Post MCO & CMCO Impact On Retail, F&B and Other Industries

Dato’ Seri Garry Chua- President of the Malaysian Retail Chain Association (MRCA)

What in your view will be the impact post MCO and CMCO — with RMCO now in effect? Please share the worst and best case scenarios.

Things will not be good for the next six months. Looking at the Food & Beverage (F&B) restaurant scene post lockdown in Shanghai – they are now only running at about 30% capacity. Even after the lockdown, people will not just come out just like that and they will conserve cash. I predict that it will take at least six months for normalcy to recover. Even Bill Gates said it will take at least 18 months for a worldwide recovery because the Covid-19 pandemic is global in its impact.

In Malaysia, some industries like the glove-making sector is doing well. I believe many retailers and Small and Medium-sized Enterprises (SMEs) will be trimming down their outlets and their overhead businesses especially those with borderline outlets in out-of-reach areas and other not-so-convenient outlets. Even with the subsidies from the Government – some companies are not taking up the offers. For example – “no pay leave” has to be based on labour law. We are not interested to ask anything from the Government in the event this Movement Control Order (MCO) and Conditional Movement Control Order (CMCO) didn’t take place but want to support the Government. The rate this is going however – with the MCO being extended with the CMCO – which has now reached the Recovery Movement Control Order (RMCO) stage will be even more devastating. There’s a survey that was recently done which anticipated that 47% of self-employed businesses entailing property agents, etc. will be out of jobs.

In terms of outlets – 20% to 30% of retailers with many outlets will also close shop. Even the big boys like AirAsia may be able to hold out only some six months. The SME Corp survey shows that 48% of SMEs can’t last for six months while another 46% are estimated to be able to last around six to 12 months – and not longer. In a best case scenario – the International Monetary Fund (IMF) projected that Malaysia will bounce back the fastest and greatest with a Gross Domestic Product (GDP) of 9% rebound for next year in comparison to other South East Asian countries.

What more can be done to stimulate growth in your industry and what more can be done to heal the damage already incurred with RMCO now in place?

The thing is that when there is no income – akin to having no water – one may die within a week. In business, you may own RM100 million priced properties but cannot liquidate them – so it’s a cash flow issue. Even the Government won’t have income tax – so how are they going to sustain the salary of the civil service? So right now, the Government needs to open up businesses with stringent Standard Operating Procedures (SOPs). Singapore and Taiwan have practised social distancing with Taiwan having a successful testing system. Taiwan reacted fast and was effective so they didn’t have a lockdown.

What can be done to cushion the blow following the after effects post MCO and CMCO?

Until today, there is no solid post MCO or CMCO action plan. Yes, they have the Economic Council. At least Thailand is trying to attract more investors so there will be a bit of recovery – either by way of foreign investments or local reinvestments. This could see multinationals reinvesting – either going for higher deficit or by taking a Covid-19 bond. After World War II, many countries took a bond after the war so we should establish a Covid-19 bond. Malaysia has to ask for help. Malaysia has good rapport with many countries which is a good thing. So, Malaysia should capitalise on the good relationships. Palm oil is also an important commodity. Malaysia should ensure that after the lockdown, it must do aggressive exporting, pursue foreign direct investments and address how it can help SMEs as the stimulus Prihatin package is not stimulating at all.

The good thing is the Government is helping the micro SMEs as well as the B40 and M40 groups. But, what about the rest of the SMEs that form 70% to 80% of the nation’s businesses? There must be a sense of urgency and SMEs are here to help the government because if the SMEs don’t survive – the government won’t have the Service and Sales Tax (SST) or income tax revenue and the Bumiputera companies too are suffering.

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?

In facing “The New Normal” – the first thing that is very important is to address health facilities from the Government. Fortunately, the Government has been doing the right thing from day one. Our healthcare treatment is good but general hygiene is poor. So, we must wash hands more often, use the sanitisers and wear masks, etc. All food workers should also be scanned.

Restaurant and coffee shops can’t operate at full capacity. Already, Hong Kong and Taiwan only operate at 50% capacity. But, how will malls provide support? Malls should give retailers some 50% discount. Everybody is affected here so Tenaga Nasional Berhad (TNB) should step in to give 50% rebate for the next six months to help out the retailers. In the retail sector – people will still play it safe so the window period for recovery post MCO and CMCO I think, is about six months. Things will start picking up again after six months so it will take another six months to a year to return to status quo. Bill Gates in fact anticipated some 18 months. The Spanish Flu which lasted from 1918 to 1920 which lasted three to four years affected some 20 million people worldwide. People then didn’t have knowledge and healthcare was not even in its proper place.

