Malaysia Retailer|Vol 8|No 4|2020|Datuk Seri Johari Abdul Ghani

Vol 8 No 4 2020

From Business to Politics to Business – A Kaleidoscope of Perspectives Datuk Seri Johari Abdul Ghani Chairman, KUB Malaysia Bhd & C.I. Holdings Bhd

WM RM9 / EM RM11

Impact of Budget 2021

CONTENTS / VOL. 8 NO. 4

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Slow Retail Recovery Expected in 2021

Cautious Optimism for Shopping Malls Sector

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From Business to Politics to Business – A Kaleidoscope of Perspectives

Armed with experience in business and politics, Datuk Seri Johari Abdul Ghani, Chairman, KUB Malaysia Bhd & C.I. Holdings Bhd, is an accomplished man with a rich perspective of industry and society. Tapping on his invaluable experience as former Minister of Finance II and a leading corporate figure, he expounds on current matters in society and the economy.

23 Repayment Aid Remains Available For Borrowers

24 Bill To Temporarily Reduce Impact of COVID-19 Gazetted

25 Mental Health Issues Will Be Among Primary Productivity Disruptor

26 6 Key Findings for Southeast Asia e-commerce Market

28 Developing Resilience to Handle the Global Pandemic Crisis

30 Digital Transformation Guide 32 Ambank Islamic Awarded Best Islamic Corporate Bank In Malaysia 2020

FEATURES 08 Slow Retail Recovery Expected in ON THE COVER

2021

10 Cautious Optimism for Shopping Malls Sector

Ambank Launches New Cash Rebate Credit Card

33 Updates / News

13 Sunway Malls Celebrates Christmas in the Spirit of Giving & Gratitude

14 What’s The Impact of Budget 2021?

18 No Light Yet at the End of the Retail Tunnel Datuk Seri Johari Abdul Ghani Chairman, KUB Malaysia Bhd & C.I. Holdings Bhd

20 Retailers, Malls Association & SMEs Urge Government for More Aid in Budget 2021

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Digital Transformation Guide

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Malaysia Retailer Vol 8 No 4

Armed with experience in business and politics, Datuk Seri Johari Abdul Ghani is an accomplished man with a rich perspective of industry and society. Tapping on his invaluable experience as former Minister of Finance II and a leading corporate figure, he expounds on current matters in society and the economy.

atuk Seri Johari Abdul Ghani, Chairman of KUB Malaysia and C. I. Holdings Berhad, the largest shareholder of both companies, is a leading figure in Malaysia’s financial industry. An accountant by profession, Datuk Seri Johari is a Malaysian politician and was formerly Minister of Finance II from 2016 to 2018.

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EDUCATION – A KEY CATALYST Speaking about his humble beginnings, Datuk Seri Johari explains that education is key to his success in the business and political arena. “My parents are key influencers in my life. I came from a family that was economically challenged and my parents were not well-educated. Despite that, my mother and late father emphasised the importance of education in breaking the vicious cycle of poverty in the family,” he explains.

“It is not the assets or money left to me by my parents that has helped me but the education that they emphasised on that has been a major driver,” he stresses.

On his choice of accountancy as a profession, Datuk Seri Johari says, “Since my early school days, it has been my dream to be involved in the business world, where I don’t need to report to anyone. I noticed that a common characteristic of businessmen is that they have good financial literacy.”

He explains that accountancy gives one an edge in financial literacy and sets the path for good business acumen. “I believe that a good accountant is able to multi-task, make quick decisions and is a fast learner – common characteristics of a good business leader,” he adds.

E-COMMERCE COMPLEMENTS THE RETAIL BUSINESS As an experienced businessman and Malaysia Retailer Vol 8 No 4

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From Business to Politics to Business – A Kaleidoscope of Perspectives

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“For good e-commerce, you need a strong and efficient ecosystem which includes logistics partners, infrastructure and warehousing, among others. This calls for digital technology advancement.”

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corporate figure, Datuk Seri Johari shares his thoughts on e-commerce and its growing influence in today’s society. With the COVID-19 pandemic adversely affecting the retail sector in Malaysia and globally, Datuk Seri Johari says that e-commerce is a platform that complements and supports the brick and mortar retail concept.

“Regardless of what is said about the wonders of e-commerce, physical retail outlets will always be there,” he says. He reiterates that the only difference is that 20 to 30 years ago, retail outlets were the only option for customers, however, today consumers can enjoy the convenience of online stores.

