Hundreds of businesses across Malaysia had to close indefinitely in mid-March because of the MCO aimed at curbing the spread of the virus
by DASHVEENJIT KAUR/ pic by RAZAK GHAZALI
FROM veterans in the event management industry to wholesale food distributors and beauty products retailers, local business owners are finding it tough to survive the perilous economic climate caused by the Covid-19 pandemic.
Hundreds of businesses across the country had to close indefinitely in mid-March because of the stay-at-home order aimed at curbing the spread of the virus.
As the Movement Control Order (MCO) enters its fourth phase, most business owners fear that even the government support offered so far may not be enough.
Events and Entertainment
For a company like Define International Sdn Bhd, which has been established for over two decades, the industry is currently plagued with unprecedented uncertainty.
Founder and group CEO Andrew Anthony said in a recent survey done by the Malaysian Association of Convention and Exhibition Organisers and Suppliers, 76% of industry players were extremely uncertain about how their businesses and the industry as a whole would progress.
“There has also been a lack of proper initiative and directives from the relevant ministries and appointed panels and due to that, over 70% of business owners think they cannot sustain beyond six months,” he told The Malaysian Reserve (TMR).
Anthony suggested that a better plan is needed for the industry as until now, there are no proper progressive and sustainable directions from the government to better help small and medium enterprises (SMEs).
“We also need a more in-depth SME package that helps ease the severe problems faced and includes industry-related initiatives for the next seven to eight months.
“We would rather face another MCO extension than a third wave of Covid-19, however, it must be done systematically,” he said, adding that early announcements are crucial to cover high operational costs.
As for the food and beverages (F&B) and entertainment sectors, such desolation has not occurred before.
The Group managing partner Roen Cian Nagapan said never in history has the entertainment industry witnessed such a crippling blow.
“One cannot be certain about the time it will take to recover and for us to fully function,” he told TMR.
Roen also owns a co-working space called the Common Ground in several locations across the Klang Valley, as well as Curious Child, a learning centre.
Additionally, he has a tea franchise, Gong Cha, in 1Utama, Petaling Jaya, Selangor and Jungle Bunnies, a facility for football games, among others.
Despite being a versatile entrepreneur, he is not invincible to the economic threats the virus brings.
“It is hard to digest as all of my businesses are classified as non-essential, which means no revenue on the table.
“The only business with some form of returns is the Gong Cha franchise which still takes orders via Grab and is doing better than expected,” he added.
Business owners throughout Malaysia are left with painful decisions as they seek to weather the increasingly complex economic climate.
“I know that some prominent businesses and restaurants have already folded, while others are bracing for imminent closure.
“Almost all are seeing mounting financial losses,” Roen said.
However, he is optimistic that his businesses will resume to its normalcy, although in stages.
“People have been trapped at home for way too long and crave for life to return to normal which means socialising, going out, playing sports and going to work.
“For my co-working space, it is inevitable, people will return to work. For the bars or football fields, I cannot expect a large crowd, but a decent number of people will be back soon enough to get the business going,” he added.
Wholesalers and Food Suppliers
Most restaurants and hotels have drastically cut the amount of food supply orders in the wake of the ensuing closures.
For a distributor, supplier and wholesaler of vegetables, fruits, groceries, poultries, frozen food and marine products like YSK Maju Ventures Sdn Bhd, the system is at standstill.
Director Shan said he has tonnes of stocks with nowhere to go and the drop in demand has rippled through the industry.
“YSK is more than willing to cooperate if this can really bring the situation under control.
“On the other hand, it is a monumental task to maintain our workers’ salaries and other operational costs without any income,” he told TMR.
Without supplying vegetables, fruits, groceries and poultry to fine dining restaurants and hotels, his company has been left with no income since the MCO as most of his clients’ operations are also halted.
“Furthermore, we need to supply on credit basis ranging from 30 to 90 days. Now, with the lockdown, we are unable to collect money for what we have supplied before as most of our clients’ businesses are not operating.
“The amount uncollected is in millions,” he shared, saying that it worries him not knowing how many clients will be able to make it through the MCO.
Shan said huge company capital and investments are at risk.
“After the MCO, until there is a vaccine for this pandemic, people’s lifestyle will be altered, therefore leaving the F&B industry in the gloom.
“Business may fall to over half, but our expenditure will be the same or slightly lesser than what it was before the MCO. How are we going to repay bank loans and handle operational cost after the moratorium?” he added.
Shan also believed recovery would take a long time, on top of the rising cost of raw materials and products, the cost for F&B would also rise.
“While the government is doing their best based on the country’s capacity and capabilities, we are not sure if they can look more at the overall economic condition of Malaysia and the rest of the world.
“The government should also get local farmers to grow onions, broccoli, cauliflower and some of the imported vegetables. This way, we can reduce import and educate people to consume local produce which we believe will be of better quality,” he said, adding that it would lead to supply consistency and steady price.
Beauty Industry Goes Online
A homegrown brand like Chinie’s which retails cosmetic and body care brands has been fully relying on its online sales since the start of the MCO.
Co-founder Vandana Ratnani said experiencing a partial lockdown for the first time did not only cause businesses to be on hold, but it also caused her company to operate at a loss.
“Having the retail industry to fully shut, there is zero source of income for businesses, yet operational costs are maintained.
“Fortunately, we have ventured into online retailing since last year and that has assisted in the injection of side income for the company. Thankfully, there has been a drastic increase in online sales as MCO locked in,” she told TMR.
However, Ratnani said, it is of no comparison to retail which helps sustain the business on regular days.
“With the lockdown being extended for the third time, businesses are worried as stocks are piling and costs are not taking a step back.
“The government has offered to give wage subsidies for businesses that we managed to apply for, but the website keeps crashing,” she said, adding that it has been over a week since she applied, but there has been no update.
Concurring with many SMEs, Ratnani said it is upsetting because in times like these, all these are to be accounted for and she believed the government has taken things very lightly.
“We are appreciative of the government providing alternatives to mall managements and landlords on waiving off rental costs, but unfortunately, it was not made compulsory.
“This has led to some mall managements to continue charging their tenants the same rate. These days, everybody wants to survive with whatever little they have. This leaves us to the question: Who are we to blame?”
Ratnani also said for some SMEs that have not been maintaining proper accounting records, they may be facing tougher times as there are still ongoing immediate expenses and they may not be eligible for banks’ special relief funds.
“In order to revive the economy, we urge Malaysians to support local businesses and focus on helping SMEs,” she added.