The State of the Economy

Malaysian consumers attitudes towards the

economy and prices

October 2008

© 2008. Synovate Ltd. All rights reserved.

The concepts and ideas submitted to you herein are the intellectual property of
Synovate Ltd. They are strictly of confidential nature and are submitted to you under
the understanding that they are to be considered by you in the strictest of confidence
and that no use shall be made of the said concepts and ideas, including
communication to any third party without Synovate’s express prior consent and/or
payment of related professional services fees in full.
Why is this all so important?
- A timeline

• August 9th 2007 – Bad news from BNP Paribas triggered a sharp rise in
the cost of credit

• September 2007 – Northern Rock customers withdraw 1 billion pounds

sterling in a day (approx. RM6 billion)

• March 2008 – BN loses a number of states in parliamentary elections

leading to degree of political and economic uncertainty

• June 2008 – Malaysian pump prices rise to RM2.70 on the back of high
global oil prices

• July 2008 – US Mortgage lender IndyMac collapses

• August 2008 – Synovate survey

AND SINCE THEN A BARRAGE OF ALMOST DAILY ECONOMIC

NEWS ALERTS !!

© Synovate 2008 1
Nearly 6500 interviews across 9 countries in
August 2008

© Synovate 2008 2
The Global Economy
 How bad is it ? If you live in a ‘developed’ economy, then
things are not considered to be getting better anytime soon!
Q1: Which of the following statements was most applicable to your view on the current state of the economy in your country?

South
Malaysia Japan Taiwan Brazil USA France Russia Turkey
Africa

63 63 64
The economy
is going 49
downhill and
37 39
will get worse
before it gets
22 20
better
8

[Unit: %]

© Synovate 2008 4
 Far higher level of optimism in ‘developing’ countries or is it
blind optimism?
Q1: Which of the following statements was most applicable to your view on the current state of the economy in your country?

South
Malaysia Japan Taiwan Brazil USA France Russia Turkey
Africa

55
The economy
45 45
is in a bad 42
patch but will
30 32
quickly get
better 22 20
12

[Unit: %]

© Synovate 2008 5
 Actually it may be naivety – those that have been through
economic crises before may have learnt
Q1: Which of the following statements was most applicable to your view on the current state of the economy in your country?

RM999 RM1k- RM2k- RM4k &

15-24 25-34 35-49 50-64 & below 1999 3999 above
The economy is………..

58
52 47 50
46
36 37 40

….in a bad patch but will

quickly get better

28 24 24
17 17 21 23
…going downhill and will 14
get worse before it gets
better

[Unit: %]

© Synovate 2008 6
 A large decline in saving and investing as disposable income
becomes reduced with rising inflation costs
Q2: Have you changed any of the following monetary habits in the last six months?

South
Malaysia Japan Taiwan Brazil USA France Russia Turkey
Africa

Nett Change in 15
People
Saving -2
-11 -9 -14 -17
-28 -29 -38

-18 -12 -11 -15

Nett Change in -21
-27
People -37 -35
Investing -53

[Unit: %]

© Synovate 2008 7
 Half of Malaysians
(49% net) are now
more likely to check
the prices of food
items that they buy

© 2008. Synovate Ltd. 8

 Malaysians appear to be very prudent in comparison to
counterparts when it comes to spending on luxuries

Q2: Have you changed any of the following monetary habits in the last six months?

Malaysia Japan Taiwan

Spending less on luxuries 81 59 61

Less impulse buying 52 56 58

Compare prices first more 59 55 57

© 2008. Synovate Ltd. 9

Whilst the more affluent are least likely to be cutting their
spending, they are more likely to still be checking cost of
products to ensure value

Spending less on Compare Prices

Luxuries More
100 91 88 86
79

65 66
50 56 58

0
MHI <RM1k MHI RM1k- RM2k-3,999 >RM4k
1,999

© 2008. Synovate Ltd. 10

 But the reality is that spending cuts are evident wherever you
go…
Q3a: Have you had to make cuts in your spending in the past 6 months?

South
Malaysia Japan Taiwan Brazil USA France Russia Turkey
Africa

80
75
69 70
62 64 61
58

40

[Unit: %]

© 2008. Synovate Ltd. 11

 The travel industry in Malaysia is likely to be the hardest hit
- indeed this is a global phenomenon
Q3b: What was the first item you gave up?

