market review under the competition act 2010 for service … · draft final report: market review...

Draft Final Report: Market Review under The Competition Act 2010 for Service Sector in

Malaysia (Wholesale and Retail for Selected Products)

MARKET REVIEW UNDER THE COMPETITION ACT 2010

FOR SERVICE SECTOR IN MALAYSIA

(WHOLESALE AND RETAIL FOR SELECTED PRODUCTS)

DRAFT FINAL REPORT

Prepared by:

Frost & Sullivan Perunding Strategi Sdn. Bhd.

27 February 2020



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Table of Contents

LIST OF FIGURES................................................................................................................................. 5

LIST OF TABLES ................................................................................................................................. 11

LIST OF ABBREVIATIONS ................................................................................................................. 13

1 INTRODUCTION .......................................................................................................................... 15

1.1 Market Review Background .................................................................................................. 15

1.2 Market Review Objectives .................................................................................................... 16

1.3 Expected Outcomes ............................................................................................................. 16

1.4 Research Methodology ......................................................................................................... 17

1.5 Scope and Limitations .......................................................................................................... 19

1.5.1 Scope ............................................................................................................................ 19

1.5.2 Limitations ..................................................................................................................... 21

1.6 Focus of the Market Review ................................................................................................. 22

1.6.1 Quantitative Approach................................................................................................... 22

1.6.2 Qualitative Approach ..................................................................................................... 27

1.6.3 List of Selected Product Categories ............................................................................. 35

1.7 Report Outline ....................................................................................................................... 37

2 OVERVIEW OF THE MALAYSIAN ECONOMY AND SERVICES SECTOR .............................. 38

2.1 Overall Macroeconomic Trends ............................................................................................ 38

2.1.1 Gross Domestic Product ............................................................................................... 38

2.1.2 Labour Indicators .......................................................................................................... 39

2.1.3 Productivity .................................................................................................................... 40

2.1.4 Consumer Price Index................................................................................................... 42

2.1.5 Household Expenditure ................................................................................................. 43

2.2 Services Sector in Malaysia ................................................................................................. 48

2.2.1 GDP Contribution .......................................................................................................... 48

2.2.2 Labour Indicators .......................................................................................................... 50

2.2.3 Productivity Performance .............................................................................................. 51

2.2.4 Investment Performance ............................................................................................... 52

2.3 Overview of the Wholesale and Retail Trade Industry ......................................................... 54

2.3.1 Number of Establishments ............................................................................................ 54

2.3.2 Employment .................................................................................................................. 57



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2.3.3 Performance .................................................................................................................. 60

2.3.4 Wholesale Trade ........................................................................................................... 61

2.3.5 Retail Trade ................................................................................................................... 66

2.3.6 Supply Chain ................................................................................................................. 71

2.3.7 Rules and Regulations Governing Wholesale and Retail Trade .................................. 74

2.3.8 Pricing Trends ............................................................................................................... 88

2.3.9 Industry Trends ............................................................................................................. 92

2.3.10 Key Findings from Interviews with Industry Players outside Kuala Lumpur ................. 95

3 MARKET ASSESSMENT FOR FOOD & BEVERAGES .............................................................. 97

3.1 Market Definition and Product Segmentation ....................................................................... 97

3.2 Market Overview ................................................................................................................... 97

3.2.1 Key Players in the F&B Landscape .............................................................................. 98

3.3 Pricing Analysis and Margins ............................................................................................... 99

3.3.1 Pricing Trends ............................................................................................................... 99

3.3.2 Margins Analysis ......................................................................................................... 101

4 MARKET ASSESSMENT FOR HOUSEHOLD CLEANING PRODUCTS ................................. 103

4.1 Market Definition and Product Segmentation ..................................................................... 103

4.2 Market Overview ................................................................................................................. 103

4.2.1 Key Players in the Household Cleaning Products Landscape ................................... 103

4.3 Pricing Analysis and Margins ............................................................................................. 104

4.3.1 Pricing Trends ............................................................................................................. 104


5 MARKET ASSESSMENT FOR PERSONAL CARE & TOILETRIES ......................................... 108


5.2 Market Overview ................................................................................................................. 108

5.2.1 Key Players in the Personal Care & Toiletries Market Landscape ............................. 109


5.3.1 Pricing Trends ............................................................................................................. 110


6 MARKET ASSESSMENT FOR CLOTHING ............................................................................... 114


6.2 Market Overview ................................................................................................................. 114



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6.2.1 Key Players in the Clothing Retailing Market Landscape ........................................... 114


6.3.1 Pricing Trends ............................................................................................................. 115


7 COMPETITION ASSESSMENT ................................................................................................. 119

7.1 Market Concentration ......................................................................................................... 119

7.1.1 Market Concentration in Wholesale Trade Industry ................................................... 119

7.1.2 Market Concentration in Retail Trade Industry ........................................................... 121

7.2 Competition Concerns in the Wholesale and Retail Trade Industry .................................. 123

7.2.1 Introduction .................................................................................................................. 123

8 PRELIMINARY RECOMMENDATIONS ..................................................................................... 143

8.1 Issues and Challenges ....................................................................................................... 143

8.1.1 Market Driven Issues .................................................................................................. 143

8.1.2 Regulatory Driven Issues ............................................................................................ 145

8.2 Preliminary Recommendations ........................................................................................... 147

8.2.1 Mapping of the Preliminary Recommendation to Issues/Challenges ......................... 150

9 APPENDICES ............................................................................................................................. 153

9.1 Findings from Industry Survey ............................................................................................ 153

9.1.1 Profile of Survey Participants ...................................................................................... 153

9.1.2 Business Operations ................................................................................................... 159

9.1.3 Pricing and Promotion ................................................................................................. 168

9.1.4 Level of Competition and Experience/Observation of Potential Anti-Competitive

Practices ..................................................................................................................................... 184

9.1.5 Industry Trends ........................................................................................................... 189

9.1.6 Awareness of MyCC ................................................................................................... 191

9.2 Findings from Consumer Survey ........................................................................................ 193

9.2.1 Profile of Survey Participants ...................................................................................... 193

9.2.2 Consumer Purchasing Behaviour ............................................................................... 194

9.2.3 Preferred Retail Channel ............................................................................................ 206

9.2.4 e-Commerce................................................................................................................ 212

9.2.5 Competitive Landscape and Product Offerings .......................................................... 216

9.2.6 Product Pricing ............................................................................................................ 218



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9.2.7 Product Bundling ......................................................................................................... 224

9.3 Price Trends Comparison ................................................................................................... 228

9.3.1 Rempah Ratus ............................................................................................................ 228

9.3.2 Rempah Ratus (Berbungkus) ..................................................................................... 229

9.3.3 Beras ........................................................................................................................... 230

9.3.4 Bihun ........................................................................................................................... 233

9.3.5 Roti .............................................................................................................................. 234

9.3.6 Gula ............................................................................................................................. 235

9.3.7 Tepung ........................................................................................................................ 236

9.3.8 Minyak Dan Lemak ..................................................................................................... 237

9.3.9 Ikan Dalam Tin ............................................................................................................ 238

9.3.10 Kicap Dan Sos ............................................................................................................ 240

9.3.11 Sapuan (Spreads) ....................................................................................................... 241

9.3.12 Mentega ...................................................................................................................... 243

9.3.13 Santan (Kotak) ............................................................................................................ 244

9.3.14 Penjagaan Diri ............................................................................................................. 246

9.3.15 Penjagaan Rumah ...................................................................................................... 247

9.3.16 Bahan-Bahan Minuman .............................................................................................. 248

9.3.17 Tersedia Diminum ....................................................................................................... 249

LIST OF FIGURES

Figure 1: Total Number of Consumer Complaints Received, Food & Beverages, 2014–2019 .......... 30

Figure 2: Total Number of Consumer Complaints Received, Household Cleaning Products, 2014–

2019 ..................................................................................................................................................... 31

Figure 3: Total Number of Consumer Complaints Received, Personal Care & Toiletries, 2014–2019

.............................................................................................................................................................. 33

Figure 4: Total Number of Consumer Complaints Received, Clothing, 2014–2019 ........................... 34

Figure 5: Contribution to GDP at Constant 2015 Prices, Malaysia, 2015–2018 ................................. 38

Figure 6: Annual Employment by Kind of Economic Activity, 2015 - 2018 ......................................... 39

Figure 7: Employed Persons by Occupation, Malaysia, 2018 ............................................................. 39

Figure 8: Labour Productivity Trends, Malaysia, 2014–2018 .............................................................. 40

Figure 9: Labour Productivity Growth by Key Economic Sectors, Malaysia, 2016–2019 ................... 41

Figure 10: Weightage of Categories covered in Malaysia‟s CPI ......................................................... 42



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Figure 11: Consumer Price Index, Malaysia, 2011–2019 ................................................................... 43

Figure 12: Mean Household Expenditure Trend, Malaysia (2009/10, 2014,2016) ............................. 44

Figure 13: Mean Household Expenditure of Selected Products, Malaysia (2014-2016) .................... 47

Figure 14: Services Sub-Sectors‟ Contribution to the Services Sector GDP, Malaysia, 2015–2018 . 48

Figure 15: Overall GDP and Services Sector Growth Trends, Malaysia, 2016–2018 ........................ 49

Figure 16: Breakdown of Employment by Services Sector, Malaysia, 2018 ....................................... 50

Figure 17: Services Sector Labour Productivity Growth, Malaysia, 2016–2018 ................................. 51

Figure 18: Number of Establishments in WRT, Malaysia (2013 and 2018) ........................................ 54

Figure 19: Number of Establishments in WRT by State (2018) .......................................................... 55

Figure 20: Number of Establishments in Wholesale Trade Sub-sector by State (2018) .................... 55

Figure 21: Number of Establishments in Retail Trade Sub-sector by State (2018) ............................ 56

Figure 22: Breakdown of Establishments in WRT by Firm Size (2015) .............................................. 56

Figure 23: Number of Persons Engaged in WRT During December or the Last Pay Period, Malaysia

(2013 and 2018) ................................................................................................................................... 57

Figure 24: Breakdown of Persons Engaged in WRT by type of Engagement (2018)......................... 58

Figure 25: Distribution of Employed Person in WRT by Nationality .................................................... 58

Figure 26: Total Revenue in WRT, Malaysia (2013 and 2018) ........................................................... 60

Figure 27: Total Expenditure in WRT, Malaysia (2013 and 2018) ...................................................... 61

Figure 28: Number of Establishments under Wholesale Trade sub-industry ...................................... 63

Figure 29: Revenue Breakdown of Wholesale Trade sub-industry ..................................................... 64

Figure 30: Expenditure Breakdown of WholesaleTrade sub-industry ................................................. 65

Figure 31: Number of Establishments under Retail Trade sub-industry ............................................. 67

Figure 32: Revenue Breakdown of Retail Trade sub-industry ............................................................ 68

Figure 33: Expenditure Breakdown of Retail Trade sub-industry ........................................................ 69

Figure 34: WRT Supply Chain (except for Clothing) ........................................................................... 72

Figure 35: Supply Chain for Clothing ................................................................................................... 74

Figure 36: Prevailing Regulations in WRT ........................................................................................... 81

Figure 37: Rating of Price Volatility by Product Segment - Food & Beverages .................................. 99

Figure 38: Observed Price Increase by Consumers in the Past 12 Months, Malaysia (2019) ......... 100

Figure 39: Price Margins for Food & Beverages Products, Malaysia................................................ 101

Figure 40: Price Margins Illustration for Food & Beverages Products, Malaysia .............................. 102

Figure 41: Rating of Price Volatility by Product Segment - Household Cleaning Products .............. 104



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Figure 42: Key Household Cleaning Products by Price Increases Observed by Consumers in the

Past 12 Months, Malaysia .................................................................................................................. 105

Figure 43: Price Margins for Household Cleaning Products, Malaysia ............................................. 106

Figure 44: Price Margins Illustration for Household Cleaning Products, Malaysia ........................... 107

Figure 45: Rating of Price Volatility by Product Segment - Personal Care Products ........................ 110

Figure 46: Key Personal Care Products by Price Increases Observed by Consumers in the Past 12

Months, Malaysia ............................................................................................................................... 111

Figure 47: Price Margins for Personal Care Products, Malaysia ...................................................... 112

Figure 48: Price Margins Illustration for Personal Care Products, Malaysia ..................................... 113

Figure 49: Rating of Price Volatility by Product Segment – Clothing ................................................ 115

Figure 50: Key Clothing Products by Price Increases Observed by Consumers in the Past 12

Months, Malaysia ............................................................................................................................... 116

Figure 51: Price Margins for Clothing Products, Malaysia ................................................................ 117

Figure 52: Price Margins Illustration for Clothing Products, Malaysia ............................................... 118

Figure 53: Market Concentration using CR and HHI ......................................................................... 119

Figure 54: Business Nature of the Surveyed Companies ................................................................. 153

Figure 55: Product Offerings .............................................................................................................. 154

Figure 56: Location of Main Business Activities ................................................................................ 155

Figure 57: Years of Operating in Malaysia ........................................................................................ 155

Figure 58: Company‟s Ownership and Public Listing status ............................................................. 156

Figure 59: Company‟s Size ................................................................................................................ 157

Figure 60: Operating Profit Margin in 2018 - Breakdown by Business Nature ................................. 159

Figure 61: Operating Profit Margin in 2018 - Breakdown by Location of main Business Activities .. 160

Figure 62: Operating Profit Margin in 2018 - Breakdown by Product Offering ................................. 160

Figure 63: Top 5 Operating Cost Components .................................................................................. 161

Figure 64: Average Contribution of the Different Product Categories to Company‟s Revenue ........ 161

Figure 65: Key Distribution Channel .................................................................................................. 163

Figure 66: Number of Product Suppliers ........................................................................................... 164

Figure 67: Top 3 Most Concerning Areas in Business – Breakdown by Business Nature ............... 165

Figure 68: Top 3 Most Concerning Areas in Business – Breakdown by Geographical Location ..... 166

Figure 69: Frequency of Checking Inventory ..................................................................................... 167

Figure 70: Frequency of price review – Breakdown by Business Nature ......................................... 168

Figure 71: Frequency of price review – Breakdown by Product Offering .......................................... 169



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Figure 72: Factors Influencing Product Pricing .................................................................................. 170

Figure 73: Supplier‟s Influence on Product Pricing ........................................................................... 171

Figure 74: Availability of a Systematic Mechanism to Monitor and Set the Prices of Products Sold 172

Figure 75: Price consistency across different shops or for different clients ...................................... 173

Figure 76: Price consistency between online and in-store ................................................................ 173

Figure 77: Practice of Products below Cost Price ............................................................................. 174

Figure 78: Rating of Price Volatility by Product Segment - Food & Beverages ................................ 175

Figure 79: Rating of Price Volatility by Product Segment - Household Cleaning Products .............. 176

Figure 80: Rating of Price Volatility by Product Segment - Personal Care Products ........................ 177

Figure 81: Rating of Price Volatility by Product Segment – Clothing ................................................ 178

Figure 82: Frequency of Changing Selling Price - Food and Beverages .......................................... 179

Figure 83: Frequency of Changing Selling Price - Household Cleaning Products ........................... 180

Figure 84: Frequency of Changing Selling Price - Personal Care Products ..................................... 181

Figure 85: Frequency of Changing Selling Price - Clothing .............................................................. 182

Figure 86: Discounts or Promotions .................................................................................................. 183

Figure 87: Top 5 Client/customer Attractions .................................................................................... 184

Figure 88: Perception of the Wholesale and Retail Trade Industry in Malaysia ............................... 185

Figure 89: Existence of Potential Anti-Competitive Practices ........................................................... 186

Figure 90: Perception of anti-competitive practices in Malaysian wholesale and retail trade industry

............................................................................................................................................................ 188

Figure 91: Expectation of industry growth in the next 3 years – Breakdown by Business Nature.... 189

Figure 92: Expectation of industry growth in the next 3 years – Breakdown by Employment Size .. 189

Figure 93: Plan to expand/ open new stores/ distribution centres/ warehouses within the next 3 years

............................................................................................................................................................ 190

Figure 94: Key Industry Trends ......................................................................................................... 191

Figure 95: Awareness of MyCC and Competition Law ...................................................................... 191

Figure 96: Perception of the existing rules, regulations and laws ..................................................... 192

Figure 97: Profile of Survey Participants ........................................................................................... 193

Figure 98: Top 5 Most Frequently Purchased / Consumed Food & Beverages ............................... 195

Figure 99: Monthly Expenditure on Food & Beverages ..................................................................... 196

Figure 100: Frequency of Product Purchase - Food & Beverages ................................................... 197

Figure 101: Top 5 Most Frequently Purchased / Consumed Household Cleaning Products -

Breakdown by Monthly Household Income (MHI) ............................................................................. 198



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Figure 102: Monthly Expenditure on Household Cleaning Products ................................................ 199

Figure 103: Frequency of Product Purchase - Household Cleaning Products ................................. 200

Figure 104: Top 5 Most Frequently Purchased / Consumed Personal Care & Toiletries- Breakdown

by Monthly Household Income (MHI) ................................................................................................ 201

Figure 105: Monthly Expenditure on Personal Care & Toiletries ...................................................... 202

Figure 106: Frequency of Product Purchase - Personal Care & Toiletries ....................................... 203

Figure 107: Top 5 Most Frequently Purchased / Consumed Clothing Items - Breakdown by Monthly

Household Income (MHI) ................................................................................................................... 204

Figure 108: Monthly Expenditure on Clothing ................................................................................... 205

Figure 109: Frequency of Product Purchase - Clothing .................................................................... 206

Figure 110: Place of Purchase - Food & Beverages ......................................................................... 207

Figure 111: Place of Purchase - Household Cleaning Products ....................................................... 208

Figure 112: Place of Purchase - Personal Care & Toiletries ............................................................. 209

Figure 113: Place of Purchase - Clothing .......................................................................................... 210

Figure 114: Reasons for Purchasing the Selected Items at the Selected Retail Outlets .................. 211

Figure 115: Adoption of e-Commerce - Food & Beverages Items .................................................... 212

Figure 116: Adoption of e-Commerce - Household Cleaning Products ............................................ 213

Figure 117: Adoption of e-Commerce - Personal Care & Toiletries .................................................. 213

Figure 118: Adoption of e-Commerce - Clothing ............................................................................... 214

Figure 119: Reasons for Purchasing the Selected Items Online ...................................................... 215

Figure 120: Number of Groceries Retail Stores within Respondent's Housing Area ........................ 216

Figure 121: Price Difference for the Same Retail Outlet Brand in Different Locations ..................... 217

Figure 122: Price Difference for the Same Product Sold by Competing Retail Outlets .................... 217

Figure 123: Availability and Satisfactions with Brand Options .......................................................... 218

Figure 124: Observed Price Increase in the Past 12 Months - Food & Beverages .......................... 220

Figure 125: Observed Price Increase in the Past 12 Months - Household Cleaning Products ........ 221

Figure 126: Observed Price Increase in the Past 12 Months - Personal Care Products .................. 222

Figure 127: Observed Price Increase in the Past 12 Months - Clothing ........................................... 223

Figure 128: Observed Product Bundling - Food & Beverages .......................................................... 225

Figure 129: Observed Product Bundling - Household Cleaning Products ........................................ 226

Figure 130: Observed Product Bundling - Personal Care Products.................................................. 227

Figure 131: Average Price of Rempah Ratus by Format, Malaysia (2019) ...................................... 228

Figure 132: Average Price of Rempah Ratus by State, Malaysia (2019) ......................................... 229



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Figure 133: Average Price of Rempah Ratus (Berbungkus) by Format, Malaysia (2019) ............... 230

Figure 134: Average Price of Beras by Format, Malaysia (2019) ..................................................... 231

Figure 135: Average Price of Beras by State, Malaysia (2019) ........................................................ 232

Figure 136: Average Price of Bihun by Format, Malaysia (2019) ..................................................... 233

Figure 137: Average Price of Bihun by State, Malaysia (2019) ........................................................ 233

Figure 138: Average Price of Roti by Format, Malaysia (2019) ........................................................ 234

Figure 139: Average Price of Roti by State, Malaysia (2019) ........................................................... 234

Figure 140: Average price of Gula by Format, Malaysia (2019) ....................................................... 235

Figure 141: Average Price of Gula by State, Malaysia (2019) .......................................................... 235

Figure 142: Average Price of Tepung by Format, Malaysia (2019) .................................................. 236

Figure 143: Average Price of Tepung by State, Malaysia (2019) ..................................................... 236

Figure 144: Average Price of Minyak Dan Lemak by Format, Malaysia (2019) ............................... 237

Figure 145: Average Price of Minyak Dan Lemak by State, Malaysia (2019)................................... 238

Figure 146: Average Price of Ikan Dalam Tin by Format, Malaysia (2019) ...................................... 239

Figure 147: Average Price of Ikan Dalam Tin by State, Malaysia (2019) ......................................... 239

Figure 148: Average Price of Kicap Dan Sos by Format, Malaysia (2019) ....................................... 240

Figure 149: Average Price of Kicap Dan Sos by State, Malaysia (2019) .......................................... 241

Figure 150: Average Price of Sapuan (Spreads) by format, Malaysia (2019) .................................. 242

Figure 151: Average Price of Sapuan (Spreads) by State, Malaysia (2019) .................................... 243

Figure 152: Average Price of Mentega by Format, Malaysia (2019) ................................................ 244

Figure 153: Average Price of Mentega by Format, Malaysia (2019) ................................................ 244

Figure 154: Average Price of Santan (Kotak) by Format, Malaysia (2019) ...................................... 245

Figure 155: Average Price of Santan (Kotak) by State, Malaysia (2019) ......................................... 246

Figure 156: Average Price of Penjagaan Diri by Format, Malaysia (2019) ....................................... 247

Figure 157: Average Price of Penjagaan Diri by State, Malaysia (2019) .......................................... 247

Figure 158: Average Price of Penjagaan Rumah by Format, Malaysia (2019) ................................ 248

Figure 159: Average Price of Penjagaan Rumah by State, Malaysia (2019).................................... 248

Figure 160: Average Price of Bahan-Bahan Minuman by Format, Malaysia (2019) ........................ 249

Figure 161: Average Price of Bahan-Bahan Minuman by State, Malaysia (2019) ........................... 249

Figure 162: Average Price of Tersedia Diminum by Format, Malaysia (2019) ................................. 250

Figure 163: Average Price of Tersedia Diminum by State, Malaysia (2019) .................................... 250



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LIST OF TABLES

Table 1: Wholesale Trade MSIC Codes Covered in the Study ........................................................... 19

Table 2: Retail Trade MSIC Codes Covered in the Study ................................................................... 20

Table 3: Summary of Wholesale Trade Quantitative Indicators, Malaysia (2018) .............................. 23

Table 4: Summary of Retail Trade Quantitative Indicators, Malaysia (2018) ...................................... 24

Table 5: Summary of CPI, Malaysia (December 16–November 2019) ............................................... 25

Table 6: Top Five Industries Based on Quantitative Filtering Parameters .......................................... 25

Table 7: Similar Studies Undertaken by Other Jurisdictions ............................................................... 27

Table 8: Consumer Complaints Received, 2014–2019 ....................................................................... 29

Table 9: Consumer Complaints Trends, Food & Beverages (2014-2019) .......................................... 30

Table 10: Consumer Complaint Trends, Household Cleaning Products, 2014–2019 ........................ 32

Table 11: Consumer Complaint Trends, Personal Care & Toiletries, 2014–2019 .............................. 33

Table 12: Consumer Complaints Trends, Clothing (2014-2019) ......................................................... 35

Table 13: Wholesale Trade MSIC Codes Covered in the Market Review .......................................... 35

Table 14: Retail Trade MSIC Codes Covered in the Market Review .................................................. 36

Table 15: Mean Household Expenditure Comparison, Malaysia (2014-2016) ................................... 44

Table 16: Mean Household Expenditure on Selected Products Comparison, Malaysia (2014-2016) 45

Table 17: Approved Investments in the Services Sub-Sector, Malaysia, 2018–2019 ........................ 52

Table 18: Popular Players in the Hypermarket and Supermarket Space, Malaysia ........................... 70

Table 19: Popular Players in the Mini Market Space, Malaysia .......................................................... 70

Table 20: Popular Players in the Convenience Store Space, Malaysia .............................................. 70

Table 21: Key Stakeholders Across Supply of Selected Product Categories ..................................... 71

Table 22: Key Government Stakeholders, Malaysia ........................................................................... 74

Table 23: Description of Act/Policy Related to Selected Product Categories ..................................... 82

Table 24: Licences and Certificates Requirements ............................................................................. 86

Table 25: Difference in Average Prices by State and Format by Products in 2019 ............................ 89

Table 26: Recent Activities in Malaysian Retail Industry ..................................................................... 92

Table 27: Market Concentration in Wholesale Trade Industry by MSIC Code, Malaysia ................. 119

Table 28: MSIC Code with High Concentration in Wholesale Trade Industry, Malaysia .................. 120

Table 29: Market Concentration in Retail Trade Industry by MSIC Code, Malaysia ......................... 121



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Table 30: MSIC Code with High Concentration in Retail Trade Industry, Malaysia .......................... 122

Table 31: Level of Attention Warranted for the Potential Anti-Competitive Concern ........................ 125

Table 32: Preliminary Proposed Initiatives ........................................................................................ 147



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LIST OF ABBREVIATIONS

ACD ASEAN Cosmetic Directive

AML Anti-Monopoly Law

CAGR Compound Annual Growth Rate

CDCR Control of Drugs and Cosmetic Regulations

CPI Consumer Price Index

CR Concentration Ratio

DOSM Department of Statistics Malaysia

DSM Department of Standards Malaysia

F&B Food & Beverages

FCA Finnish Competition Authority

FMCG Fast Moving Consumer Goods

FSQD Food Safety and Quality Division

FTA Free Trade Agreement

FTC Federal Trade Commission

GDP Gross Domestic Product

HACCP Hazard Analysis and Critical Control Point

HHI Herfindahl–Hirschman Index

IDI In-depth interview

IDIs Indepth Interviews

JAKIM Jabatan Kemajuan Islam Malaysia

KPDNHEP Ministry of Domestic Trade and Consumer Affairs

KPKT - Ministry of Housing and Local Government, Malaysia

MEA Ministry of Economic Affairs, Malaysia

MED Ministry of Entrepreneur Development, Malaysia

MHBN National Product Price Council (Majlis Harga Barang

Negara)

MIDA Malaysian Investment Development Authority

MITI Ministry of International Trade and Industry, Malaysia

MOH - Ministry of Health, Malaysia

MPC Malaysia Productivity Corporation

MSIC Malaysia Standard Industrial Classification



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MyCC The Malaysia Competition Commission

NCAC National Consumer Advisory Council

NDRC National Development and Reform Commission

NPRA National Pharmaceutical Regulatory Agency

OFT Office of Fair Trading

PBT Pihak Berkuasa Tempatan

PLB Private Label Brands

RGM Retail Group Malaysia

RM Ringgit Malayia

SAMR State Administration for Market Regulation

Sdn. Bhd. Sendiran Berhad

SME Small and medium-sized enterprises

SSM Companies Commission of Malaysia (Suruhanjaya

Syarikat Malaysia)

TDO Trade Description Order

USD United States Dollars

WRT Wholesale and Retail Trade



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1 INTRODUCTION

1.1 Market Review Background

To escape the middle-income trap and move towards becoming a high-income nation, a highly

efficient and competitive market is crucial in enabling robust economic development. The

introduction of the Competition Act in 2010 has been regarded as a cornerstone for increased

economic governance in Malaysia. Previously, anti-competitive conduct, such as price-fixing,

intended supply limitation, market sharing, and sharing of sensitive information among industry

players were often practised among groups, such as trade associations, as commonplace and often

ignored, and sometimes misconstrued as acceptable by consumers.

Section 11(1) of the Competition Act 2010 lays the foundation for the Malaysia Competition

Commission (hereinafter “the MyCC”) to conduct a review on any market to determine whether any

feature or combination of features prevents, restricts or distorts competition in the market.

The MyCC has decided to conduct a market review on competition in Malaysia‟s services sector,

focusing on wholesale and retail trade of selected products as the sector is crucial to the country‟s

economy and growth. In 2018, the services sector contributed 56.7% to Malaysia‟s Gross Domestic

Product (GDP),1 grew at a growth rate of 5.7% between 2017 and 2018 when compared to the

overall national GDP at 4.4%. The highest contribution within the services sector came from

wholesale and retail trade industry, contributing 29.4% in 2018.

A competitive wholesale and retail trade industry is of utmost importance as it holds the key to both

economic stability and directly impacts household expenditure as a significant portion is spent on

basic essentials, such as food and beverages (18.0%), clothing (2.70%), household cleaning

products (0.99%) and personal care & toiletries (2.85%).2 An inefficient and less competitive market,

typically reflecting the possibility of higher prices for end consumers and lower costs for producers,

could adversely affect low-earning households more extensively as a higher proportion of their

expenditure would be spent on these essential products.

Given the importance of wholesale and retail trade industry to the nation‟s economic development,

the MyCC is encouraged to conduct a market review of the services sector with a focus on

wholesale and retail trade of selected products to determine the market structure, level of

competitiveness, and promote healthier competition in the sector.

1 Department of Statistics, Malaysia (DOSM)

2 DOSM – Household Expenditure Survey 2016



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1.2 Market Review Objectives

The general objective of this market review is to understand the market structure and assess market

activities along the supply chain to identify any anti-competitive conduct in the wholesale and retail

trade services industry in Malaysia. It also seeks to evaluate prevailing industry practices and

regulations that restrict competition and cause unnecessary regulatory burdens.

Specific objectives of this market review are:

1. To determine the market structure, supply chain, and profile of industry players involved in

wholesale and retail trade services;

2. To assess the conduct of enterprises engaged in wholesale and retail trade services;

3. To assess the conduct of suppliers and consumers to enterprises involved in wholesale and

retail trade services;

4. To identify the cost, prices, and revenues of enterprises in wholesale and retail trade

services, which will be treated as strictly confidential;

5. To assess competition in wholesale and retail trade services;

6. To identify anti-competitive practices of enterprises involved in wholesale and retail trade

services;

7. To determine the extent of market distortion and whether government intervention is

necessary for curbing anti-competitive conduct in wholesale and retail trade services; and

8. To recommend improvements across government agencies and regulators in the identified

sector to minimise the actual or potential restrictive effect of regulations on competition in

wholesale and retail trade services.

1.3 Expected Outcomes

The expected outcomes of the market review are as follows:

To assess the overall market structure, market concentration, and market behaviour;

To identify possible anti-competitive conduct that may exist in the supply chain of the selected

product categories;

To examine the possibility of existing legislations and policies that may impede competition;

To enhance MyCC‟s knowledge on the competition level in the selected product categories and

strengthen enforcement activities should industry players practice anti-competitive conduct; and

To recommend measures to promote competition in the selected product categories markets and

identify areas where MyCC can provide advocacy to key stakeholders, in particular, the

respective government agencies or ministries.



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1.4 Research Methodology

The review employs a three-pronged methodology leveraging both secondary and primary sources

to address the objectives of this market review.

A summary of the primary interactions and secondary research is presented below:

1 Survey of consumers: N=400 interviews (face-to-face).

2 Survey of distributors, wholesalers and retailers: N=400. This proposed sample size

corresponds to the statistical rigour of 95% confidence level and 5% margin of error. This

sample size is split between wholesale and retail distributive trade services (mix of online,

face-to-face and telephone).

3 In-depth interviews with wholesalers/distributors, retailers, manufacturers and discussions

with the Ministry of Domestic Trade and Consumer Affairs and related agencies including

MyCC, to obtain their views on potential harmful practices adopted in distributive trade

services.

4 Secondary research focusing on data gathering from DOSM, KPDNHEP, MHBN, SSM,

MPC, MIDA, internal databases; industry reports; local, regional and international news

articles; academic research publications; and company websites/annual reports/media

releases.

Objectives Methodology

1 To determine the market structure, supply

chain and profile of industry players that

are involved in wholesale and retail trade

services

Determine market structure largely through in-

depth interviews with the supply chain

participants pertinent to competition-related

factors along the supply chain

Mapping the supply chain largely through face-

to-face interactions and secondary research.



18

Objectives Methodology

2 To assess the conduct of enterprises

involved in the wholesale and retail trade

services

Determine anti-competitive conducts through

analysis of inputs received from in-depth

interviews and secondary research focusing on:

Price comparison of products across various formats and states and investigate into pricing practices

Examine any unfair practices restricting the availability of products or substitute products to competitors such as horizontal exclusive agreements, vertical exclusive agreements, market sharing, among others

3 To identify the cost, prices and revenues of

enterprises in the wholesale and retail

trade services which will be treated with

highly confidential

Preliminary assessment of cost and prices

validated from in-depth interviews, survey and

data gathered from DOSM, SSM, MHBN, and

various other secondary sources.

4 To assess competition in the wholesale

and retail trade services

Determine the level of competition through


interviews and secondary research

5 To identify anti-competitive practices of

enterprises involved in the wholesale and

retail trade services

Determine anti-competitive conducts through


interviews, survey and secondary research

6 To determine the extent of market

distortion and whether government

intervention is necessary in curbing

anticompetitive conduct in in wholesale

and retail trade services

a) Market distortion is defined as any activities,

market structure or regulatory factors that give

rise to anti-competitive practices due to among

others, dominant position in the market that will

result in distorted prices (prices which are

different from actual market prices) and supply

constraints

b) The extent of market distortion will be

determined by assessing time series data of

price, cost of goods sold and also taking into

consideration any prevailing subsidies available

to market participants, in addition to qualitative

and qualitative analysis that will be performed

through face-to-face interactions with the

industry participants



19

1.5 Scope and Limitations

1.5.1 Scope

The wholesale and retail trade services industry covers a broad range of segments such as F&B,

pharmaceuticals, and household goods, among others. For competition assessment to be focused

and meaningful, principles of economic relevance on both the supply side and demand side have

been considered to arrive at the focus products for this market review. On the supply side, the

selected products represent a high share of both revenue and employment of the larger wholesale

and retail trade industry. On the demand side, the selected segments have a significant impact on

consumer expenditure. Using quantitative indicators, such as contribution to economy, employment

generation, labour productivity, and qualitative indicators, such as the number of consumer

complaints and review of similar studies undertaken by other jurisdictions, four product categories,

namely F&B (processed), personal care & toiletries, household cleaning products, and clothing are

identified.

The following tables show the selected Malaysia Standard Industrial Classification (MSIC) codes

covering the product categories covered in this study.

Table 1: Wholesale Trade MSIC Codes Covered in the Study

No MSIC Code Description

1. 46321 Wholesale of rice, other grains, flour, and sugars

2. 46322 Wholesale of dairy products

3. 46323 Wholesale of confectionary

4. 46324 Wholesale of biscuits, cakes, breads, and other bakery products

5. 46325 Wholesale of coffee, tea, cocoa, and other beverages

6. 46329 Wholesale of other foodstuffs

Food & Beverages Personal Care & Toiletries

Household Cleaning Products

Clothing



20


7. 46413 Wholesale of clothing

8. 46419 Wholesale of textiles, clothing n.e.c.

9. 46422 Wholesale of perfumeries, cosmetics, soap, and toiletries

Table 2: Retail Trade MSIC Codes Covered in the Study


1 47111 Provision stores

2 47112 Supermarket

3 47113 Mini market

4 47114 Convenience stores

5 47191 Department stores

6 47192 Department stores and supermarket

7 47193 Hypermarket

8 47194 Newsagent and miscellaneous goods store

9 47199 Other retail sales in non-specialised stores n.e.c.

10 47211 Retail sale of rice, flour, other grains, and sugars

11 47213 Retail sale of dairy products and eggs

12 47216 Retail sale of bakery products and sugar confectionery

13 47217 Retail sale of mee, kuey teow, mee hoon, wantan skins, and other

food products made from flour or soya

14 47219 Retail sale of other food products n.e.c.

15 47222 Retail sale of tea, coffee, soft drinks, mineral water, and other

beverages

16 47510 Retail sale of textiles in specialised stores

17 47711 Retail sale of articles of clothing, articles of fur, and clothing

accessories

18 47722 Stores specialised in the retail sale of perfumery, cosmetics, and

toilet articles



21

The market review comprises the following aspects in the selected product categories:

1. Overview of the existing legislation and regulations in relation to the establishment, business

operations, product sourcing, and distribution along the value chain of the wholesale and

retail trade services industry;

2. Overview of the market structure and supply chain;

3. Profile of industry players involved along the supply chain of wholesale and retail trade

levels;

4. Competition in the supply chain of wholesale and retail trade levels on the following aspects:

a. Market share and market concentration

b. Market dominance and its economic impact on the sector;

5. Competition concerns in the supply chain of wholesale and retail trade services in relation to:

a. Possible anti-competitive conduct (e.g., anti-competitive agreement or abuse of

dominant position) among enterprises

b. Any existing policy or law that impedes competition in the industry; and

6. Recommendations and conclusion.

1.5.2 Limitations

The main limitation with regards to this market review is the non-availability of a standard

definition for personal care& toiletries, household cleaning products, and clothing which are

the three out of four products covered in this study.

As this market review views the product categories sold at the wholesale and retail levels,

aspects such as market structure and supply chain do not vary significantly with a slight

exception for clothing.

The interactions with the industry and various stakeholders are still in progress. Hence, some

of the information stated in this draft final version will be further strengthened and revised

during the next reporting stage to improve the accuracy and relevance of the content to the

market review.

The next version will include full comprehensive findings and the associated

recommendations after taking into consideration suggestions from public validation and

feedback from stakeholders.



22

1.6 Focus of the Market Review

Quantitative and qualitative indicators are used to prioritise candidate sectors for market studies

such as this current market review. There is no single universal approach. The table below shows

commonly used indicators for selecting candidate sectors or industries.

Commonly used quantitative indicators Commonly used qualitative indicators

Consumer price index (weights in consumer

baskets)

Complaints (consumers, industry players,

suppliers)

GDP output Changes in the industry which has the potential

to affect competition intensity

Employment Similar studies conducted by other jurisdictions

Investments Feedback from stakeholders, academicians

Productivity

Source: Frost & Sullivan analysis based on the Guide on Market Studies for Competition Authorities

OECD Publication

Quantitative and qualitative approaches are used to select the focus product categories for this

market review. Based on the current data available, four quantitative indicators have been used for

industry selection and validated with other jurisdiction studies.

1.6.1 Quantitative Approach

Economic Contribution: This criterion assessed the economic contribution of each industry based on

the sales value generated between 2012 and 2018. Sales value refers to:

The value of all goods, for which ownership or effective right to use with a view to ultimate purchase, has been transferred to others; and

The value of services rendered during the inquiry period, irrespective of time or method of payment.

Employment Size: As competition drives job creation, which leads to labour productivity and quality

of life improvements, it is an important criterion for consideration:

a. Assessed the total number of persons employed in each industry between 2012 and 2018.

Labour Contribution: This criterion is calculated as sales per employee as one of the measures for

determining retail industry productivity based on:

a. Estimated sales value generated by each employee for each industry. b. To be noted that productivity information published by Malaysia Productivity Corporation

does not publish data on industries covered within wholesale and retail (only up to two-digit MSIC codes are available).

Impact to Consumers: This criterion assessed consumers‟ spending patterns and importance based

on CPI and household expenditure survey.



23

1.6.1.1 Summary of Quantitative Indicators

Wholesale Trade

As shown in the table below, wholesale of household goods (textiles, clothing, footwear, and other

household goods) ranked first in terms of employment size and second in economic contribution,

indicating the industry‟s importance in job creation and revenue contribution to the economy.