He explains that one of the main advantages of e-commerce is convenience. “It has the ability to disrupt the normal retail ecosystem, however, for good e-commerce, you need a strong and efficient ecosystem which includes logistics partners, infrastructure and warehousing, among others.

This calls for digital technology advancement,” he elaborates.

Datuk Seri Johari explains that e-commerce is borderless, however, retail shops have limitations in customer reach. With e-commerce, the million-dollar question is “which platform” can scale-up to cater to millions of customers.

On his thoughts of the poor footfall and sales performance of department stores in Malaysia and globally that has led to many closing down after having been in business for decades, Datuk Seri Johari says with urbanisation and the rapid pace of new township developments, more retail space has been made available, causing an influx.

With this phenomenon, there is a glut in retail space resulting in brand owners making demands on shopping malls, and duplicate stores becoming available across various malls, thus cannibalising

consumers. “The same number of consumers who frequent these stores are now split in numbers as the same stores are available across various malls,” he explains. Hence, retailers are then no longer able to obtain large numbers of consumers.

“In retail, you need numbers, and without numbers, you do not have throughput,” he stresses.

His advice is for retailers to strategically plan their presence in the respective target markets and locations in order to capitalise on the right target market and consumer groups.

Datuk Seri Johari also advises malls to have their own specific identity, effective mall management strategy and a strategic combination of tenants mix that can cater to the needs of the predominant consumer groups in a particular area or locality. At the same time, he advises retailers to capitalise on e-commerce and bridge the gap between purchasing online and in retail outlets. “Retail shops and e-commerce have to complement each other and co-exist,” he stresses.

Brands Marked overseas by C. I. Holdings.

C. I. HOLDINGS IN THE PALM OIL INDUSTRY As the largest shareholder in C.I. Holdings which is involved in manufacturing and packing of all types of edible oils, Datuk Seri Johari says that as a downstream player in the palm oil industry, his company is involved in exporting refined oil to 117 countries spanning Asia, Africa and the Middle East continents.

On the anti-palm oil rhetoric by the West, Datuk Seri Johari explains that 30 years ago, this rhetoric may have been relevant. Today however, countries producing palm oil are also concerned about the environment and are doing everything they can to be sustainable while continuing to supply the world.

“Today, the world produces 59 million metric tonnes of palm oil, of which 85% is produced by Malaysia and Indonesia. Citizens of these countries are also concerned about the environment, and hence these countries are now meeting and subscribing international standards such as RSPO, MSPO and ISPO standards,” he stresses.

He points out that the palm

oil industry in the world currently employs 6 million workers under improved conditions, and provides sustenance for 2 to 3 million smallholders. “It not only the responsibility of palm oil industry players to comply with international standards. In fact, even the banking industry is now moving towards responsible financing,” he says.

While it is important to comply with these standards, Datuk Seri Johari also stresses the importance to preserve the palm oil industry so that people and society continue to benefit socioeconomically. At the end of the day, the palm oil industry has enabled many people to emerge from poverty, get a good education and pursue professional careers in the Malaysian and regional economies, he points out.

DIGITALISATION AND INDUSTRY 4.0 IN MALAYSIA Touching on the dynamics of digitalisation and IR4.0 in Malaysia, Datuk Seri Johari explains that the country is on track, albeit not fast enough. He believes that in order to successfully embark on this, the government has to actively drive digitalisation and IR4.0.

This requires good and efficient infrastructure and the Internet of Things (IoT) spanning, artificial intelligence, cloud computing, robotics and augmented reality.

“All this can only work with welldistributed infrastructure both in the urban, suburban and rural areas,” he adds.

Datuk Seri Johari says that despite SMEs driving the Malaysian economy, these industries are still labour-intensive. “Without foreign workers, many SMEs are handicapped because they rely heavily on foreign workers. As long as we continue to rely on foreign workers, Malaysia’s progress into IR4.0 will be at a slower pace,” he notes.

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6 As an example, Datuk Seri Johari reminisces that about three decades ago, one could hardly see foreign workers in hotels. “Now you see a huge number of foreign workers in the hotel industry because locals are not willing to take up low-paying jobs,” he says. According to Datuk Seri Johari, hotel rates in Jakarta are

priced much higher than those in Kuala Lumpur. “We have the lowest hotel rates in Kuala Lumpur now compared to Bangkok or Jakarta,” he notes.

