Few in the property and tourism industries were impressed with the latest stimulus package by the Malaysian government citing the lack of focus and not targeting the right group namely SMEs and businesses.
Text & Photography by Jan Yong
“Too little, too late” is the general consensus among industry players contacted by Asian Property Review on the RM150 billion National People’s Well-Being and Economic Recovery Package (PEMULIH) unveiled at the end of June by Prime Minister Tan Sri Mahiaddin Yassin.
“The handouts including cash, grants and subsidies are too little and too scattered while the lateness for me, would refer to the delay in controlling the pandemic in Malaysia,” opines Koong Ling Loong, Managing Partner of Reanda LLKG International.
Citing the example of the small cash handouts to the B40 and M40 income groups which would be staggered over two months, Koong, who is also the Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM) Chairman of SMEs Committee, said that the stimulus should be extremely targeted and focused on those who need it especially businesses.
“For big businesses with loans in the millions or tens of millions of ringgit, with monthly repayments ranging between RM20K – RM40K, they would be suffering as this stimulus package does not offer them much relief.”
Even the loan moratorium for them is subject to approval after submitting all the required documentation, unlike the case for individuals and microentrepreneurs who would get automatic approval upon application without any supporting documentation.
For Koong, Malaysia has lost a golden opportunity to flatten the curve significantly late last year when she should have imposed a total lockdown for 14 days during the year-end holiday season. The current threshold figure of 4,000 and below of average daily Covid-19 infections, etc, before moving to Phase 2, is not exactly the best yardstick to transition to a recovery phase,” he added.
Dato Alexander J., Deputy President of Langkawi Business Association, agreed that the latest stimulus package is a little too late for the tourism industry. Alexander, who’s also the owner of cruise operator Tropical Charters Langkawi, stressed that the moratorium should be automatic for all with an opt-out option. He reiterated the government should cut the red tape to aid the severely affected tourism industry.
‘Lip service’
Shaharuddin Saaid, Malaysian Association of Hotel Owners Executive Director, has strong words to describe the stimulus effort. Saying the hotel sector is “very disappointed” with the PEMULIH initiatives, which he described as “looking more like lip service”, the outspoken hotelier said as long as interstate and international borders are closed, the situation looked bleak and recovery was nowhere in sight.
He described the wage subsidy scheme as just a “window display” which would only be disbursed when the country is in Phase 2 and 3; then asked rhetorically, “Any idea when that might be?”
Malaysia is currently in Phase 1 of the National Recovery Plan; in order to transition to Phase 2, the average daily COVID-19 cases must drop below 4,000, the intensive care unit (ICU) usage must no longer be at a critical level, and 10% of the country’s population must have received two doses of the COVID-19 vaccine.
As for the 10% discount on electricity bill, Shaharuddin likened it to “chicken feed” and mentioned that big ticket costs like assessments, Indah Water Konsortium (IWK) monthly fixed charges and business licences are not given any consideration at all.
He concluded that the best way out is for the government to talk to industry players to find a workable solution to restart tourism in the new normal setting.
To date, at least 120 hotels have ceased operations either temporarily or permanently since the lockdown began in March 2020. An estimated 100,000 workers across various industries have lost their jobs since then, according to the Human Resources Ministry.
Ivan Chong, President of MVR Malaysian Vacation Rental Services Management (MVR) was not too enthusiastic either, saying, “At least, there is still something which is better than nothing for a lot of people. However, for many SME employers, it is just a small Panadol. As long as the market is not moving, they are continuing to bleed.”
Jordan Oon, CEO and Founder of HostAStay Berhad agreed that the initiative is better than nothing at all, but thought it’s not going to help much. Many in the short-stay rental accommodation industry, he added, had felt like giving up or had already given up.
Indirect Impact
On its impact on the property industry, Koong of Reanda, said the stimulus had an indirect impact primarily through the loan moratorium, wage subsidy and soft loans.
“The most important is the loan moratorium which is a big relief to individuals and borrowers of housing loans, whether they are from the T20, M40 or B40 income group.
“Without the automatic moratorium upon application, the entire property industry would suffer. Imagine, if a worker is retrenched or lost his income, he would stop paying his housing instalment resulting in an auction where his house would be sold at a cheaper price. If this happens widely, it would reduce the value of property overall.
“With the stimulus, businesses don’t have to retrench, so employees can continue to pay their housing instalments and those who want to change house, can capitalise on the lower prices; so it helps both the primary and secondary markets. The takeaway is that the government should help businesses more. Unfortunately, there is too little help for businesses.”
Koong, who is also a chartered accountant, further said, overall the latest stimulus was not much different from previous ones. “To me, this stimulus is to calm down everyone, but in the process, it scatters too many goodies around in small portions, instead of targeting the right group namely businesses especially the bigger SMEs and mid-tier companies. These are the ones which employ the majority of the B40 and M40 groups comprising 80% of the workforce.”
“Such extreme targeted help is needed so that these businesses don’t go bust or retrench workers which will have serious consequences for the broader economy.”
Juwai IQI chief economist Shan Saeed agreed that the stimulus was to keep the momentum in order to maintain macroeconomic stability. “This also allows the government to have room to manoeuvre in fiscal policy and for BNM to have a lot of room to manoeuvre in the monetary policy lever.”
For Brian Koh, Executive Director of Nawawi Tie Leung Real Estate Consultants Sdn Bhd, the loan moratorium would help in moderating any strong uptick in non-performing loans, which would create a downward spiral in prices and sentiment.