Other specialised wholesale, comprising gaseous fuels, metals, construction materials, also ranked

within the top three in economic contribution, employment generation, and labour contribution.

Wholesale of food, beverages, and tobacco ranked third in terms of economic contribution to overall

wholesale and retail trade services as well as in employment generation.

Table 3: Summary of Wholesale Trade Quantitative Indicators, Malaysia (2018)

MSIC Code 46: Wholesale

Trade

Economic

Contribution to

Overall

Wholesale Trade

Employment

Size

(Ratio to Overall

Wholesale

Trade)

Labour

Contribution

In RM

461 Wholesale on a

fee or contract

basis

1.9% (7) 1.4% (7) 1,731,464.49 (2)

462 Wholesale of

agricultural raw

materials and live

animals

8.2% (5) 6.7% (5) 1,582,631.29 (3)

463 Wholesale of

food, beverages

and tobacco

18.1% (3) 20.0% (3) 1,172,431.47 (4)

464 Wholesale of

household goods

19.3% (2) 29.3% (1) 852,253.48 (5)

465 Wholesale of

machinery,

equipment and

supplies

8.7% (4) 16.4% (4) 689,724.00 (7)

466 Other specialised

wholesale

41.1% (1) 21.9% (2) 2,436,405.84 (1)

*Number within the brackets indicate the ranking

Source: Frost & Sullivan analysis based on Quarterly Services Statistics, Malaysia – DOSM

Publication



24

Retail

As shown in the table below, within the retail segment, non-specialised stores ranked among the top

three in all three quantitative parameters, followed by the sale of other goods in specialised stores.

In terms of economic contribution and employment generation, non-specialised stores are seen to

be crucial to the retail trade.

Table 4: Summary of Retail Trade Quantitative Indicators, Malaysia (2018)

MSIC Code 47: Retail Trade Economic

Contribution to

Overall Retail

Trade

Employment

Size

(Ratio to Overall

Retail Trade)

Labour

Contribution

In RM

471 Retail sale in non-

specialised stores

34.2% (1) 29.8% (1) 533,392.29 (3)

472 Retail sale of food,

beverages and

tobacco in

specialised stores

5.8% (6) 8.3% (5) 322,274.70 (8)

473 Retail sale of

automotive fuel in

specialised stores

8.4% (5) 3.6% (7) 1,108,734.15 (1)

474 Retail sale of

information and

communication

equipment in

specialised stores

10.4% (4) 10.1% (4) 483,299.32 (4)

475 Retail sale of other

household

equipment in

specialised stores

13.3% (3) 16.5% (3) 380,610.79 (6)

476 Retail sale of

cultural and

recreation goods in

specialised stores

5.6% (7) 7.4% (6) 348,693.05 (7)

477 Retail sale of other

goods in

specialised stores

21.2% (2) 22.7% (2) 438,057.16 (5)

478 Retail sale via

stalls and markets

0.0% (9) 0.0% (9) 112,489.90 (9)

479 Retail trade not in

stores, stalls or

markets

0.8% (8) 0.6% (8) 677,655.46 (2)

*Number within the brackets indicate the ranking.

Source: Frost & Sullivan analysis based on Quarterly Services Statistics, Malaysia – DOSM

Publication



25

Summary of CPI Index

Based on the consumer price index (CPI), the top three groups include food and non-alcoholic

beverages weightage at 29.5%, followed by housing, water, electricity, gas and other fuels at 23.8%

and transport at 14.6%.

Table 5: Summary of CPI, Malaysia (December 16–November 2019)

Category Weight

Nov-19

Dec-18

Dec-17

Dec-16

Total 122.1 121.1 120.9 116.8

Food & Non-Alcoholic Beverages 29.5% 133.3 131.7 130.8 125.7

Alcoholic Beverages & Tobacco 2.4% 168.0 167.5 165.6 165.3

Clothing & Footwear 3.2% 93.9 94.7 97.8 98.3

Housing, Water, Electricity, Gas & Other Fuels 23.8% 122.2 120.1 117.7 115.2

Furnishings, Household Equipment & Routine Household Maintenance

4.1% 116.8 115.3 115.2 112.5

Health 1.9% 123.2 121.5 122.0 119.3

Transport 14.6% 114.8 117.1 119.5 107.2

Communication 4.8% 97.5 96.1 97.4 97.9

Recreation Services & Culture 4.8% 112.3 111.5 111.7 111.1

Education 1.3% 120.3 118.3 117.0 115.1

Restaurants & Hotels 2.9% 132.3 131.1 129.4 126.1

Miscellaneous Goods & Services 6.7% 114.3 111.5 114.3 113.5

Source: DOSM

Note:

The weights used in the calculation of the CPI are updated periodically. This procedure is necessary to ensure that the weights reflect changes in consumer expenditure patterns.

Top Five Industries for Each Quantitative Filtering Parameter

The table below shows the top five industries identified using the quantitative indicators.

Table 6: Top Five Industries Based on Quantitative Filtering Parameters

Quantitative Indicator Wholesale Trade Retail Trade

Economic Contribution

Wholesale of food, beverages, and tobacco

Wholesale of household goods

Other specialised wholesale

Wholesale of machinery, equipment and supplies

Wholesale of agricultural raw materials and live animals

Retail sale in non-specialised stores

Retail sale of other goods in specialised stores

Retail sale of other household equipment in specialised stores

Retail sale of information and communication equipment in specialised stores

Retail sale of automotive fuel in specialised stores



26

Quantitative Indicator Wholesale Trade Retail Trade

Employment Size




Wholesale of machinery, equipment and supplies




Retail sale of other household equipment in specialised stores


Retail sale of food, beverages, and tobacco in specialised stores

Labour Contribution




Wholesale on a fee or contract basis





Retail trade not in stores, Stalls or Markets


Impact on Consumers

Food and non-alcoholic beverages

Miscellaneous goods and services

Housing, water, electricity, gas, and other fuels

Transport

Recreation services and culture



27

1.6.2 Qualitative Approach

1.6.2.1 Studies Undertaken by Other Jurisdictions

For the qualitative approach, coverage of similar studies undertaken by other jurisdictions was

considered. It also examined eight studies under the wholesale and retail trade industry conducted

by competition authorities in other jurisdictions.

The table below provides a summary of the eight studies.

Table 7: Similar Studies Undertaken by Other Jurisdictions

No. Country Title of the Study

Year Focus Area Reasons for Selecting the Focus Areas

1 South Africa

Grocery Retail Market Inquiry

2019 Grocery retail ● Elucidate features of the grocery

retail market that have resulted in

reduced competition and

diminished space for the

participation of small and

independent retail outlets (both in

urban and non-urban economies)

2 Mexico Competition Policy in the Mexican Grocery Retail Industry

2019 Grocery retail ● Grocery retail industry plays a vital

role from a consumer welfare

perspective.

Reference to other countries –

Several antitrust agencies

worldwide has conducted

comprehensive market

investigations into the grocery

retail market.

3 Botswana Competitive Analysis Of The Retail And Wholesale Sector In Botswana

2013 Food & groceries

● Highest proportion of complaints

(56%) received in 2011-2012

An earlier study noted that the

retail sector was characterised by

the rapid increase of chain stores

and supermarkets, and the

proliferation of franchising stores

which tended to exclude local

firms.

4 Turkey Turkish FMCG Sector Inquiry: Lessons From A Developing Country Perspective

2013 FMCG ● The growing trend of retail chains;

rapid consolidation of existing

domestic stores (mostly in the

form of creeping mergers)

Increase in food prices and

number of complaints from

suppliers on retailer practices.

5 Spain Report on the relations between

2011 Food retail ● Drastic changes in the retail food

market.



28



manufacturers and retailers in the food sector

Growing social concern over the

consequences of the increasing

bargaining power of retail

distribution over operators in the

rest of the food supply chain.

6 Ireland A Description of the Structure and Operation of Grocery Retailing and Wholesaling in Ireland: 2001 to 2006

2008 Food & drinks and household necessities

● Request from the Minister for

Enterprise, Trade and

Employment due to the recent

changes in the legislative and

regulatory environment.

7 United Kingdom

The supply of groceries in the UK market investigation

2008 Convenience and grocery stores

● There were several market

features in grocery supply by

retailers that could reasonably be

suspected to be preventing,

restricting, or distorting

competition, e.g., landholdings of

large grocery retailers and their

use of restrictive covenants, the

increase in buyer power of major

grocery retailers, and below-cost

selling and “price flexing” of major

grocery retailers.

8 Austria Allgemeine Untersuchung des österreichischen Lebensmittelhandels unter besonderer Berücksichtigung des Aspekts der Nachfragemacht (General Investigation of the Austrian Grocery Trade with special Consideration of the Aspect of Buying Power)

2007 Grocery retail ● Market dominance – two biggest

Austrian grocery chains (Rewe

and Spar) have a common market

share of approximately 65% in

Austria.

There have been complaints

about retailers using their buyer

and negotiation power to put

substantial pressure on their

suppliers.

9 Turkey Fast Moving Consumer Goods –

2005 FMCG retail trade

● FMCGs constitute a large part of

consumer spending.

Drastic transformation within the



29



Competitive Conditions and Policies

retail sector for FMCGs.

From the studies undertaken by other jurisdictions on the wholesale and retail trade industry, the

main focus was found to be on basic essential products.

1.6.2.2 Consumer Complaints

1.6.2.2.1 Overall

Based on the consumer complaints among the selected product categories covered in this market

review received by KPDNHEP between 2014 and early October 2019, more than 90% of the

complaints were related to F&B products, followed by clothing which received about 4% of

complaints in 2019. Between 2014 and 2019, the number of complaints recorded a CAGR of 16.9%

with steep jumps in 2015 and 2018.

The surge in consumer complaints in 2015 was mainly driven by price hike after the implementation

of GST and the misconduct of some sellers to charge GST although no receipt was provided or

there was no GST registration number stated on the receipt.

In 2018, the steep increase in consumer complaints was primarily due to no price drop during 0%

GST period and price increase after the implementation of SST.

Table 8: Consumer Complaints Received, 2014–2019

Product

Category

2014 2015 2016 2017 2018 2019*

Food &

Beverages

1,122 3,242 2,239 2,096 3,792 2,424

Personal

Care &

Toiletries

24 52 28 39 51 48

Household

Cleaning

Products

9 12 7 13 32 16

Clothing 34 47 43 77 140 109

Total 1,189 3,353 2,317 2,225 4,015 2,597

Y-o-Y

Growth in

complaints

182% -31% -4% 80% -35%

*Until October 3, 2019

Source: KPDNHEP



30

1.6.2.2.2 Food & Beverages

Within the F&B segment, the number of complaints related to food was much higher compared to

beverages. In 2019, the number of complaints saw a steep decline of 36% compared to 2018, which

saw an increase of nearly 81%. The surge in complaints in 2018 could be attributed to dissatisfaction

regarding pricing.

Figure 1: Total Number of Consumer Complaints Received, Food & Beverages, 2014–2019


Source: KPDNHEP

Among the complaints received, more than two-thirds were related to price issues, closely followed

by quality as well as fraudulent practices.

Most of the complaints received about food & beverages were related to unreasonable pricing, price

increase, non-display of prices and inconsistent food prices at eateries. Only around 3% of the

complaints were related to the retail of food & beverages in retail shops, where retailers were selling

the products above market price or did not display product price.

Table 9: Consumer Complaints Trends, Food & Beverages (2014-2019)

Item Types of Complaints Year

Total 2019* 2018 2017 2016 2015 2014

Food

Pricing 1,328 2,105 1,107 1,301 1,607 510

Quality 176 129 155 65 141 98

Choices 4 2 5 1 3 1

Availability of stock 7 3 3 6 1 3

No receipt 11 21 16 19 73 2

No refund 53 13 4 0 0 0

Fraud 99 160 90 80 277 73

Misleading advertisements 21 24 24 14 26 12

780

2,197

1,524 1,501

2,559

1,766

342

1,045

715 595

1,233

658

-

500

1,000

1,500

2,000

2,500

3,000

2014 2015 2016 2017 2018 2019*

Nu

mb

er

of

co

mp

lain

ts

Food

Beverages



31


Total 2019* 2018 2017 2016 2015 2014

Not related 67 102 97 38 69 81

TOTAL 1,766 2,559 1,501 1,524 2,197 780 10,327

Beverages

Pricing 538 726 488 336 847 215

Quality 25 76 40 68 54 54

Choices 1 0 0 1 0 0

Availability of stock 2 1 0 2 1 0

No receipt 10 18 5 6 19 0

No refund 4 3 0 0 2 1

Fraud 53 94 56 21 88 17

Misleading advertisements 14 113 113 119 169 40

Not related 11 14 13 42 53 15

Total 658 1045 715 595 1,233 342 4,588


Source: KPDNHEP

1.6.2.2.3 Household Cleaning Products

In the household cleaning product category, of the complaints received in the past five years, 58%

were on floor mop products followed by detergents (21%) and brooms (17%). During the same

period, dishwashing liquid products did not receive many complaints.

Figure 2: Total Number of Consumer Complaints Received, Household Cleaning Products, 2014–2019


Source: KPDNHEP

0

5

10

15

20

25

30

35

2014 2015 2016 2017 2018 2019*

Nu

mb

er

of

Co

mp

lain

ts

Mop

Broom

Bleach

Dishwashing Liquid

Detergent



32

As seen in the table below, most complaints about mop products were related to fraud, while pricing

was the main issue for brooms.

Table 10: Consumer Complaint Trends, Household Cleaning Products, 2014–2019


Total 2019* 2018 2017 2016 2015 2014

Detergent

Pricing

7 2

1 1

Availability of stock

1

No refund 1 2

Misleading

advertisement 1

Not related 3

TOTAL 4 10 2

2 1 19

Dishwashing

liquid

Pricing

1

TOTAL

1

1

Bleach

Pricing

1

Not related 1

TOTAL 1 1

2

Broom

Pricing 2 2

1 2 1

Quality

1

1


1

Fraud

3

Not related 1

TOTAL 3 6

2 2 2 15

MOP

Pricing 2

1

3 1


1

No refund 1 2 1 1 1

Fraud 2 4 2 2

3

Not related 3 7 7 2 4 2

Total 8 14 11 5 8 6 52


Source: KPDNHEP



33

1.6.2.2.4 Personal Care & Toiletries

In the personal care & toiletries category, the highest number of complaints was received on

shampoo products, followed by toothpaste and body wash between 2014 and 2019.

Figure 3: Total Number of Consumer Complaints Received, Personal Care & Toiletries, 2014–2019


Source: KPDNHEP

As shown in the table below, price was the leading cause of consumer complaints across all four

selected products within the personal care toiletries category.

Table 11: Consumer Complaint Trends, Personal Care & Toiletries, 2014–2019


Total 2019* 2018 2017 2016 2015 2014

Toothbrush

Pricing 6 4 1

5 4

Quality

1


1

No refund

1 1

Fraud

1

Misleading advertisement

1 1 1

Not related 1

3

Total 7 7 6 3 5 4 32

Toothpaste

Pricing 8 8 5 3 14 5

Quality

1


1

No refund 1

Fraud 2

2 1 1


1

Not related

1 1

1

4 5 3 6 7 7 6

16

5

8 10 11 4

8

4

9 11 10

10

23

16

16

23 20

0

10

20

30

40

50

60

2014 2015 2016 2017 2018 2019*

Nu

mb

er

of

co

mp

lain

ts

Shampoo

Body Wash

Toothpaste

Toothbrush



34


Total 2019* 2018 2017 2016 2015 2014

Total 11 10 8 5 16 6 56

Body wash

Pricing 5 5 4 2 7 2

Quality

1

Fraud

2

1

Misleading advertisement 1 1


Total 10 11 9 4 8 4 46

Shampoo

Pricing 8 12 4 4 15 5

Quality

1

1


1 1

No refund 1 3

Fraud 3 2 4 1 3 3

Misleading advertisement 4 1

2


Total 20 23 16 16 23 10 108


Source: KPDNHEP

1.6.2.2.5 Clothing

Following the F&B product category, clothing was the next category receiving the highest number of

consumer complaints. Based on KPDNHEP data, headscarf products received the highest number

of complaints while the school uniform category received minimal consumer complaints. Between

2014 and 2019, there was no complaint received about baby clothing.

Figure 4: Total Number of Consumer Complaints Received, Clothing, 2014–2019


Source: KPDNHEP

0

20

40

60

80

100

120

140

160

2014 2015 2016 2017 2018 2019*

Nu

mb

er

of

Co

mp

lain

ts

Head Scarf

Undergarments

School Uniform



35

Within the school uniform category, the complaints were mostly related to pricing, while for the

headscarf category, most complaints were recorded under fraud, followed by no refund and pricing.

Table 12: Consumer Complaints Trends, Clothing (2014-2019)


Total 2019* 2018 2017 2016 2015 2014

School uniform

Pricing

3 2 2 5

12

Not related 1

1

2

Total 1 3 3 2 5

14

Undergarments

Pricing 1 1

1 1

No refund

1

1

Fraud

1 2

Not related

1 2 2

Total 1 2 3 2 3 1 12

Headscarf

Pricing 6 19 2

4

Quality 2 9 4 3 2 1

Availability of stock 1 1

No receipt

1

No refund 8 1 12 8 3 3


1 4

1

Fraud 78 86 36 23 22 12

Not related 12 18 13 4 8 16

Total 107 135 71 39 39 33 424


Source: KPDNHEP

1.6.3 List of Selected Product Categories

The selection of the final list of product categories is based on the top three rankings on the

quantitative indicators and commonality between wholesale and retail trade services, which is also

crossed referenced with other jurisdiction studies. The market review focus is on basic necessities

for consumers namely, 1) processed F&B products, 2) personal care products, 3) household

cleaning products, and 4) clothing.

The following tables show the selected MSIC codes under wholesale and retail trade services for

this market review.

Table 13: Wholesale Trade MSIC Codes Covered in the Market Review


1. 46321 Wholesale of rice, other grains, flour and sugars

2. 46322 Wholesale of dairy products



36


3. 46323 Wholesale of confectionary

4. 46324 Wholesale of biscuits, cakes, breads, and other bakery products

5. 46325 Wholesale of coffee, tea, cocoa, and other

beverages

6. 46329 Wholesale of other foodstuffs

7. 46413 Wholesale of clothing

8. 46419 Wholesale of textiles, clothing n.e.c.

9. 46422 Wholesale of perfumeries, cosmetics, soap and toiletries

Table 14: Retail Trade MSIC Codes Covered in the Market Review


1 47111 Provision stores

2 47112 Supermarket

3 47113 Mini market

4 47114 Convenience stores

5 47191 Department stores

6 47192 Department stores and supermarket

7 47193 Hypermarket

8 47194 Newsagent and miscellaneous goods store

9 47199 Other retail sales in non-specialised stores n.e.c.

10 47211 Retail sale of rice, flour, other grains and sugars in specialised

stores

11 47213 Retail sale of dairy products and eggs in specialised stores

12 47216 Retail sale of bakery products and sugar confectionery in

specialised stores

13 47217 Retail sale of mee, kuey teow, mee hoon, wantan skins, and other

food products made from flour or soya in specialised stores

14 47219 Retail sale of other food products n.e.c. in specialised stores

15 47222 Retail sale of tea, coffee, soft drinks, mineral water, and other

beverages in specialised stores

16 47510 Retail sale of textiles in specialised stores



37


17 47711 Retail sale of articles of clothing, articles of fur, and clothing

accessories

18 47722 Stores specialised in the retail sale of perfumery, cosmetics, and

toilet articles

1.7 Report Outline

The draft final report contains nine chapters, including the Appendix. Chapter 1 provides an

introduction to this market review. In chapter 2, a brief overview of the Malaysian economy and

services sector is covered along with an overview of Malaysia‟s wholesale and retail trade services

industry. Chapters 3, 4, 5, and 6, a detailed market assessment of the selected products, namely

F&B, personal care & toiletries, household cleaning products, and clothing are covered. Chapter 7

looks into competition assessment, covering market concentration and potential competition

concerns in wholesale and retail trade, Chapter 8 provides preliminary recommendations to address

issues and areas of concern, and finally, Chapter 9 is the Appendix that details findings from the

industry and consumer surveys.



38

2 OVERVIEW OF THE MALAYSIAN ECONOMY AND SERVICES SECTOR

2.1 Overall Macroeconomic Trends

2.1.1 Gross Domestic Product

From an economy dominated by the production of primary natural resources, including tin and

rubber in the 1960s, Malaysia has since evolved to become one that is increasingly highly

diversified, to include robust manufacturing activities and a vibrant services sector. In 2018,

Malaysia‟s GDP stood at RM1,361.53 billion with the services and manufacturing sectors collectively

contributing to over 79%. The country‟s economy reported a 4.7% growth in 2018 amid a slowdown

in the global economy and change in government following the general election, and together with it,

new policy initiatives and reforms. In 2018, the services sector reported the highest growth of 6.8%,

followed by manufacturing at 5.0%, and construction at 4.2%. The agriculture sector saw less than

1% increase while mining and quarrying witnessed negative growth of -2.6%.3

In terms of contribution, the services sector was the highest contributor to the Malaysian economy.

In 2018, the value-added of the services sector was an estimated RM771.9 billion, contributing

56.7% to the national GDP.4

Figure 5: Contribution to GDP at Constant 2015 Prices, Malaysia, 2015–2018

Source: DOSM

3 DOSM

4 DOSM

97.5 94.0 99.4 99.5 103.1 105.4 105.8 103.1

262.4 273.9 290.5 304.8

55.4 59.5 63.5 66.2

643.9 680.6 722.6 771.9

0.0

200.0

400.0

600.0

800.0

1,000.0

1,200.0

1,400.0

2015 2016 2017e 2018p

RM

Billio

n

Agriculture Mining and quarrying Manufacturing Construction Services



39

2.1.2 Labour Indicators

Between 2016 and 2018, annual employment grew at a CAGR of 1.9% to reach 14.8 million in 2018

which is comparatively lower to GDP growth. During this period, the services sector saw the highest

growth of 2.9% in employment while the slowest growth was in the mining and quarrying sector (-

4.4%).

Figure 6: Annual Employment by Kind of Economic Activity, 2015 - 2018

Source: DOSM

In terms of types of professions, in 2018 it was estimated that 23.2% of those employed were

engaged as service and sales workers while 12.4% of them were involved in elementary

occupations and 12.3% were professionals.

Figure 7: Employed Persons by Occupation, Malaysia, 2018

Source: DOSM

1,876 1,775 1,839 1,844 79 73 73 69

2,379 2,391 2,441 2,502

1,517 1,498 1,497 1,509

8,141 8,439 8,601 8,880

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

2015 2016 2017e 2018p

An

nu

al

em

plo

yen

t ('

000)

Services

Construction

Manufacturing

Mining and quarrying

Agriculture

Managers 4.5% Professionals

12.3% Technicians

and associate

professionals 10.4%

Clerical support workers

8.4%

Service and sales workers

23.2% Skilled

agricultural, forestry, livestock

and fishery workers

6.2%

Craft and related trades

workers 10.5%

Plant and machine

operators and assemblers

12.1%

Elementary occupations

12.4%



40

2.1.3 Productivity

Overall labour productivity grew at 2.2%, reaching RM91,972 in 2018, from RM89,953 in 2017. Over

the same period, the labour market remained stable, expanding by 2.4% to reach 14.8 million

persons, mainly driven by the services sector, which constituted nearly 60% of the total jobs

created.5 The figure below shows Malaysia‟s labour productivity performance from 2014 to 2018.

Figure 8: Labour Productivity Trends, Malaysia, 2014–2018

Source: Malaysia Productivity Corporation

5 Malaysia Productivity Corporation

81,274 84,115 86,712 89,952 91,971

3.6% 3.5%

3.1%

3.7%

2.2%

2.3%

1.5% 1.3%

1.9%

2.4%

6.0%

5.1%

4.4%

5.7%

4.7%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

74,000

76,000

78,000

80,000

82,000

84,000

86,000

88,000

90,000

92,000

94,000

2014 2015 2016 2017 2018

Gro

wth

RM

Labour Productivity Labour Productivity Growth

Employment Growth GDP Growth



41

In 2018, the services sector saw the highest productivity growth of 3.5%, closely followed by the

construction sector with an increase of 3.4% and manufacturing at 2.4% growth. In terms of

productivity levels, manufacturing stood highest at RM121,841, followed by services at RM86,921

and agriculture at RM53,943, while construction had the lowest productivity level at RM43,882.6

Figure 9: Labour Productivity Growth by Key Economic Sectors, Malaysia, 2016–2019

Source: Malaysia Productivity Corporation

6 Malaysia Productivity Corporation

2

4.2 3.5

-2

0

2

4

6

8

10

12

2016 2017e 2018p

Gro

wth

(%

)

Labour Productivity Growth Agriculture

Mining and quarrying Manufacturing

Construction Services



42

2.1.4 Consumer Price Index

Malaysia‟s CPI is broken down into 12 categories, with the weightage of each category shown

below.

Figure 10: Weightage of Categories covered in Malaysia’s CPI

Source: DOSM


29.5%

Alcoholic beverages and tobacco

2.4%

Clothing and footwear 3.2%

Housing, water, electricity, gas and

other fuels 23.8% Furnishings,

household equipment and routine household

maintenance 4.1%

Health 1.9%

Transport 14.6%

Communications 4.8%


4.8%

Education 1.3%

Restaurants and hotels 2.9%


6.7%



43

The following figure displays the CPI of Malaysia and selected product group index trends from

December 2010 to December 2019. During this period, overall CPI recorded a CAGR of 2.1%, food

and non-alcoholic beverages at a CAGR of 3.1%, goods and services for routine household

maintenance at 2.5%, and personal care & toiletries at 1.5% while clothing saw a decline at -0.6%.7

Figure 11: Consumer Price Index, Malaysia, 2011–2019

Source: Frost & Sullivan analysis based on DOSM

2.1.5 Household Expenditure

Household expenditure was seen to be highest on housing, water, electricity, gas and other fuels

(24.0%), followed by food and non-alcoholic beverages.

The mean household expenditure grew at a CAGR of 6.2% between 014 and 2014 and stood at

RM4,034. The change was driven by education (14.8%), health (12.7%), and furnishings, household

equipment and routine household maintenance (10.7%) which saw double-digit growth in household

expenditure between 2014 and 2016. During the same period, expenditure on transport,

communication, and food and non-alcoholic beverages increased at a lower CAGR of 2.8%, 3.6%,

and 3.6% respectively.

7 DOSM

70

80

90

100

110

120

130

140

2010Dec

2011Dec

2012Dec

2013Dec

2014Dec

2015Dec

2016Dec

2017Dec

2018Dec

2019Dec

CPI (100%)

Food and non-alcoholic beverages index (29.5%)

Clothing (3.2%)

Goods & services for routine household maintenance (1.9%)

Personal care (3.3%)



44

Figure 12: Mean Household Expenditure Trend, Malaysia (2009/10, 2014,2016)

Source: DOSM

Table 15: Mean Household Expenditure Comparison, Malaysia (2014-2016)

No. Expenditure Group

2014 2016 Changes

between

2014 and

2016

RM % Share RM % Share

1 Food and non-alcoholic beverages 676 18.9% 726 18.0% 3.6%

2 Alcoholic beverages and tobacco 83 2.3% 98 2.4% 8.7%

3 Clothing and footwear 124 3.5% 136 3.4% 4.7%

4 Housing, water, electricity, gas and

other fuels 853 23.8% 969 24.0% 6.6%

5 Furnishings, household equipment &

routine household maintenance 137 3.8% 168 4.2% 10.7%

6 Health 59 1.6% 75 1.9% 12.7%

7 Transport 523 14.6% 553 13.7% 2.8%

444.00 676.00 726.00

495.00

853.00 969.00

327.00

523.00

553.00

239.00

454.00

540.00

190.00

266.00

312.00

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

2009/10 2014 2016

RM


Restaurants and hotels

Education


Communication

Transport

Health

Furnishings, household equipment& routine household maintenance

Housing, water, electricity, gas andother fuels

Clothing and footwear

Alcoholic beverages and tobacco




45

No. Expenditure Group

2014 2016 Changes

between

2014 and

2016

RM % Share RM % Share

8 Communication 189 5.3% 203 5.0% 3.6%

9 Recreation services and culture 174 4.9% 200 5.0% 7.2%

10 Education 41 1.1% 54 1.3% 14.8%

11 Restaurants and hotels 454 12.7% 540 13.4% 9.1%

12 Miscellaneous goods and services 266 7.4% 312 7.7% 8.3%

Total 3,579

4,034 6.2%

Source: DOSM

2.1.5.1 Share of Household Expenditure on Selected Products

The household spending on selected products covered in this market review contributed to 24.1%.

Other appliances, articles and products for personal care (2.9%), garments (2.4%), Fresh fish

(2.2%), and fresh meat (1.9%) represented the highest spending by Malaysian household in 2016.

In terms of growth, Fresh and reconstituted milk saw the highest growth, grew at CAGR of 22.9%

between 2014 and 2016 while during the same period Evaporated/condensed milk declined by 1.0%

which could indicate that households are becoming health conscious by shifting towards purchasing

fresh milk. To further strengthen this trend, it can be noted that spending on sugar was among the

top decliners and saw a decline of 5.3% while packaged Mineral water, soft drinks, fruits, and

vegetable juices saw a marginal decline during this period.

Table 16: Mean Household Expenditure on Selected Products Comparison, Malaysia (2014-2016)

Subgroups of expenditure

2016 2014 Changes (RM) (%) (RM) (%)

Group Household Expenditure 4,032.98 100.0%

3,577.60 100.0% 6.2%

0111 Rice 43.96 1.1% 42.08 1.2% 2.2%

0112 Flour and other cereals 15.28 0.4% 13.43 0.4% 6.6%

0113 Biscuits 19.99 0.5% 17.80 0.5% 6.0%

0114 Bread and bakery products 50.53 1.3% 46.48 1.3% 4.3%

0115 Other products made from cereal grains

11.62 0.3% 10.93 0.3% 3.1%

0121 Fresh meat 77.24 1.9% 76.57 2.1% 0.4%

0122 Frozen meat 10.13 0.3% 9.81 0.3% 1.6%

0123 Processed meat 16.66 0.4% 14.54 0.4% 7.0%

0131 Fresh fish 90.65 2.2% 90.09 2.5% 0.3%

0132 Fresh seafood 46.20 1.1% 40.90 1.1% 6.3%

0133 Processed fish and seafood 20.69 0.5% 19.18 0.5% 3.9%

0141 Fresh and reconstituted milk 6.74 0.2% 4.46 0.1% 22.9%



46

Subgroups of expenditure

2016 2014 Changes (RM) (%) (RM) (%)

0142 Evaporated/condensed milk 7.46 0.2% 7.60 0.2% -1.0%

0143 Milk powder and other dairy products

30.50 0.8% 30.06 0.8% 0.7%

0144 Eggs 14.47 0.4% 14.28 0.4% 0.7%

0151 Butter, fat and prepared animal oils

1.77 0.0% 1.32 0.0% 15.6%

0152 Oils 16.91 0.4% 13.70 0.4% 11.1%

0153 Margarine, peanut butter, etc. 2.84 0.1% 2.29 0.1% 11.5%

0161 Fresh fruit 35.28 0.9% 29.09 0.8% 10.1%

0162 Preserved fruit 3.18 0.1% 2.53 0.1% 12.2%

0163 Coconut and nuts 9.31 0.2% 7.07 0.2% 14.8%

0171 Fresh vegetables 71.13 1.8% 68.37 1.9% 2.0%

0172 Preserved vegetables 5.95 0.1% 5.59 0.2% 3.2%

0173 Potatoes and other tubers 7.00 0.2% 6.10 0.2% 7.1%

0181 Sugar 7.30 0.2% 8.14 0.2% -5.3%

0182 Chocolate, sweets and ice cream

12.04 0.3% 11.48 0.3% 2.4%

0183 Jam, honey, etc. 5.23 0.1% 3.58 0.1% 20.8%

0191 Spices 19.92 0.5% 15.60 0.4% 13.0%

0192 Other foods 19.70 0.5% 16.38 0.5% 9.7%

0193 Sundry goods 3.29 0.1% 3.72 0.1% -5.9%

0101 Coffee 8.35 0.2% 8.09 0.2% 1.6%

0102 Tea, cocoa, etc. 16.34 0.4% 15.84 0.4% 1.6%

0103 Mineral water, soft drinks, fruits and vegetable juices

18.68 0.5% 18.71 0.5% -0.1%

0311 Clothing materials 2.64 0.1% 2.50 0.1% 2.9%

0312 Garments 95.36 2.4% 87.86 2.5% 4.2%

0313 Other articles of clothing and clothing accessories

6.46 0.2% 5.90 0.2% 4.6%

0314 Cleaning, repair and hire of clothing

4.62 0.1% 3.88 0.1% 9.1%

0561 Non-durable household goods 39.83 1.0% 32.57 0.9% 10.6%

1213 Other appliances, articles and products for personal care

114.95 2.9% 96.80 2.7% 9.0%

Source: DOSM



47

Figure 13: Mean Household Expenditure of Selected Products, Malaysia (2014-2016)

Source: DOSM

-

20.00

40.00

60.00

80.00

100.00

120.00

140.00

Ric

e

Flo

ur

and o

ther

cere

als

Bis

cuits

Bre

ad a

nd b

akery

pro

ducts

Oth

er

pro

ducts

made f

rom

cere

al gra

ins

Fre

sh m

eat

Fro

zen

me

at

Pro

cessed m

eat

Fre

sh f

ish

Fre

sh s

eafo

od

Pro

cessed fis

h a

nd s

eafo

od

Fre

sh a

nd r

econ

stitu

ted

milk

Evapora

ted/c

ondensed m

ilk

Milk

pow

der

and o

ther

dairy p

roducts

Eg

gs

Bu

tter,

fat and p

repare

d a

nim

al oils

Oils

Ma

rgarin

e, pea

nut butter,

etc

.

Fre

sh f

ruit

Pre

serv

ed fru

it

Coconut and n

uts

Fre

sh v

ege

table

s

Pre

serv

ed v

egeta

ble

s

Po

tato

es a

nd o

ther

tubers

Su

gar

Chocola

te, sw

eets

an

d ice c

ream

Jam

, honey, etc

.

Sp

ices

Oth

er

foods

Su

ndry

goods

Coffee

Te

a, cocoa, etc

.

Min

era

l w

ate

r, s

oft d

rinks, fr

uits a

nd

veg

eta

ble

ju

ices

Clo

thin

g m

ate

rials

Garm

ents

Oth

er

art

icle

s o

f c

loth

ing

and c

loth

ing a

ccessorie

s

Cle

anin

g, re

pair a

nd h

ire o

f clo

thin

g

Non-d

ura

ble

household

goods

Oth

er

ap

plia

nces, art

icle

s a

nd p

roducts

for

pe

rsonal care

RM

2014 2016



48

2.2 Services Sector in Malaysia

2.2.1 GDP Contribution

The services sector was the highest contributor to the Malaysian economy in 2018, with the value-

added estimated at RM771.9 billion, contributing 56.7% to national GDP.8

Within this sector, wholesale and retail trade contributed close to one-third of the sector, as shown

below.9

Figure 14: Services Sub-Sectors’ Contribution to the Services Sector GDP, Malaysia, 2015–2018

Source: DOSM

8 DOSM

9 DOSM

29%

29%

29%

29%

15%

15%

15%

15%

10%

10%

10%

10%

9%

9%

9%

8%

7%

7%

7%

7%

6%

6%

6%

6%

5%

5%

5%

6%

5%

5%

5%

5%

15%

15%

14%

14%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

2015

2016

2017e

2018p

Wholesale and retail trade Government services

Information and communication Finance

Transportation and storage Food & beverage and accommodation

Business services Utilities

Others



49

As shown in the following figure, the services sector has seen higher growth than the overall national

GDP growth in the past three years, increasing at 6.8% in 2018. The wholesale and retail industry

witnessed a growth of 8.1% in 2018.10

Growth has been driven by private consumption despite

cautious spending by consumers amid continued uncertainties in business outlook and rising living

costs.

Figure 15: Overall GDP and Services Sector Growth Trends, Malaysia, 2016–2018

Source: DOSM

10 DOSM

4.4%

5.7% 4.7%

5.7%

6.2%

6.8%

6.3%

7.1%

8.1%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

2016 2017 2018

Gro

wth

%

GDP growth (Overall) Services sector growth

Wholesale and retail trade growth



50

2.2.2 Labour Indicators

Within the services sector, the WRT contributed to 27.6% of total employment in 2018. Wholesale

and retail trade provides immense job opportunities in any economy as it does not require formal

education. Between 2016 and 2018, employment in WRT grew at a CAGR of 4.8% when compared

to the overall services sector which grew at 2.9%. The faster growth can be attributed to the opening

of new stores due to the increasing demand for goods.

Figure 16: Breakdown of Employment by Services Sector, Malaysia, 2018

Source: DOSM

Utilities 1.1% Wholesale and

retail trade 27.6%

Food & beverages and accommodation

17.1%

Transportation and storage

5.9%

Information and communication

2.5%

Finance and insurance

4.1%

Real estate and business services 12.3%

Other services 29.3%



51

2.2.3 Productivity Performance

Growth in the services sector labour productivity has been driven by the wholesale and retail trade

industry, increasing at 4.8% in 2018 compared to 2.9% in 2017, followed by information and

communication at 4.5%.11

Figure 17: Services Sector Labour Productivity Growth, Malaysia, 2016–2018

Source: DOSM

Discussions with the MPC have highlighted the following challenges impacting the wholesale and

retail trade industry:

1. Workforce – High turnover mainly due to long working hours; companies are unable to attract

graduates or skilled locals, and as a result, are highly dependent on low-skilled foreign

workers.

2. Technology – SMEs employ traditional processes and may not even have POS systems; on

the contrary, large players heavily invest in technology and digitisation platforms. SMEs do

not find the need to invest in technology as they only view it as a cost and not long-term

investment.

3. Productivity/efficiency tracking – SMEs prioritise profitability and do not consider productivity

and efficiency as important considerations. They also rarely send their workers for training as

they do not believe it is necessary.

4. Participants also pointed out the lack of negotiation and business communication skills

among local graduates, prompting many companies to hire skilled foreigners instead.

11 DOSM

-2.0

0.0

2.0

4.0

6.0

8.0

10.0

2016 2017e 2018p

Services

Utilities

Wholesale and retail trade

Food & beverages andaccommodation

Transportation and storage

Information andcommunication

Finance and insurance

Real estate and businessservices

Other services

Draft Final Report: Market Review under The Competition Act 2010 for Service Sector in Malaysia (Wholesale and Retail for

Selected Products)

2.2.4 Investment Performance

The following table shows the approved private investments in the services sector in 2018 and 2019 (January to September). Between

January and September 2019, a total of 3,299 investments were approved, of which wholesale and retail trade reported the highest

approval rates, representing more than one-third of total approvals.

The wholesale and retail trade industry saw growth close to 61% in investment approvals during this period. Also, the wholesale and retail

trade industry obtained the highest foreign investment approvals, with the potential of generating more than 77% employment opportunities

in total services sector investments approved from January to September 2019,12

indicating the importance of this sub-sector to the overall

economy.

