by NUR HANANI AZMAN/ pic by BERNAMA
IT IS high time for Malaysia to enact law on Covid-19 to protect individuals, businesses and companies that are cash-starved, as the country begins to plan its exit strategy from the Movement Control Order (MCO), the Malaysian Bar said.
“Legal protection from the unintended non-performance of contracts needs to be provided for specifically and enacted by way of legislation, so as to provide comprehensive coverage,” its president Salim Bashir said in a statement yesterday.
In Singapore, such legislation was introduced in the second week of April 2020 to secure booking deposits made for wedding and business functions that had to be postponed, and to prevent termination of business premises leases due to non-payment of rent.
In the UK, the Coronavirus Act 2020 was introduced in March 2020 to allow regulations regarding employment contracts to protect employers and employees.
According to Salim, the government’s decision to schedule a one-day sitting of the Dewan Rakyat on May 18, to hear the speech of the Yang di-Pertuan Agong and to table certain legislation, could delay more pressing motions related to the business community from being deliberated.
“According to various news reports, there will be no motions and no debates during this sitting; all business being deferred to the next sitting, likely to be held sometime in July 2020,” he added.
Wong Mun Hoe, a practicing lawyer and part of the MyLegal Response initiative, also called for an urgent enactment of such law that would ensure temporary aid for businesses, especially small and medium enterprises (SMEs) that are adversely affected by the Covid-19 pandemic.
“We need such laws in Malaysia and the civil society should push for such legislation to be enacted. As a result of the MCO in Malaysia, a lot of SMEs are exposed to complications in legal documentation.”
Agreements drafted in the past, which did not anticipate unprecedented exceptional circumstances such as the pandemic and the MCO, are presented with layers of complications.
“For example, to a supply agreement, the supplier might not be able to supply due to shortage or manufacturer unable to operate during the MCO. When negotiating the agreement, the parties might not think about that, so now that this happened, what can the supplier do since if he cannot supply, he will be in breach.
“In a situation where the commercial agreement did not cover such a situation, parties to the agreement are still obliged to perform its contractual obligations, failing which, they will be in breach of the agreement,” he told The Malaysian Reserve.
“Certain moves have been implemented by the government, for example, the adjustment of the insolvency threshold. However, these might not be able to prevent parties from enforcing their contractual rights in court,” he added.
China-Asean Legal Cooperation Centre and Persatuan Usahawan Maju Malaysia VP Datuk Dr Teh Tai Yong also issued a call for the law earlier this month to safeguard retail and real estate-related businesses.
“During the MCO, there are no or little cash sales for retail businesses, but the expenses are mostly fixed and payable monthly. This causes problems as most of the retail businesses have been surviving on weekly or monthly cashflow.
“This has a direct impact on real estate-related business, which include landlord, sub-lessor and property developer.”
The number of rental defaulters and the number of purchasers withdrawing and withholding from the sale and purchase of properties have increased, while the demand for retail space has declined significantly.
However, most SMEs are still required to honour contracts despite the disruption to cashflow.