He explains that in order for hotels to sustain, they have to hire foreign workers as wages are also kept very low. This has kept local

About Datuk Seri Johari Abdul Ghani Datuk Seri Johari Abdul Ghani was born and raised in Kampung Pandan in Kuala Lumpur, and received his secondary education in Sekolah Menengah Aminuddin Baki in Kuala Lumpur. He pursued his tertiary education at Institut Teknologi MARA (ITM) and obtained his Diploma in Accounting before furthering his accounting studies in the United Kingdom. He became a member of the Chartered Association of Certified Accountants in 1988 and was awarded Fellowship of the Chartered Association of Certified Accountants in 1993.

Datuk Seri Johari started his career at the international accounting firm Peat Marwick & Co. (now known as KPMG) as an auditor. Since then, he has held several senior positions in the corporate arena and has helmed renowned Malaysian corporations. He is no stranger to the fast moving consumer goods (FMCG) industry as he had substantial shareholding in KFC Holdings where he managed brands such as KFC, Pizzahut and Ayamas, turning it around into a company with a market capital of more than RM4 billion.

He also helmed Pemanis Sdn Bhd ((an exclusive bottler of PepsiCo products) as Group Managing Director from 2005 to 2011, managing 14 brands under PepsiCo. Datuk Seri Johari purchased the Pepsi franchise for RM72 million and sold the franchise in 2011 for RM820 million to Asahi, Japan, and won the best deal of the year award in 2011.

Datuk Seri Johari has held several senior positions as Group Managing Director and Chairman in various companies.

He previously sat on the Malaysian Economic Council and he formally served on a number of Boards including, amongst others, as the Chairman of Langkawi Development Authority (LADA), Chairman of Urban Development Authority (UDA), Director of Khazanah Nasional Berhad, Trustee of Yayasan Pelaburan Bumiputera which manages funds under Permodalan Nasional Berhad (PNB) and Amanah Saham Berhad (ASN), member of the National Productivity & Export Council and member of the Advisory Council for Agriculture Development under the Ministry of Agriculture Malaysia.

He is also the founder and is currently the Chairman of Yayasan Bena Nusa, established to help reduce urban poverty and improve educational outcomes for children of the urban poor.

A man with an illustrious track record and a golf enthusiast, Datuk Seri Johari is a true-blue Malaysian who loves “nasi goreng kampung” an authentic Malaysian food fare that incorporates a host of flavours.

Malaysia Retailer Vol 8 No 4

workers away from such jobs as it is almost impossible to survive in the big city with such low wages although the working conditions are conducive in Malaysian hotels.

Datuk Seri Johari observed, “Hotel operators state that Malaysian workers are not interested in taking up these jobs. This is not necessarily true.

If you noticed, nowadays, more Malaysian workers are commuting to Singapore to work in hotels there simply because they are paid better wages compared to locally.”

On addressing manpower needs, Datuk Seri Johari shares, “At C.I. Holdings, we have invested in automation and robotics in many areas of our business. We use sensors and artificial intelligence in our manufacturing processes.

With automation in place, production volume can be doubled and tripled without having to increase manpower. I believe that investing in automation and digitalisation is an investment into the future,” he adds.

IN GOVERNMENT AND BUSINESS Datuk Seri Johari spent 25 years in the business world before

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stepping into government. “In the government, I was able to gain a different perspective on business and administration of the country,” he explains. He says that the government is not driven by profit as in business. Instead, the main aim is to create political stability and economic progression.

“In business, people are not concerned about the rich or poor, but in running the government where growing the economy is a priority, there is a need to bridge the gap between the rich and the poor, where it’s important to create more high income earners to achieve a healthy socioeconomic condition,” he explains.

He elaborates that the government has limitations, and striking the balance between the needs of the rich and poor is often a difficult task. He reminds that, in government, there needs to be

checks and balances, especially when the government is focused in growing the economy at a fast pace. “Temptations to bulldoze initiatives to achieve this, regardless of the cost, may well destroy the business ecosystem that we have painstakingly built. Absolute power without the necessary checks and balances can destroy everything.”

Nevertheless, he stresses that having had both perspectives, he wants to continue to embark on initiatives for the betterment of the country and people, especially in creating more employment opportunities.