Table 17: Approved Investments in the Services Sub-Sector, Malaysia, 2018–2019

Summary Number Potential

Employment

Domestic

Investment

(RM million)

Foreign Investment

(RM million)

Total Investment

(RM million)

Services Sub-sector Jan-

Sept

2019

2018 Jan-

Sept

2019

2018 Jan-Sept

2019

2018 Jan-Sept

2019

2018 Jan-Sept

2019

2018

Global Establishments 126 204 884 2010 0 3080.1 11,677 4,378.3 11,677 7,458.4

Support Services 449 346 1,934 4,278 2,558 4,381.9 817.1 652.1 3,375.1 5,034

MSC Status 0 107 0 3,339 0 729.6 0 341.9 0 1,071.5

Transport 6 12 0 0 290.2 578.3 36.1 220.5 326.3 798.9

Real Estate 936 968 NA NA 29,730.4 45,147.5 0 2,742.4 29,730.4 47,890

Utilities NA NA 3 10 19,178.7 9,836.1 0 0 19,178.7 9,836.1

Telecommunication 234 508 NA NA 2,727.4 8,613.5 0 0 2,727.4 8,613.5

12 MIDA


Selected Products)

53

Summary Number Potential

Employment

Domestic

Investment

(RM million)

Foreign Investment

(RM million)

Total Investment

(RM million)

Wholesale and Retail

Trade

1,044 1,263 29,790 43,676 1,148.9 2,409.7 10,525.4 4,847.4 11,674.4 7,257

Hotel and Tourism 52 63 3,660 4,135 2,962.6 3,925.4 80.4 716.7 3,043 4,642.1

Financial Services 16 47 97 105 2,321.6 8,950.9 505.4 744.4 2,827 9,695.3

Health Services 5 11 275 4,374 90 1,647.2 43.4 986.2 133.4 2,633.4

Education Services 429 704 2,160 6,837 235 682.7 80.4 447.3 315.4 1,130

Other Services 2 1 60 28 0.3 10.7 40 0 40.2 10.7

Total 3,299 4,234 38,863 68,792 61,242.9 89,993.5 23,805.1 16,077.2 85,048.1 106,070.7

Source: Malaysian Investment Development Authority (MIDA)



54

2.3 Overview of the Wholesale and Retail Trade Industry

2.3.1 Number of Establishments

According to the latest WRT census published by DOSM, there were in total 468,930 establishments

in WRT as of 2018, a 26% increase from 2013. 70% of these companies were involved in retail

trade, while 17% were in wholesale trade and the remaining 13% were in motor vehicles trade.

Among these three sub-sectors, wholesale trade grew the fastest in terms of the number of

establishments, at a compound annual growth rate (CAGR) of 6.8% from 2013 to 2018. This was

followed by retail trade sub-sector, at a CAGR of 4.7% within the same period.

Figure 18: Number of Establishments in WRT, Malaysia (2013 and 2018)

CAGR 2013-18P 4.8% 6.8% 4.7% 3.3%

Source: DOSM – Preliminary Report of Wholesale and Retail Trade Census, 2019

370,725

57,050

260,664

53,011

468,930

79,334

327,209

62,387

Total Wholesale trade Retail trade Motor vehicles

2013

2018P


Malaysia (Wholesale And Retail For Selected Products)

55

More than 160,000 of these companies in WRT (35%) are located Klang Valley (Selangor and Kuala

Lumpur), followed by Johor (10%), Perak (8%), Sabah (7%), Sarawak (7%) and Penang (7%).

Figure 19: Number of Establishments in WRT by State (2018)


Within the wholesale trade sub-sector, there were 79,334 establishments as of 2018. Most of these

companies are located in Klang Valley (44%) and Johor (13%).

Figure 20: Number of Establishments in Wholesale Trade Sub-sector by State (2018)




56

In 2018, there were 327,209 companies in the retail trade sub-sector. 34% of these companies are located in Klang Valley, whereas Sabah, Johor, Perak, Sarawak, and Kelantan are each home to around 7%-9% of the companies.

Figure 21: Number of Establishments in Retail Trade Sub-sector by State (2018)


The WRT sector consists of mainly SMEs, with 80% of the establishments are micro-sized company

and 18% of them are small-sized companies. Medium and large companies only made up 1% each.

Figure 22: Breakdown of Establishments in WRT by Firm Size (2015)

Source: Frost & Sullivan‟s Analysis based on DOSM‟s Economic Census 2016 - Profile of SMEs and

Establishment Statistics

Micro 80%

Small 18%

Medium 1%

Large 1%



57

2.3.2 Employment

In 2018, close to 2 million people were engaged in the WRT of which 59% of them were engaged in

the retail trade establishments while 26% were engaged in wholesale trade. Between 2013 and

2018, the total number of persons engaged in WRT grew at a CAGR of 3.3%, mainly driven by retail

trade sub-sector which saw a CAGR of 3.5% within the same period.

On average, each wholesale trade establishment engaged around 6 to 7 persons, whereas 3 to 4

persons were engaged in a retail trade establishment.

Figure 23: Number of Persons Engaged in WRT During December or the Last Pay Period, Malaysia (2013 and 2018)

CAGR 2013-18P 3.3% 3.2% 3.5% 2.7%

Average number

of person

engaged per

establishment

(2018P)

4.3 6.5 3.6 4.9

Source: Frost & Sullivan‟s Analysis based on DOSM‟s Preliminary Report of Wholesale and Retail

Trade Census, 2019

1,700

443

989

268

1,998

519

1,173

306


2013

2018P

('000)



58

In the WRT, 74% of the persons engaged in 2018 are full-time employees. Wholesale trade sub-

sector tends to hire more full-time employees as compared retail trade sub-sector.

Figure 24: Breakdown of Persons Engaged in WRT by type of Engagement (2018)


In WRT, 10% of employed persons are non-Malaysians. The WRT ranked 8th out of 20 industries in

terms of the highest ratio of non-Malaysian employment.

Figure 25: Distribution of Employed Person in WRT by Nationality

Source: DOSM – Labour Force Survey Report 2018

20%

10%

26%

18%

74%

84%

69%

78%

5%

6%

5%

3%

TOTAL

Wholesale Trade

Retail Trade

Motor Vehicles

Working proprietors & unpaid family workers Full time employees Part time employees

Malaysian Citizen 90%

Non-Malaysian Citizen 10%



59

In 2019, in order to address the difficulties faced by the industry players, the government has lifted

the freeze on foreign worker intake in the wholesale and retail trade sector imposed since 2009.

Industry players that fulfill the following terms and conditions are now able to apply for foreign

workers13

:

i) The number of foreign workers hired is only limited to 15% of the total employment;

ii) Only supermarket premises with a floor size of more than 2,500 square metres (sqm) and

distribution/storage center are allowed to apply/hire foreign workers in this sector;

iii) Job positions that are allowed for the hiring of foreign workers are as following:

a. Shelf fillers/food processing workers for supermarket; and

b. Freight workers and storage labourers for distribution / storage center;

iv) For distribution/storage center, the hiring of foreign labours are only allowed in the wholesale

and retail business owned by the company, whether it is in owned premises or rented

premises. The hiring of foreign workers is disallowed for contractor companies or warehouse

operators; and

v) Applications must be submitted together with the company‟s exit policy of foreign workers‟

management.

13 Source: Ministry of Home Affairs (MOHA), Notis Makluman - Pengambilan Pekerja Asing dalam

Sektor Perkhidmatan Borong dan Runcit, 19 November 2019



60

2.3.3 Performance

The WRT sector generated total revenue of RM1,321.74 billion in 2018, which registered a CAGR of

8.2% since 2013. This is a faster growth rate as compared to the CAGR of 6.6% between 2008 and

2013.

In 2018, 51% of the WRT revenue was contributed by the wholesale trade sub-sector, whereas the

retail trade sub-sector contributed 37%. Nonetheless, the total revenue in the retail trade sub-sector

grew at a faster pace (9.5%) than wholesale trade (8.4%) between 2013 and 2018.

In spite of retail trade representing close to 70% of the WRT establishments, the average revenue

contribution per establishment was the lowest in WRT at RM1.51 million. On the contrary, wholesale

trade generated RM8.48 million per establishments. This can be attributed to the characteristics of

wholesale trade which deals in bulk sales as compared to retail trade.

Figure 26: Total Revenue in WRT, Malaysia (2013 and 2018)

CAGR 2013-18P 8.2% 8.4% 9.5% 3.8%

Average revenue

per establishment

(2018P)

RM2.82 mil RM8.48 mil RM1.51 mil RM2.47 mil


Trade Census, 2019

893

450

315

128

1322

672

495

154


2013

2018P

(RM billion)



61

In tandem with the revenue growth, the WRT sector experienced similar growth rate in terms of

expenditure between 2013 and2018.

Figure 27: Total Expenditure in WRT, Malaysia (2013 and 2018)

CAGR 2013-18P 8.2% 8.0% 9.9% 4.5%

Average

expenditure per

establishment

(2018P)

RM2.43 mil RM7.50 mil RM1.23 mil RM2.27 mil


Trade Census, 2019

2.3.4 Wholesale Trade

2.3.4.1 Definition14

Wholesale trade refers to the resale (sale without transformation) of new and used goods to

retailers; industrial, commercial, institutional or professional users; or to other wholesalers; or selling

merchandise to, such persons or companies.

Wholesalers frequently physically assemble, sort and grade goods in large lots; break bulk, repack

and bottle (except in air-tight containers) and redistribute in smaller lots; store, refrigerate, deliver

and install goods as well as engage in sales promotion for customers and label design.

14 Source: DOSM - Preliminary Report of Wholesale and Retail Trade Census, 2019

769

405

250

113

1,139

595

402

141


2013

2018P

(RM billion)



62

The main types of operations for the Wholesale trade are as follows:

Merchant wholesalers

Merchant wholesalers are those who take title to the goods they sell, such as wholesale merchants

or jobbers, industrial distributors, exporters, importers, terminal elevators, and co-operative buying

associations, petroleum bulk station or terminals. Assemblers, buyers and co-operative associations

engaged in the marketing of farm products, scrap metal, waste and junk dealers and yards are

included as well.

Sales offices and sales branches

Refers to establishments, other than retail stores, which are maintained by manufacturing or mining

enterprises, apart from their plants or mines, for the purpose of marketing their products and which

do not merely take orders to be filled by direct shipments from plants or mines. Such establishments

are covered if they maintain separate distributive trades‟ accounts.

Agents or brokers

Include merchandise and commodity brokers, commission merchants and agents which involve in

wholesale activities. They do not take title to the goods they sell but instead work on the basis of

commissions and fees, through buying and selling on the accounts of others.

2.3.4.2 Classification of Wholesale Trade

Wholesalers are classified into the following categories:

Wholesale on a fee or contract basis;

Wholesale of agricultural raw materials and live animals (grain, seeds, animal feeds,

flowers, plants, live animals, hides, skin, leather);

Wholesale of food, beverages, and tobacco;

Wholesale of household goods (textiles, clothing, footwear, other household goods);

Wholesale of machinery, equipment, and supplies (computers, electronics, agriculture

machinery, others);

Other specialised wholesale (gaseous fuels, metals, construction materials); and

Non-specialised wholesale trade.

Source: DOSM



63

2.3.4.3 Performance of Wholesale Trade in Malaysia

Number of Establishments

„Wholesale of household goods (textiles, clothing, footwear, other household goods)‟ represented

26% of the total number of establishments under Wholesale trade. In terms of growth, the number of

establishments under „Other specialised wholesale (gaseous fuels, metals, construction materials)‟

grew at a CAGR of 8.8% between 2013 and 2018 while Wholesale of food, beverages, and tobacco

saw modest growth of 6.8% during the same period.

Figure 28: Number of Establishments under Wholesale Trade sub-industry

Source: Preliminary findings on the Wholesale and Retail Trade Census, DOSM 2019

1,183

4,762

10,011

14,937

9,925

10,546

5,686

1,352

6,887

13,932

20,412

13,566

16,065

7,120

0 20,000 40,000


Wholesale of agricultural raw materials andlive animals

Wholesale of food, beverages and tobacco


Wholesale of machinery, equipment andsupplies


Non-specialised wholesale trade

Number of establishments

2018

2013



64

Revenue Contribution

„Other specialised wholesale‟ contributed 43.0% of revenue to wholesale trade followed by

„Wholesale of household goods‟ (17.8%) and „Wholesale of food, beverages, and tobacco‟ (16.9%).

Between 2013 and 2018, „Other specialised wholesale‟ saw the fastest CAGR growth of 10.5% while

„Wholesale of household goods‟ grew at 8.9% and „Wholesale of food, beverages and tobacco‟ grew

at a CAGR of 8.1%.

The reasons attributing to higher growth in other specialised wholesale can be due to increased

construction activities and also the comparatively higher value of products covered under this

industry.

Figure 29: Revenue Breakdown of Wholesale Trade sub-industry


9,920

41,918

76,891

78,277

54,602

175,388

12,891

14,824

47,714

113,566

119,816

70,422

288,815

17,269

0 200,000 400,000








Revenue in RM Million

2018

2013



65

Expenditure

Wholesale trade expenditure grew at a CAGR of 8.0% between 2013 and 2018. During this period,

the expenditure of „Other specialised wholesale‟ grew faster at 10.0% while „Wholesale of

agricultural raw materials and live animals‟ expenditure was the lowest at 2.1%

Figure 30: Expenditure Breakdown of WholesaleTrade sub-industry


2.3.4.4 Key Players in Wholesale Trade

Shown below are key wholesalers and distributors in Malaysia. Based on discussions with industry

participants, DKSH Malaysia is one of the most popular wholesalers in Malaysia.

No Wholesalers and Distributors Products Sold

1 DKSH Malaysia F&B, personal care & toiletries, household cleaning

products

2 Delfi Marketing F&B, personal care & toiletries, household cleaning

products

3 Kawan Food Food

4 Mydin F&B, personal care & toiletries, household cleaning

products, clothing

5 NSK Trade City F&B, personal care & toiletries, household cleaning

products

6 Segi Fresh F&B, personal care & toiletries, household cleaning

products

7 Checkers F&B, personal care & toiletries, household cleaning

6,064

39,152

70,895

69,610

48,453

159,538

11,337

9,483

43,494

104,331

103,838

61,790

257,365

14,962

0 200,000 400,000








Expenditure in RM Million

2018

2013



66

No Wholesalers and Distributors Products Sold

products

8 Econsave F&B, personal care & toiletries, household cleaning

products, clothing

Source: Frost & Sullivan analysis based on various industry sources

2.3.5 Retail Trade

2.3.5.1 Definition15

Retail trade is defined as the resale (sale without transformation) of new and used goods mainly to

the general public for personal or household consumption or utilisation. It includes selling by shops,

department stores, stalls, mail-order houses, hawkers and peddlers, consumer co-operatives, online

and etc.

The main types of operations for the Retail trade are as follows:

Retailer

Refers to individual / company engaged in selling good activities to household and personal. Most

retailers take title to the goods they sell, but some act as an agent for a principal and sell either on

consignment or on a commission basis.

Chain or branches

Chain refers to two types or more establishments engaged in sametypes of business under single

ownership and control. Chain consists of branches under the ownership and control of a head office

within Malaysia. It does not include establishments within an enterprise but registered separately

with the Registrar of Business or Registrar of Companies. Neither are international chains included

unless they have two or more branches in Malaysia. For example Seng Hup, Jaya Jusco, Courts

Mammoth and others. A branch refers to two or more establishments engaged in the same types of

business under single ownership and control with its headquarters. It is directly managed by the

headquarters for the purpose of marketing and direct shipments of its products after receiving orders

from customers.

Agents or brokers

Include merchandise and commodity brokers, commission merchants and agents which involve in

wholesale activities. They do not take title to the goods they sell but instead work on the basis of

commissions and fees, through buying and selling on the accounts of others.

2.3.5.2 Classification of Retail Trade

Retail trade is classified into the following categories:

Retail sale in non-specialised stores with food, beverages, and tobacco;

Retail sale of food, beverages, and tobacco in specialised stores;

Retail sale of automotive fuel in specialised stores;

15 Source: DOSM - Preliminary Report of Wholesale and Retail Trade Census, 2019



67

Retail sale of information and communication equipment in specialised stores (computers,

software, telecommunication);

Retail sale of other household equipment in specialised stores (textiles, hardware, paint,

glass, carpets, electrical);

Retail sale of cultural and recreation goods in specialised stores (books, music, sports,

games);

Retail sale of other goods in specialised stores (clothing, footwear, pharma, cosmetics, and

toiletries);

Retail sale via stalls and markets; and

Retail trade not in stores, stalls or markets.

Source: DOSM

2.3.5.3 Performance of Retail Trade in Malaysia

Number of Establishments

„Retail sale in non-specialised stores with food, beverages, and tobacco‟ represented 26.1% of total

establishments in 2018, followed by „Retail sale of other goods in specialised stores (clothing,

footwear, pharma, cosmetic, and toiletries)‟ (20.9%). Between 2013 and 2018, „Retail trade not in

stores, stalls or markets‟ saw the fastest growth of 12.8% CAGR. This industry represents retail

trade through e-commerce and currently only represents 2% of total establishments.

Figure 31: Number of Establishments under Retail Trade sub-industry


69,976

41,146

3,727

21,512

36,953

19,876

55,892

8,012

3,570

85,463

46,044

4,370

28,044

52,118

25,758

68,332

10,563

6,517

0 50,000 100,000

Retail sale in non-specialised stores with food,beverages and tobacco

Retail sale of food, beverages and tobacco inspecialised stores

Retail sale of automotive fuel in specialisedstores

Retail sale of information and communicationequipment in specialised stores

Retail sale of other household equipment inspecialised stores

Retail sale of cultural and recreation goods inspecialised stores

Retail sale of other goods in specialisedstores

Retail sale via stalls and markets

Retail trade not in stores, stalls or markets

Number of establishments

2018

2013



68

Revenue Contribution

Similar to the number of establishments, „Retail sale in non-specialised stores with food, beverages,

and tobacco‟ was the highest contributor to retail trade revenue at 31.5% in 2018. During 2013 and

2018, „Retail sale of other goods in specialised stores (clothing, footwear, pharma, cosmetic and

toiletries)‟ saw the highest growth in CAGR of 11.7%.

Figure 32: Revenue Breakdown of Retail Trade sub-industry


97,509

18,541

33,797

33,562

45,308

16,754

65,200

735

3,588

155,740

26,939

50,149

47,185

69,517

25,839

113,438

992

5,131

0 100,000 200,000










Revenue in RM Million

2018

2013



69

Expenditure

Retail trade expenditure grew at a CAGR of 9.9% between 2013 and 2018. During this period, the

expenditure of „Retail sale of other goods in specialised stores (clothing, footwear, pharma, cosmetic

and toiletries)‟ grew fastest at 11.3% while „Retail sale via stalls and markets‟ expenditure was the

lowest at 5.6%.

Figure 33: Expenditure Breakdown of Retail Trade sub-industry


2.3.5.4 Key Players in Retail Trade

Malaysia‟s retail trade has the presence of both local and foreign establishments. The types of

modern retail establishments prevalent in Malaysia include:

Hypermarkets: A standalone self-service distribution store with a sales floor area of 5,000 sqm or

more, selling a wide variety of mainly consumer goods, comprising a mix of food and non-food

products, in a range of transaction sizes or quantities, and different forms of packaging.

Supermarkets: A self-service shop offering a wide variety of food, beverages, and household

products, organised into sections.

Small format stores: Modern trade stores that appeal to today‟s on-the-go shopper. Small

supermarkets, mini-marts, convenience stores, and mom-and-pop stores all fall under this

category.

Mini markets: A store that sells selected food, and sometimes other goods, but it is not as big as

a supermarket or hypermarket.

Convenience stores: A small local store where you can buy food, newspapers, and daily

household items; it stays open till late or all the time.

73,180

13,084

25,425

25,889

39,247

12,824

56,828

704

3,288

121,939

21,531

39,291

38,675

58,371

19,484

97,183

924

4,982

0 100,000 200,000



Retail sale of automotive fuel in specialisedstores




Retail sale of other goods in specialisedstores



Expenditure in RM Million

2018

2013



70

Superstores: A self-service distribution store with a sales floor area of 3,000 sqm to less than

4,999 sqm retailing a wide variety of mainly consumer goods, comprising a mix of food and non-

food products.

Departmental stores: Distribution store with a sales floor area of varying sizes, usually engaged

in retailing a vast assortment of consumer goods that are departmentalised by gender, age or

lifestyle, through self-service or with sales assistance, generally under a common store

management. A departmental store may include a supermarket of not more than 2,000 sqm.

Table 18: Popular Players in the Hypermarket and Supermarket Space, Malaysia

No Name Revenue

1. GCH Retail Malaysia Sdn Bhd RM4.6 billion (2017)

2. Tesco RM4.37 billion (2018)

3. Mydin RM2.54billion (2018)

4. Village Grocer RM17.9 million (2018)

5. AEON RM4.35 billion (2018)

6. NSK RM136.7 million (2018)

7. Econsave RM17.4 million (2018)

8. AEON Big RM1.68 billion (2018)

9. Trendcell Sdn Bhd (Jaya Grocer) RM573.4 million (2017)

Source: SSM and Company Annual Reports

Table 19: Popular Players in the Mini Market Space, Malaysia

No Name Revenue

1. 99 Speedmart (East Malaysia) Sdn

Bhd

RM189.9 million (2017)

2. 99 Speedmart Sdn Bhd RM3.4 billion (2018)16

3 KK Supermart RM728.7 million (2018)

Source: SSM, Company Annual Reports, News Articles

Table 20: Popular Players in the Convenience Store Space, Malaysia

No Name Revenue

1. 7Eleven RM2.22 billion (2018)

2. Family Mart NA17

(90 stores as of March 2019)

3. MyNews.com RM393.34 million (2018)

Source: Company Annual Reports

16 Source: http://bernama.com/en/news.php?id=1709166

17 As a franchising business, each franchisee of Family Mart has registered its business separately with a

different company name. The master franchisee of Family Mart in Malaysia, QL Resources Berhad, did not disclose the revenue of Family Mart in its annual report.

http://bernama.com/en/news.php?id=1709166



71

2.3.6 Supply Chain

A supply chain is a system of organisations, people, activities, information, and resources involved in

moving a product or service from supplier to customer. Activities in a supply chain usually involve the

transformation of natural resources, raw materials, and components into a finished product before it

is delivered to the consumers.

The following table shows the key stakeholders involved in the traditional supply of selected product

categories.

Table 21: Key Stakeholders Across Supply of Selected Product Categories

Supply Chain Level Key Activities

Manufacturers (upstream)

Manufacturers are companies that make finished

products from raw materials and sell their output

to distributors, wholesalers, sourcing agents,

retailers or directly to consumers.

Distributors (midstream)

Distributors typically have a business

relationship with manufacturers that they

represent. Majority of distributors will maintain

exclusive buying agreements that limit the

number of participants or grant them the

exclusivity to cover the certain territory.

Distributors will normally buy non-competing

products or product lines, store them at their

warehouses or distribution centers. Distributors

are normally manufacturers‟ first point of contact

to customers and they usually work with

wholesalers, who will buy their stocks in large

quantities. Distributors resell them to retailers

and rarely sell directly to customers due to the

very large stocks that they deal with.

Wholesalers (midstream)

Wholesalers on the other, buy large quantities of

goods from various distributors, store them at

warehouses, and resell to retailers. Buying large

quantities typically will improve wholesalers‟

pricing and buying power. Most distributors or

manufacturers will provide discounts for a certain

quantity of products purchased.

Sourcing Agent/Agency

Sourcing agent/agency is essentially a link

between buyers (retailers) and suppliers

(manufacturers). Sourcing agents will normally

assist buyers in selecting the right suppliers,

price negotiation, following up on production,

quality control, product compliance, testing,

shipping, logistics, depending on the



72

Supply Chain Level Key Activities

agreement/reached by both suppliers and

buyers. Sourcing agents also are known to be

beneficial to suppliers/ manufacturers by guiding

them in different market operations ranging from

marketing analysis, buying decisions, content

management, buying techniques, and spending.

Retailers (downstream)

Retailers consist of large and small businesses

that sell products directly to customers that can

be either brick-and-mortar stores as well as

online. The retailer can be traditional sundry

shops or modern store formats such as

supermarkets, hypermarkets, mini markets, and

convenience stores. Generally, retailers source

their products from wholesalers/distributors with

the most competitive pricing and sell back to

customers. There are instances where retailers

could source directly from manufacturers.

Source: Frost & Sullivan, based on interaction with industry participants

The general supply chain consists of the manufacturer, distributor, wholesaler, and retailer. The

supply chain for bigger retailers like hypermarkets is shorter while for standalone mini markets, it is

longer with more than one distributor and wholesaler. The variances in the supply chain depend on

the manufacturers‟ cost structure, ability to deliver, availability of warehouse/distribution centre,

product nature (i.e., ambient chain, cold chain, frozen chain) and retailers‟ order volume. Generally,

there are two types of supply chains; direct and indirect, which consists of two to three layers of

players within the supply chain as illustrated below.

Figure 34: WRT Supply Chain (except for Clothing)




73

An indirect supply chain is the most common within the wholesale and retail trade, especially for sale

of imported products, smaller retailers, and retailers in rural areas. Indirect supply chain consists of

interaction with distributors and wholesalers, in which the distribution channel normally have varying

lengths depending on the manufacturers‟ requirements and needs, product nature

(ambient/cold/frozen), retailers‟ order volume, availability of warehouse/distribution centres, and

ability to get credit terms. Manufacturers, especially foreign participants, will usually appoint local

distributors to sell their products locally. The distributors can be pure distributors (conventional) or

logistic companies (e.g., Reckitt Benckiser appointed DHL as a distributor for some of its products)

to help manufacturers sell their products to wholesalers and retailers. Wholesalers are generally the

entity that serves small retailers, such as provisions stores, mini markets, and small sundry shops

that order in smaller quantities.

Direct supply chain, on the other hand, is a channel distribution where manufacturers have more

control over all aspects of distributions and typically have more direct interaction eliminating the

involvement of distributors and wholesalers within the channel. Most of the foreign retailers like

Tesco, Lulu and Giant, even local like 99 Speed Mart and KK Mart opt for this channel of distribution.

For this type of supply chain, both retailers and manufacturers establish an agreement (agreed

selling price at agreed quantity) prior to their engagement. The manufacturers either use their own

distribution centre or instruct appointed distributors to distribute the products to retailers' distribution

centres. Distribution prices, in this case, are generally lower than going through the conventional

distribution channel as there are fewer layers within the supply chain.

With the increasing adoption of e-commerce, there are increasing numbers of manufacturers that go

directly to customers through e-commerce platforms. In principle, the more layers in the supply

chain, the more expensive the products will be. The general trend is to cut down the layers as more

layers will squeeze profit margins.

Based on our observation and findings, the supply chain for three product categories under market

review; i.e., processed F&B, personal care & toiletries, and household cleaning products share

similar supply chain structures for both direct and indirect. Manufacturers and retailers for all three

product categories will either opt for indirect or direct distribution channels depending on the nature

of the product as well as the terms negotiated that suits their business model and strategy, as

illustrated in the figure above.

The clothing industry is an agile industry where fashion trends and market direction are evolving

constantly. The majority of manufacturers in this product category are adopting the co-creation

business model, in which manufacturers and retailers work closely with sourcing agents to gain

valuable insights to better understand the dynamic customer needs and trends. This concept allows

both manufacturers and retailers to provide customers the right product at the right time and at the

right cost. Hence, the clothing category has a slightly different structure than the general supply

chain discussed previously. Sourcing agents‟ role is to assist retailers in selecting the right suppliers,

negotiating price, following up on production, quality control, product compliance, testing, shipping,

and logistics, depending on the agreement reached by both manufacturers and retailers.



74

Figure 35: Supply Chain for Clothing


On the manufacturer side, sourcing agents usually advise manufacturers on the current trends and

demands based on market intelligence (i.e., retailers). The manufacturers then produce the products

based on requests and inputs from sourcing agents (pull demand). In return, sourcing agents work

with retailers to get the products into the market. This type of supply chain eliminates

distributors/wholesalers and is found to be more cost-effective, as depicted by the figure above.

The difference between sourcing agent and distributor is that distributor purchases product at

wholesale price and resell the products at a marked-up price. While sourcing agent, on the other

hand, will reach out to a variety of suppliers/manufacturers, source the product the retailers need,

and make a commission out of the sale transactions.

2.3.7 Rules and Regulations Governing Wholesale and Retail Trade

2.3.7.1 Key Government Stakeholders

The following table provides a brief description of the roles and responsibilities of the relevant

ministries and agencies.

Table 22: Key Government Stakeholders, Malaysia

Related Ministries and Agencies Roles and Responsibilities

1 Kementerian Perdagangan Dalam

Negeri dan Hal Ehwal Pengguna

(KPDNHEP)/Ministry of Domestic

Trade and Consumer Affairs (MDTCA)

KPDNHEP formulates policies, strategies, and

reviews matters pertaining to the development of

domestic trade, i.e., wholesale and retail trade and

consumerism sectors. The most relevant divisions

related to wholesale and retail trade services are

the:

a) Domestic Trade Division (PDN)

Regulates foreign participation in the



75


distributive trade sector in accordance with

the provisions in the Guidelines on Foreign

Participation in the Distributive Trade Sector

(Amendment) 2010;

Manages the issuance of direct selling

licences in accordance with the provisions

of the Direct Sales Act 1993;

Controls the prices of goods in accordance

with the provisions under the Price Control

Act 1946;

Regulates the supply of control items in

accordance with the provisions of the

Control of Supplies Act 1961;

Regulates the optical disc industry in accordance with the provisions of the Optical Discs Act 2000;

Regulates and improves awareness of safety issues in the petroleum industry as stipulated under the Petroleum (Safety Measures) Act 1984 and the regulations in it;

Manages applications for prospecting of crude oil under the Exclusive Economic Zone Act 1984 [Sections 21 (1) and 22];

Regulates the marketing and distribution

activities of petroleum products in the

Downstream Sector through the issuance of

the PDA licence in accordance with the

requirements of Section 6 (3) of the

Petroleum Development Act 1974;

Manages applications for weights and

measures licences in accordance with the

Weights and Measures Act 1972;

Regulates subsidised diesel distribution to

the Land Transport Sector and Passenger

Transportation Sector in Sarawak and

Sabah waters;

Controls and promotes the use of e-

commerce; and

Conducts pricing analysis studies and

analyses the cost of production of control

commodities under the Price Control Act

1946 and the Control of Supplies Act 1961.

b) Sekretariat Majlis Harga Barang Negara (MHBN)



76


MHBN, a division under KPDNHEP, was

formed on Jan 9, 2008, with the function of

setting policy relating to product pricing, to

discuss and find solutions to problems

relating to price increases, price control,

inflation, supplies, and subsidies.

The council has two primary programmes to

support its function:

1. Price Monitoring Programme – To

monitor the prices of selected products on a

daily, weekly or monthly basis. The division

is responsible for preparing analysis on

market price trends for the government‟s

reference in planning action plans and

ensuring the stability of product prices and

supplies. MHBN tracks the pricing of 432

products. This list does not cover all the

products covered; however, it is updated as

and when necessary.

160 products tracked daily.

Price updates reflected in the

system before 12pm every day

(fresh products).

200 products tracked weekly

(mostly food products that are

packaged, canned, and in

boxes).

72 products tracked monthly

(household products).

This programme is meant to be

a reference point for consumers

to make price comparisons and

plan purchases.

2. Price Uniformity (Penyeragaman)

Programme – To ensure suppliers observe

price uniformity in rural areas, especially in

Sabah, Sarawak, Langkawi, and Kelantan

for seven controlled goods (rice, sugar,

flour, cooking oil, diesel, petrol, and LPG).

c) Enforcement Division

To tackle issues of rising prices and

curb price manipulation in the country at

every stage of business through



77


enforcement of the Price Control and

Anti-Profiteering Act 2011 (AKHAP);

To enforce the Festive Season Price

Control Scheme (SKHMP) under the

Price Control and Anti-Profiteering Act

2011 to protect consumers from traders

that take advantage of the festive

season to raise prices of main

commodities;

To eradicate leakages of subsidised

control items and stabilise the supply of

essential goods by ensuring they are

readily available in the market under the

Supply Control Regulations 1974 and

the Control of Supplies Act 1961;

To investigate consumer complaints

utilising the law that is enforced to

ensure a healthy and ethical business

environment;

To eradicate unethical business

activities to protect consumers from

exploitation by traders through the Hire

Purchase Act 1967, Weights and

Measures Act 1972, Direct Selling and

Anti-Pyramid Scheme Act 1993,

Consumer Protection Act 1999, and

Trade Descriptions Act 2011, including

sale activities, door-to-door sales, hire

purchase agreements, verification of

weighing and measuring equipment,

and use of halal terms;

To issue permits for scheduled

controlled items under the Supply

Control Act 1961 for the purpose of

distribution of controlled items;

To protect intellectual property rights

under the Copyright Act 1987 for works

eligible for copyright protection,

including works of literature, film, music,

sound, art, and broadcast;

To promote good trade practices by

prohibiting false trade descriptions and

false or misleading statements in

relation to the supply of goods and



78


services under the Trade Descriptions

Act 2011;

To regulate licensing and manufacturing

of optical discs under the Optical Discs

Act 2000; and

To assist in the regulation of franchise

activities by ensuring that franchisors

and franchisees comply with the laws

stipulated under the Franchise Act

1998.

2 Ministry of Housing & Local

Government (KPKT)

KPKT formulates policies and programmes and

provides technical advice to the federal

government, state governments, and local

authorities in relation to planning, development,

implementation, and managing housing and land.

3 Ministry of Health (MOH) MOH is responsible for providing equitable,

accessible, and quality health facilities aligned with

pattern shifts in environmental health and health

technology development globally. It is also under

the MOH purview to ensure Malaysian citizens

maintain a certain level of health status.

4 Ministry of Economic Affairs (MEA) Services Industry Division under the MEA is

responsible for planning, formulation of policies,

strategies, and development programmes to

strengthen the services sector as the nation's

economic growth driver. Key Functions

Plans, formulates policies, strategies, and development programmes for the services sector;

Monitors policies, strategies, programmes, and project implementations based on KPIs/outcomes;

Evaluates, endorses, and monitors development allocations;

Reviews policies, strategies, programmes, and recommends changes; and

Carries out economic research and intelligence.

5 Ministry of International Trade and

Industry (MITI)

MITI is in charge of making Malaysia the preferred

investment destination and among the most

globally-competitive trading nations. MITI oversees

strengthening bilateral, regional, and multilateral

trade relations and cooperation to enhance national



79


productivity and competitiveness, and facilitate the

development of SMEs, among others.

Wholesale and retail trade Free trade agreement

(FTA) commitments18

:

Malaysia has made commitments to allow foreign equity of up to 70% in wholesale and retail and 30% in franchising services under the Malaysia-Pakistan FTA.

Under ASEAN Framework Agreement on Services (AFAS), commitments have been made to allow foreign equity of up to 51% for commission agents dealing in textiles, clothing, and footwear; wholesale and retail; and franchising services.

6 Ministry of Entrepreneur Development

(MED)

MED is responsible for developing an inclusive and

competitive entrepreneur development policy for

SMEs, including driving the development of B40,

M40, and social entrepreneurs.

7 Suruhanjaya Syarikat Malaysia (SSM)/

Companies Commission of Malaysia

(CCM)

SSM serves as an agency to incorporate

companies and register businesses as well as to

provide company and business information to the

public. All types of companies, both local and

foreign, are required to register their businesses

with SSM.

8 Pihak Berkuasa Tempatan (PBT) PBT (under KPKT) is responsible for creating laws

and rules (in the form of by-laws) and granting

licenses and permits for any trade-ins its area of

jurisdiction. All types of companies, both local and

foreign, are required to get licences from PBT to

operate their business.

10 Department of Statistics Malaysia

(DOSM)

DOSM, under the MEA, aims to broaden its role as

the premier agency in the field of statistics towards

establishing a quality, user-oriented, and timely

information system for the formulation of policies for

national development planning and administration.

11 SME Corp SME Corp, an agency under the MED, is the central

coordinating agency that oversees implementation

of development programmes for SMEs across all

industries, including wholesale and retail trade.

18 https://www.miti.gov.my/index.php/pages/view/4218?mid=566

https://www.miti.gov.my/index.php/pages/view/4218?mid=566



80


12 Department of Occupational Safety

and Health (DOSH)

DOSH, under the Ministry of Human Resources, is

responsible for administrating and enforcing

legislation related to occupational safety and health.

DOSH ensures that the safety, health, and welfare

of people at work and others are protected from

hazards resulting from occupational activities.

13 Food Safety and Quality Division

(FSQD), MOH

FSQD under the MOH is tasked with implementing

and enforcing the Food Act. FSQD implements an

active food safety programme, which includes

routine compliance, sampling, food premises

inspection, food import control activity, and

licensing of specified food substances required

under the Food Act 1983 and Food Regulation

1985.

FSQD also monitors specific food contaminants and

additives, implements food handler training

programmes, approves food labels, advises

industry and consumers, and provides Health

Certificates, HACCP certification, and Free Sale

Certificates.

14 National Pharmaceutical Regulatory

Agency (NPRA), MOH

NPRA under the MOH ensures the quality, efficacy,

and safety of pharmaceuticals through the

registration and licensing scheme. The agency also

looks into personal care products, such as

cosmetics.

15 Department of Islamic Development

Malaysia (JAKIM )

JAKIM is responsible for offering Halal certification.

At every stage of processing, inspection is

conducted by JAKIM to ensure that Halal standards

and quality are maintained throughout.


Selected Products)

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2.3.7.2 WRT Regulations Across the Supply Chain

Shown below are the prevailing regulations in WRT trade covering entire players in the supply chain.

Figure 36: Prevailing Regulations in WRT

Source: Frost & Sullivan Analysis



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Table below provides brief description of the act/policies related to selected product categories.

Table 23: Description of Act/Policy Related to Selected Product Categories

No Act/Policy Description Industry

1 Food Act 198319

- Food

Safety and Quality Division

(FSQD) of the Ministry of

Health (MOH) is

charged with implementing

and enforcing the law

It aims to protect the public

against food related hazards

and frauds, as well as to

promote and motivate the

preparation, handling,

distribution, sale and

consumption of safe, high

quality food.

F&B

2 Food Regulations 198520

Ministry of Health

Food Regulations 1985 is the

key supporting regulation

which governs the various

aspects of food safety and

quality control including food

standards, food additives and

nutrient supplement, food

packaging and labelling

requirements, food hygiene,

food import and export and

food advertisement for over

380 food items. The Food


(FSQD) of the MOH is

charged with the

implementation and

enforcement of the law.

All imported and locally

manufactured food, beverage

and edible agricultural

products are required to

comply with the guidelines,

and the requirements apply to

imports from all countries.

F&B

3 Malaysian Standard on Halal

Food (MS 1500:2009)

The Malaysian Standard

entitled „Halal Food:

Production, Preparation,

F&B

19 http://www.hdcglobal.com/upload-web/cms-editor-files/HDC-26/file/Act%20281%20-

%20Food%20Act%201983.pdf

20 https://extranet.who.int/nutrition/gina/sites/default/files/MYS%201985%20Food%20Regulations_0.pdf

https://extranet.who.int/nutrition/gina/sites/default/files/MYS%201985%20Food%20Regulations_0.pdf



83


Handling and Storage –

General Guide (MS

1500:2009) was developed

under the Malaysian

Standard Development

System, under the wing of

Department of Standards

Malaysia (DSM). This

standard contains practical

guidelines for the food

industry on the preparation

and handling of halal food

(including nutrient

enhancers). It aims to set the

ground rules for food

products or food businesses

in Malaysia. It will be used by

JAKIM as the basis for

certification whilst other

requirements will also be

taken into account to

complete the certification

process.

4 Halal Certification Halal certification in Malaysia

is standardised across the

country as it is governed by

JAKIM, which is the sole halal

certification body in the

country.

