Welcome to Malaysians on Malaysia: our quarterly report on Malaysian consumer confidence, featuring essential insights into confidence, behaviour, e-wallet, tech and esports trends in Malaysia.
As we welcome 2020, our Malaysians on Malaysia study is set to understand the trends and sentiments that have happened thus far. Our previous coverage on Malaysian consumer confidence can be found here.
Political Shifts and Widespread Pandemic Dampens Consumer Confidence
The beginning of year 2020 brings with it the COVID-19 pandemic amongst other notable events like changes in the political front this quarter. Each of these has brought much impact to Malaysia especially with the rapid spread of COVID-19 cases in Malaysia. Malaysians across all walks of life are experiencing an unprecedented lifestyle change with the announcement of the Movement Control Order (MCO) on 18th March 2020 by the Malaysia Government. Ever since then, business owners, employers, employees as well as individuals are forced to come to terms with the new norm.
Media Coverage of Global Recession Worry Malaysians
With economic activity across the world at a unified halt, talks of a global financial crisis lingers and has consumers concerned about the economic state of our country.
Usage of E-wallet Continues to Grow at Immense Pace
Usage of e-wallets and the movement towards a more digitalized society has seen steady incline in 2019. Further development and growth is seen this quarter, with a 65% growth in e-wallet usage, no doubt fueled by current circumstances.
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As we welcome the first quarter of 2020, we now see a steep decline of 25 points towards the 100-points mark vs Q4’2019, as we see contraction across key component indices this quarter. With shifts on the political front, uncertainties caused by the onset of the COVID-19 pandemic globally and consequently implementation of the MCO locally here in Malaysia, they have collectively resulted in an overall decline in Malaysian consumer confidence.
As of writing, with the MCO by the Malaysian Government still in force, the state of consumers’ financial well-being saw an almost 20-points decline which hit sentiments among upper-middle income groups more significantly. Having said that, the index still hovers above the 100-point threshold, suggesting Malaysians in general are still fairly optimistic for the moment with regards to where their current financial well-being stands.
Despite growing apprehension on their current state of financial well-being, the perception is that Malaysians remain optimistic that they can overcome current events and to be better-off financially in the upcoming year ahead, as seen with a slight lift seen in the index here.
This is more so with consumers in Penang, Klang Valley and JB; Kuantan, on the other hand, are less confident about it (-19pts vs Q4’2019).
The index for the most part on spend on major purchases has been slowly recovering over the last few quarters with an uptrend, which saw Q4 2019 finally showing good gains to break-through the 100-point mark.
However, due to recent events, the index has plunged significantly back into the sub-100 zone, which is the case seen as well across the board in other demographic breaks.
Malaysian confidence in the current state of economy during the world lockdown period has shown a drastic decline of -51points during this period. Sentiments among M40 and T20 level Malaysians are reported to be more depressed compared to lower income groups.
There is little doubt that the current economic environment in Malaysia is a pessimistic one, brought about by the COVID-19 pandemic and the subsequent actions taken to curb it.
The pessimistic view is shared when we look at sentiments over the next 12 months of Malaysia’s state of economy, where most are unable to see recovery in the near term.
The long-term effects of the current environment is undoubtedly going to continue to dampen Malaysian consumer confidence, short of incisive and corrective actions taken by the government to arrest the decline.
Focus: On COVID-19 and Its Impact on Malaysia
Our data shows 95% of Malaysians are worried how the outbreak of COVID-19 will affect their daily life and activities. Baby Boomers aged between 57 to 65 years old are reported to feel more tense on the impact compared to Generation Z (16 to 23 years old).
When we look at income groups, the higher the household income the more elevated the concern to the impact its causing to their daily lives.
List of COVID-19 prevention precaution measures such as constant hand sanitizing, social distancing and overall personal cleanliness were seen to be adopted by most of Malaysia even before the implementation of MCO by Malaysian Government. Such actions are Malaysian behavioral changes ever since the worldwide outbreak of COVID-19 Pandemic. Reports show that 64% of Malaysian are sanitizing their hands more frequently than usual, as well as an increase in home cooking occasions. Whereas outdoor activities such as visits to the cinema, recreational parks, and use of public transport are reported close to 70% less often ever since the outbreak compared to before.
Almost three-quarters (73%) of Malaysians feel that the COVID-19 pandemic and subsequently MCO phases will affect their financial well-being a lot.
