By Tan Sri William Cheng
THE two-week extension of Phase 1 of the full movement control order (FMCO) to June 28 is fatal to the retail industry.
The non-essential products retail sectors were not allowed to operate during this period and therefore they have to close their shops with no income to foot their essential recurring expenses namely staff salaries, rental and creditors let alone servicing their banking commitments and other statutory payments.
The lockdown had so far NOT BEEN VERY EFFECTIVE in bringing down the rate of positive cases. During the first 14 days (June 1 to June 14), the rate of positive cases detected among those tested still hovers between 6.4% to 7.8% although the number of positive cases may vary daily depending on the number of tests conducted but the fact is the rate of positive cases remained more or less the same.
Therefore, since the rate of positive cases versus the number tested did not indicate any significant improvement, the non-essential products retail sectors should be allowed to OPEN IMMEDIATELY as they are apparently not the root cause of the problems. It would be appreciative, even if we’re only allowed to open with lesser days in a week (eg Tuesday, Thursday and Saturday) and even with shorter operating hours.
Malaysia’s brick and mortar retailers were already adversely affected by the MCO as is reflected in the negative retail sale growth rate of -9.9% for Q1 (Jan-Mar) of 2021. This Q1, 2021 result though still negative was better than the Q4 (Oct-Dec) of 2020 at -19.7%.
The retail industry did start to show some positive sign of recovery despite some of the retail sectors being ordered to shut down under MCO 2.0 and conditional MCO (CMCO).
However, the announcement of MCO 3.0 in May, transited to FMCO in June has caused the retail industry to crash back to ZERO.
Based on the 4 phases of the National COVID-19 Recovery Plan (NRP), it seems unlikely that we can bring down the number of positive cases to below 4,000 for 7 consecutive days for Malaysia to transition into Phase 2 of the NRP unless we theoretically do less or stop testing. On that basis, we will remain perpetually at Phase 1.
Retail sector not root cause of infections
While new clusters may continue to emerge, we must highlight and acknowledge that retail and its workplace is not the root cause of the infections. The Ministry of Health (MOH) through a statement issued on June 10, had announced that the 60 clusters since May 13 had stemmed from two major social and festive celebrations.
The retail industry, despite obediently complying to all the stringent standard operating procedures (SOPs) at its workplace and retail stores, has to unfortunately bear the crunch of a total lockdown.
We wish to reiterate that the retail sector had not contributed any index cases nor clusters and to further support this claim, please refer to the first HIDE (Hotspot Identification by Dynamic Engagement) figures (Feb 22 to April 2) which showed that only 4.78% of all cases were related to malls including shopping areas, and the latest MOH statistics (April 9 to May 28) showed that shops, malls and markets including shopping areas combined ONLY accounted for 0.8% from 340 clusters reported nationwide.
It is thus without any basis that the retail sectors appear to be “unfairly penalised” under the lockdown.
Burdened with no significant assistance
Despite being caught under such dire circumstances, the retail sector had not received any significant assistance from the Government except for the financial aid under the Wage Subsidy Programme (WSP) which is granted to all.
We earnestly request the Government to review the scheme to increase the ceiling of eligibility to RM5,000 from the current RM4,000, remove the limit of 500 head count and extend the assistance till Dec 31.
With zero income during the stores closure under the lockdown, the retail sectors are still burdened with having to pay for the following:
- Payment of various trading and signboard licenses when we are not allowed to open for business.
- Payment of assessment and quit rent although the premise cannot perform the designated trade.
- Contribution to Human Resources Development Fund (HRDF) funds when we cannot conduct training and worse still, having to spend on training when we can’t even pay salaries.
- Contribution to SOCSO when the staff can’t even travel to work.
- Monthly income tax instalment Payment when businesses are already running at a loss.
- Rental when we can’t even open for business.
- Stocks will continue to age when the shops can’t open to trade and these stocks will have to be marked down later resulting in huge losses.
- The air-conditioning at the outlets is shut down during the lockdown period where the stores cannot open to trade. Much of the merchandise in the stores will be damaged in the humid and stale air environment due to the lack of air-conditioning especially leather goods which will attract mould.
- Despite being unable to trade, retailers are still obligated to pay their creditors although the stocks are still in the stores unsold.
The Malaysia Retailers Association (MRA) requests the Government to waive and/or defer the above items (1) to (5) till Dec 31 to help retailers tide over their extremely tight cash flow, especially during this time of lockdown.
Also, to provide rental subsidy on top of whatever rental rebates granted by the landlord and special grant to retailers during the lockdown period to assist lessen their stress on the credit obligation when there is no income at all.
Nip the problem in the bud
MRA has been consistently appealing against a total lockdown due to the irreparable damage to the retail industry and the livelihoods of so many at stake as well as to the Malaysian economy. It had been reported earlier by Malaysian Employers Federation (MEF) that a total lockdown could lead to the closure of many businesses and significant job losses.
We are already receiving feedback that the retail industry in facing the impact of the FMCO; that some MRA members have cautiously indicated at least 20% stores closures with an estimation of 20% retrenchment which roughly translates to 120,000 job losses.
It is anticipated that if FMCO is further extended after June 28, we surmised that more severe job losses will surface.
While we fully support the need to protect lives, we are most concerned that the decision on the 3 phase FMCO seems to be discriminating as the majority of the retail sectors are deemed as non-essential.
Based on the recovery plan, the non-essential retail sector will most likely be allowed to open only in September and by then, we are deeply worried that most of them would have already been forced to cease operation permanently. We believe the Government’s intention for the various MCOs is to control the movement of people, and not to subject businesses nor trade from operating or sell their goods.
MRA would strongly urge the Government, where necessary, to implement TEMCO instead of a total nationwide lockdown. This will help to identify, locate and nip the problem in the bud. The retail sectors with the least number of cases are unfortunately not allowed to do so under the lockdown and once again we appeal to the government to allow us to resume our business immediately under strict SOP.
All retailers, whether small, medium and even the larger ones, are suffering under these unprecedented circumstances.
Therefore, we appeal to the Government to come out with a detailed exit plan that takes all sectors into consideration and the necessary relief fund to shore up economic recovery to prevent the country from going into its worst ever recession which may take years or even decades to recover from.
At the same time, MRA calls on the Government for an urgent roll-out and acceleration of the vaccination programme for the retailing sector to speed up the attainment of herd immunity in our country.
In conclusion, the retail industry is cognizant of the need for everyone to take collective responsibility to continue to ensure strict adherence to the SOPs and to take stringent measures at the workplace and stores towards ensuring the wellbeing of the retail sector and all consumers. – June 23, 2021
Tan Sri William Cheng is the president of Malaysia Retailers Association (MRA).
The views expressed are solely of the author and do not necessarily reflect those of Focus Malaysia.