According to the Trade

Descriptions (Certification

and Marking of Halal) Order

2011, imported foods and

goods marketed in Malaysia

should not be described as

halal unless the imported

food and goods comply with

the requirements or certified

as halal by the foreign halal

certification body recognized

by JAKIM. As such, the

importer or manufacturer of

F&B



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the foods which have been

certified as halal by the

foreign halal certification body

recognized by JAKIM should

indicate the name of the said

certification body on the food

products. Every product with

halal certification must ensure

the halal status of the product

at every stage and at every

process involved in the

production of the product,

including logistics.

5 Price Regulation The regulations that are

enforced to determine the

unreasonably high profit for

goods or services are AKHAP

2011 and Price Control and

Anti-Profiteering (Mechanism

to Determine Unreasonably

High Profit for Goods)

Regulations 2018.

All

6 Consumer Protection Law

1999 (Act 599)

An act that is responsible

towards consumer protection

affairs through National

Consumer Advisory Council

(NCAC)

All

7 Environmental Quality

(Prohibition on the Use of

Controlled Substances in

Soap, Synthetic, Detergent

and Other Cleansing Agents)

Order 1995 & its subsequent

amendments

Policy to control industrial

pollution, including

wastewater which was not

previously regulated, air

pollution from factories, and

solid waste problems.

Household cleaning products

8 Control of Drugs and

Cosmetic Regulations

(CDCR) 1984

This standard is to ensure

that these products are safe

and non-hazardous to

consumers.

Personal care & toiletries

9 Malaysian Standard MS

2200:2008 requirements for

halal certification

The department of Islamic

development in Malaysia

(JAKIM) is the responsible




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body for regulation and

certification of halal products

including cosmetics and

personal care. Consumers

are advised to look for Halal

logo to confirm its halal to be

used.

10 Guidelines for Control of

Cosmetic Product 2017 under

National Pharmaceutical

Regulatory Agency (NPRA) -

The content of this guideline

is adapted from the ASEAN

Cosmetic Directive (ACD).

This guideline shall be read in

conjunction with the current

laws and regulations together

with other relevant

legislations, where

applicable, governing

cosmetics for human use in

Malaysia, which include but

not limited to the following:

Sale of Drugs Act 1952

Control of Drugs and Cosmetics Regulations 1984

Dangerous Drugs Act 1952

Poisons Act 1952

Medicines (Advertisement & Sale) Act 1956

Patents Act 1983

Wildlife Conservation Act 2010 (Laws of Malaysia Act 716)

International Trade in Endangered Species Act 2008 (Act 686)

Medical Device Act 2012

Trade Descriptions Act 2011


11 Guidelines on Good

Distribution Practice (GDP)

2013

This guideline lays down the

appropriate principles for

those involved in the supply

chain in conducting their




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activities while ensuring the

maintenance of high

standards of quality

assurance and integrity of the

distribution processes

12 Trade Description Act 1972 The 1972 Act provided a

unique IP enforcement tool,

known as the Trade

Description Order (TDO), for

both registered and common-

law trademark owners. The

Act also covers rules and

regulations governing labels,

fiber content and flammability

standards

Clothing

13 Trade Description Act 2011 Act prohibits false trade

descriptions and false or

misleading statements,

conduct and practices in

relation to goods or services,

thereby protecting the

interests of consumers.

Clothing

2.3.7.3 Licence and Certificate Requirements

Companies engaged in the wholesale and retail trade services industry are required to obtain

licences and certificates. The table below lists down some of the licences/ certificates applicable to

the products covered in this Market Review.

Table 24: Licences and Certificates Requirements

Licences/Certificates Description

Wholesale Retail Trade

Licence (KPDNHEP/MDTCA)

The Wholesale Retail Trade (WRT) licence is a business permit

applicable to foreign-owned companies intending to engage in

distributive trade services in Malaysia. A foreign-owned company is

a company with more than 50% of its total shares owned by non-

Malaysians. Approval for the WRT licence is awarded by the

MDTCA.

WRT licences are generally awarded to four main categories of distributive trades in Malaysia, namely:

1. Retail, Trading (Import and Export), Wholesale Trade 2. Restaurants 3. Franchises



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4. Services and Consultancy

The WRT licence issuance aims to:

1. Ensure orderly and fair development of the industry, while promoting the growth of local businesses;

2. Encourage modernisation and increase the efficiency of the industry and its continued contribution to the growth of the economy; and

3. Regulate foreign participation in the wholesale and retail trade sector in Malaysia.

Import and Export Licences

under the Ministry of

International Trade and

Industry (MITI)

The following goods in the customs prohibition of import/export

orders under the Customs Act 1967 require licences for

import/export:

1. Raw sugar 2. Other sugar 3. Wheat flour 4. Milk (for tariff codes 0401 30 110 and 2202 90 100 only).

The following goods under the Act require an export licence from

MITI:

1. Refined sugar 2. Other sugar 3. Milk and milk products (milk and cream, buttermilk,

yoghurt, whey, butter and other fats/oils, from milk, cheese and curd, malt extracts, preparation of milk for infants, condensed sweetened/unsweetened milk).

Halal Certification (JAKIM) Halal certification in Malaysia is standardised across the country as

it is governed by JAKIM, which is the sole halal certification body in

the country. This certification is required for Halal food products/

beverages, cosmetics, and personal care items, among others.

Malaysia‟s halal certification scheme is divided into the following:

1. Food products/beverages/supplements 2. Food premises/hotels 3. Consumer goods 4. Cosmetics and personal care products 5. Slaughterhouses 6. Pharmaceuticals 7. Logistics

Health Certificate – Food


(FSQD) under the Ministry of

Health (MOH)

FSQD under the MOH issues health certificates for exporters or

distributors that sell foreign products in Malaysia or oversee the

objectives of ensuring that:

1. Food items for use in the local market and exported are safe for consumption and quality;

2. Food items to be exported meet the standards set by the importing country's food laws; and

3. The certificate safeguards the reputation of the country in the capacity of the food industry.



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Guidelines for the Control of

Cosmetic Products in

Malaysia – National

Pharmaceutical Regulatory

Agency (NPRA), MOH

Guidelines for the control of cosmetic products in Malaysia revised

on February 1, 2017, serves as a reference for the notification

process, including quality control, inspection, and post-market

surveillance activities of cosmetics.

The scope of this guideline includes information relating to:

1. Submission of cosmetics notification through the NPRA Quest online system;

2. Regulatory requirements for cosmetic products; and 3. Post-market surveillance activities.

Product Testing – National

Pharmaceutical Regulatory

Agency (NPRA), MOH

Product testing is carried out by the NPRA (MOH) for notified

cosmetic products. This is to ensure that all products sold are safe,

of quality, and use claims that can be supported by adequate

supporting documents.

General – Export Certificates The export certificates are offered by the FSQD (MOH). The

certificate is offered to meet the requirements set by the importing

country. Three types of export certificates can be applied with the

MOH, namely:

1. Health certificates for food products and food contact materials;

2. Free sales certificates for food products; and 3. Non- genetically modified food certified and non-genetically

Modified Foods.

2.3.8 Pricing Trends

For the purpose of this market review, price trends of various products were compared across

different formats and states using data provided by MHBN. In 2019, a total of 272 products of FMCG

products were tracked by MHBN across 16 states and five formats namely (Kedai Runcit, Pasar

Mini, Pasar Besar, Supermart, and Hypermarket).

Out of the 272 products, though all the products were analysed, not all the products showed

significant differences (more than 10%). Around 40 products were found to have more than 10%

price difference between the highest average price and lowest average price by States/format

Instances where the prices of certain products are particularly lower or higher in one region or a

format than the rest of the market do not necessarily imply the prevalence of anti-competitive

behaviour. This is only an indication for further investigation to find out if this is affecting the industry

and/or consumer.

The table below only shows the significant differences between the highest and lowest average

prices of selected products based on the data provided.



89

Table 25: Difference in Average Prices by State and Format by Products in 2019

Product Category Products Average Price

Difference by State

Average Price

Difference by

Format

1 Rempah Ratus Rempah Sup (Tidak

Berbungkus) (100g)

44% higher at

Terengganu; lowest at

Putrajaya

40% higher at

Supermarket; lowest

at Hypermarket

2 Rempah Ratus Biji Sawi (100g) 56% higher at Sabah;

lowest at Pahang

34% higher at Kedai

Runcit; lowest at

Supermarket

3 Rempah Ratus Jintan Manis (Kasar)

(100g)

57% higher at Sabah;

lowest at Putrajaya

27% higher at Pasar

Mini; lowest at

Hypermarket

4 Rempah Ratus Buah Pala (100g) 73% higher at Perlis;

lowest at Putrajaya

25% higher at Pasar

Mini; lowest at Pasar

Basah

5 Rempah Ratus

(Berbungkus)

Garam Halus Biasa

(Pelbagai Jenama)

(±350g)


lowest at Perak

32% higher at Kedai

Runcit; lowest at

Hypermarket

6 Rempah Ratus

(Berbungkus)

Serbuk Kari Kurma

Alagappas (200g)

48% higher at

Sarawak; lowest at

Labuan

29% higher at

hypermarket; lowest

at Pasar Mini

7 Beras Beras Super Cap Jati

TWR 5% (Import)

(10kg)

49% higher at

Sarawak; lowest at

Sabah

29% higher at Pasar

Mini; lowest at Pasar

Basar

8 Beras Beras Pulut Thailand

(Biasa) Cap Floral

(1kg)

32% higher at

Terengganu; lowest at

Sarawak

20% higher at

Supermarket; lowest

at Kedai Runcit

9 Beras Beras Pulut Thailand

(Susu) Cap Sakura

(1kg)

46% higher at

Putrajaya; lowest at

Sarawak

13% higher at

Hypermarket; lowest

at Pasar Basar

10 Beras Beras Super Tempatan

(ST15%) (10kg)

37% higher at

Sarawak; lowest at

Selangor

12% higher at

Hypermarket; lowest

at Kedai Runcit

11 Bihun Bihun Kering (Cap

Jasmine) (400g)

31% higher at

Sarawak; lowest at

Sabah

Not significant

12 Bihun Bihun Kering (Cap

Bintang) (400g)

38% higher at Perlis;

lowest at Sabah

10% higher at

Hypermarket; lowest



90


Difference by State

Average Price

Difference by

Format

at Pasar Mini

13 Roti Roti Sandwich

Gardenia (400g)

31% higher at

Labuan; lowest at KL

Not significant

14 Roti Roti Gardenia

WholeMeal (400g)


lowest at Sarawak

Not significant

15 Gula Gula Merah Lembut

(Pelbagai Jenama)

(500g)

32% higher at

Labuan; lowest at

Melaka

16% higher at Pasar

Mini; lowest at

hypermarket

16 Gula Gula Halus Castor

(Pelbagai Jenama)

(500g)

23% higher at

Labuan; lowest at

Perlis

12% higher at Pasar

Mini; lowest at

hypermarket

17 Tepung Tepung Jagung (Star

Brand) (400g)

48% higher at

Labuan; lowest at

Perlis

17% higher in Kedai

Runcit; lowest in

Hypermarket

18 Tepung Tepung Beras

(Pelbagai Jenama)

(500g)

39% higher in Sabah;

lowest in Perlis

11% higher in Kedai

Runcit

19 Tepung Tepung Naik Sendiri

Cap 'MFM' (850g)

35% higher in

Labuan; lowest in

Sabah

13% higher in Pasar

Basar; lowest in

Hypermarket

20 Tepung Tepung Gandum GP

(Berbungkus) Pelbagai

Jenama (1kg)

32% higher in

Putrajaya

Not significant

21 Minyak dan lemak Minyak Jagung Cap

Mazola (2kg)

47% higher in Melaka;

lowest in Putrajaya

39% higher in

Supermarket; lowest

in Kedai Runcit

22 Minyak dan lemak Minyak Sapi Cap QBB

(400g)

26% higher in

Labuan; lowest in

Perak

19% higher in

hypermarket; lowest

in Pasar Basar

23 Minyak dan lemak Minyak Masak Campur

Cap Helang (5kg)

22% higher in

Labuan; lowest in

Melaka

9% higher in Kedai

Runcit; lowest in

Hypermarket

24 Minyak dan lemak Minyak Jagung Cap

Vecorn (2kg)

21% higher in

Labuan; lowest in

Pahang

9% higher in

Hypermarket; lowest

in Pasar Basar



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Difference by State

Average Price

Difference by

Format

25 Kicap dan sos Kicap Tamin (Dark Soy

Sauce) (330ml)

49% higher in

Labuan; lowest in

Sabah

10% higher in Pasar

Basar; lowest in Kedai

Runcit

26 Kicap dan sos Sos Cili Life (340g) 20% higher in Sabah;

lowest in Melaka

Not significant

27 Sapuan (Spreads) Lepaan Farmcows

(250g)


lowest in Pahang

14% higher in Kedai

Runcit; lowest in

hypermarket

28 Sapuan (Spreads) Lepaan Buttercup

(250g)

27% higher in

Sarawak; lowest in

Pahang

Not significant

29 Mentega Mentega SCS (Salted)

(250g)

45% higher in

Sarawak; lowest in

Labuan

10% higher in

Supermarket; lowest

in Pasar Basar

30 Penjagaan Diri Berus Gigi Oral B

(Complete Easy Clean

- Soft) (1 btg)


lowest in Perlis

13% higher in

hypermarket; lowest

in Kedai Runcit

31 Penjagaan Diri Berus Gigi Colgate

(Twister - Soft) (1 btg)

16% higher in

Selangor; lowest in

Sarawak

13% higher in

hypermarket; lowest

in Pasar Mini

32 Penjagaan Diri Berus Gigi Colgate (Zig

Zag - Soft) (1 btg)

16% higher in

Selangor; lowest in

Sarawak

Not significant

33 Penjagaan Rumah Pelembut Pakaian -

Softlan (Floral Fantasy)

(900ml)

32% higher in KL;

lowest in Labuan

12% higher in Pasar

Basar; lowest in

Hypermarket

34 Penjagaan Rumah Dynamo Power Gel

(Regular) (2kg)

22% higher in

Terengganu; lowest in

Johor

Not significant

35 Penjagaan Rumah Sabun Buku Kuat

Harimau (Pelbagai

Jenis) (150g)

22% higher in

Kelantan; lowest in

Labuan

25% higher in Pasar

Basar; lowest in

Hypermarket

36 Bahan-Bahan

Minuman

Serbuk Kopi Hang

Tuah Robusta/Liberica

(200g)

29% higher in Kedah;

lowest in Sabah

10% higher in

Hypermarket; lowest

in Supermarket



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Difference by State

Average Price

Difference by

Format

37 Bahan-Bahan

Minuman

Serbuk Kopi Cap Kapal

Api (Berbungkus)

(180g)

26% higher in

Labuan; lowest in

Pahang

Not significant

38 Tersedia Diminum Yogurt Marigold (Low

Fat) (135g)

27% higher in

Labuan; lowest in

Selangor

8% higher in Kedai

Runcit; lowest in

Hypermarket

39 Tersedia Diminum Yogurt Nestle (Fat

Free) (125g)

24% higher in

Sarawak; lowest in

Selangor

Not significant

40 Tersedia Diminum Red Bull (Botol)

(150ml)

23% higher in

Putrajaya; lowest in

Perak

24% higher in Pasar

Basar; lowest in

hypermarket

2.3.9 Industry Trends

According to the latest Malaysian Retail Industry Report published by the Malaysian Retail

Association, the third quarter of 2019 (July to September) reported the lowest growth in the retail

industry in the past year. The industry saw an increase of barely 1.8% while during the same quarter

in 2018 the industry grew at 6.7%. Low consumer confidence levels and prevailing market

uncertainties are some of the primary factors discouraging consumers from spending more. The

MIER Consumer Sentiment Index‟s third-quarter results echo these findings, indicating a decline in

the index to 84.0 points, the lowest since the fourth quarter of 2017. Contributing factors for the

latest index include the rising cost of living, stagnant purchasing power, and dim future job

prospects.

Key highlights of the Malaysian retail industry are shown below. While several hypermarkets and

supermarkets are approaching expansion plans with caution, all convenience stores are

aggressively extending their reach. A few large players have ceased operations while others are

venturing into diversification businesses and e-commerce.

Table 26: Recent Activities in Malaysian Retail Industry

Type of Activity Description

Opening of new stores Hypermarket

o NSK hypermarket to open a store in Cyberjaya by the end of 2020

Supermarket o Tesco‟s maiden supermarket opened in the Klang

Valley in 2019 following the government‟s easing of rules in 2018 allowing foreign hypermarket operators to open stores under 3,000 sqm in size

Convenience store o 7-Eleven has set a target to open up to 200 stores in



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Type of Activity Description

2019 o MyNews.com has set a goal to open up to 100 stores

in 2019 o FamilyMart entered the Malaysian market in 2016 and

is on track to expand up to 300 stores by 2022

Mini Market o KK Supermart is opening 200 stores between 2019 and

2020 o 99Speedmart has opened up to 1,000 stores as at

2017 and plans to continue its expansion

Closing down of stores

Parkson has closed several stores since 2017. In June 2019, Parkson closed its M Square Mall store in Puchong just 18 months after opening

Dairy Farm International Holdings Ltd has closed several stores in the past two years, namely Cold Storage and Giant supermarkets and hypermarkets

Acquisition In 2017, Village Grocer Group bought Ben‟s Independent

Grocer (100%). The deal allows Village Grocer to extract procurement and operational synergies to serve the growing market segment

Diversification Tesco is reducing its store size and capitalising on the

available land space to venture into property development. Current development is Tesco Ampang and another potential store for similar development is Tesco Mutiara Damansara

7-Eleven is venturing into parcel service, bill payment services for utilities, and PTPTN payments

99 Speedmart is venturing into parcel services

MyNews.com is venturing into parcel services and fresh food

E-commerce Tesco is reducing its store space and placing some of its

products on the e-commerce platform

Source: Frost & Sullivan analysis based on industry news and reports

2.3.9.1 Small Format Stores Gaining Momentum

Hypermarkets and large department stores are increasingly less favoured by Malaysian consumers

in recent years. Consumers prefer smaller grocery stores as they want to save time shopping. As a

result, the hypermarket segment has reported negative growth over the past three quarters of 2019,

leading many large players to close some of their stores. Conversely, the small format shops

segment continues to record robust growth. Big players like Giant are investing in convenience

stores, although current government regulations allow only 30% foreign participation in convenience

stores and the stores cannot exceed 1,500 sqft in size. As such Giant has partnered with Negeri

Sembilan royalty-linked Syarikat Pesaka Antah Sdn Bhd to open ShopSmart convenience stores,

with the group expecting to add 500 stores in the coming decade.



94

2.3.9.2 Growing number of convenience stores at Petrol Stations

Petrol stations such as Petronas, Shell are increasingly seen to open up more convenience stores

within their premise. Based on an industry report21

, out of 1,064 Petronas stations nationwide, there

are around 760 Mesra stores that sell confectionaries, beverages, food, and other items. The

convenience stores are however operated by the dealers and not Petronas Dagangan (PDB). To

complement Mesra store, PDB has formed alliances with franchises such as KFC, Starbucks,

Dunkin‟ Donuts, etc. as means to attract customers not only to these outlets but also to shop at

Mesra stores. <>

Similarly, there are over 360 Shell Select stores. Similar to Mesra stores, Shell SELECT retail is

operated by the petrol station operator. Currently, Shell Malaysia Trading Sdn Bhd has appointed

one contractor to look after the supply of products throughout peninsular Malaysia except for cold

chain products 22

.

2.3.9.3 E-commerce Proliferation

Although e-commerce represents a small proportion of retail sales currently, Malaysia‟s e-commerce

segment is one of the fastest-growing among Southeast Asian countries. Based on industry reports,

almost 50% of the population are online shoppers. Consumer preferences for convenience, greater

choice, and affordable prices are key factors driving the growth of e-commerce that is poised to

redefine the retail industry landscape. Government initiatives under the National Ecommerce

Strategic Roadmap, developed by MITI and MDEC, are also pivotal in increasing e-commerce

adoption. The roadmap covers six thrust areas, namely to:

1. Accelerate seller adoption of e-commerce

2. Increase adoption of e-procurement by businesses

3. Lift non-tariff barriers (e-fulfilment, cross-border, e-payment, consumer protection)\

4. Realign existing economic incentives

5. Make strategic investments in selected e-commerce player(s)

6. Promote national brand to boost cross-border e-commerce

2.3.9.4 Adoption of New Technologies Among Brick-and-Mortar Companies

Traditional retailers are working with third-party providers to offer online shopping. Such retailers

allow customers to place orders on their website or third-party mobile application, with the choice to

either, have the goods delivered at home or pick up their purchases directly from the store.

21

http://www.bursamarketplace.com/mkt/tools/research/ch=research&pg=research&ac=519511&bb=530880

22 IDI with Shell Select Retail Convenience Stores



95

2.3.9.5 Private Label Brands

Though private label brands have been around in Malaysia for a while, it remains underdeveloped.

Based on an industry report published in 2014, PLB represented 2% or lower share of the store

brand23

. As consumers become more price-sensitive and seek more value for their money, demand

for private label brands is expected to increase. Recognising this opportunity, retailers are expanding

the number of private label products under their umbrella. Private label allows them to price the

products independently, potentially gaining higher margins as they deal directly with the OEM

without any middlemen.

2.3.10 Key Findings from Interviews with Industry Players outside Kuala Lumpur

Perlis

Based on discussions with five retailers operating within the distance of 0.2 - 34 kilometres from the

border side of Perlis state, mom and pop stores are the most prominent type of format with no

existence of large-format stores.

Price: The retailers interviewed indicated that there are no price differences in products between the

border side stores to the other part of peninsular Malaysia.

Issues: Based on the IDIs with retailers, there are no specific issues prevalent in Perlis that is

affecting their businesses currently.

Trend: Retailers mentioned that the locals prefer to do their grocery shopping at the local store. This

is due to currency fluctuation and spending money outside Malaysia especially in Thailand is not

cost-effective to the local people. Furthermore, the mobility of the people from coming in and out

from the border has been difficult. The border side security has been tightened lately (since August

2019) by Malaysian Immigration thus impacting the inward and outward bound of people. They

highlighted that previously Malaysian would go to Thailand to purchase goods such as baby milk,

baby diapers, personal care & toiletries and household cleaning product. Since the stricter

enforcement is in place to check revenue losses, the movement of people cross border to purchase

goods has reduced.

Sarawak/Sabah

Based on discussions with retailers, there are three main issues faced by them in Sarawak and

Sabah. The below-mentioned issues are the main causes for price differences when compared to

Peninsular Malaysia.

1. Logistics cost: Retailers from Semenanjung that have outlets in Sabah and Sarawak

encountered restocking issues and their outlets in those areas are consistently facing out-of-

stocks issues due to local authority delays in processing their suppliers‟ shipment from

peninsular Malaysia. The local authorities in Sabah and Sarawak required that these retailers

to source their supplies from local suppliers first before they can ship their supplies from

Semenanjung Malaysia, as indicated in their licensing agreement. There are cases where

the local authorities still make it difficult for the retailers to restocks from Semenanjung, even

though there are no such suppliers available in those states.

23http://gbse.com.my/v3no7september17/Paper-115-.pdf

http://gbse.com.my/v3no7september17/Paper-115-.pdf



96

2. The smaller volume of goods: Unlike peninsular Malaysia, retailers in Sabah and Sarawak

highlighted that their volume of goods is smaller due to population size. This sometimes

affects the pricing of products in order to be profitable.

3. Minimum wages increase: Though minimum wages change affect all, retailers in Sabah/

Sarawak indicated that the impact for them seem to be higher has they are already faced

with the difficulties to finding labour and any small increase in wages affects their ability to

pay their workers and therefore hits their profitability.



97

3 MARKET ASSESSMENT FOR FOOD & BEVERAGES

3.1 Market Definition and Product Segmentation

The Malaysian F&B product categories comprise:

Cocoa and cocoa preparations

Prepared cereals and flour preparations

Processed seafood

Dairy products

Prepared and preserved vegetables and fruits

Processed meat

Sugar and sugar confectionery

Coffee

Tea

Juices and cordial drinks

Spices

Edible products and preparations

Source: MITI

3.2 Market Overview

The processed F&B segment in the country is predominantly Malaysian-owned small and mid-sized

enterprises (SMEs). Based on the Retail Group Malaysia (RGM) report, Malaysia‟s F&B retailers

generated revenue of RM106.62 billion in 2018, expecting to increase by 4% in 2019.24

Currently,

store-based retailing is a more prominent distribution channel for F&B businesses with less than 5%

of purchases made online. Industry participants expect the e-commerce industry to pick up pace as

a distribution channel in the next five years, particularly in the Klang Valley and other major cities.

Processed food trends transforming the F&B segment in Malaysia include:

Higher consumer awareness about nutritional value increasing demand for functional foods, minimally-processed fresh foods, organic, and natural food flavours from plants and seafood.

Halal products are gaining more traction globally. Malaysia, as one of the leading Halal hubs, has the potential to attract more local and foreign investments to cater to global and domestic food requirements.

Large companies are investing in automation and digitisation to improve operational and output efficiency.

Despite these opportunities, there are challenges affecting the segment, which include a fragmented

manufacturing environment, ageing infrastructure impeding productivity, and reliance on foreign low-

skilled labour. The food processing segment is estimated to account for about 10% of manufacturing

output.25

A total of 56 projects, amounting to RM1.6 billion in investments, were approved in 2018, of which

RM1.1 billion were domestic investments while the remaining were foreign ventures. Of the 56

projects, 35 were new projects while 21 were expansion/diversification projects that are expected to

24 https://www.fas.usda.gov/data/malaysia-retail-foods-annual-3

25 MIDA – Malaysia Investment Performance Report, 2018

https://www.fas.usda.gov/data/malaysia-retail-foods-annual-3



98

provide 4,660 new jobs. Production of cereals, flour-based products, and food ingredients

represented 18% of investments; followed by animal feed (13%); beverages (11%); processed fruits,

vegetables, tubers, and meat products (9%); chocolate and sugar confectioneries and food

supplements (5%); dairy products and seafood products (4%); and other food products.26

3.2.1 Key Players in the F&B Landscape

The F&B industry in Malaysia has more than 8,000 companies, predominantly local SMEs. Key

players in the industry include Nestle (Malaysia) Bhd, Mamee-Double Decker Bhd, Yeo Hiap Seng

Sdn Bhd, Fraser & Neave Bhd, Ramly Food Processing Sdn Bhd, Dewina Food Industries Sdn Bhd,

Ajinomoto (M) Bhd, Charoen Pokphand Holdings (M) Sdn Bhd, Kerry Ingredients (M) Sdn. Bhd, Hup

Seng Industries Bhd, Apollo Foods Holding Bhd, and Oriental Food Industries Holding Sdn Bhd.

26 MIDA – Malaysia Investment Performance Report, 2018



99

3.3 Pricing Analysis and Margins


3.3.1.1 Pricing Practices of Product Suppliers/Retailers

Generally, the surveyed industry players feel that price volatility of the selected products is low (i.e.

the magnitude of price difference is low), except for essential food items which 41% of the industry

players rated it as moderate and 22% rated it as high or very high. 70% of these companies claimed

that the price difference for essential food items is 6-10% and 15% said the price difference is 11-

15%.

Figure 37: Rating of Price Volatility by Product Segment - Food & Beverages

n= 254-260

Source: Frost & Sullivan Industry Survey

(Q28a. Please rate the price volatility of the following product categories:)

5%

26%

31%

33%

34%

35%

34%

34%

33%

33%

37%

31%

36%

36%

36%

37%

36%

36%

39%

39%

34%

36%

41%

37%

31%

28%

25%

26%

25%

24%

25%

28%

24%

20%

2%

3%

3%

3%

3%

5%

3%

3%

4%

3%

2% Essential food items

Frozen food

Noodles, pasta

Canned food

Baked goods

Snacks

Dairy products

Cold beverages

Confectionary

Hot beverages

Condiment

Very low (1) Low (2) Moderate (3) High (4) Very high (5)

Mean

2.83

2.15

2.05

2.01

1.98

1.96

2.02

1.96

1.98

2.04

1.93



100

3.3.1.2 Price Increases Observed by Consumers in the Past 12 Months

In the past 12 months, almost 60% of surveyed consumers in the central region have noted price

increases for essential food items, while over 50% of consumers in the southern region highlighted

price hikes for canned foods, frozen foods, and dairy products. Such price increases are typically

within 5%. In Sarawak, 57% of consumers indicated price increases of 6%–10% in canned foods.

Figure 38: Observed Price Increase by Consumers in the Past 12 Months, Malaysia (2019)

Source: Frost & Sullivan Consumer Survey

(Q17 Have you noticed any price increases for the selected items at your selected retail outlets in the

past 12 months? If yes, please specify the percentage of price increase.)

34%

27%

20%

22%

37%

35%

42%

57%

32%

22%

30%

37%

38%

29%

23%

20%

17%

14%

40%

23%

41%

35%

37%

29%

18%

52%

63%

71%

15%

17%

11%

19%

26%

18%

17%

9%

24%

18%

31%

33%

45%

57%

39%

19%

7%

0%

25%

7%

0%

Essential food items

Baked goods

Hot beverages

Cold beverages

Dairy products

Frozen food

Canned food

TOTAL

Central Region

Nothern Region

Southern Region

Eastern Region

Sarawak

Sabah



101

3.3.2 Margins Analysis

For the food & beverage category, manufacturers normally operate on low to moderate margin but in

high volume, sales to gain profitability. The margin for manufacturers range from 5-15% if the

manufacturers sell to distributors and wholesalers, and the margin could go up to 20% if the

manufacturers sell directly to retailers or even directly to consumers through e-commerce platforms.

Distributors and wholesalers margin for this category is generally set at 5% or less. Distributors and

wholesalers typically do not deal directly with customers or small purchases, hence their margins are

quite straight forward. However, there are few cases where wholesalers have a physical outlet for

customers to walk in and purchase their products in bulk purchases with wholesale prices, with the

same margin they sell to retailers

Retailers‟ margin for food & beverage is normally set below 10% depending on products and various

factors, such as lower margins for “invested line” products.

Figure 39: Price Margins for Food & Beverages Products, Malaysia

Source: IDIs and Industry Survey

To illustrate the final price paid by consumers within the indirect distribution, usually the price is

derived after adding manufacturer‟s margin, distributor‟s margin, wholesaler‟s margin and retailer‟s

margin into the manufacturing cost of a product. For example the cost of a product which takes

RM10 to manufacture, can be sold at RM13.95 after taking into consideration all the margins at

different levels.



102

In direct distribution, only the manufacturer‟s margin and retailer‟s margin are added to the cost of a

product, hence the product can be sold to the consumer at a lower price of RM12.65.

In the case when the product is sold online by the manufacturer directly to the customer, the final

sale price is estimated to be RM12.

Figure 40: Price Margins Illustration for Food & Beverages Products, Malaysia

Source: Frost & Sullivan Analysis based on input from IDIs and Industry Survey



103

4 MARKET ASSESSMENT FOR HOUSEHOLD CLEANING PRODUCTS


Household cleaning products are used to remove dirt, including dust, stains, bad odours, and clutter

on various surfaces. Household cleaning products include, but are not limited to:

Soap, organic surface-active products

Organic surface-active agents (other than soap), surface-active preparations, washing preparations, and cleaning preparations

Brooms, brushes, mops, and feather dusters

Garbage bags and other plastic articles

Source: Frost & Sullivan based on industry reports

4.2 Market Overview

Modern retail channels are becoming the preferred choice of store to purchase cleaning products,

even in Malaysia, where traditional trade is still popular for everyday shopping. Most Malaysians

purchase their household cleaning products from retail chains or hypermarkets due to their

competitive pricing and choice of products available compared to mom-and-pop stores.

Online retail platforms have to gain significant traction in Malaysia when it comes to purchasing

household cleaning products. According to Nielsen‟s Global Homecare Survey conducted in 2016,

Malaysian consumers consider effectiveness, multipurpose usage, and price as their top 3 attributes

when choosing household cleaning products.

4.2.1 Key Players in the Household Cleaning Products Landscape

According to 2016 Nielsen‟s Global Homecare Survey, efficiency and value are the topmost

attributes for Malaysian consumers when choosing home cleaning products. The household cleaning

products segment in Malaysia is highly competitive, driven by leading players such as Unilever,

Henkel, Lion Corporation, and Kao Corporation.



104




Based on the feedback received from the industry participants prices of household cleaning products

are less volatile.

Figure 41: Rating of Price Volatility by Product Segment - Household Cleaning Products

n= 217-220



30%

31%

30%

32%

32%

33%

31%

31%

31%

31%

41%

40%

42%

39%

40%

38%

41%

42%

41%

41%

28%

28%

26%

28%

28%

28%

27%

26%

27%

27%

1%

1%

1%

1%

1%

1%

Laundry cleaningdetergent

Dish detergent

Multipurpose cleaner

Floor cleaner

Kitchen cleaner

Toilet/bathroom cleaner

Mop and broom

Garbage bag

Disinfectants anddisinfectant cleaners

Glass and multi-surfaceCleaners


Mean

2.01

2.00

2.00

1.98

1.98

1.96

1.96

1.99

1.99

1.99



105

4.3.1.2 Price Increases Observed by Consumers in the Past 12 months

Most surveyed consumers did not notice any price increases for the main household cleaning

products in the last 12 months.

Figure 42: Key Household Cleaning Products by Price Increases Observed by Consumers in the Past 12 Months, Malaysia




32%

26%

23%

30%

22%

46%

29%

22%

21%

25%

21%

25%

34%

35%

26%

31%

37%

18%

33%

18%

18%

16%

17%

39%

23%

36%

20%

32%

33%

18%

24%

16%

0%

0%

0%

Laundry cleaning detergent

Dish detergent


Floor cleaner

Kitchen cleaner

TOTAL

Central Region

Nothern Region

Southern Region

Eastern Region

Sarawak

Sabah



106


Household cleaning product manufacturers normally operate on moderate to high margin ranging

between 6% up to 15% in total depending on the innovative product offerings that cater to the

growing demand for premium and natural based products. Manufacturers‟ margin to distributor and

wholesaler in this category is between 6-10%, while the margin could go up to 15% if the

manufacturers sell directly to retailers or even directly to consumers through e-commerce platforms.

For distributors and wholesalers of household cleaning products, the margin is typically below 5%.

While retailers‟ margin for this product category is typically set at 10% or less, as consumers

spending on household cleaning products is considered flexible. Customers can afford to be

economical and selective when it comes to household cleaning products and are normally price

sensitive. Hence it is quite difficult for retailers to enjoy high margins.

Figure 43: Price Margins for Household Cleaning Products, Malaysia



derived after adding the manufacturer‟s margin, distributor‟s margin, wholesaler‟s margin and

retailer‟s margin into the manufacturing cost of a product. For example the cost of a product which

takes RM10 to manufacture, can be sold at RM13.35 after taking into consideration all the margins

at different levels.





107


sale price is only RM11.50.

Figure 44: Price Margins Illustration for Household Cleaning Products, Malaysia




108

5 MARKET ASSESSMENT FOR PERSONAL CARE & TOILETRIES


Personal care & toiletries is defined as products generally used to eliminate odour or/and enhance

appearance and personality. Personal care & toiletries include, but are not limited to:

Make-up and skincare preparations

Haircare products

Oral and dental hygiene

Cosmetics and toilet preparations, including shaving, bath, and deodorant products

Soap and other body washes

Personal care brushes, e.g., nails, teeth, shaving.


5.2 Market Overview

The personal care and toiletries in Malaysia is growing rapidly alongside the increase in consumer

expenditure rate. Based on GlobalData‟s report, „Country Profile: Cosmetics & Toiletries in Malaysia‟

published in 2019, Malaysia‟s cosmetics & toiletries industry was estimated to be RM6.4billion in

201827

.

Previously, most Malaysian consumers purchased only basic personal care products, such as hair

care and bath products. Their buying habits have since changed due to higher disposable income

levels and a greater choice of products in stores. Malaysian consumers are now more sensitive and

highly conscious about the quality, the use of natural ingredients, cruelty-free, and halal grooming

brands, products, and services to suit their lifestyles and tastes. While women are the primary

customers in the personal care market, an increasing number of Malaysian men, particularly in

urban areas that are also generating strong demand for personal care products. In light of this trend,

expenditure on personal care products in Malaysia is forecast to trend upwards in the coming years.

The market for personal care products can be divided into three segments, i.e. mass market,

prestige brands market and others. Products that fall under the mass market are low to medium

price range toiletries and skincare that are sold at supermarkets, hypermarkets, pharmacies, etc.

Prestige brands, on the other hand, are products sold at beauty counters in major department

stores. Whereas, products that fall under others are those sold at specialty stores that have certain

special focus such as natural based products such as Body Shop, Origins, or specialized beauty

centers such as Dermalogica, Leonard Drake, etc. However, for the purpose of this market review,

we will be focusing on personal care & toiletries that are sold in mass markets.

Store-based retailing is the dominant distribution channel for the personal care and toiletries market

in Malaysia, primarily due to a large number of grocery retailers offering these products, including

small independent grocers and supermarkets/hypermarkets. The number of consumers buying

personal care products online, although relatively small, has registered faster sales growth at the

expense of store-based retailers. In 2018, Statista reported that Malaysia‟s revenue for personal

27 https://www.globaldata.com/malaysias-cosmetics-toiletries-industry-poised-for-modest-value-cagr-of-4-

2-over-2018-2023-says-globaldata/

https://www.globaldata.com/malaysias-cosmetics-toiletries-industry-poised-for-modest-value-cagr-of-4-2-over-2018-2023-says-globaldata/

https://www.globaldata.com/malaysias-cosmetics-toiletries-industry-poised-for-modest-value-cagr-of-4-2-over-2018-2023-says-globaldata/



109

care purchased through e-commerce channels amounted to RM1.11 billion (US$275 million),

expecting to reach RM2.43 billion (US$594) million by 2024, at a CAGR of 13.9% over the period28

.

Personal care and cosmetic products in Malaysia are required to comply with Malaysian Standards

MS 2200:2008 requirements for halal certifications. This standard is to ensure that all personal care

and cosmetic products offered in Malaysia are safe. The department of Islamic Development

Malaysia (JAKIM) is the responsible body that is in charge of regulation and certification of halal

products The Federation of Malaysian Manufacturers – Malaysian Cosmetics and Toiletries Industry

Group (FMM-MCTIG) reported that currently there are more than 50 small and medium sized local

companies producing personal care products in Malaysia.

5.2.1 Key Players in the Personal Care & Toiletries Market Landscape

While international players dominate the personal care products market in Malaysia, there is a

growing number of domestic companies, primarily pharmacy chains and specialised stores with

online websites, entering the market with the increase in local distributors. Multinational corporations

such as Procter & Gamble, DKSH, and Unilever continue to lead the beauty and personal care

market in the country. However, in recent years, local retail outlets such as Guardian and Caring

Pharmacy are offering more dermatological skincare products with a strong focus on halal and

natural products for sensitive skin.

Prominent personal care product manufacturers in Malaysia include Procter & Gamble Co., L‟Oreal

Group, Unilever Group, Colgate-Palmolive Co., Avon Products Inc., Estee Lauder Cos Inc.,

Beiersdoirf AG, Johnson & Johnson Inc., Shiseido Co Ltd, and Kao Corp.

28 Statistia outlook report on Malaysia Revenue for Personal Care 2018

https://www.statista.com/outlook/254/122/personal-care/malaysia



110




Based on the feedback received from the industry participants‟ prices of personal products are

similar to household cleaning products, less volatile.

Figure 45: Rating of Price Volatility by Product Segment - Personal Care Products

n= 220-229

(Q28a. Please rate the price volatility of the following product categories:)Source: Frost & Sullivan

Industry Survey

(Q29 How frequent does your selling price of the following product category change?)