Datuk Seri Johari explains that C.I. Holdings is actively involved in corporate social responsibility (CSR) efforts and this gives him the opportunity to personally reach out to the community while leading his people in charitable work and giving back to society.

Excellence Award for Corporate Governance (CG) Disclosure On 2 October 2020, Datuk Seri Johari Abdul Ghani accepted the Excellence Award for Corporate Governance (CG) Disclosure from the Minority Shareholder Watchdog Group (MSWG) under the MSWGASEAN Corporate Governance Awards 2019 for KUB Malaysia Berhad and the award for Long-term Value Creation for C.I. Holdings Berhad (CI Holdings). From a total of 866 public-listed companies assessed through the ASEAN CG Scorecard methodology, KUB Malaysia and CI Holdings were in the top 4% of the Corporate Governance Awards 2019. This award is testament to Datuk Seri Johari’s leadership in effective corporate governance in the businesses that he helms.

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Slow Retail Recovery Expected in 2021 The Bumiputera Retailers Organisation (BRO) which has 51 members and 6 affiliate members, is the voice of Bumiputera entrepreneurs in the retail and wholesale industry while the Malaysia Retailers Association (MRA) is a recognised representative of the retail industry by the Ministries and other authorities. It also represents some of the largest retail companies in Malaysia.

It has 140 members. Datuk Wira Dr Ameer Ali Mydin, President of BRO and Vice President of MRA gives an overview of the industry and how its members are coping with the current economic situation.

How is the organisation helping the members overcome the current situation?

As the voice of the organisation, we highlight issues and concerns of all our members through memorandum submissions to the government to seek solutions for short and long business development.

What is the estimated number of members who have ceased Malaysia Retailer Vol 8 No 4

business operations and the number of people who have lost their job?

Many of our members are deeply affected by the pandemic and are consolidating to either close or downsize their business operations.

With the expectation of more store closures in the retail business, unemployment will increase and salary cuts will continue until the end of this year.

Many retailers saw a 35% to 50% decline in footfall in October and November, while sales fell by almost 70% to 80%. The third quarter of 2020 saw footfall recover to almost 75% of the pre-MCO level, while sales stood at 60% to 70%.

Many retailers, including shopping malls and hypermarkets, employ about 450,000 people in total. We foresee a layoff of about 60,000 people by the end of this

9 year as retailers are unable to operate at full capacity compared to pre-COVID-19 period.

A joint statement on Budget 2021: Government intervention to save lives and livelihood, was issued recently by Bumiputra Retailers Organization, MRCA, SME Association of Malaysia and the Malaysia Shopping Malls Association. Has the government acted/responded to the issues/ proposals highlighted?

We acknowledge the government assistances to revive the retail industry.

The Wage Subsidy Programme (WSP) has helped SMEs to secure jobs and business sustainability.

From the retailer’s perspective, we are still in continuous discussion to ensure the financial aid and support extends to retailers as our role is essential for the whole economic circle.

However, the Government should look into a more holistic approach to ensure the necessary help are pinned to the targeted group. For example, waiver of rental fees, moratorium and tax deduction should be addressed to retailers.

These are very crucial to ensure the cash flow is sufficient for business and economic resilience.

To survive in the post-COVID-19 landscape, what would retailers need to focus on?

• Cost Rationalisation Priority should be given to increase operational efficiency and cost-effectiveness to ensure business survival.

• Marketing Strategy Retailers should innovate and tailored their marketing strategy digitally to remain visible. Utilisation and optimisation of social media platform are effective to reach the new market segment of untapped customers of all ages.

• Customer Experience Consumers are choosing convenience on top of

everything. Retailers should focus on innovation and fusion of technology and human dimension to enhance customer service and entice the customer to return for more..

In other words, retailers should focus on expanding their digital marketing strategy to advertise products online that is only available in store. Customers can identify the product online and come to the store physically to buy the product.

In what ways can retailers create reasons for consumers/customers to return to in-store shopping postCOVID-19?

It is true that the pandemic has made many people discover the convenience of online shopping, but we have also heard many people complaining about missing delivery items and communication barrier in robotic customer service.

Online retail is here to stay but that doesn’t mean that brick-andmotar sector is going to go away.

This is where experiential retail comes to play. The look and feel experience combined with convenience of technology are reasons to entice customers coming back to store. Footfall decreased by 10% to 30% pre-pandemic period.