Data showed that Millennials and Gen X, who are mainly the working-class groups, are most worried comparatively about the impact on financial well-being during the COVID-19 period as a large number of businesses put a pause on operations and production. They are seen to be worried about the uncertainties of job security. On the side note, Gen Z which comprises mostly students appears to be less affected.
In terms of income segments, the higher the income groups the greater the perceived impact on their financial well-being was seen.
Coming to notable activities for Q1 2020, we see some interesting patterns in the data that is aligned with the current circumstances. Namely, spikes in penetration rates are seen with various digital channels like making online purchases on e-commerce sites (to 49%) and making payments via e-wallets (to 63%).
Particularly with e-wallets, we see strong support from both government and private sectors during this quarter that have undoubtedly contributed to the growth of its usage, and the payment method is now seen to be becoming more and more mainstream.
Consequently, travel and leisure, a hard-hit industry due to the global pandemic saw significant declines, especially in the case of international travel.
Usage of e-wallets has grown by 65% over the past quarter, and now enjoys usage by 63% of Malaysians. Now, this is a significant milestone because almost two-thirds of the urban population aged 18+ are now an active user of the e-wallet payment medium, which puts the adoption rate at a majority, and looks to be headed to widespread proliferation. Again, this is a usage metric, and is not based on number of downloads or account sign-ups, etc.
No doubt, we can attribute this successful result to the introduction of e-Tunai Rakyat initiative by the Malaysia Government on 15 Jan 2020, and as well as the onset of COVID-19 pandemic circumstance that now encourages customers to make payments with “no contact”.
Interestingly, whilst we note that Malaysians used to use on average 2 to 3 e-wallets at any one time (at one point it was 3 to 4 e-wallets), we see the numbers falling to 1 to 2 this quarter.
This suggests one of two possibilities. (1) Some early consolidation in e-wallet brand usage is occurring. OR (2) Because of the e-Tunai Rakyat initiative, we see a surge of new e-wallet users to one of three appointed providers (namely: Touch n’ Go e-wallet, Grab Pay and Boost) and usage has gravitated and centered on them for now.
Usage of Touch n’ Go e-wallet has been on a strong growth uptrend, and is now in a commanding first position in terms of brand usage amongst all e-wallets in the market.
Rounding out the current top 3 are Boost and Grab Pay respectively. It’s interesting to see that these are also the three providers who are part of the e-Tunai Rakyat initiative.
Top use cases for e-wallets are predominantly constant, with F&B being the top channel where e-wallets are a popular payment medium. This is followed by the channels that are consumption-based and transactional in nature:- Convenience stores, groceries, mobile reloads and food deliveries.
With the MCO in force, it would be interesting to see if we would expect these numbers to shift, since we know some of these channels suffered disruptions, some more than others.
Having said that, many speculate that usage of e-wallets is high due to the multitude of promotions and deals the various e-wallet providers have been handing out, in the form of cash-backs, points, etc. Which begs the question,
“Would consumers continue to use e-wallets if there are no incentives given?”
Early data we are seeing suggests that at least two-thirds of existing e-wallet users claim they would. This is a big deal, certainly for e-wallets spending truckloads of money on these incentives to woo customers and users, and hopefully change natural behaviour – it looks like it is working. Once people are used to the convenience, it might indeed be harder to go back to cash later on.
We shall be sharing more detailed data into this area in the near future.
On the cryptocurrency front, ownership has dipped this quarter, which coincides with the sharp drop of Bitcoin (BTC) to its lowest point in the last 1 year to US$3,800 in March 2020.
Bitcoin is still the main crypto that Malaysians are HODL’ing on to, followed by other alt-coins. But all in all, holding rates have dropped across all.
Finally, esports as an industry have steadily grown in terms of interest amongst Malaysians, mostly Gen Z and Millennials, with the penetration rate of attendees to esport events going up too that is contributed mainly by Gen Z followers.
With the current COVID-19 pandemic diverting traffic to all things digital, esports and gaming has somewhat benefited and is now becoming more mainstream than before. We had covered the impact of esports before, and we will be doing another coverage into the topic soon.
The arena no longer belongs to just endemic brands to get involved. Non-endemic brands and marketers have reaped rewards by being involved with esports too.
Malaysians on Malaysia cover all Malaysians aged 18 and above, M40 and T20 segments, in key cities of Peninsula Malaysia representatively.
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(Featured Image Source: Malay Mail)