Rental waiver to tenants may help businesses stay afloat

by Sharina Ahmad

MALAYSIA’s retail businesses have been negatively impacted by the Covid-19 outbreak with some losing as much as 50% of their revenue.

To pull through this difficult time, the majority of the landlords have provided temporary relief of 14 days to 28 days to the non-essential tenants during the Movement Control Order (MCO) period and to help retailers stay afloat.

Addressing immediate challenges, marketing and retail design firm Visata Creative Sdn Bhd Timothy Liew co-founder told FocusM that it is essential for these tenants at a critical time like this to receive temporary relief.

“I think the most pressuring issue for most of the retailer’s mind right now is cash flow. Just like every other business, they have costs to bear and salaries to pay.

“For a long-term commitment as property owner/landlord, they do need to make sure their tenants feel that they are concerned and understand the current situation. This also to ensure that in the long run, property owners will continue to have tenants renting their property,” he said.

Other than that, Liew noted that the government should play its role to support small and medium-sized enterprises (SMEs) by making it compulsory for the banks to make loans to their retail business customers and be well-protected by the government.

“If you look at the recent survey by SME Malaysia which garnered about 15,000 respondents – 4% of the 22% of SMEs who applied for funds have been rejected.

“The focus right now should be business continuity and to ensure that the retailers continue to employ their staff,” said Liew.

He also suggested an appropriate period of the rebate. “Some malls are giving a rental rebate for the whole month of MCO and others are giving more than a month. Personally, I don’t think it’s fair for tenants to ask for a three to six months rental waiver but perhaps 50% waiver after two months and 30% for the third and fourth month.”

Malaysian Retail Association (MRA) president James Loke told FocusM that retailers are grateful that many landlords and shopping malls owners have responded positively to the association’s appeal for free rental during the MCO period.

“We are appealing to the government to assist us with the wage subsidy, which it has set at RM600 per employee, but lift the number of employees above the 100 cap, as most of our MRA members have more than 100 employees. Help us to save jobs, to save our companies and to save the economy of the country.

“The sales have dropped by as high as 60% in February. We envisage a 90% drop in March due to the MCO,” said Loke.

MRA represents 20% or RM22 bil of the country’s retail market, with a membership of over 150 major retail and related companies covering more than 10,000 retail outlets and employing more than 150,000 staff.

Loke stated that there are 37 companies to date that have provided rent-free during this challenging time.

Among landlords who have stepped forward in giving a rental waiver to non-essential businesses include Sunway Group, which has offered rent-free to non-essential trade retailers at its malls for 14 days, from March 18 to 31, at a cost of RM20 mil.

The rental exemption is for tenants at Sunway Pyramid, Sunway Velocity, Sunway Carnival, Sunway Putra Sunway Big Box Retail Park, Sunway Giza and Sunway Citrine.

Meanwhile, AEON Co (M) Bhd and AEON BiG (M) Sdn Bhd are offering a 28-day rental waiver at all 28 AEON Malls and 18 AEON BiG Mall Hypermarkets nationwide.

Pavilion REIT Mall is offering 14 days rent-free at all its malls – Pavilion Kuala Lumpur, Pavilion Elite, Da Men Mall and Intermark Mall.

According to a report, Malaysian Employers Federation (MEF) executive director Datuk Shamsuddin Bardan said the government really needs to assist retailers to manage three big cost items – rental, payment of wages and payment of statutory contributions.

“The government can mediate with landlords and tenants to bring down rentals. The landlords may be incentivised with a lower tax rate or given tax-free status for income derived from rental for 2020,” he was quoted as saying.

Among the malls that are giving rental waiver during the MCO period:

1) Imago – 28 days
2) Sunway Group – 14 days
3) Pavilion – 14 days
4) Genting Group – 14 days (to be extended)
5) Bangsar Shopping Centre – 14 days (to be extended)
6) Mydin – 14 days (to be extended)
7) Everrise – 14 days (to be extended)
8) The Spring Shopping Mall (Sarawak) – 14 days (to be extended)
9) WCT Group – Paradigm Mall – 14 days (to be extended)
10) Bangsar Village – 14 days (to be extended)
11) Kuantan City Mall – 14 days (to be extended)
12) The Gardens Mall – 14 days (to be extended)
13) Avenue K – 14 days (to be extended)
14) Kipmall – 14 days (to be extended)
15) Capitaland – 14 days (to be extended)
16) Dpulze – 28 days
17) Econsave – 14 days (to be extended)
18) Ikano group – 28 days
19) Mitsui Outlet Park KLIA – 28 days
20) Suria Sabah- 28 days
21) Central Market – 28 days
22) Johor Premium Outlet (JPO) & Genting Highlands Premium Outlets (GPO)
23) Seremban Prima – 14 days (to be extended)
24) KSL City Mall (JB) – 14 days (to be extended)
25) Giant – 14 days (to be extended)
26) IOI Puchong – 14 days (to be extended)
27) Toppen Shopping Centre (JB) – 28 days
28) Design Village Penang – 14 days (to be extended)
29) Lowyat Plaza – 14 days (to be extended)
30) Digital Mall, PJ – 14 days (to be extended)
31) Tropical Gardens – 14 days (to be extended)
32) 9 Avenue Street Mall ( Nilai) – 14 days (to be extended)
33) EkoCheras Mall – 28 days
34) M3 Shopping Mall 28 days
35) Main Place – 28 days
36) 163 Mall Mont Kiara 28 days
37) AEON Malls & AEON Big 28 days – April 2, 2020

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