Without a doubt, life post the Movement Control Order (MCO) and Conditional Movement Control Order (CMCO) will change dramatically, even with the Recovery Movement Control Order (RMCO) now in effect. Even as the dust settles – companies as well as individuals and industries at large will experience paradigm shifts with everyone now facing “The New Normal”. What are the possible ramifications that will face us? What can still be salvaged and how can we at best move forward? YES (PropertY PeoplE PlaceS) Paper gathers the thoughts of key opinion leaders and captain of industries for their analysis, views and strategies in this open-ended dialogue for unprecedented times.
Interviewees: Datuk Chang Kim Loong, Wong Kuen Kong, Datuk Michael Kang, Sr. Lim Boon Ping, Ar Saifuddin Ahmad, Siva Shanker
Datuk Chang Kim Loong – Hon. Secretary-General of The National House Buyers Association (HBA), Malaysia
The immediate thing the government should do is to protect businesses and people’s rights, obligations and entitlements in legal contracts. The government must offer legal protection in the form of “time freeze” or *moratorium* for those rights under all legal contracts during the lockdown period and perhaps, even a reasonable “extra time”, so that the weaker party is not being taken advantage of by the other covenanting party. That is why I am proposing a “Legal Shield On Contracts” – something equivalent being implemented in several countries, the nearest being Singapore.
Wong Kuen Kong – Deputy Chairman of REHDA Johor Branch Group Director of Townships, UMLand
“Every cloud has a silver lining and the sun will shine after the rain. Together, we shall prevail.”
What in your view will be the impact post MCO — also given the extended MCO and CMCO on your industry? Please share the worst and best case scenarios.
Most developers would put on hold new property launches by six to 12 months after the pandemic is contained. The main focus will be to expedite construction activities in order to catch up with the delay due to the temporarily suspension under MCO and CMCO. The immediate impact on the property and construction industry would be the shortage of construction foreign workers as many have gone back to their own countries and may not return due to quarantine issues, etc. Raw materials and supplies for the construction industry will also be delayed due to closure of production factories. Even if projects are allowed to start work with the Ministry of International Trade and Industry’s (MITI) approval, there will be additional costs incurred in complying with the stringent Standard Operating Procedure (SOP) of MITI such as safety controls, wearing of mask and sanitisation of workers. It will also take at least two to three months for site construction to resume to normal speed. As such, the handing over of Vacant Possession (VP) to buyers may be delayed.
Property sales will take more than two months to generate more new sales as firstly, we need to tidy up the sales gallery and show houses that have been abandoned for some time. Secondly, less buyers will commit due to the fact that many are jobless, retrenched or have undergone pay cuts. Thirdly, due to the sentiment of a looming economic recession, most banks will be stringent on their mortgage loan approvals and buyers will not be able to obtain financing for their purchases. The bottom line is the negative impact on developers’ revenue, profit as well as cash flow besides having to pay fixed overheads and expenses. However, amid all these problems and uncertainties, there is also an opportunity to purchase property either for one’s own occupation or investment as prices are at their lowest due to the economic recession. There are already many special offers or packages in the market so prices of properties will definitely come down.
What can be done to cushion the blow following the after effects post MCO and CMCO?
The way of doing business or sales of property will never be the same as before. Property developers will have to work harder in coming out with strategies to push sales with the launch of new products amid unprecedented market conditions. They will have to go into digital marketing, online advertisement and sales through social media. We hope that government will be able to come out with effective housing policies and guidelines to help the developers to dispose of their existing unsold stocks such as expediting the Bumi release process, reduction of development charges and other compliance costs for development while lowering down the threshold for foreign buyers, etc. Authority approvals for building plans and Advertising Permit and Developer’s License (APDL) need to be expedited and fast tracked in order not to delay new product launches. Constructions at site will also need to be operating at high speed and have to work round the clock to catch up with the delay. To ease developers’ cash flow in order to pull through the aftermath of MCO and CMCO, perhaps the government could look into reducing corporate tax rates and the reduction or waiver of Employees Provident Fund (EPF) contributions. After the MCO and CMCO, the top priority would be to generate adequate liquidity or cash flow to manage business operations.
What do you think the “New Normal” will be? What more can be done to stimulate growth in your industry and what more can be done to heal the damage already incurred?
Things are never going to be the same again for a long time to come, even with RMCO in place now. For survival sake, the ways of doing business will be adjusted to the current MCO situation even after CMCO has been lifted. As for the nation, there will definitely be less traffic congestions as compared to “The Old Normal”. With “The New
Normal”, many will still continue to work from home and, with social distancing in place, social activities will be reduced. Social distancing now will become “The New Normal”. It has been proven that we can work from home so more flexible work cultures and lifestyles have emerged.
Dato Michael Kang – SME Association President
What in your view will be the impact post MCO and CMCO — also now that RMCO is in place? Please share the worst and best case scenarios.