37%

37%

38%

36%

35%

35%

34%

34%

35%

33%

33%

35%

35%

38%

37%

37%

38%

38%

36%

38%

28%

26%

26%

25%

26%

27%

26%

27%

28%

28%

2%

2%

2%

1%

1%

1%

1%

Body Soap / Shower Gel

Hand wash

Tooth paste

Tooth brush

Mouthwash

Hair Shampoo

Hair Conditioner

Deodorant

Facial wash

Lotion/Moisturiser


Mean

1.96

1.94

1.93

1.91

1.93

1.96

1.95

1.97

1.96

1.97



111

5.3.1.2 Price Increases Observed by Consumers in the Past 12 months

Most surveyed consumers did not notice any price increases for the main personal care products in

the past 12 months.

Figure 46: Key Personal Care Products by Price Increases Observed by Consumers in the Past 12 Months, Malaysia




21%

28%

33%

25%

18%

27%

31%

44%

41%

34%

20%

40%

19%

14%

33%

20%

17%

15%

7%

25%

24%

26%

5%

25%

18%

20%

37%

20%

21%

29%

36%

32%

34%

21%

33%

10%

18%

16%

11%

8%

Tooth paste

Body Soap/ Shower Gel

Hair Shampoo

Facial wash

Tooth brush

Mouthwash

TOTAL

Central Region

Nothern Region

Southern Region

Eastern Region

Sarawak

Sabah



112


Personal care products manufacturers earn a 6% to 20% margin. These manufacturers, in general,

will have their appointed long-standing distributors and wholesalers that will distribute the products to

retailers.

Distributors and wholesalers within this product category typically trade the products below a 5%

margin.

Retailers, on the other hand, will enjoy a slightly better margin than wholesalers and distributors with

up to 10% for their house brand products and lower than 10% for other products due to increased

competition with online platforms.

Figure 47: Price Margins for Personal Care Products, Malaysia



derived after adding manufacturer‟s margin, distributor‟s margin, wholesaler‟s margin and retailer‟s

margin into the manufacturing cost of a product. For example the cost of a product which takes

RM10 to manufacture, can be sold at RM14.55 after taking into consideration all the margins at

different levels.





113


sale price is only RM12.00.

Figure 48: Price Margins Illustration for Personal Care Products, Malaysia




114

6 MARKET ASSESSMENT FOR CLOTHING


Clothing is typically made of fabrics or textiles, and even include garments made from animal skin or

thin sheets of materials put together. Clothing products include, but are not limited to:

Men and boys‟ underpants, briefs, nightshirts, pyjamas

Women and girls‟ slips, petticoats, briefs, panties, nightdress, pyjamas

T-shirts, singlets

Babies‟ garments and clothing accessories

Men or boys‟ suits, jackets, blazers, trousers

Women or girls‟ suits, jackets, blazers, trousers

Men or boys‟ shirts

Women‟s or girls‟ blouses, shirts and shirt-blouses.


6.2 Market Overview

The clothing retailing market is one of the fastest-growing segments in Malaysia and characterised

by fierce competition, short life cycles, and vast product varieties. The segment is often regarded as

highly-fragmented, uncertain, fast-changing, and challenging, with a large representation of SMEs.

Malaysia‟s textile and textile products is considered to be the 13th

largest exporting industry in 2018

and was estimated to be RM12 billion with the USA being the top market for exported products.29

In

terms of investments, a total of 18 projects totalling RM851 million were approved in 2018. The 18

projects consist of primary textiles (RM398 million), specialised apparel (RM181.6 million), technical

textile (RM108.6 million), made-up garments (RM14.3 million), and textile products (RM148.5

million).

6.2.1 Key Players in the Clothing Retailing Market Landscape

In Malaysia, millennials are considered heavy consumers in clothing retailing, contributing to the

strong performance of clothing retailing channels in the country. Brand image is vital as many

Malaysians are familiar with international fashion brands, resulting in the rapid expansion of leading

fashion retailers such as Uniqlo, H&M, Cotton-On, Zara, and Mango.

29 https://www.mida.gov.my/home/textiles-and-textile-products/posts/

https://www.mida.gov.my/home/textiles-and-textile-products/posts/



115




Compared to all the products reviewed under this market review, clothing products are less volatile

indicating that the prices tend to be steadier.

Figure 49: Rating of Price Volatility by Product Segment – Clothing

n= 85-96



27%

28%

31%

39%

51%

47%

33%

39%

31%

33%

31%

30%

66%

63%

56%

49%

38%

42%

53%

50%

57%

54%

57%

61%

8%

9%

12%

11%

11%

10%

14%

10%

12%

12%

11%

9%

1%

1%

1%

1%

1%

1%

Men innerwear

Men daily clothes

Men business attire

Men sportswear

Women innerwear

Women daily clothes

Women business attire

Women sportswear

Children innerwear

Children daily clothes

Children school uniform

Children sportswear


Mean

1.81

1.81

1.84

1.73

1.60

1.66

1.81

1.72

1.81

1.81

1.82

1.79



116

6.3.1.2 Price Increases Observed by Consumers in the Past 12 Months

More than half of the surveyed consumers in the central region noticed price increases in men‟s

daily wear and business attire as well as children‟s daily wear in the past 12 months. Price increases

for both types of men‟s clothing varied greatly; although 53% of consumers in the east coast

observed 6%–10% price increases in men‟s daily wear. Prices of children‟s daily wear typically

increased by 6%–10%.

Figure 50: Key Clothing Products by Price Increases Observed by Consumers in the Past 12 Months, Malaysia




35%

37%

30%

22%

16%

36%

29%

44%

54%

52%

38%

36%

61%

45%

30%

19%

21%

14%

4%

10%

20%

28%

30%

26%

25%

4%

17%

19%

45%

53%

27%

13%

21%

31%

26%

33%

19%

11%

22%

33%

7%

6%

15%

7%

0%

Women daily clothes

Men daily clothes


Women innerwear

Men innerwear

Men business attire


TOTAL

Central Region

Nothern Region

Southern Region

Eastern Region

Sarawak

Sabah



117


Within the clothing category, there is a growing trend eliminating distributors and wholesalers and

replacing it with sourcing agents along the supply chain, due to the co-creation business model. The

observed margin for manufacturers in this product category could range from 20% up to 50%

depending on the channel used. Manufacturers expect their margin through sourcing agents to be

around 15-25% with up to 5% commission to sourcing agents and around 20-30% margin is

expected if they deal directly with retailers. Meanwhile, manufacturers‟ margin could go up to 50% if

they sell directly to consumers through e-commerce platforms.

Retailers can expect their margin to be in the range of 25-50%, with higher margin expected from

their house brands.

Sourcing agents typically work on commission basis around 1-10% from assisting both

manufacturers and retailers.

Figure 51: Price Margins for Clothing Products, Malaysia


For the clothing supply chain, a general rule for pricing of a product within the co-creation model is

by adding manufacturer‟s margin plus commission paid to sourcing agent together with retailer‟s

margin inclusive of commission paid to sourcing agents to the cost of the product. In this case, a

clothing product that cost RM10 to the manufacturer can be sold at RM19.00

For direct distribution supply chain, manufacturer‟s margin and retailer‟s margin are added to the

RM10 cost of a product, which cost the end product to the consumer of RM19.50



118

When product is sold online by the manufacturer, the final sale price is only RM15.00, even with a

50% margin.

Figure 52: Price Margins Illustration for Clothing Products, Malaysia




119

7 COMPETITION ASSESSMENT

7.1 Market Concentration

Market concentration is a measure to gauge the extent to which market shares are concentrated

between small numbers of firms. It is often taken as a proxy for the intensity of competition. If there

is a low concentration, the means that the market is not influenced by top „N‟ companies and the

industry is considered to be competitive. On the other hand, in the case of high concentration, top

companies have a major influence and have a high market share.

The Concentration Ratio (CR) and Herfindahl Index (HHI) are commonly used measures for market

concentration.

CR measures the market share of top 4 firms in an industry. CR can range between 0 10 100%

while HHI, is a measure of the size of firms in relation to the industry. It is calculated by squaring the

percentage of the market share of each firm in the market and summing these numbers to calculate

the index. The index can range from 0 to 10,000.

Figure 53: Market Concentration using CR and HHI

Source: Adapted from Corporate Finance Institute, Dinesh Bakshi, Economics Help

7.1.1 Market Concentration in Wholesale Trade Industry

Based on WRT 2014 Census data, except „Wholesale of dairy products‟ rest of the categories are

seen to have low to no concentration.

Table 27: Market Concentration in Wholesale Trade Industry by MSIC Code, Malaysia

MSIC

Code Description

Number of

Establishments HHI

Concentration

Ratio

46322 Wholesale of dairy products 96 3,883.61 CR-4=89.2%

46323 Wholesale of confectionary 182 995.93 CR-4=51.5%



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MSIC

Code Description

Number of

Establishments HHI

Concentration

Ratio

46422 Wholesale of perfumeries, cosmetics,

soap and toiletries 975 478.25 CR-4=37.3%

46324 Wholesale of biscuits, cakes, breads,

and other bakery products 648 336.76 CR-4=31.5%

46325 Wholesale of coffee, tea, cocoa, and

other beverages 720 224.09 CR-4=21.63%

46419 Wholesale of textiles, clothing n.e.c. 676 158.49 CR-4=20.4%

46321 Wholesale of rice, other grains, flour and

sugars 901 152.63 CR-4=19.1%

46413 Wholesale of clothing 2,078 137.10 CR-4=18.2%

46329 Wholesale of other foodstuffs 1,767 96.89 CR-4=14.1%

Legend

High Concentration Low Concentration No Concentration

Source: Frost & Sullivan Analysis based on DOSM, WRT Census 2014

Within Wholesale of dairy products (46322), one company holds more than 59.4% of the market

share with a HHI of 3,528.80.

Table 28: MSIC Code with High Concentration in Wholesale Trade Industry, Malaysia

MSIC Code Name of Establishment Market Share HHI

46322 Company A 59.4% 3,528.80

46322 Company B 14.5% 211.03

46322 Company C 11.0% 121.77

46322 Company D 4.2% 17.99




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7.1.2 Market Concentration in Retail Trade Industry

Based on WRT 2014 Census data, except „Retail sale of dairy products and eggs in in specialised

stores‟ and „Retail sale of tea, coffee, soft drinks, mineral water, and other beverages in in

specialised stores‟ which has high concentration rest of the categories have low to no concentration.

Table 29: Market Concentration in Retail Trade Industry by MSIC Code, Malaysia

MSIC

Code Description

Number of

Establishments HHI

Concentration

Ratio

47213 Retail sale of dairy products and eggs in

specialized stores 161 2,696 CR-4=62.7%

47222

Retail sale of tea, coffee, soft drinks,

mineral water, and other beverages in

specialized

1,094 1,765 CR-4=52.1%

47199 Other retail sales in non-specialised

stores n.e.c. 8,441 680 CR-4=29.6%

47192 Department stores and supermarket 153 556 CR-4=38.4%

47217

Retail sale of mee, kuey teow, mee

hoon, wantan skins, and other food

products made from flour or soya in

specialized stores in specialised stores

398 496 CR-4=35.8%

47114 Convenience stores 314 365 CR-4=29.1%

47191 Department stores 485 317 CR-4=29.5%

47211 Retail sale of rice, flour, other grains and

sugars in specialised stores 1,732 288 CR-4=28.2%

47216 Retail sale of bakery products and sugar

confectionery in specialised stores 2,914 243 CR-4=24.5%

47722 Stores specialised in the retail sale of perfumery, cosmetics, and toilet articles

4,947 243 CR-4=25.7%

47112 Supermarket 1,108 218 CR-4=21.8%

47193 Hypermarket 124 211 CR-4=20.0%

47219 Retail sale of other food products n.e.c. in specialised stores

4,401 148 CR-4=19.9%

47113 Mini market 5,704 129 CR-4=18.9%

47711 Retail sale of articles of clothing, articles of fur, and clothing accessories in specialised stores

13,054 77 CR-4=14.5%



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MSIC

Code Description

Number of

Establishments HHI

Concentration

Ratio

47194 Newsagent and miscellaneous goods store

365 76 CR-4=10.8%

47510 Retail sale of textiles in specialised stores

7,197 71 CR-4=13.5%

47111 Provision stores 50,187 20 CR-4=5.9%

Legend

High Concentration Low Concentration No Concentration


Within „Retail sale of dairy products and eggs in specialised stores (47213)‟ one company has 51.2%

of the market share with a HHI of 2,624.71. Within Retail sale of tea, coffee, soft drinks, mineral

water, and other beverages in specialised stores (47222) one of the company than 41.3% of the

market share with a HHI of 1,702.

Table 30: MSIC Code with High Concentration in Retail Trade Industry, Malaysia

MSIC Code Name of Establishment Market Share HHI

47213 Company A 51.2% 2,624.71

47213 Company B 4.2% 18.00

47213 Company C 4.0% 15.70

47213 Company D 3.3% 10.69

47222 Company E 41.3% 1,702.32

47222 Company F 5.0% 25.30

47222 Company G 3.8% 14.14

47222 Company H 2.0% 4.09


Notes and Limitations

1. Market concentration in this market review was calculated based on revenue data from DOSM‟s WRT census 2014.

2. The market concentration section only covers the selected 5-digit MSIC codes, which are the focus of this market review.



123

7.2 Competition Concerns in the Wholesale and Retail Trade Industry

7.2.1 Introduction

Section 4 of the Competition Act 2010 prohibits horizontal and vertical agreements between

enterprises where an agreement has the object or effect of significantly preventing, restricting or

distorting competition in any market for goods and services. For the Act, “agreement” has the

broadest meaning possible and includes any form of contract, arrangement or understanding,

decision by associations, and concerted practices. Such agreements need not be legally enforceable

to fall within the ambit of the Act. From a competition law perspective, the analysis of theories of

harm statements will highlight whether or not a particular conduct is anti-competitive.

In line with Section 4 of the Act and based on international studies, 12 theories are identified which

can affect competitors within the industry, suppliers, and/or consumer outcomes in wholesale and

retail services trade. Theories of harm can be defined as statements of harmful practices which

could decrease competition among competitors, such as hardcore cartel or abuse of market-

dominant positions or monopolisation. Analysing the theories could shed light on competition, and

ultimately how the practice can harm consumers.

For this market review, 12 possible competition concerns are studied. The following section provides

detailed description and observation in Malaysian context.

7.2.1.1 Observation in Malaysia

The following table indicates if the stated possible competition concern is observed in Malaysia

based on findings from the industry survey and other interactions.

No. Possible Competition Concern Observation in Malaysia

1 Downstream buyer power of large

supermarkets

Yes

2 Dominant Local Retail Players No

3 Price flexing Yes

4 Predatory Pricing Yes

5 Suppliers of products have market power Yes

6 Upstream producers restrict rivals' access

to essential ingredients

No

7 Collusion by firms at some level of the

supply chain

Yes

8 Collective denial of entry to newcomers No

9 Exclusive distribution Yes

10 Price fixing Yes

11 Tying products No

12 Bundling Yes

7.2.1.1.1 Level of Issue and Attention Warranted

Out of the 12 possible competition concerns that were studied, through IDIs and survey eight of the

behaviours were observed in Malaysia.



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No. Possible Competition Concern Survey questions pertaining to the

concern

1 Downstream buyer power of large

supermarkets

Q35: Large players are dominating and

influence the market

2 Dominant Local Retail Players Q37: Some competitors agree to divide or

allocate customers, suppliers or territories

among themselves rather than allowing

competitive market forces to work

3 Price flexing Q25a. Is the pricing of your products the

same across all your shops / for all your

clients?

Q37: Some companies sell the same

product at different prices to different

buyers, in order to maximize sales and

profits.

4 Predatory Pricing Q27a. Has your company sold any product

below cost price before?

Q37: Some companies are pricing their

goods/services at such a low level that

other firms cannot compete and are forced

to leave the market.

5 Suppliers of products have market power Q35: Suppliers are having higher bargaining

power than buyers

Q21a. Does your company‟s supplier

influence or control the pricing of your

products bought from them?

Q31a. Are there any clauses in the contract

detrimental to your business?

6 Upstream producers restrict rivals' access

to essential ingredients

Q37: Some parties collude to choose the

winner of a bidding process while others

submit uncompetitive bids

7 Collusion by firms at some level of the

supply chain

Q37: Some parties collude to choose the

winner of a bidding process while others

submit uncompetitive bids.

Q37: There are agreements between

competing companies, or between a

company and an individual or business, that

stipulates that they refuse to do business

with another

8 Collective denial of entry to newcomers Q37: There are obstacles or hindrances that

make it difficult to enter a given market

9 Exclusive distribution Q29. a. Do you have any exclusive

agreement with any of your

supplier/wholesaler?



125

No. Possible Competition Concern Survey questions pertaining to the

concern

Q37: A retailer or wholesaler is 'tied' to

purchase from a supplier on the

understanding that no other distributor will

be appointed or receive supplies in a given

area.

10 Price fixing Q37: Some group of businesses decides to

“fix” their prices and dissuades others to

compete

11 Tying products IDI: 25. Have you experienced selling or

purchasing any kind of tying product? What

is your view on this matter? Is there any

specific reason for this?

12 Bundling Q37: A company provides a product or

service on the condition that a customer

purchases some other product or service.

IDI: 26. Have you experience selling or

purchasing any kind bundling product?

What is your view on this matter? Is there

any specific reason for this?

Level of attention warranted is determined based on the responses reveived from the survey. As can

be seen, „downstream buyer power of large supermarkets‟ and „suppliers of product have market

power‟ were found to be the highest issue which require attention of MyCC and other stakeholders.

Table 31: Level of Attention Warranted for the Potential Anti-Competitive Concern

No. Issue Observation in Malaysia Level of Attention Warranted

1 Downstream buyer

power of large

supermarkets

83% of the respondents

agreed or strongly agreed

that large players dominate

and influence the market.

2 Suppliers of

products have

market power


indicated that „suppliers have

higher bargaining power than

buyers.

3 Bundling 74% of respondents provide

a product or service on the

condition that the customers

purchase some other

products or services.



126

4 Collusion by firms at

some level of the

supply chain


indicated that there are

agreements between

competing companies, or

between a company and an

individual or business, that

stipulates that they refuse to

do business with another.

5 Exclusive distribution

72% of the respondents cited that a retailer or wholesaler is 'tied' to purchase from a supplier on the understanding that no other distributor will be appointed or receive supplies in a given area.

6 Price Fixing 71% of the respondents agreed or strongly agreed that some group of businesses 'fix' their product prices and dissuades others to compete.

7 Price flexing 68% of respondents indicated that they agree or strongly agree that some companies within the industry sell the same product at different prices to different buyers to maximise sales and profits.

8 Selling Below Cost 65% of respondents stated that some companies in the industry price their goods/services at such a low level that other firms cannot compete and are forced to leave the market.

Source: Frost & Sullivan based on Industry Survey and In-depth Interviews with Industry Participants

Detailed Analysis of Competition and Consumer Protection

This section sets out the theories of harmful practices in wholesale and retail trade industry and

examines the implications for competition and consumers in Malaysia by drawing evidence gathered

through industry and consumer interviews and surveys.



127

7.2.1.2 Downstream Buyer Power of Large Supermarkets

7.2.1.2.1 Description of Practice

Suppliers may be forced to accept lower prices for products sold to the largest supermarkets (e.g.,

Giant and Cold Storage, Tesco, and Mydin), or risk losing exposure of its products in the territory.

The scale of some supermarkets – classified as hypermarkets in some cases – may enable them to

extract favourable terms in negotiating the cost per unit of FMCGs from suppliers or distributors.

This is especially true if the supermarket chain accounts for a large proportion of the supplier‟s

revenue in a particular territory or region.

7.2.1.2.2 Implications on Consumers and/or Competition

The high level of buyer power may pose excessive risks and costs on suppliers, and result in the

supermarket negotiating such low prices that suppliers would need to recoup the loss in profits

through an increase in prices they charge to the supermarket‟s competitors (i.e., “waterbed” effect),

leading to consumer harm. Competitors could be smaller convenience stores and traditional

retailers, which each account for a small share of the supplier‟s revenues, and therefore may not

have the countervailing buyer power to refuse higher prices. Smaller competitors could be forced out

of the market as a result, given the higher sourcing costs to the detriment of competition overall. The

UK‟s Office for Fair Trading (now the CMA) expects the waterbed effect to damage the fast-moving

consumer goods (FMCG) retail segment, reducing consumer choice and amenity.30

An alternative possibility is that the downward pressure on prices could drive some suppliers out of

business in the long term, reducing the choice of FMCGs available to consumers.

7.2.1.2.3 International Examples

In actual practice, downstream buyer power of supermarkets refers to the dominant buying power of

large supermarkets that buy in bulk quantities, and thus receive better terms from suppliers. A critical

element in considering buyer power is the proportion of the total supply of a particular product going

to one of the largest supermarket chains in the country. In most cases, retailers that sell products at

discounted prices allege that large supermarket chains would threaten their suppliers to stop

providing such products or they would stop selling the product. Such pressure may induce the

supplier to put pressure on smaller retailers, even perhaps to the extent of cancelling such supply.

One example of such a practice occurred in Australia. In 1997, the Australian Bureau of Statistics

(ABS) estimated that the three largest supermarket chains, namely, Woolworths, Coles, and

Franklins, accounted for 62% of the market share.31

In 1996, the Australian Competition and

Consumer Commission alleged that Woolworths (trading as Safeway Stores Pty Ltd) misused its

market power by stopping the sale of George Weston bread to discourage the bakery company from

supplying its bread to small retailers at discounted pricing. Woolworths‟ action succeeded in forcing

George Weston to stop supplying to small retailers at discounted prices. The Full Federal Court

30 OFT (2006), “Grocery market: The OFT's reasons for making a reference to the Competition

Commission” https://assets.publishing.service.gov.uk/media/555de47840f0b669c4000141/oft845.pdf

31 Joint Select Committee on the Retailing Sector (1999), Fair Market or Market Failure, Parliament

of the Commonwealth of Australia, Canberra.



128

concluded that Woolworths‟ action of deleting bread products from George Weston was not aimed at

obtaining the lowest prices, but rather to stop the supplier from selling cheap generic bread to keep

market prices up. In the end, Woolworths was fined USD8.9 million for breaching sections 45, 46,

and 47 of the then Trade Practices Act 1974.

7.2.1.2.4 Observation in Malaysia

Interviews with food distributors revealed that large retailers (hypermarkets/supermarkets)

tend to impose commercial conditions on distributors/suppliers. Back-margins (other

discounts/allowances, listing fees) are imposed on distributors/suppliers for promoting and

selling their products, affecting distributors‟ profit margins.

Close to 83% of the respondents agreed or strong agreed that large players are dominating

and influence the market

Over 81% of respondents indicated that they agree or strongly agree that there are a few

business groups that “fix: their product prices and dissuade others from competing.

Product Category Observation in Wholesale and Retail Trade

Food & beverages Yes

Personal care & toiletries Yes

Household cleaning products Yes

Clothing Yes

7.2.1.2.5 Mitigating Considerations

If the waterbed effect were to occur, retailers competing with big supermarkets might pass on the

higher prices to consumers. The overall impact on consumers would depend on the balance of the

waterbed effect and potentially lower prices faced by the big supermarkets‟ customers. There may

also be distributional considerations, as the demographic profiles of supermarkets and other FMCG

retailers‟ customers may differ. For example, lower prices in supermarkets may favour customers in

urban areas to the detriment of rural customers.

7.2.1.3 Dominant Local Retail Players

7.2.1.3.1 Description of Practices

Some retailers may have a position of market dominance by virtue of where the store is located.

This may allow them to charge prices in excess of what might correspond to competitive prices, or

offer inferior services (e.g., shorter opening hours). This issue may arise even though national

market share data suggests that no particular retailer having an especially large presence. Rather,

the issue is the presence of local monopolies that may restrict consumers from having a viable

alternative to using a given retailer‟s store(s) because there are no rivals nearby.

Whether a retailer is considered a local monopoly depends on the distances of alternative retailers

and the associated travel costs. They may, therefore, be more likely to have a presence in smaller

towns and rural areas, where the market is relatively small. However, it is possible for a retailer

operating a number of sites urban areas, having minimal or no presence of rival retailers.



129


A chain operating in a location devoid of competitors could exploit its position by charging higher

prices in that location than it does in locations where it faces competition. For consumers in areas

with fewer competing stores, the harm is straightforward in that they will have to pay higher prices or

make do with inferior services. Some consumers avoid using the most conveniently located store

because it is abusing its dominant position, and are willing the incur the added costs and

inconvenience of using another store in a more competitive location (assuming such stores exist).

A local monopoly could arise given the effect of proximity of outlets to consumers. Shops located

between places of work and residential areas may be conveniently located for some consumers who

spend a large proportion of their budget at them. These consumers may be considered somewhat

“trapped” if there is insufficient retailer competition in these areas.

Being a local monopoly means that a retailer may act as a “gatekeeper” to the consumers it serves.

This could give it particular buyer power in terms of suppliers wanting to reach customers in that

area. These suppliers may be forced to accept a lower price if they want to sell their products to the

retailer‟s customers. There is also the possibility of consumer harm arising from such behaviour, as

there may be FMCGs that the retailer chooses not to stock. The absence of competitors means that

the retailer does not need to worry about a fall in footfall if it fails to stock certain FMCGs.


A study conducted by the Institute for Local Self-Reliance found that Wal-Mart captures 50% or more

of grocery sales in 43 metropolitan areas and 160 smaller micropolitan markets in the US. That

translates into one in every 10 metropolitan areas and nearly one in three micropolitan areas. Under

the guidelines established by the US‟ Justice Department‟s Antitrust Division in 2010, markets in

which one corporation captures more than 50% of revenue generated in a predefined market is

classed as as “highly concentrated”. The city of Lawton, Oklahoma, is one example where Wal-Mart

exerts such dominance. There are several Wal-Mart stores in the city, but limited options beyond

Wal-Mart. Local marts and other chains are inadequate substitutes for Wal-Mart as they carry only a

narrow selection of grocery items. As a result, Wal-Mart captured approximately 71% of the

expected USD238 million grocery market recorded in Lawton city in 2018. Wal-Mart‟s near-total

market control allows it to be in a position to decide which types of groceries or brands are available

for local residents, influencing their consumption habits.


Based on interactions with industry participants, currently, there is no dominant local retail player in

Malaysia. However, based on the interactions with retailers, some manufacturers dominate the F&B

and personal care product markets but not necessarily have monopoly.


Food & beverages No

Personal care & toiletries No

Household cleaning products No

Clothing No



130

7.2.1.4 Price Flexing


Large retailers that operate in multiple locations, such as Giant and Cold Storage, Tesco, Mydin, 99

Speedmart and 7Eleven, might differentiate prices between locations. While a retailer with a single

store has to charge the same price to all its customers, a retailer with multiple stores can respond to

the competitive environment with targeted actions raising or lowering prices in just a few of its stores.

The growth of online shopping may also make it easier for retailers to engage in targeted pricing

strategies, favouring customers assessed to be most likely to switch retailer while charging higher

prices to other customers (i.e., a loyalty premium).


Price flexing could distort competition in the market.32

It may focus price competition in locations

where low-price competitors are present and reduce it in areas where competition is weak. This may

serve as a barrier to entry for new competitors that may not have the ability to cross-subsidise low

prices in one store by charging higher prices in another. Even the threat of price flexing may be

sufficient to deter new market entrants.

There may be concerns about fairness as well since consumers at some stores could benefit from

the lower prices while consumers of another store owned by the same retailer may face higher

prices for the same FMCGs.

This practice may come in the form of direct price reductions on products or through voucher

systems where spending $X in total gives the customer a discount of $Y. A practice rewarding

customers with discounts if they spend a sufficiently large sum may disadvantage traditional retailers

that specialise in selling just a subset of FMCGs. Large chains may be able to drive such firms out of

business, reducing consumer choices over retailer. This also makes entry more difficult as the option

to start as a small retailer specialising in selling a few goods and eventually expanding the range of

FMCGs, may not be possible.

Price flexing may also affect consumer perceptions about the value for money of large retailers. This

could unfairly damage the reputation of traditional retailers that have smaller product ranges, and

therefore a lower capacity to cross-subsidise across products. In the UK, smaller retailers tend to

rely disproportionately on revenue from known-value items (KVIs), whose prices tend to be more

visible to consumers than other products.33

This means that the option of recovering losses made on

one line of products through increasing the price of KVIs can be effectively ruled out.

32 OFT (2006), “Grocery market: The OFT's reasons for making a reference to the Competition

Commission”

https://assets.publishing.service.gov.uk/media/555de47840f0b669c4000141/oft845.pdf

33 KVI: A product which is high profile or well known, where price awareness among consumers may

be higher than for most products OFT (2006).

https://assets.publishing.service.gov.uk/media/555de47840f0b669c4000141/oft845.pdf



131


In Australia, a report released by the Australian Competition and Consumer Commission (ACCC) in

2008 analysed the competitiveness of retail prices for standard groceries. The report included

empirical analysis of the local store pricing of Woolworths and Coles. The report found that the local

presence of a competing supermarket, in this case, Coles or Woolworths, has a significant effect on

local pricing. The report found that in 2007, consumers shopping at a Coles store with a Woolworths

supermarket located within 1 km radius paid on average 1.36% lower than consumers shopping in a

Coles store without the presence of local competition. The report also found that the local presence

of an Aldi store (discount supermarket chain) has an even higher effect on price flexing. In 2007,

consumers shopping at a Coles store with an Aldi within 1 km radius paid on average 5.15% lower

than at a Coles store without an Aldi within 5 km radius.


Price flexing is not generally practised by retailers, but used by some suppliers.

The retailers during the IDIs indicated that the pricing of products that they sell is the same

across all their outlets. However, they reduce prices while selling products online to attract

more customers.

Large manufacturers have a systematic system to determine product pricing. They mostly

follow a tiered pricing strategy; as a result; prices need not be the same across the country.

However, 68% of respondents indicated that they agree or strongly agree that some

companies within the industry sell the same product at different prices to different buyers to

maximise sales and profits. This practice was found even through the pricing data provided

by MHBN.





Clothing Yes

7.2.1.5 Predatory Pricing


A dominant firm lowers its price and deliberately incurs losses or foregoes profits in the short term to

enable it to eliminate rivals or prevent the entry of potential rivals. This practice hinders the level of

competition in the market. Large retailers or suppliers may engage in predatory pricing behaviour.


Firms with sufficient capacity have the ability to practise predatory pricing and absorb short-term

losses. Combined with better per-unit costs of sourcing a product, which would make the per-unit

loss for the large firm smaller than for smaller incumbents or entrants, predatory pricing entails



132

lowering prices. Consumer harm could arise during periods when the large firm does not have to

engage in predatory pricing because it is able to enjoy market power. After it has engaged in

predatory pricing, the firm may increase prices once rivals have exited the market. Alternatively, just

the threat of predatory pricing may be sufficient in deterring entry.


In September 2000, Wal-Mart was charged with three counts of predatory pricing by the Wisconsin

Department of Agriculture, Trade and Consumer Protection for allegedly violating the state‟s antitrust

law. Similarly, Wal-Mart was charged by the German Cartel Office, along with two other supermarket

chains, of selling goods below cost. The complaint accused Wal-Mart of selling standard groceries

like butter, milk, laundry detergent, and other staple goods below cost at stores in selected towns.

For instance, the charge alleged that Wal-Mart sold a bottle of laundry detergent that cost USD6.51

for less than USD5 at several of its stores. The intention was to force competitors out of business,

thus gaining a monopoly in local markets which would allow it to recoup its losses by selling higher

prices later. In 2001, Wal-Mart settled the predatory pricing charge with the Wisconsin Department of

Agriculture, Trade and Consumer Protection. Wal-Mart admitted no wrongdoing and did not pay a

fine, but risks facing double or triple fines for future violations according to the terms of the

settlement.


Based on interactions with industry players, few large-scale retailers adopt this practice for

some of their product ranges known as invested lines. Similar views were aired during

discussions with MHBN, particularly relating to fresh foods, wherein some large players are

said to cap the prices of certain products, which in most cases, are below market prices.

From the survey, 6% of distributors, 2% of wholesalers and 1% of retailers mentioned that

they have sold some of their products below cost price to boost sales and to clear old / near

expiring stock.

Also, 65% of respondents stated that some companies in the industry price their

goods/services at such a low level that other firms cannot compete and are forced to leave

the market.





Clothing Yes


Predatory prices may just be a firm responding to competitors by lowering prices, suggesting a

competitive market. The role of competition authorities is to protect competition, not competitors.

Allowing a more efficient retailer to sell goods at a lower price than its rivals benefits consumers.



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Even if the lower prices represent predatory pricing rather than a deliberate strategy of below-cost

pricing, consumers can benefit. If the attempt to predate fails and the competitor(s) remain in the

market, then consumers have enjoyed a period of especially low prices without any long-term

detrimental implications.

7.2.1.6 Product Suppliers That Have Market Power


Some producers may abuse market power if they are the sole producer of a product. Also suppliers

have market power if they can change the prices of products, decrease quantity without intimating

the buyer (retailer/ distributor), or limit the number of products sold.


Given the high appetite levels for a product (or sufficiently price-inelastic demand), the producer may

exploit this situation by charging higher prices to distributors and/or retailers. They may also offer a

restricted range for the product.

It is also possible for prominent suppliers to use their market power to engage in practices like

exclusive dealing and tied selling, with detrimental exclusionary effects. For example, large suppliers

like Nestle or Proctor & Gamble may require outlets to sell new products as they are launched or

guarantee favourable shelf space for their products to the detriment of rival suppliers.


In 2015, the ACCC won a misuse of market power case against Visa. Visa had misused its market

power by banning rival currency conversion services on ATMs that use its cards. Visa was alleged to

have shut out other competitors in the currency conversion market by banning Australian retailers

from using other currency conversion systems, and refusing to allow foreign travellers in Australia

the option to pay for goods and services in their own currency. This practice was said to account for

up to 30% of Visa‟s USD17 billion annual revenue.


Some retailers revealed that a few large manufacturers control the prices of products sold to

consumers. These manufacturers do not allow retailers to sell their products beyond the

stipulated pricing, even if the retailer has to undertake a temporary loss. The agreement also

dictates the quantity the retailer has to purchase from such manufacturers.

Some manufacturers have a verbal agreement with the retailer to fix a promotion price for

the retailer to qualify for the promotion subsidy. In such instances, the retailer is not allowed

to sell the selected products below the agreed price, or else it will not be entitled to the

subsidy.

Based on interactions with retailers, contracts with a few large F&B manufacturers indicated a certain percentage of their products to be displayed and sold by retailers; the larger the retail set up, the higher the percentage.

For some products, especially international branded goods (clothing/cosmetics), suppliers

normally impose the quantity that can be purchased. The quantity mentioned in the contract

increases every year in most circumstances.



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Discussions with the MHBN revealed that they have observed groups that have influence

over the market prices of certain products. These players are usually middlemen along the

value chain.

On the industry survey, 83% of the respondents indicated that „suppliers have higher

bargaining power than buyers.

Over 72% of companies agree or strongly agree with the statement about there being

agreements between a manufacturer and wholesaler/distributor/retailer not to sell a product

below a specified price.





Clothing Common in international branded products


Competition is dynamic, not static, so temporary market power may not be a disadvantage.

Consumers could benefit from innovation and new products coming into the market. While for

producers, the ability to earn profits is a significant incentive to innovate and key rationale for

patenting inventions. Consequently, allowing a supplier to charge higher prices for a patented or

newly-launched product may be in consumers‟ long-term interests. This argument may be relatively

more important for FMCGs produced specifically for the Malaysian market. To the extent that the

product under consideration is produced by a multinational operating in many markets, the profits

available from setting high prices in Malaysia may not be enough to spur investment in R&D.

7.2.1.7 Upstream Producers that Restrict Rivals’ Access to Essential Ingredients


The F&B processing market, and to some extent, personal care product and toiletries manufacturing

could experience sub-optimal competition in upstream markets as these FMCGs need to source

ingredients and foodstuffs for their goods. The entity sourcing (or even producing) these materials

and selling them to distributors or retailers could command excessive power over firms downstream

in the production chain.


A large-scale sourcing/producing entity may be the only viable source for processors requiring large

quantities of ingredients. This may give sourcers/producers a degree of monopoly power over

processors, allowing them to charge high prices.



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Where there is vertical integration, such that the entity with the only viable source of materials is also

a processor, there is scope for market foreclosure. Market foreclosure or vertical foreclosure is the

production limitation put on a producing organisation, if either it is denied access to a supplier (an

upstream foreclosure) or denied access to a downstream buyer. Large-scale sourcing entities may

choose to disadvantage rival processors, including ones that are more efficient. The competition

between processors could ultimately not benefit consumers.

The extent to which consumers are harmed by absorbing passed-on higher prices depends on the

contribution of ingredients to the final product. Personal care products typically comprise several

disparate ingredients, some of which may be purchased from a monopsony middle-man; whereas in

the case of foodstuffs the item sourced may be identical to one finally purchased by the consumer

(and so the consumer feels the full effect of the higher sourcing cost).


In December 1998, the US Federal Trade Commission (FTC) charged Mylan (the country‟s second-

largest generic drugmaker) with the restraint of trade, monopolisation, and conspiracy to monopolise

the drug-making market. The charge concerned two generic drugs used to treat anxiety – lorazepam

and clorazepate – through exclusive dealing arrangements. Mylan was charged with conspiring with

other parties to deny its competitors access to essential ingredients to manufacture the anti-anxiety

drugs. The conspiracy involved a 10-year exclusive supply agreement for the essential ingredients

between Mylan and the suppliers in which the suppliers would have received a percentage of profits

from drug sales. In the end, FTC successfully stopped implementation of the exclusive agreement

and approved a US$100 million settlement with Mylan.


Based on industry interactions to date, currently, no players impose any restrictions, directly or

indirectly on their rivals‟ access to essential ingredients.


Food & beverages No



Clothing No

7.2.1.8 Collusion by Firms at Some Level of the Supply Chain


Firms may agree not to compete on certain aspects, such as the prices they charge or quantities

they supply to the market. A simple form of collusion would be to agree on the prices to be charged.

In other cases, the suppliers may agree to segment the market (e.g., geographically), only serving

specific parts of the country and not competing for market share elsewhere.

Such collusion could occur at any stage of the supply chain, although it is more likely to happen in

instances where there are relatively few firms, the products are broadly similar, monitoring rivals‟



136

behaviour (e.g. pricing decisions) is straightforward, and it is possible to “punish” firms that deviate

from the collusive agreement. Firms can monitor prices by subscribing to price-monitoring services

that provide pricing information in real-time, and allow users to announce planned price changes.

Inter-firm agreements can be maintained either through decisive agreements or without

communication, such as through a mutual understanding of what could happen if one of them were

to renege on the implicit agreement. The latter would constitute tacit collusion. Collusion may also

occur where a “market leader” sets a price which rival firms follow, perhaps settling on a price high

enough that even the least efficient firm in the market is able to earn a profit. Announcements about

price changes ahead of time may help ensure that rival firms are not caught off guard and have time

to change their prices.


Collusion (tacit or otherwise) could result in higher prices than under open competition. Wherever

the collusion occurs in the supply chain, it is expected to ultimately feed through, at least partially, to

consumers in the form of higher prices. Collusion could also discourage industry participants from

innovating, adversely impacting consumers in terms of less variety.

The higher prices in a collusive setting may also allow the continued survival of inefficient firms that

would otherwise have exited the market.