Digital shopping will be more permanent. Transactions will go online and while previously, only the Millennials were shopping online, now even online training is rampant. Some countries have stopped the schools and used online teaching instead. You can see all the digital companies such as Alibaba doing very well. Online games and online transactions are aplenty. Here, Grab and Food Panda are doing roaring business. I’m told that they’re making more than 10 times on food delivery. So, we should encourage more delivery services to come to the fore to create increased competition to reduce the cost of delivery. Banks too should be more caring.


Jennifer Ong – Founder & CEO if HAPA Group

What in your view will be the impact post MCO and CMCO — with RMCO now in effect? Please share the worst and best case scenarios.

All business owners will not be spared the consequences of Covid-19, whether they helm large or smaller scale businesses. The Food & Beverage (F&B), hospitality and tourism industries are already hard hit by this Covid-19 pandemic. Employers are bleeding and employees are in distress. Despite the drop in revenue, obligations remain, including payments to landlords, utility companies, banks, the taxman, suppliers and not forgetting, wages. The potential percentage of business failures is growing every minute and employees will be out of a job if these businesses fail.

We will witness many businesses shutting down due to depleting cash flow which will cause a huge number of workers being laid-off. The F&B, hospitality and tourism industries face the most dire consequences, with a projected decline in revenue of approximately 83% and no idea as yet as to how long this Covid-19 driven downturn is going to last.

In any event, I think the good thing that will come out of this crisis is the sudden surge of new innovations in the way we do business. The offerings to customers will be a lot more creative and certainly will be technology driven. We will see a great amount of digital transformation taking place in many businesses. This will be the good side of things – the efforts and initiative made by the Government to move towards The Fourth Industrial Revolution (IR 4.0) is now being embraced by most companies, if not all in order to survive this crisis.

What can be done to cushion the blow following the aftereffects post MCO and CMCO?

As this is a “Black Swan” impact to the economy of our country and globally, we foresee it will take at least one year for businesses to recover their strength. Certainly, a long journey is ahead for all of us. We need to build up confidence to the public that Covid-19 is suppressed and we are safe to live with the lifestyle before. Industry players and relevant Ministries will need to work together to promote and support domestic tourism. We need to get people coming out back again to spend their vacation only in Malaysia, eating in their hometown restaurants, visiting Malaysia’s tourist places and buying local products at local stores.

What do you think “The New Normal” will be? How will this impact the nation? Any positive takeaways that can arise from this?

Due to the MCO and CMCO, the virus phobia that have been implanted into every Malaysian will change the way we live. For example, people will tend to takeaway or cook at home during the first

two weeks at the least, to confirm if the spread has finally halted for good. Distance dining will be the new norm after the MCO and CMCO. As such, business owners have to reinvent their business models as fast as they can, and the relevant Ministries must be able to support these new business innovations. Our country will start to move towards I.R.4.0 faster than expected. All the Digital Transformation initiatives implemented years ago will now be embraced by organisations positively.

What more can be done to stimulate growth in your industry and what more can be done to heal the damage already incurred?

The F&B industry will have to have the ability to change the way they do business to stimulate growth for this sector. They can start focussing on food deliveries and distant dining, so to speak.


They will have to consolidate and re-invent their business model and give more value to people. However, the hotel and tourism sectors will be highly impacted as they will experience a very long low-peak period. We will not see tourists’ arrivals increasing anytime soon post MCO and CMCO — and only perhaps, by end of the year at the earliest. This will also impact other tourism-related businesses such as beauty tourism, medical tourism, wellness tourism, sports tourism and the aviation industry. To this end, I think SME business owners and entrepreneurs need to start focussing on the evolution of their businesses.

Every crisis will always cause us to evolve but the good news is that we have always evolved in every crisis. Evolving is not new to us as much as it can be very painful. We now need to shift our mindsets to focus on how we are going to get our employees back to speed when the MCO and CMCO is lifted. We need to train our best soldiers so that they will be skilled enough to fight the post-MCO and CMCO war for us to avoid an extinction to our businesses. We need to rebuild confidence in ourselves and our employees. We need to remove the fear in us and trust our very own entrepreneurial instincts that we will be able to recover sooner than expected.

Damage or no damage, the survival of the industry is and will be in the hands of business owners and entrepreneurs because it is the resilience of these entrepreneurs that will take the industry out of this crisis. This too will pass, and we shall all come out leaner maybe but definitely stronger. So, we need to stay strong… We need to keep going, just like everything else.


