CMCO: Businesses in a rut

As the pandemic forced people to stay at home, major malls reported up to 90% loss in shopping traffic to date


MANY businesses suffer more losses with the extension of the Conditional Movement Control Order (CMCO) despite the government’s greenlight for economic activities.

As the pandemic forced people to stay at home and do more things online, major malls reported up to 90% loss in shopping traffic to date. Hotels, especially in the Klang Valley, are expected to record a 5% occupancy rate. The Malaysian Reserve (TMR) spoke to industry players on the struggle they are facing at the moment. Here are their stories:

SMEs Are the Worst Hit

SME Association of Malaysia president Datuk Michael Kang said food and beverage (F&B) outlets and tourism industry players remain the most affected.

“The government said business as usual but the standard operating procedures (SOPs) don’t say so. A maximum of four people per table for dine-in doesn’t encourage a huge family or group of people to eat outside.

“It’s not really business as usual, with no cross-border travel from the CMCO areas, even domestic tourism recovery is nowhere to be seen. Recovery? It’s the worst (situation),” he told TMR.

Cornery FNB Sdn Bhd MD Datuk Joe Tan said three F&B brands under its portfolio are currently experiencing very slow sales.

“People are not going out, and now less spending power with the ending of the moratorium. Even orders for food delivery are dropping compared to before,” he told TMR.

Hotel Occupancy Likely to Drop

Malaysian Association of Hotels CEO Yap Lip Seng said hotel occupancy throughout the country suffered when CMCO was implemented in Kuala Lumpur, Selangor and Putrajaya, dropping to a low average occupancy of 20% only.

He said, with an almost nationwide implementation, the entire industry will likely see a drop in occupancy rate to as low as 5%, similar to what they experienced during the first MCO in March.

“We never expected a V-shaped recovery for as long as a vaccine and cure are not discovered and distributed worldwide,” he told TMR.

Initially, the industry was anticipating the commencement of tourism recovery in mid-2021. But judging by the current situation especially in Malaysia, we will likely not see any signs of recovery till end-2021, he added.

“To lessen financial burdens of hotels, we need the government to direct extension of 50% electricity and water discounts, as well as for all local governments to allocate discounts on assessments of hotel properties.

“We also hope for the government to take control of loan moratorium instead of leaving it to commercial banks’ discretion, financial help is needed desperately and immediately,” he said.

Footwear Manufacturers Predict U-shaped Recovery

Malaysian Footwear Manufacturers Association president Rachel Foo stressed that the V-shaped recovery is not likely due to the high retrenchment rate.

She opined that no one can safely say 2021 will be a fantastic year because the destruction of this virus is too strong. U-shaped recovery is more likely.

“With shops open but people are advised to stay at home, it only increases the operating costs; electricity, air-condition, sanitisers, yet zero sales.

“Secondly, enforcement officers executed their duties and summons issued for shops when the SOPs was still in the middle of adjustment almost every week,” she told TMR.

Foo also said there was no mention of rental support under the Budget 2021, and Covid Act also does little to support the retailers.

“Besides brick-and-mortar shops, we have to be able to compete with the e-commerce platforms. I am of the view that if the subsidy support is spent within the Malaysian market, it will be of great help.

“But if consumers are buying through overseas platforms or local platforms but imported goods from overseas, it does not do any benefit to the local businesses nor contribute anything to the government,” she said.

Foo said imported items are cheaper because of lack of rental, salary or taxes in Malaysia. Local businesses will find it difficult to compete due to the operating costs incurred.

School Closure Effects Other Businesses

The government’s decision to close all schools, even in states not currently under the latest CMCO may collapse the school bus operators’ business.

Federation of Malaysian School Bus Operators Association president Mohd Rofik Mohd Yusof has sent a memorandum to the Ministry of Transport on a temporary licence change request.

The temporary licence change is important to ease the burdens, he said, but the ministry has not responded so far.

“A bus operator who bought a van last year cost him RM150,000 with an instalment amount of RM2,500 per month for five years. With the school closure, how can he pay the loan?

“We have been suffering since the MCO, the period for school to reopen before this was too short. Some of the bus operators have been declared bankrupt,” he told TMR.

He hopes the government can urge the credit companies to offer a moratorium on vehicle loans for school bus operators.

“We are not borrowing from the bank because we are not encouraged to. If there is no moratorium, I think only 2,000 school bus operators will be able to survive in 2021 from a total of 8,000 at the moment.

“Previously, we recorded 12,000 members, but 4,000 school bus operators have already ceased operations during the MCO earlier this year,” he added.

Meanwhile, a daughter of a school canteen operator who wished to remain anonymous said her mother bought the ingredients a week prior to the school closure.

“It’s a waste of money. If she knew sooner, she won’t spend the money for that. Even with school allowed to open previously, my mom didn’t earn that much.

“All the food needs to pack. School students are not allowed to eat in the canteen. My mom can’t sell drinks or other food to get additional income,” she told TMR.

Read our earlier report here