UK‟s Office of Fair Trading (OFT) launched a price-fixing investigation in 2002 and 2003 on the

groceries retail sector. In its investigation, OFT found that the UK‟s biggest supermarket chains and

dairy companies violated the country‟s competition law by fixing the prices of milk, cheese, and

butter. The companies were found coordinating among themselves to increase the retail prices of

certain dairy products. The OFT reported that customers were being charged 15p extra for a quarter

pound of butter, 15p extra for a half-pound of cheese, and 3p extra for a pint of milk. This action was

estimated to have cost consumers about £270 million. The case was closed in 2011 and the OFT

found three infringements committed by parties and imposed penalties totalling £49.51 million.


Industry participants commented that the current wholesale and retail industry in Malaysia offers a

level playing field, and they do not need to collude with other firms to distort the market.

However, about 75% of surveyed companies agreed that some parties do collude to choose the

winner of a bidding process while others submit uncompetitive bids. Also in the survey, 72% of the

respondents indicated that there are agreements between competing companies, or between a

company and an individual or business, that stipulates that they refuse to do business with another.



Personal care products Yes


Clothing Yes



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7.2.1.9 Collective Denial of Entry to Newcomers


Firms may work collectively to deny market entry to potential rivals. For example, essential

infrastructure for production may be controlled by the colluding firms that can refuse to allocate it to

newcomers. Vertically integrated FMCG producers/distributors may agree to distribute only their own

products and refuse to distribute FMCGs supplied by other producers. The new entrant would thus

need to develop its own distribution network, which may be prohibitively expensive.


Lack of access to crucial resources or infrastructure could hamper the ability of potential competitors

to enter and compete effectively. This may result in higher prices as inefficient producers may be

able to keep out more efficient producers. Consumers may also have fewer products to choose from,

and in the longer term, the benefits from innovation will be less due to the muted competitive

incentives to innovate.


In 2004, the Finnish Competition Authority (FCA) filed an infringement fine of EUR1 million to

regional telecommunication company, L nnen Puhelin Inc., for abusing its dominant position in the

broadband services market. L nnen Puhelin has been the sole provider of broadband connections in

the region with more than 90% market share. The FCA reported that L nnen Puhelin had breached

the Competition Act by refusing to grant new players with access to the regional network and

favouring its service providers by charging higher fees to competitors. The price bias made it difficult

for competitors to gain access to the consumer broadband services market.


As Malaysia is a relatively free market, there are currently no practices preventing the entry of

newcomers into the market. In the past, however to some extent, when foreign hypermarkets

entered Malaysia, there were some entry barriers pertaining to the financial strengths of these

players, the presence of an effective and well-managed supply chain, technological innovation, and

wider retail experiences. However, in recent years this trend is shifting due to the active participation

of local players such as Econsave, NSK, and Checkers.


Food & beverages No



Clothing No



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7.2.1.10 Exclusive Distribution


A large distributor may be able to extract exclusive supply rights from a supplier/producer in a

particular territory or region. This includes the possibility that imported FMCGs are exclusively

supplied to a single distributor (possibly a vertically integrated retailer/distributor). Such

arrangements may be an attractive option for smaller suppliers that see it as a way of guaranteeing

a certain level of demand for their products, especially if the distributor‟s total demand for the product

exceeds the production capacity of an individual supplier. A distributor that can secure such terms

with multiple suppliers in a given area may put itself in a monopsony position in the area, and

effectively lock potential competitors out of the market for sourcing the product in that area.

On the other hand, a supplier may require that only one distributor can hold the rights to resell its

product. This could amount to a form of vertical integration in substance rather than name, since the

exclusivity terms may extend to limiting the extent to which the distributor can sell the product in

other territories.


The consequences of exclusive distribution for consumers could conceptually affect both product

prices and availability in different territories. A supplier limiting the ability of a distributor to sell the

product in other territories would mean the product is more difficult to obtain for customers in these

territories (although there may be supplier-distributor pair of competitors carrying out the same

practice in those territories). The distributor that can purchase all the produce of a supplier may be

able to resell the product in the territory at a large mark-up to consumers.


In the case of Microsoft and Netscape, the manufacturers of browser software, Internet Explorer and

Navigator respectively, have exclusive dealings with computer manufacturers and Internet access

providers considered as a form of anti-competitive conduct. Their exclusive dealings require

foreclosure of a sufficient share of distribution to rivals for a significant time so that what remains to

serve their competitors cannot support a manufacturer of minimum efficient scale forcing the

manufacturer‟s rivals to operate at a considerable cost disadvantage for an extended period. This

exclusivity could force existing competitors to withdraw and/or prevent the entry of new

manufacturing competitors until sufficient distribution becomes available again.


Industry players interviewed indicated that some large retailers have exclusive distribution

agreements for a few products, particularly, international brands

From the survey, 72% of the respondents cited that they agreed or strongly agreed that a retailer or

wholesaler is 'tied' to purchase from a supplier on the understanding that no other distributor will be

appointed or receive supplies in a given area.





139



Clothing Yes

7.2.1.11 Price Fixing

7.2.1.11.1 Description of practice

Big supplier companies (e.g., Nestle, Proctor & Gamble, Coca-Cola, and Unilever in the FMCGs

segment) may prohibit resellers/redistributors from independently pricing their products. They can

force their distributors to sell their products at a price no lower than the specified minimum price.

Distributors that discount the products lower than the minimum price may be penalised by these

suppliers. The practice prohibits resellers from independently pricing the given products, thus

restricting competition in that product segment.

Big companies also use this pricing strategy for "loss leader selling" activities. In other words, they

sell some products at a loss to attract customers to buy other products at regular prices.


Price fixing (or resale price maintenance) by large supplier companies may be harmful as it

eliminates intra-brand competition among distributors and manufacturers if the product is sold at a

loss, and lowers economic efficiency. The implications of stemming competition can be viewed as

predatory pricing, as it harms consumers over the long term via higher prices.

Moreover, if the given product has fewer substitutes in the market, this practice may severely limit

consumer choice in the market, decreasing consumer welfare.


In China, most industry associations are quasi-governmental and serve as forums through which

member companies coordinate their activities; in some cases, they even coordinate price-fixing

among them. This kind of anti-competitive behaviour involving industry association is rampant in

China and a salient issue under the Anti-Monopoly Law (AML). In September 2017, China‟s National

Development and Reform Commission (NDRC) issued penalties to three Chinese chemical

manufacturers worth a total of USD5.3 million for their involvement in price-fixing of polyvinyl

chloride (PVC) when the three attended the Western China PVC association conference.


Though from the interviews, none of the players mentioned about price fixing practice, from the

survey it was found that close to 71% of the respondents agreed or strongly agreed that some group

of businesses 'fix' their product prices and dissuades others to compete.






140


Clothing Yes

7.2.1.12 Tied Selling Products


A supplier may make the sale of one product (the tying product) to a distributor/retailer conditional

upon the distributor also purchasing another product (the tied product). If the tying is not justified by

the nature of the product or commercial usage (e.g., complementary products, such as a pestle and

mortar, if both are not already sold together), this practice could represent an abuse of the supplier‟s

dominant position.


Tying two products typically benefits the consumer, given that both products are often consumed

together.34

However, the harm to consumers resulting from this practice is when the tying supplier is

dominant, and the practice is not justified by efficiencies.

Tying reduces the number of potential customers available for its competitors in the market of the

tied product. This could cause existing competitors to become marginalised or exit from the market

altogether and create a barrier for potential entrants. This could allow the supplier to extract higher

profits from the sale of the tied product, the costs of which to the distributors are passed to

consumers as higher prices.

Tying can also result in adverse consumer outcomes if they are forced to buy additional products

they do not need. This could either be direct, e.g., by including mandatory services or products to the

main one the consumers are interested in, or indirect, by having the auto-inclusion of certain

products which consumers need to explicitly opt out.


In December 2018, China‟s State Administration for Market Regulation (SAMR) issued an

infringement decision to Hunan Er-Kang Medical Operation and Henan Jiushi Pharmaceutical with a

total fine of CNY10.04 million for abusing their dominance in the supply of chlorpheniramine active

pharmaceutical ingredients (API) in China. The parties were said to have abused the anti-

competition act by engaging in the tied selling activity by requiring downstream purchasers of

chlorpheniramine API to also purchase starch capsules, medical sugar cane, and other medical

supplements from them when there was no direct relation in the usage of those supplements with

chlorpheniramine API. The tied selling was found to restrict the downstream purchasers‟ right to

choice in the market as they were forced to buy the items even when there is no need for them as

compared to buying the said supplements separately when required. In this case, Hunan Er-Kang

and Henan Jiushi breached Article 17(5) of the AML for imposing tied selling requirements without

objective reasons.

34 CompTIA (2006), „Competition, Competitors, and Consumer Welfare‟

https://ec.europa.eu/competition/antitrust/art82/092.pdf



141


So far, tying selling seems to be uncommon unlike bundling practices. Both suppliers/distributors, as

well as retailers, tend to adopt bundling practices.


Food & beverages No



Clothing No

7.2.1.13 Bundling


Bundling involves offering multiple products together at a different price from that which would be the

result of totalling the prices of the individual goods and services. Selling practices can be divided into

three categories: pure components (also known as unbundling or separate pricing), where the

components are sold separately; pure bundling or tied sales, occurring when the purchase can be

made only jointly (as discussed above); and mixed bundling, where both options to buy the services

or goods separately and together are available.


Bundling may be said to exploit consumer preferences for convenience, as buying a set of cleaning

products together is simpler than searching a shop or several shops for these goods. Knowing this,

the firm may charge a higher price for the set of products than the sum of prices of the individual

items.

An implication for competition may be market foreclosure, whereby an FMCG producer dominant in

one product space can leverage that into other markets and threaten the survival of competitors and

potential entrants. Market foreclosure can impact consumer welfare if it undermines competition in

the market by increasing prices and/or reducing choice and quality.


In France, the French Competition Commission imposed a fine of EUR15.36 million to Wyeth Hellas

and EUR384.64 million to Phadisco for illegally bundling a rebate scheme by offering a free quantity

of Meningitec (meningococcal vaccine) with the purchase of a specific quantity of Prenevar (another

pneumococcal vaccine). Wyeth and Phadisco had infringed section 6(1) (d) of the Law by abusing

their dominant position in the market for the pneumococcal vaccine since the quantitative discounts

offered to doctors and pharmacists were not economically justified.


Suppliers typically bundle low-demand products with high-selling items as a strategic

business move to increase sales.

Retailers usually bundle products to clear stocks.



142

Manufacturers bundle products during promotional periods to increase sales

The survey found that 72% of respondents provide a product or service on the condition that the customers purchase some other products or services.





Clothing Yes


Tying may be a sensible practice for certain types of products. Selling two complementary products

together could be beneficial for consumers who do not have the time to search for them

independently. As such, there may be a convenience value in purchasing bundled products.



143

8 PRELIMINARY RECOMMENDATIONS

8.1 Issues and Challenges

Based on the preliminary assessment through discussions with industry players, stakeholders and

surveys, the following issues and challenges have been identified:

Market driven issues Regulatory driven challenges

High cost of operation (Affects all retailers) Lack of understanding of Anti-profiteering Act

among retailers (Affects all retailers)

Difficulty in finding local labour (Affects all

retailers and wholesalers/distributors)

Frequent Review of Statutory Minimum Wage

(Affects micro, small and medium enterprises)

e-Commerce proliferation (Affects all retailers) Logistics issues for products shipped from

Semenanjung to Sabah/Sarawak (Affects all

retailers)

Inconsistency with SME supplies (Affects large

retailers)

Limited awareness of Competition Act 2010

(Affects micro, small and medium enterprises)

Inability for local SME suppliers to adhere to

requirements (Affects large players)

Introduction of digital tax (Affects micro, small

and medium enterprises)

Back margin/Trading terms (Affects suppliers) Statutory reporting requirement for only foreign

players

Prevalent high logistic cost in Sabah, Sarawak

and rural areas

The issues and challenges identified within the wholesale retail distributive trade can be classified

into 2 categories, which are market driven issues and regulatory driven issues. The market driven

issues are issues caused by determinants and factors happening within the market whereas

regulatory driven challenges are challenges faced by industry players due to certain regulations.

8.1.1 Market Driven Issues

High cost of operation: High cost of operations has been major burdens to many businesses,

especially small and medium retailers. As it is, many businesses are struggling to survive the

rising cost of doing business in the current weak economic conditions. Rental contributes 20% to

the cost of doing business for retailers. On top of the standard annual rental increase, some

landlords will request for massive rental increase upon contract renewal. Rental cost is higher

particularly for those who have set up their operations in malls for a long period of time. Based

on the interactions with industry participants, they are subject to high rental revision upon

renewal of contracts on top of the annual rental increase, while a new entrant will be able to rent

the space with a much lower rental agreement which is in accordance with the market price. This

has caused a lot of big retailers/foreign hypermarkets to review their business strategy and some

decided to cease operation within that area due to rental increased. The cost of operations will

further increase due to higher minimum wages from 2020 as well as the proposed removal of

petrol subsidy which can lead to a higher cost of transportation, which eventually lead to an



144

increase in operating cost for retailers and possible increase in the price of goods. The industry

is in the view that these increase in cost of doing business will result in the inability of businesses,

particularly SMEs, to absorb the sudden impact of rising wage and operation cost which can

potentially result in layoffs when they could not sustain the negative margins, however, there is

no sufficient data to support this theory.

Difficulty in finding local labour: Most retailers seem to share the same issues with regards to

difficulty in sourcing and retaining local labours/talents as most of the locals are not interested to

pursue their career in retail jobs and the attrition rate among locals in retail industry is one of the

highest especially at entry/low level jobs. Many foreign retailers are struggling to achieve their

minimum requirement for local talents/labours, and most reported that they can only meet 20%

instead of the 30% requirement stated by government. Some big retailers have started to use

self-service payment terminals in their hypermarkets to address lack of cashiers‟ issue. However,

small and local retailers do not enjoy the same luxury as the big retailers, due to the high cost to

set up a self-service payment terminal in their outlets. The cost to install self-service payment

terminals could go up to RM80k for each terminal, which is higher than hiring human cashiers.

This will definitely add up to their cost of operations, as such it is very challenging for small

players to address this labour issue.

e-Commerce proliferation: Competition in the retail industry is very intense and consumers are

more price-sensitive today, especially with the availability of e-commerce. Most retailers

expressed their grievances over e-commerce platforms that have now gained more traction than

the brick and mortar businesses due to price differences. Generally, the retail price of some

products sold online is much lower than the ones sold in physical stores, but there are also

cases where the online prices are even lower than the cost price of the physical store retailers,

which has been observed especially in cases where manufacturers themselves have used the e-

commerce platforms to reach the mass market. The growing trend of e-commerce demands the

need for businesses to innovate their services and provide an Omni channel retail strategy that

matches the rapid consumer demands.

Inconsistency with SME supplies: Based on interactions with industry participants, retailers

indicated that majority SME suppliers do not offer a wide range of product varieties/options,

which is one of the major reasons these large retailers could not meet the minimum requirement

for local supplies. The incapacity of these suppliers to meet the demand by retailers is also

known to cause retailers to resort to sourcing for supplies from large/foreign suppliers.

Inability for local SME suppliers to adhere to requirements: Another issue faced by retailers

with SME suppliers is that some SMEs do not adhere to the minimum requirements set by large

retailers particularly with regards to quality and safety of products i.e. displaying expiry date for

their products, etc. There were cases where the local food suppliers unethically extended the

lifespan of their almost expired products by just replacing the old date with stickers displaying a

new expiry date, instead of disposing of/replacing the expiring products. This behaviour is

damaging retailers‟ reputation and affects the image of the retail brand.

Back margin/ trading terms: Interviews with distributors revealed that large retailers

(hypermarkets/supermarkets) tend to impose commercial conditions on distributors/suppliers.

Back-margins (other discounts/allowances, listing fees) are imposed on distributors/suppliers for

promoting and selling their products, affecting distributors‟ profit margins particularly SMEs.

These back-margins can range between 5 to 30% depending upon the product as well as the

retailer.



145

Prevalent high logistics cost in Sabah, Sarawak, and rural areas: Industry players in rural

areas in Sabah and Sarawak as well as in Semenanjung face high logistics cost to transport

their products due to infrastructure issues. The retailers are forced to increase their selling price

and charging different pricing to these locations to make up for the high logistics cost. To

overcome this, under “Program Penyeragaman Harga Barang Keperluan Asas” by KPDNHEP, a

subsidy „Pengangkutan Barang Keperluan ke Luar Bandar‟ was introduced to logistics

companies. However, currently only seven products namely rice, sugar, flour, cooking oil, petrol,

diesel, and LPG are covered under this subsidy program. The prices of other basic necessities

are still subject to high logistics costs.

8.1.2 Regulatory Driven Issues

Lack of understanding of the Anti-Profiteering Act among retailers: Anti-profiteering Act is

surely a promising step towards protecting consumers‟ interests and regulating the retail industry

in the country. This act is however claimed to be unjust to retailers and the process involved in

controlling the Anti-Profiteering Act is too hassle and defeating its purpose to industry players.

Retailers expressed their disappointments that the Act will cripple their business operations

because their profit margins are being “monitored” and their prices are being “controlled” and

held below natural levels in time of high cost of doing business. Retailers also expressed their

dissatisfactions over the process involved during investigation and claimed the paperwork

process for each product under investigation is tedious and the time given to them to revert is too

short when the process required a lot of time and efforts from retailers to comply and retailers

find it troublesome especially when the complaints were invalid. Most retailers find that this Act is

unnecessary as it caused them to spend their resources unproductively. Retailers also claimed

that in the end, this Act will hurt the consumers as most retailers would hesitate to significantly

reduce their pricing, worrying that they would violate the act if they want to increase the price

later.

Frequent Review of Statutory Minimum Wage: Labour cost contributes more than 50% to the

cost of doing business for industry players. Any increase in the cost of doing business, when

cannot be mitigated by businesses, will be passed on to consumers. When the government

decided to frequently review the statutory minimum wage, the impact on the cost is mostly

apparent in smaller businesses. Large/foreign businesses would not feel the impact much as

they are already operating within the guideline, but the new ruling caused huge impact on small

and medium businesses and this problem is more prominent for small and medium businesses

in Sabah and Sarawak as they are already operating within thin margins due to logistics cost, etc.

Industry players gave feedback that the present economic situation is hardly the time to increase

the minimum wage. It is claimed that the impact of minimum wage increase will not be confined

to just RM100, instead, there will be knock-on effects where salaries of other employees will also

have to be adjusted to maintain the wage differentials between grades and seniority as well as

an increase of other benefits.

Logistics issues for products shipped from Semenanjung to Sabah/Sarawak: Retailers

from Semenanjung that have outlets in Sabah and Sarawak encountered restocking issues and

their outlets in those areas are consistently facing out-of-stocks issue due to local authority

delays in processing their suppliers‟ shipment from peninsular Malaysia. The local authorities in

Sabah and Sarawak required that these retailers to source their supplies from local suppliers first

before they can ship their supplies from Semenanjung Malaysia, as indicated in their licensing



146

agreement. There are cases where the local authorities still make it difficult for the retailers to

restocks from Semenanjung, even though there are no such suppliers available in those states.

Limited awareness of MyCC and Competition Act 2010: Based on the responses from the

industry survey, most companies indicated that prevailing regulations do not affect their

businesses. However, when asked on their awareness level on Competition Act 2010, the

majority of the respondents, on the other hand, responded that they are not aware of the roles of

MyCC and also the Competition Act and its prohibitions.

Introduction of digital tax: With the introduction of digital tax from 1st January 2020 on any

digital service provided by a foreign-registered person (FRP) to any consumer in Malaysia can

lead to increase in prices of those products and services as the companies might transfer the

cost to the consumers.

Statutory reporting requirement for only foreign players: Currently only foreign players are

subject to periodic monitoring and reporting to KPDNHEP while the local players are only

required to get business licenses and adhere to PBT guidelines for setting up a business. As a

result, the conduct of local players does not come under any scrutiny unless and until any

complaints are made against them.



147

8.2 Preliminary Recommendations

The proposed recommendations are aimed towards framing the subsequent course of action plans

for the WRT industry.

Table 32: Preliminary Proposed Initiatives

Preliminary Proposed Initiatives

1 Facilitating structural reforms that ensures efficiency and resiliency

1.1 Encourage strategic partnerships and cooperative mechanisms along the supply

chain to better optimize flow with the objective of reducing the cost of procuring and of

doing business. This may include facilitation programs between buyer and supplier, local

suppliers (including capacity building e.g. small suppliers to scale up), and between

retailers (e.g. joint sourcing).

Crucially there should also be clearer avenues and platforms for an industry feedback loop

to the relevant authorities for raising of business concerns such as inappropriate payment

terms, inability to enter certain market jurisdictions, and other contractual obligations

deemed unfair.

Stakeholders: MDTCA, MEDAC, SMECorp, PNS, SKM, PBT

1.2 Smaller markets and geographically less concentrated states such as in Sabah and

Sarawak, the Peninsular east coast, rural towns have higher prices of retail goods due in

part through the higher cost of doing business. This includes higher sourcing cost,

exposure to labour wage policies and logistics burdens.

There is a need to revisit the „local first‟ sourcing practise (balance with wider supplier

options), increase volumes (e.g. less SKUs) and create regular interactions with

government in order to identify and prioritise interventions needed (e.g. logistics facilitation,



148

shared distribution centres, rural infrastructure improvements)

Stakeholders: State government, MDTCA, industry associations

1.3 Develop a comprehensive and structured plan for eCommerce within the WRT

industry to ensure sustainability and competitiveness amongst traditional players and

online players are balanced. The industry players (in particular retailers) have indicated that

eCommerce is potentially the most disruptive development but is unsure about strategies,

time to peak impact and how to compete. Through the existing National eCommerce

Strategic Roadmap under MITI (implemented through the National eCommerce Council

(NeCC) secretariat by MDEC), the government should consider necessary customization or

localization of eCommerce to the Malaysian way of doing business, and consumer

preferences. It should also safeguard businesses (e.g. level playing field) and consumers

(eg genuine quality product).

To support players by providing the necessary programs to equip the industry, especially

smaller retailers, to compete in this space. Examples include IT skills training programs,

eCommerce platform (local and foreign) matching for players and other capacity building

areas (e.g. payment gateways, purchase fulfilment).

Stakeholders: MDEC, MDTCA, SME Corp, MITI, MCMC, KKMM, MEDAC

2 Fostering a competitive environment towards industry best practices

2.1 Enhance awareness of the Competition Act 2010 and its Guidelines especially for

SMEs as many are still unaware of practises that are potentially non-compliant with the

Act. As the Act seeks to prohibit unfair trade practises, this may include practises that

exhibits superior bargaining power (e.g. back margin practises), unfair trading terms and

condition imposed (e.g. mandated display shelf allocation). The guidelines are deemed

important in particular to SMEs, to avoid accidental non-compliance with the Act but also as

a means for players to identify anti-competitive conduct around them.

Advocating the usage of the e-learning platform among the industry players

especially SMEs through ROS and industry association collaboration to strengthen

understanding of the Competition Act 2010.

Stakeholders: MyCC, MDTCA, SME Corp, ROS, industry associations

2.2 Rethink implementation of the Price Control and Anti-Profiteering Act 2011 to

balance the benefit to consumers and the viability of the industry over the longer

term given that it has been in force since January 2017. This Act should be seen together

with the Competition Act 2010 to decide which would be the most appropriate route that

would be effective in protecting the consumer at the same time for businesses to not be

overly encumbered.

Stakeholders: MDTCA, MyCC, industry associations

3 Establishing progressive policies and regulations with long term positive impact

3.1 Need to periodically update the rules, policies, and regulations governing WRT to

keep up with developments in the WRT sector. Currently, there are separate requirements



149

that must be adhered to by foreign players that were originally put in place to level the

playing field for inherently smaller local players. This has since served its objective in

promoting strong local players that today represent the majority share of the market.

Conversely, effective rules such as those requiring foreign players to regularly report their

performances, and minimum local labour hires are absent in rules for local players. Policies

and regulations that are closer to being an equal level playing field with a clear

regulatory framework would promote a long term competitive environment that

businesses can plan for in their growth strategies. In parallel, updates should overtime

strive to reduce regulatory burden for WRT players.

Stakeholders: MyCC, MDTCA, SME Corp, PEMUDAH, state government

4 Enhancing industry -government platforms that promotes understanding and

collaboration

4.1 Revisit existing channels and avenues for government-industry interaction which are

currently in place, but may have redundancy and overlaps in purpose and limits of

authority. For the government, more collaboration is required in addressing cross-

jurisdiction issues. For industry, more awareness and clarity of these platforms is needed.

Done efficiently, two important purposes can be met: (1) for government to disseminate

information and updates related to the industry (e.g. Competition Act 2010, Anti-

Profiteering Act 2011); and (2) for industry players to raise issues, concerns, grievances.

It is also notable that in other international jurisdictions, industry association participation by

players is mandatory, so as to ensure a strong collective industry voice, and ease of

government to consult with industry when considering possible new policies and

regulations.

Stakeholders: MyCC, MDTCA, SME Corp, PEMUDAH, state government, industry

associations



150

8.2.1 Mapping of the Preliminary Recommendation to Issues/Challenges

The proposed preliminary initiatives are recommended to address the issues and challenges

identified in this market review.

Shown below is the mapping of the preliminary recommendation to issues and challenges.

1. Facilitating structural reforms that ensures efficiency and resiliency



151

2. Fostering a competitive environment towards industry best practices

3. Establishing progressive policies and regulations with long term positive impact



152

4. Enhancing industry -government platforms that promotes understanding and collaboration



153

9 APPENDICES

9.1 Findings from Industry Survey

9.1.1 Profile of Survey Participants

The industry survey was conducted with n=400 companies within the wholesale and retail industry

for the selected products covered in this study. It covered companies of different business nature,

geographical location, years of operation and size.

Figure 54: Business Nature of the Surveyed Companies

5% 8%

22%

77%

Distributor Manufacturer Wholesaler Retailer

(n=400)



154

Figure 55: Product Offerings

Mini Market, 45%

Supermarket, 29%

Convenience Stores, 2%

Specialized Store - Personal care, 7%

Specialized Store - Pharmacy store (incl. chinese medical hall),

6%

Specialized Store - Clothing, 6%

Specialized Store - F&B, 5%

Type of Retailer (n=309)

70% 67% 66%

56%

24%

Food (processed) Household cleaningproducts

Beverages(processed)

Personal care andtoiletries

Clothing

(n=400)



155

Figure 56: Location of Main Business Activities

Note:

Central region – Kuala Lumpur and Selangor

Northern region – Perlis, Kedah, Penang and Perak

Southern region – Johor, Melaka and Negeri Sembilan

Eastern region – Pahang, Terengganu, Kelantan

Figure 57: Years of Operating in Malaysia

35%

21%

16% 14%

7% 6%

Central Region Northern Region Southern Region Eastern Region Sarawak Sabah

<3 years, 2% 3-5years, 2%

6-10 years, 18%

11-15 years, 18%

16-20 years, 24%

>20 years, 36%

(n=400)

(n=400)



156

Figure 58: Company’s Ownership and Public Listing status

Majority local, 99%

At least half

foreign, 1%

Company's Foreign Ownership Status

(n=400)

No, 92%

Yes, 6%

Don't know,

2%

Woman-owned Company

(n=400)



157

Figure 59: Company’s Size

Note: Based on SME Corp’s definition, for the services sector, SMEs are defined as firms with sales turnover/revenue

not exceeding RM20 million OR number of full-time employees not exceeding 75. Although 8% (32) of the surveyed

companies have more than 75 full time employees, none of them exceeded the RM20 million mark to be classified as

a large company.

< RM300k

, 45%

RM300k < RM1

mil, 44%

RM1 mil < RM3 mil, 6%

RM3 mil < RM10 mil, 4%

RM10 mil -

RM20 mil, 1%

Revenue in 2018

(n=400)

< 5, 41%

5-29, 36%

30-75, 15%

> 75, 8%

Number of Full-time Employees in 2018

(n=400)

No, 100%

Public Listed on the Main Board

(n=400)



158



159

9.1.2 Business Operations

9.1.2.1 Operating profit margin

The operating profit margin of the surveyed retailers are quite low as compared to that of the

surveyed distributors or wholesalers, with 67% of the retailers claimed that their profit margin in 2018

was 5% or lower, while more than 60% of the distributors and wholesalers earned more than 5%

profit margin. Companies that had higher profit margin are typically those that manufacture their own

products or are wholesaler and retailer at the same time.

By geographical location, majority of the industry players in the central region and southern region

reported a profit margin of 5% or less, while around half of them in northern region stated slightly

higher revenue of 6%-10%.

Figure 60: Operating Profit Margin in 2018 - Breakdown by Business Nature

Total n=400; Distributor n=18; Wholesaler n=87; Retailer n=309

(Q7. Please indicate the operating profit margin of your company in Malaysia in 2018.)

60%

39%

36%

67%

33%

22%

43%

30%

6%

33%

16%

1%

2%

6%

3%

1%

2%

TOTAL

Distributor

Wholesaler

Retailer

≤ 5% 6%-10% 11%-15% 16%-20% > 20%



160

Figure 61: Operating Profit Margin in 2018 - Breakdown by Location of main Business Activities

Central region n=142; Northern region n=84; Southern region n=66; Eastern region n=56; Sarawak n=30; Sabah

n=26

Figure 62: Operating Profit Margin in 2018 - Breakdown by Product Offering

Multiple Product Categories n=220; Only F&B n=70; Only Personal Care n=53; Only Clothing n=52

Note: The sample size of companies who only sell cleaning products is too small to be analyse separately (n=5)

70%

39%

79%

50%

50%

50%

22%

49%

20%

41%

43%

50%

6%

2%

9%

2%

3%

1%

4%

2%

3%

2%

Central Region

Northern Region

Southern Region

Eastern Region

Sarawak

Sabah

≤ 5% 6%-10% 11%-15% 16%-20% > 20%

73%

60%

38%

27%

25%

26%

49%

62%

1%

10%

11%

10%

1%

3%

2%

1%

2%

Multiple Product Categories

Only F&B

Only Personal Care

Only Clothing

≤ 5% 6%-10% 11%-15% 16%-20% > 20%



161

9.1.2.2 Key operating cost components

Procurement of products contributed the highest cost for all industry players, followed by labour cost

and logistics. For the distributors, their logistics cost is higher than labour costs.

Figure 63: Top 5 Operating Cost Components

Key Cost Components Ranking (All) Ranking

(Distributor)

Ranking

(Wholesaler)

Ranking

(Retailer)

Procurement of products 1 1 1 1

Labour cost / Payroll 2 3 2 2

Rental/lease of office /stores

/warehouse

3 5 4 3

Logistics 4 2 3 5

Marketing 5 4 5 4

(Q9. What is your company’s top 5 input cost? Please rank 1 to 5, where 1 is the highest cost.)

9.1.2.3 Revenue breakdown by product category

Among those surveyed retailers who offer multiple product categories, on average food & beverages

contributed to more than 50% of their revenue, while household cleaning products made up more

than 20% and personal care product category is the third largest contributor.

Figure 64: Average Contribution of the Different Product Categories to Company’s Revenue

(Q13. Please indicate the contribution of the following product segment to your company’s revenue.)

Food & beverages

52% Household cleaning products

24%

Personal care

products 14%

Clothing 10%

Supermarket

Food & beverages

59%


22%

Personal care

products 19%

Mini Market

(n=89) (n=138)



162



163

9.1.2.4 Distribution channel

More than 90% of the retailers surveyed felt that brick and mortar store is an important distribution

channel for them and they only sell their products in physical store.

The distributors surveyed are mostly selling their products through intermediaries or online, while the

wholesalers also sell their products in brick and mortar store on top of these two distribution

channels. The reason of selling products through intermediaries or online is mainly due to customer

demand.

Figure 65: Key Distribution Channel


(Q15.Which distribution channels are important for your company? Could you please explain why do you

say so?)

84%

17%

49%

94%

17%

78%

53%

6% 10%

67%

43%

1%

TOTAL Distributor Wholesaler Retailer

Brick and mortar stores Selling through intermediaries Online



164

9.1.2.5 Number of product suppliers

Within each product category, it is very common for the industry players to have more than 1 product

supplier. Less than 10% of the industry players reported to have only 1 supplier for processed food &

beverages and clothing products, and only around 15% of the industry players have 1 supplier for

personal care and household cleaning products. The median number of suppliers across all product

categories is between 3 to 7.

While similar trend is observed across the different geographical areas, larger industry players tend

to have higher number product suppliers.

Figure 66: Number of Product Suppliers

Min 1 1 1 1 1

Max 100 60 200 50 32

% with 1

supplier

6% 6% 13% 17% 8%

Processed Food n=278; Processed Beverages n=270; Personal Care Products n=269; Household Cleaning Products

n=223; Clothing n=97

(Q16.How many suppliers /distributor /wholesalers do you have for the following product categories?)

9.2

7.8

11.9

5.6

7.5

5.0 5.0

3.0 3.0

7.0

Processed Food ProcessedBeverages

Personal CareProducts

HouseholdCleaning Products

Clothing

Mean

Median



165

9.1.2.6 Concerning areas in business

Sales is the most concerning areas in the industry across industry players of different business

nature, with more than 80% of the surveyed companies indicating it as a key concern. Among the

retailers, purchasing and inventory management are the other two key concerning areas. Besides

sales, majority of the distributors are worried about logistics/transportation, while majority of the

wholesalers are concern about purchasing and logistics/transportation.

Higher percentage of the surveyed companies in Sabah and Sarawak highlighted purchasing and

logistics/transportation as key concerning areas as compared to those in the central region.

Figure 67: Top 3 Most Concerning Areas in Business – Breakdown by Business Nature


(Q17. Which are the top 3 most concerning areas in your business?)

92%

71%

58%

32%

15%

14%

7%

6%

89%

28%

22%

78%

33%

0%

28%

17%

84%

61%

32%

54%

15%

13%

24%

9%

94%

74%

65%

25%

14%

14%

2%

6%

Sales

Purchasing

Inventory Management

Logistics/Transportation

Packing / Repacking

Customer Service

Marketing

Warehousing

TOTAL

Distributor

Wholesaler

Retailer



166

Figure 68: Top 3 Most Concerning Areas in Business – Breakdown by Geographical Location

Central region n=142; Northern region n=84; Southern region n=66; Eastern region n=56; Sarawak n=30; Sabah

n=26

94%

63%

64%

27%

22%

6%

9%

5%

93%

67%

54%

37%

13%

17%

5%

10%

89%

73%

67%

27%

23%

8%

5%

5%

88%

77%

50%

34%

7%

30%

5%

7%

92%

88%

38%

46%

8%

15%

12%

0%

83%

83%

50%

40%

3%

23%

7%

10%

Sales

Purchasing

Inventory Management

Logistics/Transportation

Packing / Repacking

Customer Service

Marketing

Warehousing

CentralRegionNorthernRegionSouthernRegionEasternRegionSabah



167

9.1.2.7 Frequency of checking inventory

Around half of the surveyed industry players check their inventory for clothing items on a monthly

basis and 24% of them do that every 3-5 months. More than 30% of the surveyed companies

conduct inventory check for food & beverages, household cleaning products and personal care

products once a month, while the others perform it at a different frequency depending on sales

turnover.

Figure 69: Frequency of Checking Inventory

Food & Beverages n=289; Personal Care Products n=269; Household Cleaning Products n=223; Clothing n=97

(Q 20. How frequent does your company check inventory for the following product segments?)

4%

1%

1%

2%

15%

12%

10%

2%

4%

7%

6%

2%

35%

36%

38%

49%

17%

15%

16%

24%

16%

17%

17%

10%

10%

12%

11%

10%

Food & beverages


Personal care products

Clothing

Daily Weekly Bi-weekly Monthly

Once in 3-5 months Once in 6 months Once a year



168

9.1.3 Pricing and Promotion

9.1.3.1 Frequency of price review

While price review is typically conducted on a quarterly basis among the distributors, most retailers

review their product prices monthly. For the wholesalers, 47% of them review product prices every

quarter and 45% do it monthly.

Companies that sell food & beverages only tend to differ among themselves in terms of price review

practice, whereas other companies typical perform price review on a monthly basis.

Figure 70: Frequency of price review – Breakdown by Business Nature


(Q21. How often does your company review the price of the products?)

1%

1%

12%

11%

6%

14%

50%

6%

45%

52%

34%

72%

47%

29%

2%

6%

2%

1%

2%

6%

3%

TOTAL

Distributor

Wholesaler

Retailer

Weekly Bi-weekly Monthly Quarterly Yearly When product cost increased



169

Figure 71: Frequency of price review – Breakdown by Product Offering

Multiple Product Categories n=220; Only F&B n=70; Only Personal Care n=53; Only Clothing n=52

Note: The sample size of companies who only sell cleaning products is too small to be analyse separately (n=5)

1%

1%

11%

23%

4%

6%

52%

39%

51%

62%

33%

31%

43%

29%

1%

2%

4%

3%

4%

Multiple Product Categories

Only F&B

Only Personal Care

Only Clothing

Weekly Bi-weekly Monthly Quarterly Yearly When product cost increased



170

9.1.3.2 Factors influencing product pricing

The key factors that influence product pricing are market demand, competitor‟s pricing and cost of

purchase. Logistics costs also play an important role in the product pricing for distributors and

wholesalers.

Figure 72: Factors Influencing Product Pricing


(Q22. What are the factors that influence your company’s decision on product pricing?)

78%

73%

69%

28%

22%

18%

5%

3%

61%

50%

89%

89%

6%

6%

6%

6%

80%

67%

66%

57%

3%

20%

3%

2%

78%

75%

70%

19%

27%

17%

6%

3%

Market demand

Competitor‟s pricing

Cost of purchase from manufactures/suppliers/ distributors/ wholesalers

Logistics cost

Competition intensity in the area

Perceived value of the product

Nature of products (e.g. FMCG versusslow moving)

Warehouse/ storage cost

TOTAL

Distributor

Wholesaler

Retailer



171

Majority of the surveyed companies indicated that their suppliers do not influence or control the

selling price of the products bought from them. For those that feel their suppliers have an influence,

most of them decide their pricing based suppliers‟ pricing, i.e. if the supplier increases the selling

price, they would increase their selling price too. Similar trend is observed across different

geographical region and industry players that have different business nature as well as product

offerings.

Figure 73: Supplier’s Influence on Product Pricing


(Q23a. Do your company’s suppliers influence or control the selling price of your products bought from

them?)

21%

33%

25%

20%

79%

67%

75%

80%

TOTAL

Distributor

Wholesaler

Retailer

Yes No



172

9.1.3.3 Product Pricing Practices

Currently, more than 90% of the surveyed companies do not have a systematic mechanism to

monitor and set product prices, regardless of their business nature, geographical location and types

of products sold.

Figure 74: Availability of a Systematic Mechanism to Monitor and Set the Prices of Products Sold


(Q24. Does your company use any systematic mechanism to monitor and set prices of the products

sold?)

Almost all the surveyed companies claimed that the pricing of their products the same across all

their shops / for all their clients. Only one of the surveyed distributors stated otherwise, where the

price difference would be between 6-10%, depending on its client‟s volume, potential sales and

business nature.

4%

6%

9%

2%

96%

94%

91%

98%

TOTAL

Distributor

Wholesaler

Retailer

Yes No



173

Figure 75: Price consistency across different shops or for different clients


(Q25a. Is the pricing of your products the same across all your shops / for all your clients?)

For those surveyed companies who also sell their products online, almost all of them stated that the

price of their products is similar whether online or in-store.