What can be done to cushion the blow following the after effects post MCO and CMCO?

To date, the Australian government has announced A$320 billion (RM883.20 billion) total support for the economy across all sectors representing 16.4% of the annual Gross Domestic Product (GDP). These include various rounds of financial support and economic packages that will help businesses, individuals and families to get through this tough time. For the real estate industry – many incentives are provided to landlords and tenants, significantly reducing land tax by up to 25% while eligible tenants get up to A$2,000 (RM5,520) rental rebate per month while a six-month moratorium has been introduced for housing and car loans. As the interest rates continue to plunge (which is currently as low as 2.19%), major banks are reviewing mortgage payments in their bid to help those most affected.

What in your view will be the impact post lockdown — also given the lockdown on your industry? Please share the worst and best case scenarios.

Here in Australia – the Federal and Local Government has imposed Stage 3 Restrictions which means everyone is supposed to stay home unless it is going out for essential services like buying food or groceries, medical emergencies or supplies, work and study (only if necessary and can’t be done from home). No military has been deployed although the police force is given full authority to issue fines and arrest groups of more than two people and those who are breaking this new law.

We have all seen the effects of this pandemic with many industries affected since the lockdown especially travel, Food & Beverage (F&B), retail and even real estate as borders are closed to any traveller or outsider.  All public areas and retail shops are closed while physical property inspections and auctions are put to a halt and conducted online. This pandemic is predicted to last for at least six months in Australia with severe impact on the economy. That being said, Australians are very lucky, as the Australian Government has prepared a very generous package to help buffer Australians through the bad times with many economic stimulus given throughout many sectors to see us through these difficult times.

What do you think “The New Normal” will be? How will this impact the nation? Any positive takeaways that can arise from this?

While all of us are staying home and staying safe – the real estate industry was quick to adapt to “The New Normal” along with everyone else by conducting most of our businesses online with online face-to-face consultations via Zoom/Skype/  video calls, virtual Three-Dimentional (3D) property inspections and tours besides conducting online auctions.

This is good news for foreign investors as they are able to leverage on the latest technology to invest confidently in Australian real estate. They will be enjoying the exact same privileges as all local Australian citizens and residents relying on online research with Government websites, Google Earth for location and surrounding information as well as real time / recorded videos and 360-tours for site inspections. We are still seeing many foreign enquiries which came through while closing deals signing off-the-plan for new property purchase contracts purely by speaking with clients on the phone via video calls. All contracts and documents were signed and executed via a secured document-signing software and all monies transferred without any issue all during the lockdown period.

What more can be done to stimulate growth in your industry and what more can be done to heal the damage already incurred?

I am confident that the real estate industry will definitely recover and come back stronger as we are already seeing my clients taking advantage of the current situation with these positive points that stimulate keen interests from astute investors who are looking at taking advantage of the Australian property market:

(1) The Australian Dollar is now at an all-time low. In March 2020, the Australian Dollar plunged to its lowest ever since year 2002.

(2) Bank interest rates are at their lowest with the mortgage interest rate being at 2% in April 2020.

(3) Australian property prices in growth areas have stabilised and will continue to grow as the population increases with migration figures still rising. Melbourne growth corridors in the west and north have seen double-digit growth in the past years.

(4) Government stimulus packages that protect landlords and tenants while providing many incentives for first-time homeowners to venture into real estate.

(5) Securing investments with rental guarantees for both apartments and houses in key capital cities around Australia with packages that our company specialises in to help our clients / investors lock in their Return On Investment (ROI) right from the start.



Timothy Tiah – CEO of Colony

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.

Part of our revenue is events space rental and I don’t think events will pick up for a while even post MCO and CMCO, with RMCO now in place. We’re fortunate though that the majority of our revenue is from office space and that’s still going on and will likely keep us going for the rest of the year.

What do you think “The New Normal” will be?

I think we’ll start wearing masks and go out less. But beyond that, I really can’t tell what the future holds.

What can be done to cushion the blow following the after effects post MCO?

While we still ended quarter one on a profit run, I think we may dip in a loss in the following quarters if things get worse. Our focus now is surviving this period of losses. On this count, we are lucky that we have always been prudent as a company and keep a healthy cash reserve to tide us through bad times like this.

What more can be done to stimulate growth in your industry and what more can be done to heal the damage already incurred?

There’s an argument that as companies cut costs and trim down their traditional office leases they may opt for more flexible arrangements like co-working. This might benefit co-working as a whole. It’s too early for me to tell if it’s working out this way but I hope it’s true.


*Information and opinions expressed in this issue are accurate at the time of the interview.

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