Franchise industry seen contributing RM23b to GDP

KUALA LUMPUR: The franchise industry is projected to contribute 2.6 per cent, or some RM22.5 billion, to the country's gross domestic product (GDP) this year.

The growth is expected to be driven by the introduction of the much awaited National Franchise Development Blueprint 2012-2016 (NFDB), launched early this year.

"The NFDB creates an awareness of the franchising system. We want to encourage more businesses to expand into the franchising as a way forward, especially since the risk is low," said Deputy Domestic Trade, Cooperatives and Consumerism Minister Datuk Rohani Abdul Karim.

Last year, the franchise industry contributed 2.5 per cent to the GDP, or some RM21.48 billion, which was lower than the RM22.34 billion recorded in 2010. This was due to the weak global economic climate last year.

"This year, we are optimistic to see growth in this industry. It's not that current businesses are not interested to franchise, but they are not aware on how to develop the system.

"The ministry is actively organising seminars and other awareness programmes to highlight the benefit of franchising," she said after officiating at the Malaysian Franchise Association's (MFA) 17th annual general meeting yesterday.

Consistent with Malaysia's goal of becoming a high-income country within the next eight years, the government is targeting a 4.3 per cent contribution from the franchise industry to the country's GDP by 2016, and subsequently, a 9.4 per cent contribution by 2020.

The blueprint also aims to grow the number of franchisors to 1,140 by 2020 from 492 in 2010. This reflects 15 per cent of the compounded annual growth rate (CAGR).

Meanwhile, the number of franchisees is expected to grow to 13,942 by 2020 from 4,838 in 2010, reflecting 24 per cent CAGR.

The franchise sales per capita is also forecast to increase to RM2,990 by 2020 from RM470 in 2010.

Currently, there are 607 registered franchise brands, of which 417, or 69 per cent, are local brands and another 190 are international brands. Some 46 local franchisors have also successfully penetrated the overseas market.

As part of the initiative to further boost the franchising industry, the government allocated RM8 million since August last year for those seeking funds to take part in micro franchising businesses. To date, more than RM2.8 million has been disbursed.

On the update of the Franchise International Malaysia 2012 (FIM 2012), which will be held between July 6 and 8 at the Putra World Trade Centre, MFA chairman Abdul Malik Abdullah said this year's exhibition is expected to draw some 12,000 visitors compared with 10,000 last year.

FIM 2012 is also projected to bring in RM350 million in sales, a seven per cent increase from RM327 million sales recorded last year. To date, almost 87 per cent of its booths have been taken up.

"We had such good support last year, which was our best year to date. That's why our booths at FIM this year have been quickly snapped up," he said.