Figure 76: Price consistency between online and in-store

(Q26a. Does the price of your products vary between online and in-store?)

6%

100%

94%

100%

100%

TOTAL

Distributor

Wholesaler

Retailer

Is the pricing of your products the same across all your shops / for all your clients?)

No Yes

Yes, 2%

No, 98%

(n=48)



174

It is very uncommon among the surveyed companies to sell any product below cost price. Only 5

companies (1%) have done this before, mainly to boost sales and to clear old / near expiring stock.

Figure 77: Practice of Products below Cost Price


(Q27a. Have your company sold any product below cost price before?)

9.1.3.4 Price volatility and frequency of price changes

Generally, the surveyed industry players feel that price volatility of the selected products is low (i.e.

the magnitude of price difference is low), except for essential food items which 41% of the industry

players rated it as moderate and 22% rated it as high or very high. 70% of these companies claimed

that the price difference for essential food items is 6-10% and 15% said the price difference is 11-

15%.

1%

6%

2%

1%

99%

94%

98%

99%

TOTAL

Distributor

Wholesaler

Retailer

Yes No



175

Figure 78: Rating of Price Volatility by Product Segment - Food & Beverages

n= 254-260


5%

26%

31%

33%

34%

35%

34%

34%

33%

33%

37%

31%

36%

36%

36%

37%

36%

36%

39%

39%

34%

36%

41%

37%

31%

28%

25%

26%

25%

24%

25%

28%

24%

20%

2%

3%

3%

3%

3%

5%

3%

3%

4%

3%

2% Essential food items

Frozen food

Noodles, pasta

Canned food

Baked goods

Snacks

Dairy products

Cold beverages

Confectionary

Hot beverages

Condiment


Mean

2.83

2.15

2.05

2.01

1.98

1.96

2.02

1.96

1.98

2.04

1.93



176

Figure 79: Rating of Price Volatility by Product Segment - Household Cleaning Products

n= 217-220


30%

31%

30%

32%

32%

33%

31%

31%

31%

31%

41%

40%

42%

39%

40%

38%

41%

42%

41%

41%

28%

28%

26%

28%

28%

28%

27%

26%

27%

27%

1%

1%

1%

1%

1%

1%


Dish detergent


Floor cleaner

Kitchen cleaner


Mop and broom

Garbage bag

Disinfectants anddisinfectant cleaners

Glass and multi-surfaceCleaners


Mean

2.01

2.00

2.00

1.98

1.98

1.96

1.96

1.99

1.99

1.99



177

Figure 80: Rating of Price Volatility by Product Segment - Personal Care Products

n= 220-229


37%

37%

38%

36%

35%

35%

34%

34%

35%

33%

33%

35%

35%

38%

37%

37%

38%

38%

36%

38%

28%

26%

26%

25%

26%

27%

26%

27%

28%

28%

2%

2%

2%

1%

1%

1%

1%

Body Soap / Shower Gel

Hand wash

Tooth paste

Tooth brush

Mouthwash

Hair Shampoo

Hair Conditioner

Deodorant

Facial wash

Lotion/Moisturiser


Mean

1.96

1.94

1.93

1.91

1.93

1.96

1.95

1.97

1.96

1.97



178

Figure 81: Rating of Price Volatility by Product Segment – Clothing

n= 85-96


27%

28%

31%

39%

51%

47%

33%

39%

31%

33%

31%

30%

66%

63%

56%

49%

38%

42%

53%

50%

57%

54%

57%

61%

8%

9%

12%

11%

11%

10%

14%

10%

12%

12%

11%

9%

1%

1%

1%

1%

1%

1%

Men innerwear

Men daily clothes

Men business attire

Men sportswear

Women innerwear

Women daily clothes


Women sportswear

Children innerwear



Children sportswear


Mean

1.81

1.81

1.84

1.73

1.60

1.66

1.81

1.72

1.81

1.81

1.82

1.79



179

In terms of the frequency of adjusting selling price for food and beverages products, around 30% of

the surveyed companies change their selling price for essential food items and frozen food every 6

months, while around 35% of them amend selling price of other food and beverages products at the

same time interval. A quarter of the companies adjust the selling price of the food and beverage

products on a yearly basis.

Figure 82: Frequency of Changing Selling Price - Food and Beverages

n= 254-260

(Q29. How frequent does your selling price of the following product categories change?)

9%

10%

10%

11%

10%

10%

10%

10%

9%

9%

10%

1%

2%

2%

2%

2%

3%

2%

2%

2%

2%

2%

15%

9%

7%

8%

8%

9%

8%

8%

8%

8%

8%

24%

24%

22%

22%

20%

17%

19%

19%

19%

22%

20%

27%

31%

35%

35%

36%

37%

35%

35%

37%

33%

34%

24%

24%

24%

24%

24%

25%

25%

26%

26%

24%

26%


Frozen Food

Noodles, pasta

Canned food

Baked goods

Snacks

Dairy products

Cold beverages

Confectionary

Hot Beverages

Condiment

Weekly Bi-weekly Monthly Once in 3-5 months Once in 6 months Once a year



180

For all cleaning products, around 35% of the industry players change their selling price every 6

months, while 25% of them implement price change once a year.

Figure 83: Frequency of Changing Selling Price - Household Cleaning Products

n= 217-220


8%

8%

9%

9%

9%

9%

9%

9%

9%

9%

4%

4%

3%

3%

3%

3%

3%

3%

3%

3%

9%

8%

8%

8%

8%

9%

8%

8%

8%

8%

22%

21%

21%

20%

19%

19%

19%

20%

20%

18%

33%

34%

33%

35%

36%

35%

36%

34%

35%

37%

25%

26%

26%

25%

25%

25%

25%

25%

25%

25%


Dish detergent


Floor cleaner

Kitchen cleaner


Mop and broom

Garbage bag

Disinfectants &disinfectant cleaners

Glass and multi-surface Cleaners




181

The frequency of changing selling price across all types of personal care products is similar to that of

household cleaning products.

Figure 84: Frequency of Changing Selling Price - Personal Care Products

n= 220-229


8%

8%

8%

8%

8%

8%

8%

8%

8%

8%

3%

3%

3%

3%

3%

3%

4%

3%

4%

4%

8%

8%

8%

8%

8%

8%

8%

8%

8%

8%

20%

20%

19%

18%

19%

21%

19%

21%

21%

21%

35%

34%

33%

35%

34%

34%

35%

33%

34%

34%

26%

27%

28%

28%

28%

26%

27%

26%

25%

26%

Body Soap/ Shower gel

Hand wash

Tooth paste

Tooth brush

Mouthwash

Hair Shampoo

Hair Conditioner

Deodorant

Facial wash

Lotion/Moisturiser




182

For clothing, the changes in selling price typically occur once a year across all different types of

clothing items.

Figure 85: Frequency of Changing Selling Price - Clothing

n= 85-96


2%

2%

2%

2%

2%

2%

2%

2%

2%

2%

2%

2%

4%

4%

6%

4%

4%

4%

5%

5%

4%

4%

4%

4%

6%

8%

7%

7%

7%

8%

9%

6%

6%

6%

7%

6%

24%

21%

19%

19%

19%

22%

22%

22%

21%

23%

22%

21%

20%

23%

29%

24%

24%

21%

24%

21%

22%

23%

22%

22%

43%

42%

36%

43%

44%

43%

38%

43%

44%

42%

43%

44%

Men innerwear

Men daily clothes

Men business attire

Men sportswear

Women innerwear

Women daily clothes


Women sportswear

Children innerwear



Children sportswear




183

9.1.3.5 Discounts/Promotions

30% of the industry players reported that they offer regular discounts or promotions and such

promotions usually take place during festive seasons, e.g. Hari Raya, Chinese New year, Deepavali,

Christmas, etc.

Figure 86: Discounts or Promotions

Yes 30%

No 70%

Do you offer regular discounts or promotions?

2%

4%

4%

7%

10%

11%

14%

22%

25%

81%

Every Weekend

Weekly

Once a year

School Holidays

Quarterly

Once in 6 months

Megasale Carnival

Public Holidays

Monthly

Festive Seasons

Discount/ Promotion Period

(n=400) (n=118)



184

9.1.4 Level of Competition and Experience/Observation of Potential Anti-

Competitive Practices

9.1.4.1 Key client/customer attractions

Across all industry players of different business nature, the surveyed companies perceived that price

is top criteria that attracted their clients/customers to buy from them, followed by convenience. For

retailers, proximity to customers is the third key attraction, whereas availability of promotion/discount

play a more important role than proximity for the distributors and wholesalers.

Figure 87: Top 5 Client/customer Attractions


(Q31. In your opinion, what are your customers’ top 5 key considerations to buy from your store /

company?)

96%

82%

74%

52%

24%

16%

15%

13%

2%

100%

67%

56%

61%

50%

33%

6%

22%

100%

72%

56%

75%

41%

11%

11%

25%

95%

85%

79%

45%

18%

17%

17%

9%

2%

Price

Convenience

Proximity

Promotion/ discount

Online presence

Customer service

Availability of credit

Product delivery

Loyalty card/ points

TOTAL

Distributor

Wholesaler

Retailer



185

9.1.4.2 Perception of the wholesale and retail trade industry

Around 80% of the surveyed companies agreed/strongly agreed with the following statements:

Figure 88: Perception of the Wholesale and Retail Trade Industry in Malaysia

n= 400

(Q38. How much do you agree with the following statements on the distributive trade industry in

Malaysia?)

15%

23%

14%

15%

15%

17%

17%

19%

52%

33%

46%

53%

55%

46%

60%

62%

34%

44%

41%

32%

30%

37%

23%

19%

There are too many playersin the market

Price war competition exists

The increasing cost ofbusiness is deterioratingoperating profit margin

The increasing cost ofbusiness is further pass on

to consumers

Large players aredominating and influence

the market

Suppliers are having higherbargaining power than

buyers

Many stores are closingdown in the past three years

It is difficult for new playersto enter the market

Strongly Disagree (1) Disagree (2) Neutral (3) Agree (4) Strongly Agree (5)

Mean

4.19

4.22

4.27

4.16

4.16

4.21

4.06

4.06



186

9.1.4.3 Observation and Perception of Potential Anti-Competitive Practices

Based on the survey conducted with 400 industry players within the wholesale and retail trade

industry, there is no potential anti-competitive practice observed in terms of exclusive distribution

agreement, price parity clause, unfair conditions in contract, controlling or limiting sales of goods and

tying to a single supplier.

Figure 89: Existence of Potential Anti-Competitive Practices

No 100%

Exclusive Distribution Agreement

No 100%

Price Parity Clauses

No 100%

Clause(s) in the Contract that are Detrimental to Business

No 100%

Unfair Conditions Imposed on the Quantity of Products that can be

Purchased

(n=400) (n=400)

(n=400) (n=400)



187

(Q32a. Do you have any exclusive distribution agreement with any of your supplier/wholesaler?)

(Q33a. Is your company subject to any price parity clauses? (i.e. obliged to sell your products at a given

price or to sell to a customer at a price no higher and/or at terms no less agreeable than offered to other

customers.)

(Q34a. Are there any clauses in the contract detrimental to your business?)

(Q35. Are there any unfair conditions imposed on the quantity of products that can be purchased?)

(Q36. Have you observed any practices of controlling or limiting sales of goods in the market?)

(Q37a. Is your company tied to a single supplier for any of the products sold?)

(Q41a. Have you ever experienced any manufacturer/ distributor/ retailer/ wholesaler that impose

different terms and condition for the same transaction?)

However, majority of the surveyed companies agreed/strongly agreed with the following statements

on anti-competitive practices in the Malaysian distributive trade industry:

Yes 1%

No 99%

Observed any practices of controlling or limiting sales of goods

in the market

No 100%

Tied to a single supplier for any of the products sold

No 100%

Manufacturer/ distributor/ retailer/ wholesaler impose different terms & condition for the same transaction

(n=400) (n=400)

(n=400)


Selected Products)

188

Figure 90: Perception of anti-competitive practices in Malaysian wholesale and retail trade industry

n=400

(Q40. How much do you agree with the following statements on anti-competitive practices in the Malaysian distributive trade industry?)

1%

20%

37%

25%

28%

29%

29%

29%

32%

35%

60%

39%

47%

52%

48%

49%

53%

52%

50%

21%

25%

28%

20%

24%

23%

19%

16%

15%

Some group of businesses “fix” their product prices and dissuades others to compete.

Some competitors agree to divide or allocate customers, suppliersor territories among themselves rather than allowing competitive

market forces to work

Some parties collude to choose the winner of a bidding processwhile others submit uncompetitive bids

Some companies provide a product or service on the condition thatthe customers purchase some other products or services

Some retailers/ distributors/ wholesalers are 'tied' to purchase froma supplier on the understanding that no other distributor will be

appointed or receive supplies in a given area.

There is an agreement between competing companies, or betweena company and an individual or business, that stipulates that they

refuse to do business with another

There is an agreement between a manufacturer and a wholesaler/distributor/ retailer not to sell a product below a specified price.

Some companies sell the same product at different prices todifferent buyers, in order to maximize sales and profits.

Some companies are pricing their goods/services at such a lowlevel that other firms cannot compete and are forced to leave the

market.

Strongly Disagree (1) Disagree (2) Neutral (3) Agree (4) Strongly Agree (5)

Mean Score

4.01

3.88

4.03

3.93

3.94

3.90

3.84

3.80

3.95



189

9.1.5 Industry Trends

Generally, majority of the surveyed companies are positive with the industry growth in the next 3

years, with 84% of the distributors, 74% of the wholesalers and 62% of the retailers expected the

market to grow in the near future. Most of them believe that the growth will be within 10%.

Larger companies (in terms of employment size) tend to be more positive about the future of the

industry.

Figure 91: Expectation of industry growth in the next 3 years – Breakdown by Business Nature


(Q42. How do you see the growth of the wholesale and retail industry in the next 3 years?)

Figure 92: Expectation of industry growth in the next 3 years – Breakdown by Employment Size

12%

6%

10%

12%

6%

6%

3%

7%

11%

6%

12%

6%

6%

7%

6%

26%

39%

26%

25%

23%

33%

36%

20%

16%

12%

12%

17%

TOTAL

Distributor

Wholesaler

Retailer

Shrink by >10% Shrink by 6-10% Shrink by 1-5% Stagnant (0%)

Grow by 1-5% Grow by 6-10% Grow by >10%

19%

8%

8%

7%

6%

10%

13%

12%

2%

10%

3%

6%

10%

17%

25%

29%

20%

24%

18%

26%

32%

21%

16%

13%

17%

27%

Micro (<5 FTE)

Small (5-29 FTE)

Medium (30-75 FTE)

Large (>75 FTE)

Shrink by >10% Shrink by 6-10% Shrink by 1-5% Stagnant (0%)

Grow by 1-5% Grow by 6-10% Grow by >10%



190

FTE = Full-time employee

Micro n=167; Small n=145; Medium n=59; Large n=29

Nevertheless, only a small fraction of the surveyed companies have a plan to expand/ open new

stores/ distribution centres/ warehouses within the next 3 years.

Figure 93: Plan to expand/ open new stores/ distribution centres/ warehouses within the next 3 years


(Q45. Does your company plan to expand/ open new stores/ distribution centres/ warehouses within the

next 3 years?)

Industry players believe that there will be an increasing market demand for wholesale and retail

services online. Besides, the economy is growing and this will lead to higher market/product

demand. They also perceived that increasingly more foreign players will enter the Malaysian

wholesale and retail market and this will stimulate the growth of the industry. Nonetheless, with more

players entering the market and the opening of more stores, competition is going to be stiffer.

97%

78%

92%

99%

3%

22%

8%

1%

TOTAL

Distributor

Wholesaler

Retailer

No Yes



191

Figure 94: Key Industry Trends

(Q43. Could you highlight the key industry trends which are changing the dynamics in your market?)

9.1.6 Awareness of MyCC

The surveyed industry players are neither aware of MyCC nor the competition law.

Figure 95: Awareness of MyCC and Competition Law

(Q32a. Are you familiar with Malaysia Competition Commission (MyCC) and its roles in Malaysia before

this survey?)

(Q47. Are you familiar with the competition law and its prohibition?)

No 100%

Awareness of MyCC

No 100%

Awareness of Competition Law

1

2.

3.

4.

(n=400) (n=400)



192

All of them are satisfied with the existing rules, regulations and laws and did not feel that there is any

regulation in Malaysia that affects their business.

Figure 96: Perception of the existing rules, regulations and laws

No 100%

Is there any prevailing regulation in Malaysia that affects your business?

Yes 100%

Do you think that the existing rules, regulations and laws are sufficient to address anti-competitive practices in

your industry?

(n=400) (n=400)



193

9.2 Findings from Consumer Survey

9.2.1 Profile of Survey Participants

A survey was conducted with n=400 consumers of different demographics across different parts of

Malaysia. These survey participants have purchased processed food, processed beverages,

household cleaning products, personal care & toiletries and/ or clothing items within the past 12

months.

Figure 97: Profile of Survey Participants

Central, 30%

Northern, 23%

Southern, 19%

Eastern, 13%

Sarawak, 9%

Sabah, 6%

Geographical Region

(n=400)

Urban, 75%

Rural, 25%

Geographical Type

18-29 y.o., 21%

30-39 y.o., 23% 40-49

y.o., 22%

50-59 y.o., 19%

≥ 60 y.o., 15%

Age

Male, 48%

Female, 52%

Gender



194

Note:

Monthly Household Income (MHI) range based on Household Income and Basic Amenities Survey

Report 2016:

B40: < RM4,360

M40: RM4,360 - RM9,619

T20: ≥ RM9,620

9.2.2 Consumer Purchasing Behaviour

9.2.2.1 Food & Beverages

Within the food and beverages category, essential food items such as rice, sugar, flour and oil are

the most frequently purchased products among the consumers. This is followed by baked goods

(biscuits, cakes, breads and other bakery products) and hot beverages (coffee, tea, cocoa). The

same trend is observed across the different household income group. Consumers in the eastern

region consume more dairy products and condiments (spices and sauces) as compared to other

regions, whereas those in Sarawak also frequently purchase noodles/pasta and canned food, and

those in Sabah frequently consume snacks and frozen food on top of essential food items, baked

goods and hot beverages.

Malay, 63%

Chinese, 25%

Indian, 9%

Others, 3%

Race

≤ 4,000, 40%

4,001 - 10,000,

40%

>10,000, 20%

Monthly Household Income (RM)



195

Figure 98: Top 5 Most Frequently Purchased / Consumed Food & Beverages

(Q1. What are the top 5 items for each product category (food & beverages, cleaning products, personal

care & toiletries and clothing) that you have purchased frequently and mostly consumed?)

Top 5 Most Frequently Purchased / Consumed Food & Beverages Items

- Breakdown by Geographical Region

Central

(n=120)

Northern

(n=94)

Southern

(n=75)

Eastern

(n=52)

Sarawak

(n=34)

Sabah

(n=25)

1. Essential food

items (89%)

1. Essential food

items (83%)

1. Essential food

items (91%)

1. Essential food

items (90%)

1. Essential food

items (94%)

1. Baked goods

(84%)

2. Baked goods

(78%)

2. Baked goods

(81%)

2. Baked goods

(76%)

2. Dairy products

(73%)

2. Baked goods

(85%)

2. Essential food

items (72%)

3. Hot beverages

(72%)

3. Cold

beverages (53%)

3. Hot beverages

(60%)

3. Baked goods

(69%)

3. Hot beverages

(65%)

3. Snacks (72%)

4. Cold

beverages (55%)

4. Hot beverages

(50%)

4. Cold

beverages (45%)

4. Hot beverages

(54%)

4. Noodle/ pasta

(44%)

4. Frozen food

(60%)

5. Dairy products

(36%)

5. Dairy products

(46%)

5. Dairy products

(41%)

5. Condiment

(50%)

5. Canned food

(41%)

5. Hot beverages

(56%)

88%

86%

89%

89%

78%

78%

77%

81%

61%

59%

62%

61%

48%

43%

52%

48%

43%

38%

47%

45%

TOTAL

MHI ≤ RM4,000

MHI RM4,001 - RM10,000

MHI > RM10,000

Top 5 Most Frequently Purchased / Consumed Food & Beverages Items - Breakdown by Monthly Household Income (MHI)

Essential food items (rice,sugar, flour, oil)

Baked goods (biscuits, cakes,breads and other bakeryproducts)

Hot beverages (coffee, tea,cocoa and other beverages)

Cold beverages (juices,cordial drinks)

Dairy products

(n=160)

(n=160)

(n=80)

(n=400)



196

Thirty five per cent of Malaysians spend between RM101-RM300 and 32% spend between RM301-

RM500 on purchasing food and beverages products on a monthly basis. The expenditure on food

and beverages increase with household income, with majority of the low income households (MHI ≤

RM4,000) spent not more than RM300 while around 50% of the high income households (MHI

>RM10,000)spend more than RM500 monthly on food and beverages.

Figure 99: Monthly Expenditure on Food & Beverages

(Q2. Based on your experience and estimation, how much do you spend on the selected items on

monthly basis?)

Consumers typically purchase essential food items and hot beverages once a month, whereas for

baked goods and dairy products on a weekly basis. The frequency of cold beverages purchase

varies from one consumer to another, with some of them purchase on a weekly basis, while others

on a bi-weekly or monthly basis.

1%

1%

1%

3%

4%

3%

8%

14%

5%

3%

35%

44%

34%

19%

32%

29%

36%

30%

21%

8%

21%

49%

TOTAL

MHI ≤ RM4,000

MHI RM4,001 - RM10,000

MHI > RM10,000

Monthly Expenditure on Food & Beverages

≤ RM25 RM26 - RM50 RM51 - RM100

RM101 - RM300 RM301 - RM500 > RM500



197

Figure 100: Frequency of Product Purchase - Food & Beverages

(Q3. How frequent do you buy the selected items?)

9.2.2.2 Household Cleaning Products

Laundry cleaning detergent is the top consumption product within the household cleaning product

category for the Malaysians. Besides that, consumers also frequently purchase dish detergent,

toilet/bathroom cleaner, floor cleaner and kitchen cleaner.

3%

47%

18%

35%

45%

32%

33%

12%

29%

26%

61%

18%

64%

32%

23%

3%

3%

5%

4%

5%


Baked goods

Hot beverages

Cold beverages

Dairy products

Frequency of Product Purchase - Food & Beverages

Weekly Bi-weekly Monthly Once in 3-5 months



198

Figure 101: Top 5 Most Frequently Purchased / Consumed Household Cleaning Products - Breakdown by Monthly Household Income (MHI)



Top 5 Most Frequently Purchased / Consumed Household Cleaning Products


Central

(n=120)

Northern

(n=94)

Southern

(n=75)

Eastern

(n=52)

Sarawak

(n=34)

Sabah

(n=25)

1. Laundry

cleaning

detergent (97%)

1. Laundry

cleaning

detergent (91%)

1. Laundry

cleaning

detergent (89%)

1. Laundry

cleaning

detergent (94%)

1. Laundry

cleaning

detergent (97%)

1. Laundry

cleaning

detergent (84%)

2. Dish detergent

(78%)

2. Toilet/

bathroom

cleaner (66%)

2. Toilet/

bathroom

cleaner (60%)

2. Toilet/

bathroom

cleaner (67%)

2. Dish detergent

(74%)

2. Dish detergent

(76%)

3. Floor cleaner

(67%)

3. Dish detergent

(61%)

3. Floor cleaner

(65%)

2. Kitchen

cleaner (67%)

3. Kitchen

cleaner (65%)

3. Toilet/

bathroom

cleaner (36%)

4. Toilet/

bathroom

cleaner (65%)

4. Floor cleaner

(59%)

4. Dish detergent

(57%)

4. Floor cleaner

(54%)

4. Toilet/

bathroom

cleaner (56%)

4. Multipurpose

cleaner (32%)

93%

91%

95%

93%

67%

66%

64%

76%

62%

53%

66%

73%

60%

51%

65%

69%

48%

43%

53%

49%

TOTAL

MHI ≤ RM4,000

MHI RM4,001 - RM10,000

MHI > RM10,000

Top 5 Most Frequently Purchased / Consumed Household Cleaning Products - Breakdown by Monthly Household Income (MHI)


Dish detergent


Floor cleaner

Kitchen cleaner



199

5. Kitchen

cleaner (43%)

5. Kitchen

cleaner (41%)

5. Kitchen

cleaner (53%)

5. Dish detergent

(60%)

5. Floor cleaner

(53%),

5. Floor cleaner,

Kitchen cleaner

(20%)

Around half of the consumers surveyed spend not more than RM50 monthly on household cleaning

products. Majority of the high income households spend up to RM100 on household cleaning

products on a monthly basis.

Figure 102: Monthly Expenditure on Household Cleaning Products


monthly basis?)

Malaysians generally buy the required household cleaning products once a month, regardless of

household income level, geographical location, race and age.

22%

34%

18%

4%

31%

33%

32%

25%

35%

28%

36%

49%

12%

5%

14%

23%

TOTAL

MHI ≤ RM4,000

MHI RM4,001 - RM10,000

MHI > RM10,000

Monthly Expenditure on Household Cleaning Products

≤ RM25 RM26 - RM50 RM51 - RM100 RM101 - RM300



200

Figure 103: Frequency of Product Purchase - Household Cleaning Products


9.2.2.3 Personal Care & Toiletries

Tooth paste, body soap/shower gel and hair shampoo are the top 3 consumer products within the

personal care & toiletries category, regardless of household income and geographical location.

Around 50% of the consumers surveyed also purchase facial wash frequently. The consumption of

mouthwash is more prominent among the high income earners and around one-third of the

consumers in the central and southern region use deodorant frequently.

7%

5%

13%

8%

3%

75%

68%

60%

67%

77%

18%

26%

22%

23%

18%

1%

4%

2%

2%


Dish detergent


Floor cleaner

Kitchen cleaner

Frequency of Product Purchase - Household Cleaning Products

Bi-weekly Monthly Once in 3-5 months Once in 6 months



201

Figure 104: Top 5 Most Frequently Purchased / Consumed Personal Care & Toiletries- Breakdown by Monthly Household Income (MHI)



Top 5 Most Frequently Purchased / Consumed Personal Care & Toiletries


Central

(n=120)

Northern

(n=94)

Southern

(n=75)

Eastern

(n=52)

Sarawak

(n=34)

Sabah

(n=25)

1. Body Soap/

Shower Gel

(96%)

1. Tooth paste

(96%)

1. Tooth paste

(92%)

1. Tooth paste

(98%)

1. Tooth paste

(97%)

1. Body Soap/

Shower Gel

(88%)

2. Tooth paste

(90%)

2. Body Soap/

Shower Gel

(94%)

2. Body Soap/

Shower Gel

(87%)

2. Body Soap/

Shower Gel

(88%)

2. Body Soap/

Shower Gel

(91%)

2. Tooth paste

(80%)

3. Hair Shampoo

(78%)

3. Hair Shampoo

(88%)

3. Hair Shampoo

(83%)

2. Hair Shampoo

(88%)

3. Hair Shampoo

(85%)

3. Hair Shampoo

(76%)

4. Facial wash

(58%)

4. Facial wash

(49%)

4. Facial wash

(56%)

4. Facial wash

(58%)

4. Tooth brush

(62%)

4. Tooth brush

(48%)

5. Deodorant

(33%)

5. Tooth brush

(32%)

5. Deodorant

(35%)

5. Tooth brush

(27%)

5. Facial wash

(56%)

5. Hair

conditioner

(40%)

93%

96%

89%

94%

92%

91%

93%

93%

80%

81%

85%

85%

54%

47%

61%

55%

29%

34%

28%

23%

24%

19%

22%

36%

TOTAL

MHI ≤ RM4,000

MHI RM4,001 - RM10,000

MHI > RM10,000

Top 5 Most Frequently Purchased / Consumed Personal Care & Toiletries - Breakdown by Monthly Household Income (MHI)

Tooth paste

Body Soap/ ShowerGelHair Shampoo

Facial wash

Tooth brush



202

Malaysians have higher expenditure on personal care toiletries as compared to household cleaning

products. Around 60% of the households spend more than RM50 monthly on personal care items.

58% of the low income households spend not more than RM50 on personal care & toiletries on a

monthly basis, while more than 60% of medium income households and more than 70% of high

income households‟ fork out more than RM50 for such products.

Figure 105: Monthly Expenditure on Personal Care & Toiletries


monthly basis?)

Most of the key personal care & toiletries are purchased once a month, except for toothbrush which

is changed every 3-5 months.

19%

32%

14%

1%

24%

26%

23%

23%

37%

33%

38%

41%

18%

8%

23%

25%

3%

1%

3%

8%

1%

3%

TOTAL

MHI ≤ RM4,000

MHI RM4,001 - RM10,000

MHI > RM10,000

Monthly Expenditure on Personal Care & Toiletries

≤ RM25 RM26 - RM50 RM51 - RM100

RM101 - RM300 RM301 - RM500 > RM500



203

Figure 106: Frequency of Product Purchase - Personal Care & Toiletries


9.2.2.4 Clothing

Within clothing product category, women and men daily clothes are the top most frequently

purchased items, followed by children daily clothes. Households with high monthly income tend to

purchase men business attire and men innerwear more frequently than those with lower monthly

income.

2%

4%

1%

1%

1%

33%

75%

74%

66%

72%

37%

49%

22%

22%

32%

25%

53%

18%

1%

1%

1%

7%

Tooth paste


Hair Shampoo

Facial wash

Tooth brush

Mouthwash

Frequency of Product Purchase - Personal Care & Toiletries

Bi-weekly Monthly Once in 3-5 months Once in 6 months

(n=371)

(n=367)

(n=333)

(n=216)

(n=117)

(n=94)



204

Figure 107: Top 5 Most Frequently Purchased / Consumed Clothing Items - Breakdown by Monthly Household Income (MHI)


care products and clothing) that you have purchased frequently and mostly consumed?)

Top 5 Most Frequently Purchased / Consumed Clothing Items


Central

(n=120)

Northern

(n=94)

Southern

(n=75)

Eastern

(n=52)

Sarawak

(n=34)

Sabah

(n=25)

1. Women daily

clothes (78%)

1. Men daily

clothes (73%)

1. Women daily

clothes (71%)

1. Women daily

clothes (77%)

1. Women daily

clothes (79%)

1. Men daily

clothes (72%)

1. Men daily

clothes (78%)

2. Women daily

clothes (70%)

2 Men daily

clothes (67%)

1. Men daily

clothes (77%)

2. Men daily

clothes (62%)

2. Men

innerwear (60%)

3. Women

innerwear (44%)

3. Children daily

clothes (50%)

3. Children daily

clothes (57%)

3. Children daily

clothes (71%)

2. Children daily

clothes (62%)

3. Women daily

clothes (56%)

4. Children daily

clothes (43%)

4. Women

innerwear (37%)

4. Women

innerwear (37%)

4. Women

innerwear (29%)

4. Women

innerwear (56%)

4. Women

innerwear (52%)

73%

73%

77%

66%

73%

72%

69%

84%

52%

48%

58%

48%

41%

42%

41%

38%

34%

36%

28%

43%

30%

21%

30%

45%

28%

22%

36%

25%

TOTAL

MHI ≤ RM4,000

MHI RM4,001 - RM10,000

MHI > RM10,000

Top 5 Most Frequently Purchased / Consumed Clothing Items - Breakdown by Monthly Household Income (MHI)

Women daily clothes

Men daily clothes


Women innerwear

Men innerwear

Men business attire



205

4. Men business

attire (43%)

5. Men

innerwear (30%)

5. Men

innerwear (35%)

4. Men

innerwear (29%)

5. Men

innerwear (26%)

5. Children daily

clothes (24%)

Clothing is the second highest expenditure category for Malaysians within the scope of the study and

the monthly spending amount varies greatly across different household income level. The low

income households generally do not spend more than RM300 monthly on clothing, however 8% of

the medium income household fork out more than RM300 and 23% of the high income households

pay more than RM500 on clothing on a monthly basis.

Figure 108: Monthly Expenditure on Clothing


monthly basis?)

Generally, Malaysians buy daily clothes (men, women and children) once a month, whereas

innerwear (men and women) and business attire (men and women) are purchased every 3-5

months.

8%

16%

3%

20%

25%

23%

3%

25%

27%

23%

25%

37%

31%

43%

36%

6%

1%

7%

14%

5%

0%

1%

23%

TOTAL

MHI ≤ RM4,000

MHI RM4,001 - RM10,000

MHI > RM10,000

Monthly Expenditure on Clothing

≤ RM25 RM26 - RM50 RM51 - RM100

RM101 - RM300 RM301 - RM500 > RM500

(n=400)

(n=160)

(n=160)

(n=80)



206

Figure 109: Frequency of Product Purchase - Clothing


9.2.3 Preferred Retail Channel

Supermarket is the most preferred retail format to purchase food and beverages products, followed

by mini market. Hypermarket is within the top two popular venue for consumers in the central and

northern region to purchase such products, where such retail format is widely available. The

popularity of purchasing food and beverages from provision stores decreases with household

income level.

2%

1%

1%

1%

1%

1%

1%

48%

40%

54%

25%

14%

31%

27%

38%

40%

31%

53%

53%

45%

47%

10%

15%

12%

16%

27%

19%

21%

3%

3%

1%

2%

4%

4%

4%

Women daily clothes

Men daily clothes


Women innerwear

Men innerwear

Men business attire


Frequency of Product Purchase - Clothing

Bi-weekly Monthly Once in 3-5 months Once in 6 months Once a year

(n=293)

(n=292)

(n=206)

(n=163)

(n=135)

(n=118)

(n=112)



207

Figure 110: Place of Purchase - Food & Beverages

(Q4. Where typically do you buy the selected items?)

For the purchase of key household cleaning products, supermarket is the top preferred retail

channel, followed by mini market and hypermarket. Similar to the purchase of food and beverages

products, hypermarket is a popular venue for consumers in the central and northern region to

purchase such products, whereas significantly less households from the high income group make

their purchases from the provision stores.

47%

41%

42%

41%

39%

79%

77%

71%

76%

77%

51%

51%

47%

49%

40%

4%

18%

16%

23%

13%

43%

48%

47%

43%

44%

11%

6%

7%

7%

9%


Baked goods

Hot beverages

Cold beverages

Dairy products

Hyper-market

Super-market

Mini-market

Convenience store

Provision store (Kedai Runcit)

Department Store



208

Figure 111: Place of Purchase - Household Cleaning Products


Supermarket is the top preferred venue for consumers to buy key personal care & toiletries, followed

by hypermarket. Significant ratios of consumers also purchase such items from pharmacy stores,

especially shampoo and facial wash, and among the high household income group.

44%

48%

39%

42%

29%

79%

76%

80%

77%

91%

45%

46%

40%

42%

42%

1%

1%

1%

0%

1%

26%

24%

25%

24%

30%

7%

4%

8%

9%

9%

2%

0%

0%

0%

1%


Dish detergent

Toilet/bathroomcleaner

Floor cleaner

Kitchen cleaner

Hyper-market

Super-market

Mini-market

Convenience store

Provision store (Kedai Runcit)

Department Store

Pharmacy



209

Figure 112: Place of Purchase - Personal Care & Toiletries


Most of the Malaysian consumers prefer to purchase clothing from department stores. This is

followed by hypermarket and specialised store.

41%

47%

42%

35%

45%

46%

71%

69%

72%

65%

69%

70%

34%

34%

31%

27%

26%

27%

2%

1%

2%

1%

3%

5%

16%

15%

15%

10%

14%

5%

11%

14%

13%

20%

6%

20%

30%

27%

40%

41%

25%

31%

Tooth paste

Body Soap/ ShowerGel

Hair Shampoo

Facial wash

Tooth brush

Mouthwash

Hyper-market

Super-market

Mini-market

Convenience store

Provision store (KedaiRuncit)

Department Store

Pharmacy



210

Figure 113: Place of Purchase - Clothing


Convenience and reasonable price are the top two criteria for Malaysian consumers to decide where

to make their purchases. Around three quarter of the high income households also place emphasis

on the availability of a wide range of products/brands, strategic locations, and discount and

promotion.

45%

44%

46%

48%

41%

39%

53%

10%

11%

11%

11%

11%

8%

7%

75%

79%

78%

77%

74%

85%

83%

22%

21%

16%

18%

16%

24%

26%

Women dailyclothes

Men daily clothes

Children dailyclothes

Women innerwear

Men innerwear

Men business attire

Women businessattire

Hyper-market

Super-market

Department Store

Specialised Store /Night or day market



211

Figure 114: Reasons for Purchasing the Selected Items at the Selected Retail Outlets

(Q5. What are the reasons for purchasing the selected items at the selected retail outlets?)

80%

75%

70%

64%

63%

29%

8%

73%

69%

59%

58%

54%

25%

14%

84%

78%

75%

65%

66%

29%

4%

84%

80%

80%

75%

75%

38%

1%

Convenience

Reasonable price

Wide range of products/brandsavailable

Strategic location

Discount and promotion

Loyalty card/collecting points

No other options in the area

Total MHI ≤ RM 4,000 MHI RM 4,001 - RM 10,000 MHI > RM 10,000



212

9.2.4 e-Commerce

Around 95% of the consumers surveyed have never bought food and beverages products online.

Figure 115: Adoption of e-Commerce - Food & Beverages Items

(Q6. Do you purchase the selected items from e-Commerce platforms (e.g. Lazada, Shopee, Happy

Fresh, Tesco Online, Mydin Online)?)

The purchase of household cleaning products through e-commerce is also uncommon.

1%

1%

1%

1%

1%

3%

4%

2%

4%

4%

96%

95%

96%

95%

96%


Baked goods

Hot beverages

Cold beverages

Dairy products

Often Sometimes Seldom Never



213

Figure 116: Adoption of e-Commerce - Household Cleaning Products



A small fraction of the consumers do purchase personal care products online, especially hair

shampoo and facial wash. The adoption of e-commerce for the purchase increases with the

household income.

Figure 117: Adoption of e-Commerce - Personal Care & Toiletries

2%

1%

5%

6%

6%

9%

7%

93%

93%

94%

90%

93%


Dish detergent


Floor cleaner

Kitchen cleaner


1%

1%

1%

2%

3%

8%

10%

1%

7%

5%

5%

10%

13%

4%

3%

92%

91%

81%

77%

94%

89%

Tooth paste


Hair Shampoo

Facial wash

Tooth brush

Mouthwash




214



As compared to other fast moving consumer goods, the adoption of e-commerce is the highest

within the clothing product category; with around 20% of the consumers sometimes purchase daily

clothes and business attire online.

Figure 118: Adoption of e-Commerce - Clothing



The key attractions for consumers to purchase their products online are discount and promotion

available online, cheaper than normal retail shops and convenience. These aspects are especially

attractive for consumers who stay in the rural areas; with more than 85% of them make their

purchases online due to these reasons.

3%

2%

2%

2%

2%

26%

21%

19%

8%

4%

19%

19%

19%

17%

19%

13%

7%

20%

27%

51%

61%

59%

79%

89%

59%

53%

Women daily clothes

Men daily clothes


Women innerwear

Men innerwear

Men business attire





215

Figure 119: Reasons for Purchasing the Selected Items Online

(Q7. What are the reasons for purchasing selected items online?)

86%

81%

74%

65%

65%

64%

3%

85%

77%

71%

62%

61%

65%

3%

93%

100%

86%

79%

79%

59%

Discount and promotion

Cheaper than normal retail shops

Convenience

Can review and compare productseasily

The products are not sold in retailstore in my area

Overseas products that are notavailable locally

Others

Total Urban Rural(n=153)



216

9.2.5 Competitive Landscape and Product Offerings

On average, there are around 4 to 6 groceries retail stores within the survey respondents‟ housing

area. The urban areas have around 5 to 6 market players within each housing area, whereas the

rural areas have around 3 to 4. Only 2% from the 400 consumers surveyed indicated that there are

only 1 groceries retail store in their housing area.