With the shutdown, there’s no income. The impact post MCO and CMCO will see the economy going down with many losing their jobs. A majority of businesses will lay off their employees and many industries — especially the service industries will not be able to sustain while 40% to 50% of retail outlets will shut down. If the landlord of rented properties are not going to give discounts, then around 50% of Small and Medium-sized Enterprise (SME) companies will probably shut down. Consumer spending behaviour will also be affected.
What can be done to cushion the blow following the after effects post MCO and CMCO? [rml_read_more]
The Minister of Human Resource should not mislead employees to say that if they don’t work – they will still get full payment. We hope that SMEs can work together. Meanwhile, both employers and employees should work together to ensure employers can sustain their business to stay afloat. What do you think “The New Normal” will be?
Consumer behaviour will change with social distancing – with buying online becoming the new norm. Social distancing means cutting down on activities with a majority of businesses embarking on online communications.
What more can be done to stimulate growth in your industry and what more can be done to heal the damage already incurred?
I think the government should come up with a very good policy to assist SMEs by offering tax incentives and business- friendly policies to buy local. The government should take the initiative to buy 80% of local products and build up a global networking supply chain. And, this is what the government has to do. The government should come up with online infrastructure and speed up broadband infrastructure with 5G. Originally, what would have taken five years to implement now has to be done in two years – and the government can improve bureaucracy.
Sr Lim Boon Ping – President, Malaysian Institute of Estate Agents (MIEA) What in your view will be the impact post MCO, also given the extended CMCO on your industry? Please share the worst and best case scenarios.
Real estate agency activities were very much limited during the MCO and CMCO. No physical viewings could be conducted, no Sales & Purchase Agreements (SPAs) could be executed and there was no moving in nor moving out or any handing over of vacant possessions. All these made closing deals very challenging. However, we still witnessed agents closing deals especially for new projects. Right after the final CMCO is lifted, real estate activities will definitely rebound but still, with some limitations. We anticipate lesser people will visit property sales galleries while lesser people will attend property launch events as this will involve big crowd gatherings. To counter this, digital presentations and digital launches will become “The New Normal”.
What can be done to cushion the blow following the after effects post MCO & CMCO?
Government policies always play a vital role in the property market. I must applaud the government for implementing the six-month loan deferment programme. Together with the lowering of interest rates, these moves have successfully cushioned the property market. Property owners have much stronger holding power right now – even though some may have had their income affected. We acknowledge that the market sentiment will be low. Therefore, we need the government to step in to come out with measures to stimulate the property market. The Malaysian Institute of Estate Agents (MIEA) association has openly requested for the Government to waive Real Property Gains Tax (RPGT) for at least the year 2020. Coupled with that, it will be great if bank lending policies can be further relaxed – such as to remove the cap of 70% on the third residential loan. All of these measures will be able to help boost up confidence and to create more market activities.
What more can be done to stimulate growth in your industry and what more can be done to heal the damage already incurred?
It’s all about moving forward. We can’t change what has happened and we acknowledge the negative impact it has had on the property industry. But more importantly is how we move forward. As market leaders, MIEA, even before MCO and CMCO – had on numerous occasions, called upon real estate practitioners to stop calling Internet Technology (IT) a disruption, and instead, start embracing the technology. MIEA started developing several smartphone applications in the second half of 2019 and also launched three technology initiatives just two weeks before MCO. These are the MIEA Agent Data, MIEA Loan Check and MIEA Insure. During the MCO, MIEA launched MIEA Multiple Listing Service (MLS), which also received resounding response from real estate practitioners within a short period of time. Just for the record, there are several other technology related initiatives that will be rolled out in the next few months. All of these measures, we strongly believe, will help agents or real estate negotiators in their daily work and add value to them in their professional career progression. In order for agents or real estate negotiators to survive under “The New Normal”, it is all about their speed of adaptability to “The New Normal”. And, MIEA is going to continue to provide necessary technology tools such as apps and educational trainings to help them.
What do you think “The New Normal” will be? How will this impact the nation? Any positive takeaways that can arise from this?
From the perspective of real estate agents or negotiators, we foresee a new way of how real estate practitioners will do things. Basically, those without an online presence will find it hard to survive. Agents will be forced to further embrace technological changes – not just advertising on property portals but many will also now need to also learn how to operate a Facebook Fan Page to create followings and by making property related videos such as property 360, walkthroughs or other advisory videos and launching property virtual tour videos, etc. Many new skillsets are required in order to survive under “The New Normal”.
Ar Saifuddin Ahmad – Past President of PAM What in your view will be the impact post MCO — also given the extended CMCO on your industry? Please share the worst and best case scenarios.
Basically, the pandemic is unprecedented. Nobody expected it and the MCO and extended CMCO caught everybody off- guard. Those companies which were very prudent in their spending and which have reserves may be able to cover their expenses for this period since the government insists salaries must be paid in full. But beyond a couple of months – it would be a difficult situation. Depending on how you look at it – this is the best time for firms to carry out work from a different perspective – like working from home or engaging with clients via Zoom which will be the new way of working or approach post CMCO. This is really a testing period for architects but we can only test out at the moment, the design schematic and design development stage – but whatever has to deal with site work or the authorities are on hold. At the same time, many of us are taken off guard as most of our database is in the office. From this experience, we have to relook the way we work in the future. We have found that working from home is feasible but we have to ensure that the backup of data is done. Meetings can be done anywhere via video conferencing and the whole team need not be at a similar location. In view of this – we can work cross borders without travelling to the office.
