Retailers look for proactive action plans, financial aids in Budget 2022
by HARIZAH KAMEL / pic by MUHD AMIN NAHARUL
RETAILERS said they need more than monetary assistance to come out of the pandemic-induced hit on their businesses, top of which is no physical shutdowns in the future.
Retail associations are hoping the government will include proactive measures in Budget 2022 to mitigate Covid-19 that would not result in the prolonged shutdown of malls and physical stores that were deemed “non-essential”, the like of which has been seen since 2020.
Retail Group Malaysia (RGM) MD Tan Hai Hsin told The Malaysian Reserve (TMR) recently that retailers need indirect assistance from the government, instead of direct monetary incentives “to stay alive”.
“Among others, retailers need more budget allocation for proactive action plans to control the virus spread to prevent another lockdown. The non-essential retailers cannot afford another forced closure of physical stores.
“The government must allow all retailers with physical stores to stay open with strict standard operating procedures (SOPs) in the event of another lockdown. Retailers will figure out ways to lure their customers to visit stores instead of forced closures of physical stores,” he said.
Tan said the lockdowns in the last 11⁄2 years have proven that business models like online shopping, pick-ups, takeaways and deliveries are not enough to keep businesses alive.
He urged for the opening of interstate travel soon with strict SOPs as many retailers located in tourist spots — namely Genting Highlands, Cameron Highlands, Penang, Melaka and many more around the country — depend on domestic tourists.
Concurrently, he said allowing foreign tourists, especially Singaporeans, to visit Malaysia in stages is critical for retailers in major cities like Kuala Lumpur and Johor Baru.
Tan also called for proactive and concrete action plans to stimulate the economy in 2022.
“When Malaysia’s economic activities are vibrant, more people will get jobs and higher pay. When take-home pays are higher, people will be willing to spend more on consumer goods and services.”
For the first quarter of 2021, Malaysia’s retail industry recorded a negative growth rate of 9.9% in retail sales compared to the same period in 2020.
In June 2021, RGM estimated the retail growth rate for this entire year to be 4% based on the developments in the last several months. This projection is likely to be halved.
Meanwhile, the Malaysia Retail Chain Association (MRCA) proposed for the government to provide a few months of rental relief for businesses by granting direct financial assistance to small and medium enterprise (SME) tenants.
MRCA also believes the government should continue with its financial assistance and subsidies by providing a one off grant to affected companies based on annual business turnover.
On this note, retailers are pinning their hopes for an extension of the Covid-19 loan moratorium and financing throughout the business recovery period in 2022, as well as the lowering of approved loan moratorium financing interest rate, preferable at bank’s financing cost to reduce the borrowers’ overall cost of borrowing.
TMR was told that the introduction of a competitive tax regime might also ease retailers as they recover and rebuild businesses, this includes reducing corporate Real Property Gains Tax to 5% to promote investment, lowering withholding tax from the current 10% to 5%, and extending renovation and refurbishment tax deduction provision for another year until 2022.
MRCA suggested tax adjustments to increase personal tax relief, especially for health expenses, and an income tax reduction of at least 1% for all levels.
A key factor is to encourage retail spending, to which MRCA recommends the government to introduce a shopping allowance by providing targeted incentives to shoppers in the form of digital vouchers to be spent at retail outlets, malls and retail business premises.
The retail association views that the government should reintroduce duty exemption on tobacco products at duty-free locations, increase the duty-free shopping allowance by double to improve sales turnover and to promote domestic tourism, and to maintain current alcohol duty and sales tax during the business recovery period.