Eid undimmed for Southeast Asia Muslims despite rising prices

JAKARTA/KUALA LUMPUR Fri Aug 19, 2011 8:42am IST

Shopkeepers (R) sit next to mannequins outside their stalls as they wait for customers at a Ramadan bazaar ahead of Eid al-Fitri festival in Kuala Lumpur August 5, 2011.    REUTERS/Bazuki Muhammad/Files

Shopkeepers (R) sit next to mannequins outside their stalls as they wait for customers at a Ramadan bazaar ahead of Eid al-Fitri festival in Kuala Lumpur August 5, 2011.

Credit: Reuters/Bazuki Muhammad/Files

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JAKARTA/KUALA LUMPUR (Reuters) - They are running out of cars at the Toyota showroom in Kalibata, south Jakarta, as Indonesia, the world's most populous Muslim nation, prepares for the festival of Eid al-Fitr in late August.

Sales of popular mid-sized vehicles like the 145 million rupiah ($17,000) Avanza have more than doubled this month as many hope to drive to their hometowns in a new car to celebrate the end of the holy month of Ramadan.

"We received 30 units of the Avanza, it sold out in a week," said sales executive Achmad Rifai.

Like their brethren elsewhere, Southeast Asia's Muslims spend extra on food, new clothes and cars for Eid al-Fitr, the most important festival in Islam, which marks the end of Ramadan.

So far, Ramadan spending seems to be holding up in Indonesia and in neighbouring Malaysia, which together account for about 14 percent of the world's Muslims.

"Ramadan is reflected in stronger private consumption and spending because it is a once a year event where Muslims spend more on food, Eid preparations as well as for alms and charity," said Azrul Azwar Ahmad Tajudin, chief economist at Malaysia's Bank Islam.

The concern this year was whether rising inflation and worries about a global recession would affect the seasonal surge in expenditure, which provides a major boost to retailers.

(For a graphic on inflation in Asia Pacific countries - here)

"But it is not yet happening in Indonesia and Malaysia as private consumption and spending is still strong while inflation has recently peaked in both countries," said Azrul.

Ramadan is marked by dawn-to-dusk fasting and prayer, but there is an increasing trend of expenditure around the abstinence.

The once novel practice of lavish "iftar" or breaking of fast dinner buffets at swanky hotels is gaining in popularity, said Shaharudin Saaid, executive director of the Malaysian Association of Hotel Owners.

Just three years ago, only a handful of Kuala Lumpur's 23 five-star hotels charged the hefty 90 ringgit ($30.25) or more for the Ramadan dinner buffet.

"This year most of them charge at that rate which means demand is still there, if not growing," said Shaharudin, adding that some top hotels are drawing more than 1,000 Ramadan diners nightly.

Shopping for clothes, the Eid al-Fitr feasting, home repairs, new cars all are part of the festival spending.

RETAIL BOOM

In Indonesia, the extra Eid spending this year is expected to increase retail sales for the month of August by a projected 10-15 percent compared to the same period last year, according to the Indonesian Retail Association.

Malaysian retail sales are meanwhile projected to grow by 7 percent for the third quarter of 2011 due to the increase in consumer spending for Eid, according to the Malaysian Retailers Association.

While inflation is a worry, it appears to have peaked and has not really affected the expenditure.

Indonesia's annual inflation fell below 5 percent in July for the first time in 14 months but core inflation, which excludes volatile foods and administered prices, remained high at 4.55 percent.

In Malaysian annual inflation eased to 3.4 percent in July after hitting a 27-month high of 3.5 percent in June.

Still, prices of staple food items, which in Malaysia is controlled by the government during festive periods, have been steadily rising. Prices for poultry during Ramadan for example are up by a fifth over the last six years.

"I hope not to raise prices even more but it's impossible when Lebaran (Eid) is coming," said Pak Haji, who sells poultry in Depok on the outskirts of the Indonesian capital. Chicken prices almost doubled in June, he said.

For the less well-to-do, Eid al-Fitr is a time of hunting down bargains and somehow finding extra money, rather than cutting down.

"I have to plan more carefully ahead of Eid this year before spending," said 32-year old tailor Bian Bian as she visited a night market selling headscarves, dates and traditional Malay dresses in the Malaysian capital.

Sonny, a 37-year old account executive at a design company in Jakarta, said: "I don't want to cut back my consumption though the prices are high so I have to look for additional income or another job."

($1 = 8530 Indonesian Rupiah)

($1 = 2.98 Malaysian Ringgit)

(Additional reporting by Angie Teo in Kuala Lumpur and Nilufar Rizki in Jakarta; Editing by Raju Gopalakrishnan and Sanjeev Miglani)

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