Figure 120: Number of Groceries Retail Stores within Respondent's Housing Area

(Q10. Could you indicate approximately how many groceries retail stores are there within your housing

area?)

Sixty six per cent of the respondents in central region, 59% in southern region and 53% in east

Malaysia have noticed price difference for the same retail outlet brand in different locations. Half of

the respondents who noticed such phenomena stated that the price difference is within 5%, while

30% of the respondents said the price difference is around 6% to 10%.

More than half of the consumers surveyed across all geographical region noticed price difference for

the same product sold by competing retail outlets within their housing areas. Nonetheless, the price

difference is typically quite small (within 5%).

5.32 5.72

4.48

5.90

3.79

7.24

5.08

5.85

3.73

4.50

5.00

4.00

5.00

4.00

5.00 5.00 5.00

3.00

TOTAL CentralRegion

NorthernRegion

SouthernRegion

EasternRegion

Sarawak Sabah Urban Rural

Mean Median



217

Figure 121: Price Difference for the Same Retail Outlet Brand in Different Locations

(Q11.Have you noticed any price difference for the same retail outlet brand in different locations? (e.g.

The product price of Company X in store A is different than in store B). If yes, please indicate

approximately how much is the price difference.)

Figure 122: Price Difference for the Same Product Sold by Competing Retail Outlets

Yes 54%

No 44%

Not applicabl

e 3%

Observed price difference for the same retail outlet brand in

different locations

≤ 5%, 51%

6-10%, 30%

11-15%, 7%

16-20%, 5% > 20%,

7%

Magnitude of Price Difference

Yes 64%

No 36%

Observed price difference for the same product sold by competing retail outlets

≤ 5%, 60%

6-10%, 26%

11-15%, 6%

16-20%, 4%

> 20%, 4%

Magnitude of Price Difference

(n=400) (n=214)

(n=400) (n=256)



218

(Q12. Do you notice any price difference of the same product sold by competing retail outlets in your

area? If yes, please indicate approximately how much is the price difference.)

A big majority of the consumers surveyed (more than 80%) indicated that the retail outlet where they

purchased their products offer several brands of similar products and they are satisfied with the

brand options and variations provided. The dissatisfaction level is higher in the central region as

compared to other locations, where nearly 30% of the consumers are unhappy with the brand

options and variations provided.

Figure 123: Availability and Satisfactions with Brand Options

(Q15. Does the retail outlet where you purchased your product carry several brands of similar product?)

(Q16. Are you satisfied with the brand options and variations provided by the retail outlet where you

purchased your product?)

9.2.6 Product Pricing

Within the food and beverages category, almost 60% of the consumers in central region noticed

price increase of up to 5% for essential food items in the last 12 months. More than 50% of the

consumers in southern region highlighted price increase for canned food, frozen food and dairy

products within the same period. Such price increase is typically within 5%. In Sarawak, 57% of the

consumers indicated price increase of 6-10% in canned food.

In terms of household cleaning products and personal care & toiletries, most of the surveyed

respondents did not notice any price increase for the products within these two product categories in

the last 12 months.

No 13%

Yes 87%

Availability of Several Brands for Similar Products

No, 16%

Yes, 84%

Satisfaction with the brand options and variations

(n=400) (n=400)



219

For clothing, more than half consumers in the central region noticed price increase for men daily

wear, children daily wear and men business attire in the past 12 months. 53% of the consumers in

eastern region also observed price increase in men daily wear. Consumers in eastern region

indicated that the price increase for men daily wear is between 6% and 10%. In the central region,

consumers have very diverse opinion on the magnitude of price increase for men daily wear and

men business attire, .however 41% of them feel that the price increase for children daily wear is

between 6% and 10%.



220

Figure 124: Observed Price Increase in the Past 12 Months - Food & Beverages

(Q17. Have you noticed any increased in price for the selected items at your selected retail outlets in the


34%

27%

20%

22%

37%

35%

42%

57%

32%

22%

30%

37%

38%

29%

23%

20%

17%

14%

40%

23%

41%

35%

37%

29%

18%

52%

63%

71%

15%

17%

11%

19%

26%

18%

17%

9%

24%

18%

31%

33%

45%

57%

39%

19%

7%

0%

25%

7%

0%


Baked goods

Hot beverages

Cold beverages

Dairy products

Frozen food

Canned food

TOTAL

Central Region

Nothern Region

Southern Region

Eastern Region

Sarawak

Sabah



221

Figure 125: Observed Price Increase in the Past 12 Months - Household Cleaning Products



32%

26%

23%

30%

22%

46%

29%

22%

21%

25%

21%

25%

34%

35%

26%

31%

37%

18%

33%

18%

18%

16%

17%

39%

23%

36%

20%

32%

33%

18%

24%

16%

0%

0%

0%


Dish detergent


Floor cleaner

Kitchen cleaner

TOTAL

Central Region

Nothern Region

Southern Region

Eastern Region

Sarawak

Sabah



222

Figure 126: Observed Price Increase in the Past 12 Months - Personal Care Products



21%

28%

33%

25%

18%

27%

31%

44%

41%

34%

20%

40%

19%

14%

33%

20%

17%

15%

7%

25%

24%

26%

5%

25%

18%

20%

37%

20%

21%

29%

36%

32%

34%

21%

33%

10%

18%

16%

11%

8%

Tooth paste


Hair Shampoo

Facial wash

Tooth brush

Mouthwash

TOTAL

Central Region

Nothern Region

Southern Region

Eastern Region

Sarawak

Sabah



223

Figure 127: Observed Price Increase in the Past 12 Months - Clothing



35%

37%

30%

22%

16%

36%

29%

44%

54%

52%

38%

36%

61%

45%

30%

19%

21%

14%

4%

10%

20%

28%

30%

26%

25%

4%

17%

19%

45%

53%

27%

13%

21%

31%

26%

33%

19%

11%

22%

33%

7%

6%

15%

7%

0%

Women daily clothes

Men daily clothes


Women innerwear

Men innerwear

Men business attire


TOTAL

Central Region

Nothern Region

Southern Region

Eastern Region

Sarawak

Sabah



224

9.2.7 Product Bundling

Product bundling is not very common in the Malaysian retail space, especially for clothing, which

usually only some children daily clothes are bundled together for sales. Consumers are always given

a choice to purchase a single item.



225

Figure 128: Observed Product Bundling - Food & Beverages

5%

8%

7%

17%

19%

3%

9%

6%

32%

21%

3%

7%

6%

4%

14%

12%

12%

9%

15%

35%

0%

0%

0%

0%

11%

13%

17%

27%

23%

17%

0%

0%

17%

17%

0%


Baked goods

Hot beverages

Cold beverages

Dairy products

TOTAL

Central Region

Nothern Region

Southern Region

Eastern Region

Sarawak

Sabah



226

Figure 129: Observed Product Bundling - Household Cleaning Products

17%

16%

16%

27%

27%

19%

14%

17%

28%

33%

5%

12%

13%

25%

28%

28%

35%

24%

24%

20%

18%

3%

14%

30%

26%

21%

20%

16%

28%

27%

14%

16%


Dish detergent


Floor cleaner

Kitchen cleaner

TOTAL

Central Region

Nothern Region

Southern Region

Eastern Region

Sarawak

Sabah



227

Figure 130: Observed Product Bundling - Personal Care Products

16%

16%

16%

13%

21%

22%

15%

18%

20%

7%

15%

13%

11%

5%

8%

13%

20%

23%

26%

25%

19%

19%

30%

25%

6%

15%

9%

7%

21%

35%

33%

26%

28%

21%

29%

25%

10%

9%

16%

22%

8%

Tooth paste


Hair Shampoo

Facial wash

Tooth brush

Mouthwash

TOTAL

Central Region

Nothern Region

Southern Region

Eastern Region

Sarawak

Sabah



228

9.3 Price Trends Comparison

9.3.1 Rempah Ratus

Average prices of Rempah Sup, Biji Sawi, Serbuk Kunyit, Jintan Manis, Buah Pala in 2019 seem to

vary significantly across different formats. The price difference for Rempah Sup was 40% higher, Biji

Sawi 34%, Serbuk Kunyit 31%, Jintan Manis 27% and Buah Pala was 25% higher across formats.

Figure 131: Average Price of Rempah Ratus by Format, Malaysia (2019)

- 2.00 4.00 6.00 8.00 10.00 12.00 14.00

Kulit Kayu Manis (100g)

Serbuk Rempah - Kari Daging (TidakBerbungkus) (100g)

Rempah Kurma (Tidak Berbungkus) (100g)

Serbuk Rempah - Kari Ikan (Tidak Berbungkus)(100g)

Serbuk Cili (Tidak Berbungkus) (100g)

Jintan Manis (Kasar) (100g)

Serbuk Kunyit (Tidak Berbungkus) (100g)

Lada Putih (100g)

Buah Pala (100g)

Lada Hitam (100g)

Ketumbar (100g)

Buah Pelaga (100g)

Rempah Sup (Tidak Berbungkus) (100g)

Bunga Cengkih (100g)

Biji Sawi (100g)

Halba (100g)

Buah Keras (100g)

Bunga Lawang (100g)

Average Price

Overall

SUPERMARKET

PASAR MINI

PASAR BASAH

KEDAI RUNCIT

HYPERMARKET



229

Figure 132: Average Price of Rempah Ratus by State, Malaysia (2019)

9.3.2 Rempah Ratus (Berbungkus)

Average price of Garam Halus Biasa (Pelbagai Jenama) (±350g), Serbuk Kari Kurma Alagappas

(200g), Serbuk Cabai Alagappas (230g), Serbuk Kari Daging Alagappas (250g) and Perencah Nasi

Goreng Cina Adabi (17g) were found to be significantly different with price difference ranging from

32% for Garam Halus Biasa (Pelbagai Jenama) to 21% for Perencah Nasi Goreng Cina Adabi.

- 2.00 4.00 6.00 8.00 10.00 12.00 14.00 16.00

Kulit Kayu Manis (100g)

Serbuk Rempah - Kari Daging (Tidak Berbungkus)(100g)

Rempah Kurma (Tidak Berbungkus) (100g)

Serbuk Rempah - Kari Ikan (Tidak Berbungkus)(100g)

Serbuk Cili (Tidak Berbungkus) (100g)

Jintan Manis (Kasar) (100g)

Serbuk Kunyit (Tidak Berbungkus) (100g)

Lada Putih (100g)

Buah Pala (100g)

Lada Hitam (100g)

Ketumbar (100g)

Buah Pelaga (100g)

Rempah Sup (Tidak Berbungkus) (100g)

Bunga Cengkih (100g)

Biji Sawi (100g)

Halba (100g)

Buah Keras (100g)

Bunga Lawang (100g)

Overall

Terengganu

Selangor

Sarawak

Sabah

Putrajaya

Perlis

Perak

Pahang

P.Pinang

N Sembilan

Melaka

Labuan

KL

Kelantan

Kedah

Johor



230

Figure 133: Average Price of Rempah Ratus (Berbungkus) by Format, Malaysia (2019)

9.3.3 Beras

Average prices of rice Beras super Cap Jati TWR 5% (import) 10kg was found to be 29% higher in

Pasar Mini and Beras Pulut Thailand (Biasa) Cap Floral (1kg) was 20% higher in Supermarket.

- 5.00 10.00

Garam Halus Biasa (Pelbagai Jenama)…

Asam Jawa (Tidak Berbiji) Adabi (200g)

Asam Jawa (Berbiji) Cap Penguin (200g)

Perencah Nasi Goreng Ikan Bilis Seri Aji…

Perencah Nasi Goreng Cina Adabi (17g)

Perencah Tom Yam Adabi (40g)

Kiub Sup Tomyam (Maggi) (2x10g)

Serbuk Kari Daging Alagappas (250g)

Serbuk Kunyit Babas (250g)

Serbuk Cabai Alagappas (230g)

Serbuk Cili Babas (250g)

Serbuk Cili Kijang (250g)

Serbuk Kunyit Alagappas (250g)

Sup Punjut Mak Siti (10g)

Serbuk Rempah Sup Mak Siti (250g)

Serbuk Kunyit Adabi (250g)

Sup Bunjut Adabi (8g)

Serbuk Perencah Sup Adabi (250g)

Serbuk Kurma Babas (125g)

Serbuk Kurma Ayam & Daging Adabi (250g)

Serbuk Sup Faiza (220g)

Serbuk Kari Kurma Alagappas (200g)

Serbuk Kari Daging Babas (250g)

Serbuk Kari Ikan Adabi (250g)

Serbuk Kari Ikan Alagappas (250g)

Serbuk Kari Ikan Babas (250g)

Serbuk Kari Ayam dan Daging Adabi (250g)

Average Price

Overall

SUPERMARKET

PASAR MINI

PASAR BASAH

KEDAI RUNCIT

HYPERMARKET



231

Figure 134: Average Price of Beras by Format, Malaysia (2019)

- 5.00 10.00 15.00 20.00 25.00 30.00 35.00 40.00 45.00

Beras Super Cap Jati TWR 5% (Import) (10kg)

Beras Pulut Thailand (Biasa) Cap Floral (1kg)

Beras Pulut Thailand (Susu) Cap Sakura (1kg)

Beras Basmathi - Faiza (Kashmir) (5kg)

Beras Super Cap Rambutan 5% (Import)(10kg)

Beras Super Tempatan (ST15%) (10kg)

Beras Cap Faiza Emas (SST5%) (10kg)

Beras Cap Rambutan (SST5%) (10kg)

Beras Cap Jasmine (SST5%) (10kg)

Beras Cap Jati (SST5%) (10kg)

Average Price

Overall

SUPERMARKET

PASAR MINI

PASAR BASAH

KEDAI RUNCIT

HYPERMARKET



232

Prices of most of the rice are significantly higher in Sabah and Sarawak, particularly for Beras Super

Cap Jati TWR 5% (Import) (10kg) where the price difference was found to be 49%.

Figure 135: Average Price of Beras by State, Malaysia (2019)

- 10.00 20.00 30.00 40.00 50.00 60.00

Beras Super Cap Jati TWR 5% (Import) (10kg)

Beras Pulut Thailand (Biasa) Cap Floral (1kg)

Beras Pulut Thailand (Susu) Cap Sakura (1kg)

Beras Basmathi - Faiza (Kashmir) (5kg)

Beras Super Cap Rambutan 5% (Import) (10kg)

Beras Super Tempatan (ST15%) (10kg)

Beras Cap Faiza Emas (SST5%) (10kg)

Beras Cap Rambutan (SST5%) (10kg)

Beras Cap Jasmine (SST5%) (10kg)

Beras Cap Jati (SST5%) (10kg)

Average Price

Overall Terengganu

Selangor Sarawak

Sabah Putrajaya

Perlis Perak

Pahang P.Pinang

N Sembilan Melaka

Labuan KL

Kelantan Kedah

Johor



233

9.3.4 Bihun

Across the formats, average price difference is less than 10% for Bihun.

Figure 136: Average Price of Bihun by Format, Malaysia (2019)

Average prices for bihun is highest in Sarawak while lowest in Sabah with a difference of 54% for

Bihun Kering (Cap Bintang) (400g) and 31% for Bihun Kering (Cap Jasmine) (400g).

Figure 137: Average Price of Bihun by State, Malaysia (2019)

- 0.50 1.00 1.50 2.00 2.50 3.00 3.50

Bihun Kering (Cap Jasmine)(400g)

Bihun Kering (Cap Bintang)(400g)

Average Price

Overall

SUPERMARKET

PASAR MINI

PASAR BASAH

KEDAI RUNCIT

HYPERMARKET

- 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00

Bihun Kering (Cap Jasmine) (400g)

Bihun Kering (Cap Bintang) (400g)

Average Price

Overall

Terengganu

Selangor

Sarawak

Sabah

Putrajaya

Perlis

Perak

Pahang

P.Pinang

N Sembilan

Melaka

KL

Kelantan

Kedah

Johor



234

9.3.5 Roti

Though the average price of bread is similar across formats, Roti Sandwich Gardenia (400g) was

31% higher in Sabah and Labuan while Roti Gardenia WholeMeal (400g) was 26% higher in Sabah.

Figure 138: Average Price of Roti by Format, Malaysia (2019)

Though the average price of bread is similar across formats, Roti Sandwich Gardenia (400g) was

31% higher in Sabah and Labuan while Roti Gardenia WholeMeal (400g) was 26% higher in Sabah.

Figure 139: Average Price of Roti by State, Malaysia (2019)

- 0.50 1.00 1.50 2.00 2.50 3.00 3.50

Roti Sandwich Gardenia (400g)

Roti Gardenia WholeMeal (400g)

Sandwich Massimo DenganGerma Gandum (400g)

Average Price

Overall

SUPERMARKET

PASAR MINI

PASAR BASAH

KEDAI RUNCIT

HYPERMARKET

- 1.00 2.00 3.00 4.00 5.00

Roti Sandwich Gardenia (400g)

Roti Gardenia WholeMeal (400g)

Sandwich Massimo Dengan GermaGandum (400g)

Average Price

Overall

Terengganu

Selangor

Sarawak

Sabah

Putrajaya

Perlis

Perak

Pahang

P.Pinang

N Sembilan

Melaka

Labuan



235

9.3.6 Gula

Average price difference Gula Merah Lembut (Pelbagai Jenama) (500g) was 16% higher while Gula

Halus Castor (Pelbagai Jenama) (500g) was 12% at Pasar Mini.

Figure 140: Average price of Gula by Format, Malaysia (2019)

Average price of Gula Merah Lembut (Pelbagai Jenama) (500g) was found to highest at Labuan with

a difference of 32% compared to Melaka similarly average price of Gula Halus Castor (Pelbagai

Jenama) (500g) was 20% more in Labuan.

Figure 141: Average Price of Gula by State, Malaysia (2019)

- 0.50 1.00 1.50 2.00 2.50 3.00 3.50

Gula Halus Castor (PelbagaiJenama) (500g)

Gula Merah Lembut (PelbagaiJenama) (500g)

Gula Putih Bertapis Kasar(Pelbagai Jenama) (1kg)

Gula Putih Bertapis Halus(Pelbagai Jenama) (1kg)

Average Price

Overall

SUPERMARKET

PASAR MINI

PASAR BASAH

KEDAI RUNCIT

HYPERMARKET

- 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00

Gula Halus Castor (PelbagaiJenama) (500g)

Gula Merah Lembut (PelbagaiJenama) (500g)

Gula Putih Bertapis Kasar (PelbagaiJenama) (1kg)

Gula Putih Bertapis Halus (PelbagaiJenama) (1kg)

Average Price

Overall

Terengganu

Selangor

Sarawak

Sabah

Putrajaya

Perlis

Perak

Pahang

P.Pinang

N Sembilan

Melaka

Labuan



236

9.3.7 Tepung

Average prices of most of flour did not vary much across various formats. Highest difference of 17%

was found for Tepung Jagung (Star Brand) (400g).

Figure 142: Average Price of Tepung by Format, Malaysia (2019)

When compared to formats, the price difference was significant across states. On an average

Tepung Jagung (Star Brand) (400g) was 48% higher at Labuan, followed by Tepung Beras

(Pelbagai Jenama) (500g) which was 39% higher at Sabah and Tepung Naik Sendiri Cap 'MFM'

(850g) was 35% higher at Labuan.

Figure 143: Average Price of Tepung by State, Malaysia (2019)

- 1.00 2.00 3.00 4.00 5.00

Tepung Beras (Pelbagai Jenama)(500g)

Tepung Gandum NGP(Berbungkus, Cap Sauh) (1kg)

Tepung Gandum NGP(Berbungkus, Cap Faiza) (1kg)

Tepung Gandum GP(Berbungkus) Pelbagai Jenama…

Tepung Jagung (Star Brand)(400g)

Tepung Naik Sendiri Cap 'MFM'(850g)

Tepung Pulut (Pelbagai Jenama)(500g)

Average Price

Overall

SUPERMARKET

PASAR MINI

PASAR BASAH

KEDAI RUNCIT

HYPERMARKET

- 1.00 2.00 3.00 4.00 5.00

Tepung Beras (Pelbagai Jenama)(500g)

Tepung Gandum NGP (Berbungkus,Cap Sauh) (1kg)

Tepung Gandum NGP (Berbungkus,Cap Faiza) (1kg)

Tepung Gandum GP (Berbungkus)Pelbagai Jenama (1kg)

Tepung Jagung (Star Brand) (400g)

Tepung Naik Sendiri Cap 'MFM'(850g)

Tepung Pulut (Pelbagai Jenama)(500g)

Average Price

Overall

Terengganu

Selangor

Sarawak

Sabah

Putrajaya

Perlis

Perak

Pahang

P.Pinang

N Sembilan

Melaka

Labuan



237

9.3.8 Minyak Dan Lemak

With the exception of Minyak Jagung Cap Mazola (2kg), the difference in average prices of oil

across various formats was found to be less than 10%. Minyak Jagung Cap Mazola (2kg) average

price was 39% lower in KEDAI RUNCIT format.

Figure 144: Average Price of Minyak Dan Lemak by Format, Malaysia (2019)

Average price of Minyak Jagung Cap Mazola (2kg) was 47% higher in Melaka, while Minyak Masak

Tulen Cap Vesawit (5kg) and Minyak Masak Campur Cap Helang (5kg) were 23% and 21%

respectively higher at Labuan.

- 5.00 10.00 15.00 20.00 25.00 30.00 35.00 40.00 45.00

Minyak Sapi Cap Windmill Gheeblend (400g)

Minyak Sapi Cap QBB (400g)

Minyak Masak Paket (Pelbagai Jenama) (1kg)

Minyak Masak Tulen Cap Vesawit (1kg)

Minyak Masak Tulen Cap Seri Murni (1kg)

Minyak Masak Tulen Cap Buruh (1kg)

Minyak Masak Campur Cap Pisau (1kg)

Minyak Masak Campur Cap Neptune (1kg)

Minyak Masak Campur Cap Helang (1kg)

Minyak Jagung Cap Vecorn (1kg)

Minyak Jagung Cap Daisy (1kg)

Minyak Jagung Cap Mazola (1kg)



















Average Price

Overall

SUPERMARKET

PASAR MINI

PASAR BASAH

KEDAI RUNCIT

HYPERMARKET



238

Figure 145: Average Price of Minyak Dan Lemak by State, Malaysia (2019)

9.3.9 Ikan Dalam Tin

Average prices for canned fish did not vary significantly across various formats and states

- 5.00 10.00 15.00 20.00 25.00 30.00 35.00 40.00

Minyak Sapi Cap Windmill Gheeblend (400g)

Minyak Sapi Cap QBB (400g)

Minyak Masak Paket (Pelbagai Jenama)…




























Average Price

Overall

Terengganu

Selangor

Sarawak

Sabah

Putrajaya

Perlis

Perak

Pahang

P.Pinang

N Sembilan

Melaka

Labuan

KL

Kelantan

Kedah

Johor



239

Figure 146: Average Price of Ikan Dalam Tin by Format, Malaysia (2019)

Figure 147: Average Price of Ikan Dalam Tin by State, Malaysia (2019)

- 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00

Tuna Cap TC Boy (Sandwich Delite)…

Tuna Cap Ayam (Tuna Mayonnaise)…

Mackarel Cap King cup (Sos Tomato)…

Mackarel Cap King cup (Sos Tomato)…

Mackarel Cap Ayam (Sos Tomato) (425g)


Sardin Cap Ayam (Sos Tomato) (155g)


Sardin Cap King Cup (Sos Tomato) (155g)


Sardin Cap Adabi (Sos Tomato) (425g)

Average Price

Overall

SUPERMARKET

PASAR MINI

PASAR BASAH

KEDAI RUNCIT

HYPERMARKET

- 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00

Tuna Cap TC Boy (Sandwich Delite) (180g)

Tuna Cap Ayam (Tuna Mayonnaise) (160g)

Mackarel Cap King cup (Sos Tomato) (425g)

Mackarel Cap King cup (Sos Tomato) (155g)







Sardin Cap Adabi (Sos Tomato) (425g)

Average Price

Overall

Terengganu

Selangor

Sarawak

Sabah

Putrajaya

Perlis

Perak

Pahang

P.Pinang

N Sembilan

Melaka

Labuan

KL

Kelantan

Kedah

Johor



240

9.3.10 Kicap Dan Sos

Similar to canned fish, average prices of kicap dan sos did not vary much across various formats.

Figure 148: Average Price of Kicap Dan Sos by Format, Malaysia (2019)

Average price of Kicap Tamin (Dark Soy Sauce) (330ml) was found to be 49% higher in Labuan,

Kicap Lemak Manis Cap Jalen (650ml) was 21% higher at Kelantan, price of Kicap Masin Adabi

(340ml) was found to be 20% higher at Labuan and average price of Sos Cili Life (340g) was 20%

higher at Sabah.

- 1.00 2.00 3.00 4.00 5.00 6.00 7.00

Sos Cili Lingham's (340g)

Sos Cili Kimball (340g)

Sos Cili Life (340g)

Sos Tomato Life (330g)

Sos Cili Life Thai (360g)

Sos Cili Maggi (340g)

Sos Tomato Maggi (325g)


Sos Tiram Maggi (340g)

Sos Tiram Adabi (510g)

Sos Tiram Nona (510g)

Sos Tiram Kimball (510g)

Kicap Masin Adabi (340ml)

Kicap Lemak Masin Cap Kipas Udang…

Kicap Manis Adabi (340ml)

Kicap Lemak Manis Cap Kipas Udang…

Kicap Tamin (Dark Soy Sauce) (330ml)

Kicap Lemak Manis Cap Jalen (650ml)

Average Price

Overall

SUPERMARKET

PASAR MINI

PASAR BASAH

KEDAI RUNCIT

HYPERMARKET



241

Figure 149: Average Price of Kicap Dan Sos by State, Malaysia (2019)

9.3.11 Sapuan (Spreads)

With exception of Mainland Chesdale Cheddar Cheese Spread 12 Cheddar (250g), average prices

of rest of spreads were less than 10%. Average price of Mainland Chesdale Cheddar Cheese

Spread 12 Cheddar (250g) was 24% higher in Kedai Runcit.

- 1.00 2.00 3.00 4.00 5.00 6.00 7.00

Sos Cili Lingham's (340g)

Sos Cili Kimball (340g)

Sos Cili Life (340g)

Sos Tomato Life (330g)

Sos Cili Life Thai (360g)


Sos Tomato Maggi (325g)


Sos Tiram Maggi (340g)

Sos Tiram Adabi (510g)

Sos Tiram Nona (510g)

Sos Tiram Kimball (510g)

Kicap Masin Adabi (340ml)

Kicap Lemak Masin Cap Kipas…

Kicap Manis Adabi (340ml)

Kicap Lemak Manis Cap Kipas…

Kicap Tamin (Dark Soy Sauce)…

Kicap Lemak Manis Cap Jalen…

Average Price

Overall

Terengganu

Selangor

Sarawak

Sabah

Putrajaya

Perlis

Perak

Pahang

P.Pinang

N Sembilan

Melaka

Labuan

KL

Kelantan

Kedah

Johor



242

Figure 150: Average Price of Sapuan (Spreads) by format, Malaysia (2019)

Average prices for Lepaan Buttercup (250g), Lepaan Farmcows (250g) was 27% and 36% higher in

Sarawak and Sabah respectively.

- 2.00 4.00 6.00 8.00 10.00 12.00 14.00 16.00

Lepaan Buttercup (250g)

Lepaan Farmcows (250g)

Marjerin Planta (480g)


Marjerin Daisy (480g)

Kraft Hi-Calcium Singles Processed Cheese12 Slices (250g)


Mayonis Sebenar Lady's Choice (220ml)

Mentega Kacang Halus Lady's Choice (500g)


Jem Buah Campuran Lady's Choice (400g)

Seri Kaya Yeo's (480g)

Mainland Chesdale Cheddar Cheese Spread12 Cheddar (250g)

Average Price

Overall

SUPERMARKET

PASAR MINI

PASAR BASAH

KEDAI RUNCIT

HYPERMARKET



243

Figure 151: Average Price of Sapuan (Spreads) by State, Malaysia (2019)

9.3.12 Mentega

Though average prices for butter saw only less than 10% difference across various formats,

Mentega SCS (Salted) (250g) average price was found to be 45% higher at Sarawak.

- 2.00 4.00 6.00 8.00 10.00 12.00 14.00 16.00

Lepaan Buttercup (250g)

Lepaan Farmcows (250g)




Kraft Hi-Calcium Singles Processed Cheese 12Slices (250g)


Mayonis Sebenar Lady's Choice (220ml)



Jem Buah Campuran Lady's Choice (400g)

Seri Kaya Yeo's (480g)

Mainland Chesdale Cheddar Cheese Spread 12Cheddar (250g)

Average Price

Overall

Terengganu

Selangor

Sarawak

Sabah

Putrajaya

Perlis

Perak

Pahang

P.Pinang

N Sembilan

Melaka

Labuan

KL

Kelantan

Kedah

Johor



244

Figure 152: Average Price of Mentega by Format, Malaysia (2019)

Figure 153: Average Price of Mentega by Format, Malaysia (2019)

9.3.13 Santan (Kotak)

Average prices of Santan did not vary much across various formats and states with difference less

than 10%.

- 5.00 10.00 15.00 20.00

Mentega Anchor (Salted) (227g)

Mentega SCS (Salted) (250g)

Average Price

Overall

SUPERMARKET

PASAR MINI

PASAR BASAH

KEDAI RUNCIT

HYPERMARKET

- 5.00 10.00 15.00 20.00

Mentega Anchor (Salted) (227g)

Mentega SCS (Salted) (250g)

Average Price

Overall

Terengganu

Selangor

Sarawak

Sabah

Putrajaya

Perlis

Perak

Pahang

P.Pinang

N Sembilan

Melaka

Labuan



245

Figure 154: Average Price of Santan (Kotak) by Format, Malaysia (2019)

- 2.00 4.00 6.00 8.00 10.00 12.00

Santan Kelapa Jenama AyamBrand (1liter)

Santan Kelapa Jenama M&S(500ml)

Santan Kelapa Jenama Kara(200ml)

Santan Kelapa Jenama Harmuni(200ml)

Average Price

Overall

SUPERMARKET

PASAR MINI

PASAR BASAH

KEDAI RUNCIT

HYPERMARKET



246

Figure 155: Average Price of Santan (Kotak) by State, Malaysia (2019)

9.3.14 Penjagaan Diri

Berus Gigi Oral B (Complete Easy Clean - Soft) (1 btg) and Berus Gigi Colgate (Twister - Soft) (1

btg) average prices was found to be 13% higher at hypermarket when compared to the lowest

average prices.

- 2.00 4.00 6.00 8.00 10.00 12.00

Santan Kelapa Jenama Ayam Brand (1liter)

Santan Kelapa Jenama M&S (500ml)

Santan Kelapa Jenama Kara (200ml)

Santan Kelapa Jenama Harmuni (200ml)Overall

Terengganu

Selangor

Sarawak

Sabah

Putrajaya

Perlis

Perak

Pahang

P.Pinang

N Sembilan

Melaka

Labuan

KL

Kelantan

Kedah

Johor



247

Figure 156: Average Price of Penjagaan Diri by Format, Malaysia (2019)

Berus Gigi Oral B (Complete Easy Clean - Soft) (1 btg) average price was 24% higher in Sabah

while Berus Gigi Colgate (Zig Zag - Soft) (1 btg) and Berus Gigi Colgate (Twister - Soft) (1 btg) was

found to be 16% higher in Selangor.

Figure 157: Average Price of Penjagaan Diri by State, Malaysia (2019)

9.3.15 Penjagaan Rumah

Average price difference of Sabun Buku Kuat Harimau (Pelbagai Jenis) (150g) was 25% higher and

Sabun Serbuk Breeze (Power Clean) (400g) was found to be 15% higher at Pasar Basah.

- 2.00 4.00 6.00 8.00 10.00 12.00

Sabun Palmolive (3 buku)Pelbagai Jenis (3 x 80g)

Sabun May (3 Buku) PelbagaiJenis (3 x 85g)

Sabun Lux (3 Buku) PelbagaiJenis (3 x 85g)

Ubat Gigi Fresh & White (PudinaSegar) (160g)

Berus Gigi Colgate (Zig Zag -Soft) (1 btg)

Berus Gigi Oral B (CompleteEasy Clean - Soft) (1 btg)

Berus Gigi Colgate (Twister -Soft) (1 btg)

Ubat Gigi Colgate (Pudina Segar)(250g)

Average Price

Overall

SUPERMARKET

PASAR MINI

PASAR BASAH

KEDAI RUNCIT

HYPERMARKET

- 2.00 4.00 6.00 8.00 10.00 12.00 14.00

Sabun Palmolive (3 buku) PelbagaiJenis (3 x 80g)

Sabun May (3 Buku) Pelbagai Jenis(3 x 85g)

Sabun Lux (3 Buku) Pelbagai Jenis(3 x 85g)

Ubat Gigi Fresh & White (PudinaSegar) (160g)

Berus Gigi Colgate (Zig Zag - Soft)(1 btg)

Berus Gigi Oral B (Complete EasyClean - Soft) (1 btg)

Berus Gigi Colgate (Twister - Soft)(1 btg)

Ubat Gigi Colgate (Pudina Segar)(250g)

Average Price

Overall

Terengganu

Selangor

Sarawak

Sabah

Putrajaya

Perlis

Perak

Pahang

P.Pinang

N Sembilan

Melaka

Labuan



248

Figure 158: Average Price of Penjagaan Rumah by Format, Malaysia (2019)

Pelembut Pakaian - Softlan (Floral Fantasy) (900ml) average price was found to be 32% higher in

KL while Dynamo Power Gel (Regular) (2kg) was 22% higher in Terengganu and Sabun Buku Kuat

Harimau (Pelbagai Jenis) (150g) was 22% at Kelantan.

Figure 159: Average Price of Penjagaan Rumah by State, Malaysia (2019)

9.3.16 Bahan-Bahan Minuman

Average prices of Bahan-Bahan Minuman did not vary much across various formats. Among the

states, only Serbuk Kopi Cap Kapal Api (Berbungkus) (180g) was found to be 26% higher at

Labuan.

- 10.00 20.00 30.00

Pelembut Pakaian - Downy…

Pelembut Pakaian - Softlan (Floral…

Sabun Pencuci Sunlight…

Sabun Pencuci Axion Paste…

Sabun Pencuci Glo (Lime/Lemon)…

Sabun Pencuci Kuat Harimau…

Daia (Floral Freshness/Lemon…

Dynamo Power Gel (Regular) (2kg)

Sabun Buku Fab (Pelbagai Jenis)…

Sabun Buku Kuat Harimau…

Sabun Serbuk Breeze (Power…

Sabun Serbuk Fab (Perfect) (720g)

Sabun Serbuk Attack (Colour…

Sabun Serbuk Top (Super Colour)…

Average Price

Overall

SUPERMARKET

PASAR MINI

PASAR BASAH

KEDAI RUNCIT

HYPERMARKET

- 5.00 10.00 15.00 20.00 25.00

Pelembut Pakaian - Downy…

Pelembut Pakaian - Softlan…

Sabun Pencuci Sunlight…

Sabun Pencuci Axion Paste…

Sabun Pencuci Glo (Lime/Lemon)…

Sabun Pencuci Kuat Harimau…

Daia (Floral Freshness/Lemon…

Dynamo Power Gel (Regular) (2kg)

Sabun Buku Fab (Pelbagai Jenis)…

Sabun Buku Kuat Harimau…

Sabun Serbuk Breeze (Power…

Sabun Serbuk Fab (Perfect) (720g)

Sabun Serbuk Attack (Colour…

Sabun Serbuk Top (Super… Overall

Terengganu

Selangor

Sarawak

Sabah

Putrajaya

Perlis

Perak

Pahang

P.Pinang

N Sembilan

Melaka

Labuan



249

Figure 160: Average Price of Bahan-Bahan Minuman by Format, Malaysia (2019)

Figure 161: Average Price of Bahan-Bahan Minuman by State, Malaysia (2019)

9.3.17 Tersedia Diminum

Average prices of Dutch Lady UHT Coklat (Kotak) (200ml) was 24% higher and Dutch Lady UHT

Fullcream (Kotak) (200ml) 22% higher at Pasar Basah.

- 5.00 10.00 15.00 20.00 25.00

Teh Lipton (Uncang) (100 beg)


Teh Boh (Serbuk) (500g)

Pearl Café Power Root 4 in 1…

Serbuk Kopi Hang Tuah…

Alicafé Power Root 5 in 1…

Quaker Oats Instant Oatmeal…

Nescafe Blend & Brew 3 in 1…

Nescafe Classic (Paket) (200g)

Milo (Paket) (1kg)

Kordial F&N (Oren) (2 liter)

Horlicks (Botol) (440g)

Nestle Coffee-Mate (450g)

Average Price

Overall

SUPERMARKET

PASAR MINI

PASAR BASAH

KEDAI RUNCIT

HYPERMARKET

- 5.00 10.00 15.00 20.00 25.00



Teh Boh (Serbuk) (500g)

Pearl Café Power Root 4 in 1…

Serbuk Kopi Hang Tuah…

Alicafé Power Root 5 in 1…

Quaker Oats Instant Oatmeal…

Nescafe Blend & Brew 3 in 1…

Nescafe Classic (Paket) (200g)

Milo (Paket) (1kg)

Kordial F&N (Oren) (2 liter)

Horlicks (Botol) (440g)

Nestle Coffee-Mate (450g)

Average Price

Overall

Terengganu

Selangor

Sarawak

Sabah

Putrajaya

Perlis

Perak

Pahang

P.Pinang

N Sembilan

Melaka

Labuan



250

Figure 162: Average Price of Tersedia Diminum by Format, Malaysia (2019)

Among Tersedia Dimimum, average price of Yogurt Nestle (Fat Free) (125g) was found to be 24%

higher at Sabah, while Drinho Soya (Kotak) (250ml) was 21% higher at Terengganu and Mirinda

Oren (Tin) (320ml) was 20% higher at Putrajaya.

Figure 163: Average Price of Tersedia Diminum by State, Malaysia (2019)

- 2.00 4.00 6.00 8.00

Livita With Honey (botol) (150ml)

Yogurt Marigold (Low Fat) (135g)

Jus Oren Sunkist (1liter)

Seven Up Lemon & Lime (Tin)…

Mirinda Oren (Botol) (1.5 liter)

F&N Oren (Botol) (1.5 liter)

F&N Oren (Tin) (325ml)

Coca Cola (Tin) (320ml)

Drinho Soya (Kotak) (250ml)

Dutch Lady UHT Fullcream…

Susu Marigold HL (1 liter)

Average Price

Overall

SUPERMARKET

PASAR MINI

PASAR BASAH

KEDAI RUNCIT

HYPERMARKET

- 2.00 4.00 6.00 8.00 10.00

Livita With Honey (botol) (150ml)

Yogurt Marigold (Low Fat) (135g)

Jus Oren Sunkist (1liter)

Seven Up Lemon & Lime (Tin)…

Mirinda Oren (Botol) (1.5 liter)

F&N Oren (Botol) (1.5 liter)

F&N Oren (Tin) (325ml)

Coca Cola (Tin) (320ml)

Drinho Soya (Kotak) (250ml)

Dutch Lady UHT Fullcream…

Susu Marigold HL (1 liter) Overall

Terengganu

Selangor

Sarawak

Sabah

Putrajaya

Perlis

Perak

Pahang

P.Pinang

N Sembilan

Melaka

Labuan

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