Extended MCO will witness more business closures, even with aid package in sight

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The re-imposed Movement Control Order has only further led to more business closures in the country. As cases reach new peak every couple of days, businesses are facing the consequences of the lockdown.

Reported in The Malaysian Reserve, Bumiputera Retailers Organisation president Ameer Ali Mydin says retail businesses have dropped by 90 percent during the first week of MCO 2.0. The reimposed lockdown was met with mixed responses as it was deemed by certain authorities as a necessary move to curb the rising number of cases.

However, weeks since it was implemented has only led to more concerns that an extended or even a stricter imposition could bring the economy to its knees.

Malaysian Association of Tour and Travel Agents (MATTA) President, Tan Kok Liang told BusinessToday, Putrajaya has not been proactively seeking immediate actions to counter issues.

Speaking on the phone, Tan comments on the lacklustre performance of the government in handling the situation especially in the hospitality sector. He said that the situation is already dire for the whole of 2020 and with the current MCO, the sector will take another major blow.

“All of us in tourism, hospitality, and travel and tours are already in an ICU state. Hotels and travel agencies are closing rapidly than ever before. The fragile uncertainty developed a scare for the agencies related to tourism.

In Malaysia’s travel segment, the hospitality scene is very bad and all of us are having some sort of financial distress,” the President adds.

Reported in FMT, Malaysian Employers Federation, Executive Director, Shamsuddin Bardan, said a longer MCO would allow businesses to make the necessary preparations. However, no one would want a whole month of MCO restrictions if two weeks is enough to bring down the number of infections.

“The health ministry and government are also unsure whether the first two weeks will flatten the curve. After a week, if infections are down drastically but still not low enough, then maybe they can extend for just another week.

If medical practitioners say a two week is not enough, an extended one is possible. So, people need to be prepared,” he added.

Alan Pryor, Chairman of Business Event Council Malaysia (BECM) and General Manager of Kuala Lumpur Convention Centre says the MCO 2.0 has dampened the industry’s revival efforts.

“Especially with the Business Events (BE) industry being declared as non-essential sector restricting all kinds of meetings and large gatherings leading to immediate closure and loss of events with postponements being the best-case scenario.

There are no clear guidelines on whether people in the industry can conduct virtual events even with strict SOP measures in place,” Pryor says. 

Most players in the industry supply chain may experience minimal to zero revenue which will affect overhead, utilities, maintenance, and other costs which businesses have been dealing with without much assistance since early 2020.

In terms of an additional MCO imposed in the country, Malaysia’s BE industry will suffer throughout the first half of the year and possibly right into the second half of 2021 if the industry continues to be restricted to operate.

“Having said that, the industry will comply and adhere to any measures implemented by the government in the battle against the outbreak and the BE industry will continue to strive to ensure a safe and controlled environment for events and delegates,” he added.

In an attempt to aid ailing businesses in the country, Prime Minister Tan Sri Muhiyiddin Yassin unveiled a RM15 billion aid package called Permai.

Malaysia Digital Economy Corporation (MDEC), Chief Executive Officer (CEO), Surina Shukri says the aid package will allow businesses to better sustain themselves while flattening the Covid-19 curve.

“The previous economic stimulus package, Short-Term Economic Recovery Plan (PENJANA), had empowered various MDEC initiatives, specifically in e-commerce and talent development, to ensure Malaysians and local businesses can adapt to the new norm,” she says.

Additionally, in providing the means to make that digital leap, all Malaysians will be able to interact and engage with the digital economy and gain immediate benefits, such as tapping into the Gig Economy.

She believes that Permai can accelerate this vision as the country aims toward achieving the digital first nation ambition.

What the government is doing right now is in line with the nation’s vision to build a resilient Malaysia and steer it towards the progressive economy recovery phase.

This includes advancing the digital skills of all Malaysians and equipping local businesses with digital means to ensure businesses can expand and accelerate their adaptability into the Fourth Industrial Revolution.

“After all, the end-goal is to inform the world that Malaysia is open for business and as we move towards being a digitally sustainable nation in a post Covid-19 era, this further reinforces the country’s position as the Heart of Digital ASEAN,” Shukri comments.

Director (Media & Communications) of EMIR Research, Jamari Mohtar also explains that the stimulus package announced by the PM is very timely in the wake of the imposition of the MCO.

He adds that analysts too have said the MCO this time will have a relatively lesser impact on the economy compared to the first MCO, any form of assistance to cushion the impact on the economy should be welcomed.

“Many economists and financial strategists have already opined that the key to global economic recovery in 2021 lies with a robust private consumption spending. Businesses should take advantage of the new norm in online shopping to aim in increasing sale by enhancing digitalisation effort.

Since the Finance Minister, Zafrul Tengku Abdul Aziz has already said the country has enough fiscal space to cater for another stimulus if needed, the people can be rest assured that the Permai stimulus would not be the first and the last for 2021,” the Director explains.

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Additional comments: 

Afifah Basir , CEO & Co Founder of Petotum

For us in Petotum, our most important role is to support pet care businesses during the MCO period, especially pet hotels. It is most crucial now than ever as these are the most impacted businesses in the pet care industry as it is closely related to the travel industry. 

We know that helping them digitalise the process could help them transform and thrive their business even during MCO. Not to mention our role as a public member to reduce the risk of spreading the virus.  The first MCO has always taught us to have backup plans if anything happens because pandemic is unpredictable. While we are amid the second MCO, with backup plans in place, businesses need to survive, and Petotum is always ready to help them.

Tan Sheyong – CEO & Founder, BiiB

If MCO continues, we are ready to support the pet hotel businesses, and they don’t have to pay any subscription fee for the first three months when they subscribe to our platform at www.petotum.com. We hope it will help the pet care industry bounce back during this challenging period. 

With the extension of MCO, all I could think of are these three words – Be conservatively aggressive! Take “hope” away from the plan and focus on what we can do better.  We just need to persevere and move on. It is a rematch and this round; we are all well and better prepared.

Ahmad Azuar Zainuddin, CEO, Satu Creative Services Sdn Bhd

An extension of the MCO would have some impact on our business. We may hold back from hiring new employees, persist in being cost-conscious and adapt to a more viable digital business model. While the conditions may be challenging, the invaluable experience of 2020 gives us confidence that we can overcome this again.

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