For the Malaysian bookselling and publishing communities, the first quarter of the year leading up to the 6% goods and services tax (GST) implementation on April 1 was tumultuous and disruptive. (The GST—a value-added tax—is a broad-based tax on most goods, services, and other items sold or consumed in Malaysia. It replaces the 5%–10% sales and services tax that was in effect for the previous several decades.)
“It was a time when returns hit the roof, purchases slowed down substantially, and bookstores were mostly in waiting mode,” recalls Arief Hakim, managing director of PTS Media Group, which had the worst first-quarter sales in its 15-year history due to the uncertainties wrought by the GST implementation. “Nobody knows the status of books vis-à-vis the GST scheme. But the industry rallied together, lobbied hard, and had books placed under a GST zero-rated item at the last minute.”
Fortunately, the government gave out 250 MYR in early April to each of about 1.3 million students through its book voucher program—up from the 200 MYR allocated in the past three years—totaling 325 million MYR (at the time, worth almost $90 million). The vouchers, which were valid till June 30, gave publishers and booksellers a much-needed break.
For Koichiro Satomi, managing director of Kinokuniya Malaysia, “the voucher scheme drew students to our store to purchase academic titles, and gave us an opportunity to recommend new authors and genres to them for leisure reading.” At the same time, he adds, “we were able to observe what the younger demographics read when they have the purchasing power.”
Keith Thong, president of the 100-member Malaysian Booksellers Association, says the book voucher system, though it boosts readership and benefits the publishing industry, is open to abuse by recipients, who could exchange the vouchers for cash on the black market. “With the vouchers given out, funding for public libraries and universities has been slashed, and that is not good for educational publishers or the community at large,” he says.
The plummeting value of the Malaysian ringgit—exchanging at 4.23 MYR to the dollar at press time, which is down 20% since the beginning of the year—has also made imported books more expensive. “This has afforded book remainder companies such as BookXcess phenomenal growth, which goes to show that there are a lot of readers out there, but they have become more selective in their purchases due to limited resources,” Satomi says. He adds that booksellers are offering bestsellers at lower prices, and he also notes the emergence of pop-up book fairs and deep discounting of key backlist titles. “At Kinokuniya, we see stable readership and sales, and growth in every segment, especially in Malay-language publications.”
Local publishing is definitely thriving at the expense of costlier imports, Thong concurs. “Romance is huge, and most titles sold are leisure based,” he says. “At the same time, there are many new left-wing, young, social media-driven publishers out there making big bucks from our heated political climate. Some of their new publications have sold upwards of 50,000 copies within a short period of time.”
The growth of small presses is undeniable, Satomi says. “Their titles mostly originate from social media content, and since the content creators often have huge followings, the potential book sales are very high,” he notes. “This is a trend similar to that in the U.S. and U.K., where YouTube personalities and Tumblr bloggers become bestselling authors.”
Located in the capital city’s Petronas Twin Towers, Kinokuniya is the biggest bookstore in Malaysia, at 35,000 sq. ft. Currently, it offers nearly 27,000 titles, of which 70% are English books and magazines. But there will be more local titles on the shelves, promises Satomi, who finds that titles from small presses—mostly raw and unedited—appeal to urbanites who don’t read or enjoy mainstream Malay titles. Pulp fiction, poetry and short essays from such publishers are becoming very popular, he adds. “Given the potential, we are certainly hoping that there will be more small presses with quality titles and more diverse writings, not just in Malay but also in English or any other language. As long as there are books being sold, there will be readers who can be persuaded into trying other titles, authors, or genres.”
In fact, within the small press community, Kinokuniya is known for being neutral in displaying titles that are deemed controversial. For Satomi, it is a matter of “wanting variety in our store while respecting local regulations and market sentiments.” He says, “If it is within the law for us to carry a title, we will do that in order to give readers the opportunity to enjoy the book and broaden their perspectives.”
Chain stores such as Kinokuniya, which mostly deal with trade books, have more challenges than traditional sellers of textbooks, workbooks, and stationeries, says Thong. “Consumer behavior and purchasing patterns change constantly, influenced by demand for other media content for learning and entertainment,” he notes. “Then there is the question of rising rent, especially with the recent implementation of 6% GST. The growth of remainder businesses has also given the public a taste of imported titles at low prices. So chain stores are doing constant promotions and cutting margins to survive. We should learn from the French on administering price control and having a healthier respect for books and the bookselling industry.”
For Satomi, the store is much more than just books, trade or otherwise. PW’s visit in May, for instance, coincided with the start of Gakken Science Experimental workshop, where a dozen kids attended each of the sessions and got to know recommended titles from Japanese publisher Gakken. A jewelry-making workshop was held not long ago, and now plans are afoot for a coffee-related event. “It is very important for a bricks-and-mortar store to provide a unique experience and ambience to the customer,” Satomi says. “We need to experiment and gauge market interest, and to do that, we must have more, better, and varied events. We want Kinokuniya to be a sociocultural center where people come not just to buy books but also to read, interact, relax, and learn new things.”
Satomi’s counterparts—at chains such as Borders, MPH, Popular, and Times—are no doubt also working on expanding the concept of a retail bookstore into something so much more.