Holiday / leisure travel 18

Branded Items 13

Meals with family / partner 12

Big ticket items e.g. TV 11

Foods that are treat 10

Meals with friends 10

Fuel for non work trips 6

High-tech gadgets 5

© 2008. Synovate Ltd. 12

 Generally a climate of worry, although a proportion of
Malaysians still remain unconcerned about the state of the
economy!
Q5: When you think about the current state of the economy, what is your greatest fear? Name one.

Malaysians Americans

I am worried about losing my job / Being able to afford mortgage / rent

household income earner losing job - 25% payments - 25%

Not being able to afford sufficient food for I am worried about losing my job /
my family – 17% household income earner losing job – 20%

Nothing, I’m not worried – 17% Losing my investment money – 13%

© 2008. Synovate Ltd. 13

 58% of Malaysians have
changed a major life decision
due to the current economic
situation

© 2008. Synovate Ltd. 14

 And yet some segments still remarkably more buoyant than others
about the future over coming 12 months – young Malaysians
Q6: Do you think your personal economic situation will get better or worse in the next 12 months?
Q7: How about the economic situation in your country? Do you think it will get better or worse on the next 12 months?

Better Same Worse

15-24, 25-34, 35-49, 50-64,
n = 287 n = 237 n = 310 n = 176
0 50 100 0 50 100 0 50 100 0 50 100

Personal Economic 48 30 17 41 29 22 33 32 20 30 39 23
Outlook

Country’s Economic 47 18 28 30 24 36 27 17 39 36 13 35
Outlook

© Synovate 2008 15
 And the most affluent segment who largely believe their
personal situation will improve despite the overall climate
Q6: Do you think your personal economic situation will get better or worse in the next 12 months?
Q7: How about the economic situation in your country? Do you think it will get better or worse on the next 12 months?

Better Same Worse

RM999 & below, RM1000 - 1999, RM2000 - 3999, RM4000 & above,
n = 123 n = 176 n = 262 n = 246
0 50 100 0 50 100 0 50 100 0 50 100

Personal Economic 36 31 24 34 29 24 37 35 21 48 28 17
Outlook

Country’s Economic 39 14 35 37 16 33 37 18 33 35 19 38
Outlook

© Synovate 2008 16
 And we know that Affluent Malaysians have continued in 2008
to invest particularly with diversification in mind…

• Investment in unit trusts and mutual funds increased

from 29% to 40% so far in 2008

• Use of Offshore investment accounts increased from

3% to 8%

• Residential and commercial property investment

increased from 21% to 29%

Source: PAX Malaysia

© 2008. Synovate Ltd. 17
 And by mid 2008,
affluent Malaysians
had spent 12% more
on luxury goods
compared to one
year ago
- Particularly on
jewelry, watches and
Source: PAX Malaysia clothes
© 2008. Synovate Ltd. 18
So the question is will they continue to do so in this
even more uncertain global environment..?
Timeline
• August 9th 2007 – Bad news from BNP Paribas triggered a sharp rise in the cost
of credit
• September 2007 – Northern Rock customers withdraw 1 billion pounds sterling in
a day (approx. RM6 billion)
• March 2008 – BN loses a number of states in parliamentary elections leading to
degree of political and economic uncertainty
• June 2008 – Malaysian pump prices rise to RM2.70 on the back of high global oil
prices
• July 2008 – US Mortgage lender IndyMac collapses

• August 2008 – Synovate survey

• Since then in September alone :

• Lehman Brothers files for bankruptcy

• Bail-out plans announced by Western governments including US, UK and

Iceland

• Ongoing impact of credit crunch all around the world…..

© 2008. Synovate Ltd. 19

 FINALLY –
despite
everything….
53% of
Malaysians say
they are worried
but just can’t stop
spending all
together – the
highest out of the
9 countries we
surveyed!
© 2008. Synovate Ltd. 20
 Thank You For Your
Attention.
Our Curiosity Is All Yours.

© 2008. Synovate Ltd. All rights reserved.

The concepts and ideas submitted to you herein are the intellectual property of
Synovate Ltd. They are strictly of confidential nature and are submitted to you under
the understanding that they are to be considered by you in the strictest of confidence
and that no use shall be made of the said concepts and ideas, including
communication to any third party without Synovate’s express prior consent and/or
payment of related professional services fees in full.

© Synovate 2008