic.