Business Survival After the Pandemic

The Star Outstanding Business Awards (SOBA) held a live Facebook panel session on April 13 with guests from MRCA, Malaysian Associated Indian Chambers of Commerce and Industry and SME Association of Malaysia, for their views on business survival after the Covid-19 pandemic.

SPEAKERS

• Datuk Seri Garry Chua, MRCA President • Datuk Michael Kang Hua Keong, National President, SME Association of Malaysia • Datuk Dr AT Kumararajah, Malaysian Associated Indian Chambers of Commerce and Industry

MODERATOR

• Dato’ Bruce Lim, Deputy Secretary General, MRCA

ENGAGING POLICY MAKERS

Since the start of the MCO in mid-March, many associations have been engaging with the government to make the plights and woes of all SMEs, retailers, and businesses heard. With almost no income, businesses are paying overheads such as salaries, rentals, and bank loans, among others.

Datuk Seri Garry believes that it is necessary to work together with the government, employers and employees in sharing the burden. Financial institutions, suppliers, statutory contribution bodies and landlords, need to work together to support SMEs and ensure business survival, he stated.

“The “mid-to-higher tier” SMEs require further attention by the government because many of them are chain retailers, employing hundreds of employees. They also need to discuss with their respective banks to restructure their loans.

He also stated that employers should establish goodwill with their employees by ensuring two-way communication.

Picking up on that point, Datuk Michael said that an option was to offer senior employees some shares in the company or let them become a partner in the company in lieu of a full salary.

He pointed out that SMEs generally find it hard to claim and get assistance from the government to overcome their loss of income, and it falls on associations like theirs to request help from various ministries.

Datuk Kumararajah said the Government’s RM250 billion “Mak Cik Kiah” stimulus package, among other measures, achieved a “higher level of coverage” by “managing the demand side”, while acknowledging that Putrajaya might have overestimated the ability of SMEs as a “relatively resilient” group.

He suggested that the Government have a “single window of implementation” in place for its SME crisis.

Datuk Michael recommended that the government emulate the practices of the UK, and make transparent the financial assistance situation surrounding acceptance and rejection rates.

WINNING THE HEARTS OF RETAILERS

On how businesses should behave, Datuk Kumararajah called for a “transparent” approach that focused on negotiations.

Connecting to Datuk Kumararajah points, Datuk Seri Garry cited the example of Sunway Malls and their 2-week rent-free period having a rippling influence across other malls in the industry – each following suit with a rent-free or rent-reduction programme that benefits the long-term relationship with its tenants.

He added that the 15% discount from Tenaga Nasional could have been as high as 30-50%, so as to help malls “cushion part of their expenses”.

On the Special Relief Fund, Datuk Kumararajah said that it covered only a small percentage of the SMEs in the country. “It was never a medium-term solution, instead it was intended to merely cover liquidity needs in April.” He said that immediate drawdown was necessary to ensure that the purpose of the SRF was not defeated at the waiting line.

Observing that consumers are taking their shopping online, Datuk Michael opined that the RM500 million business digitalisation grant from the government was a timely opportunity for SMEs to retool, but recommended that a revision in the number of beneficiaries so that more SMEs could make the change.

According to Datuk Seri Garry, consumers are increasingly skewed towards takeaways and deliveries. Grab and Foodpanda have seen delivery volumes pick-up by a factor of 10 “compared to normal days”, even though many restaurants did not score very well throughout this period.

DIGITAL PATH

As for business opportunities, Datuk Michael pointed out that SMEs should consider going on a digital path by leveraging existing governmental assistance. “With changes in customer behaviour, the business model has to change as well,” he said.

He also stated that the government should work together with businesses to build up a sustainable and selfsufficient ecosystem within the country, instead of relying mainly on imports.

Datuk Kumararajah pointed out that SMEs realise that technology is accessible and affordable, but it’s the back end that does not match in terms of the processes. “Our processes were not aligned to work from home,” he said. However, he expressed confidence that industries would take a permanent step forward through reimagined business models in this medium-term isolation economy. New legislation and regulation must be enacted to complement and compensate the “new level of business”, he added.

Stimulus Package #4 PRIHATIN PKS: “What’s in it for SMEs?”

SPEAKERS

Datuk Seri Garry Chua, President, MRCA

Datuk Wira (Dr.) Hj. Ameer Ali bin Mydin, Vice President Bumiputra Retailers Organisation (BRO) n 7 April 2020, a day after stimulus package to aid SMEs and micro-businesses, MRCA held a webinar on the dynamics of this stimulus package.

During the session Dato’ Garry Chua pointed out that about 98.5% of businesses in Malaysia are SMEs, and these businesses support 6 million workers, while contributing one-third of Malaysia’s gross domestic product (GDP). In the wake of COVID-19 and the MCO, he explains that entrepreneurs should focus on what “you want to change”, not what “you cannot control”.

Touching on the stimulus package, Datin Winnie opines that the package is good for micro-enterprises and has helped industries to a fair extent, despite its limitations. She also points out that certain companies are left out from the stimulus as they are neither small nor big, hence they do not fit into the SME spectrum.

While lauding the government’s efforts in reaching out to SMEs, Datuk Wira Ameer recommends that the government distribute the RM2.1 billion PRIHATIN special grant strategically to ensure that the money goes towards the restoration of businesses.

Dato’ Sri Tan Thian Poh conjectures that many businesses pay out most of their cash on rent, supplies, and wages leaving aside cash in hand which, at a “maximum”, allows them to “survive for one month”. He suggests that the government look into cash flow problems of the bigger players as they may not have sufficient reserves. The discussion also touched on the possibility of tax deductions for landlords offering rental discounts of more than 30%, which is one of the biggest concerns apart from salaries. Datuk Seri Garry said that many of MRCA’s members operate in malls, with hefty rentals. Therefore, on behalf of retailers, he calls for more malls to reduce or waive rent payments to ensure that their tenants stay and continue to operate. To this, Datuk Wira Hj. Ameer, who owns 27 malls, and whose business is also a tenant in many locations, feels that tenants and landlords (including REITs and their trustees) should have the “heart” by not charging rent during the MCO, when businesses are already hurt. On the subject of economic rebound, Datin Winnie believes that restarting the economy after the MCO would require “Malaysians to help Malaysia”, by supporting homegrown industries, businesses, and by making holiday plans within the country in order to fuel economic recovery. With the COVID-19 pandemic at play, consumers are fearful thus avoiding crowds and non-essential shopping, which in turn affects the retail industry. Dato’ Sri Tan shared that the Hari Raya season has always been very important for the textile industry,

MODERATOR

Dato’ Sri Tan Thian Poh, Chairman, Federation of Malaysian Fashion, Textile and Apparel (FMFTA) Datin Winnie Loo, Deputy President, Branding Association of Malaysia (BAM) Dato’ KK Chua, Founder & CEO of Armani

Othe government announced the 4th PRIHATIN economic

Media accounting for about 35 to 40% of sales for an entire year. An extended MCO is not good for certain retailers, particularly those who depend on peak seasons to meet annual sales targets, as the MCO will pressure buyers to cancel, or divert orders to other countries “which are not shut down”.

On employer-employee relationships and negotiations, Datuk Seri Garry said, “negotiations are an avenue to alleviate issues between employers and employees.” He recommends allowing employees to be remunerated for whatever losses or deficit suffered during the MCO following its conclusion, when the company might have new contracts or a returning surge of sales eventually.

“Everyone must sacrifice – the banks, the landlords, the government and staff. All parties must compromise in certain ways to make sure we get through this difficult period.

“Lastly, it’s a test of compassion, kindness to each other, and gratitude. This should be the time to contribute to make sure everyone sails through,” stresses Datuk Seri Garry.

In supporting Datuk Seri Garry’s statement, Datuk Wira Hj. Ameer said at his company, all directors are required to take a 100% pay cut.

In concluding the session, the speakers resonate that this trying period is a test of resilience, compassion and unity to keep each other afloat in business.