What can be done to cushion the blow following the after effects post MCO and CMCO?
The MCO and CMCO have actually proven that the Fourth Industrial Revolution 4.0 (IR 4.0) using the Internet of Things (IoT) is possible. The IR 4.0 for the construction industry is possible. The database should be upgraded so should such a similar incident happen again, we are more prepared and at the same time – maybe the working hours can be changed now. We need not follow the norms anymore as flexi-time can be implemented and by doing this, we can perhaps save cost on office operations.
What do you think “The New Normal” will be?
The “New Normal” will be borderless – working borderless. What more can be done to stimulate growth in your industry and what more can be done to heal the damage already incurred?
This is where I think everybody has to play a part – especially developers. Maybe the type of projects implement is no longer projects of commercial value – like we have neglected medical projects which were put on hold in for the last few years in favour of more commercial projects.
Siva Shanker | CEO (Real Estate Agency) – Rahim & Co International Sdn Bhd What in your view will be the impact post MCO and CMCO — with the RMCO now in place on your industry? Please share the worst and best case scenarios.
This is an unprecedented situation. No one who is alive today has been through this situation. Therefore, I don’t think any practitioner will be able to predict the outcome. But, it will be towards negative territory. We will need to assess the market for the next three to six months to collect data and only then can we do an analysis.
But for now, we have no data to do a proper analysis. Everything came to a grinding halt. In order to make any analysis which is reasonable, we need to collect more data post MCO and CMCO to understand where the market is going to swing, and the extent of the damage caused by Covid-19, with the RMCO now being in place. The MCO and CMCO have certainly caused damage to the market but no one knows the extent of the damage as no one has undergone the MCO or CMCO before. But, when we get back to the office and engage with others – then, within the next three to six months – a pattern will emerge – whether the market will remain stable or go down by 10%, 20% to 30% or whatever percentage – no one in their right mind will be able to fathom. What do you think “The New Normal” will be?
In my opinion, I think the human race will be quick to forget and this “New Normal” is akin to “hangat hangat tahi ayam”. So, things will move back to normal. You know, technology like Zoom is akin to the invention of the telephone in the previous age. When 15 people enter into a Zoom conversation – it’s like a conference call that we could hold years ago. So it’s nothing new but the old ways of doing the same things that will be played out. I’m an example because I didn’t use Zoom previously but when I’m in meetings now – I can have a meeting with the architect, quantity surveyor and other stakeholders all at once without anyone of us having to drive to meet up. Therefore, I can have a Zoom meeting with many at a go. To me, that is the only takeaway for “The New Normal” which may stick. So, what you realise from this is that not everyone needs to travel so some can work from home and not at the office. I think we would have evolved in this direction anyway but this MCO and CMCO have speed up the evolution after all. A lot of things will turn back to status quo and a lot of things will change. Everyone has to work much, much harder than they used to. The whole economy is a wheel. When the wheel is stopped in order to get it going once again, takes all that more initial effort. And, the economy is like a bicycle – as long as you keep cycling, you won’t fall. But if you stop peddling at some point – the bicycle will slow down. So, at this point – you have to start pedalling to pick up speed again. If not, you will wobble and fall. So, we have to look at this whole thing like an analogy of a bicycle and we need to peddle as fast as we can. So, I’m envisioning this recovery will take three to six months thereabouts.
What more can be done to stimulate growth in your industry and what more can be done to heal the damage already incurred?
Perhaps, the government has a thousand different industries to look at but at one point – they should look at the property industry as it’s a big chunk of the market. They have to kick-start this industry again and perhaps, they should offer incentives like what they had offered during the Home Ownership Campaign (HOC) – offering easy access to loans and for a while – zero- entry cost, waiver on stamp duty as well as on the Real Property Gains Tax (RPGT) perhaps. As you not only need people to buy – but the government should also facilitate people to sell. We also need people to sell their houses and commercial spaces in the secondary market — as that’s how you kick- start the economy. We have enough data to show that the primary market comprises only 20% of total transactions per year. But, 80% of this is the secondary market so you have to give incentives to the secondary market. This needs to be kick-started so you will need a stimulus for these guys by maybe waiving stamp duties or RPGT for a while or ensure that the Economic Planning Unit’s (EPU) statutory approval can be done in a couple of weeks instead of taking months. So, let’s kick-start things faster.
What can be done to cushion the blow following the after effects post MCO and CMCO?
One of the good things is the six-month moratorium so you can have time to recover once again. If you are a small Small and Medium-Sized Enterprise (SME) business, you may need to kick-start the business once the MCO and CMCO is over all over again. Once the fight against this virus is over – I think recovery will be very fast and aggressive because the MCO and CMCO have grinded everything to a halt – so the only way forward is up.
*Information and opinions expressed in this issue are accurate at the time of the interview.