However, there was a -28.8%

growth rate for Q2 2020 according to the Malaysia Retail Industry Report. Data recorded a 30% to 50% increase in footfall after the lifting of Conditional Movement Control Order with an expected recovery of 60% to 70% next year.

How will the industry of the future (post-COVID-19) look like?

The traditional industry will not be the same in the future.

Retailers should remain focused on strengthening their resilience to weather the downward cycle while not losing sight of the future sustainability of the brick-andmortar industry.

For businesses to sustain, they need to adopt new business module such as going digital. The future of the retail industry is positive with digital transformation as it provides huge opportunities.

Having said that, it should be noted that more attention should also be given to brick-and-mortar retailers. The online retail segment in Malaysia is about 5% of the whole business. Focusing more on offline retailers by the Government, will encourage other transactions, including e-hailing drivers, parking management and restaurants, among others.

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Cautious Optimism for Shopping Malls Sector he Malaysian Shopping Malls Associations, formed in 1984, plays a significant role contributing to the country’s growth in the shopping mall industry. Its membership is well-represented by a cross-section of professionals in shopping mall management comprising owners, developers and management personnel. The Association is one of the founding members of the Council of Asian Shopping Centres which comprises shopping malls associations from Malaysia, Indonesia, Hong Kong, China, Taiwan and Japan In an interview with Malaysia Retailer, Tan Sri Dato’ Teo Chiang Kok, President of Malaysia Shopping Malls Association speaks frankly about the challenges the malls are facing in view of the current COVID-19 pandemic and suggests ways to overcome some of the core issues.

However, the recent SOP relaxations have seen slow improvements to malls’ footfall and we are cautiously optimistic.

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The Malaysia Shopping Malls Association has been around for 36 years. Can you share with us the current situation shopping malls are generally facing in view of the COVID-19 pandemic?

From July to September 2020, we experienced a steady recovery up to 70-80% footfall but suddenly with Malaysia Retailer Vol 8 No 4

Tan Sri Dato’ Teo Chiang Kok, President of Malaysia Shopping Malls Association.

the 3rd wave in October onwards, businesses deteriorated steeply and currently, it is much worse than the start of MCO with footfall down to 10 to 20%. This is compounded by the unclear SOPs and reports of unfair and arguable enforcement due to these unclear rules resulting in needless panic and fear and keeping away from shopping and patronising F&Bs. Before the current CMCO imposition, we were optimistic that the economy would recover sufficiently by mid-2021, but with the drop in confidence this target would most likely be end-2021, barring any other unforeseen spikes as it is estimated that malls will need a minimum of 8 to 12 months to recover after MCO is completely lifted.

How many members are there in your association and how many people are employed by members of the association?

There’s a total of 502 members comprising shopping malls, individuals and others.

How are the members coping in the current situation? In what ways is the Association helping its members weather the storm?

Our association has produced some PR video clips for our members to carry the message that malls are safe and encourage shoppers to visit our malls. We have also embarked on a promotion event nationwide amongst our members to boost footfall in the midst of observing SOPs and we will be collaborating with tourism authorities to inject shopping cash vouchers into the system to spur the shopping cycle.

How many retailers in shopping malls have ceased operations and would you be able to estimate the number of people who have lost their jobs?

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Employment in the retail industry is 1.55 million. Direct employment at retail outlets within Malls plus Mall management staff is estimated at 452,000. Layoff is projected to be 68,000, Mall vacancy is 13% as at 1Q 2020; Projected: 20% to 30% by 2Q 2021 (subject to no anchor tenant leaving).

Recently MRCA, SME Association of Malaysia, Bumiputra Retailers Organization and the Malaysia Shopping Malls Association issued a joint statement on Budget 2021: Government intervention to save lives and livelihood. Has the government acted/responded to the issues/proposals highlighted?

Are the incentives sufficient and if not, what more should the government do?

We were extremely disappointed that there were no effective provisions for our industry.

It is disappointing that the conditions for tax relief on rental reductions have not been removed, resulting in the severed ability of

landlords to extend such rental reductions to assist retailers to conserve cash flow in the situation of extremely poor sales revenue and the severe reduction of up to 60% allowable capacity to trade due to compliance with social distancing.

We urgently seek government assistance for the preservation of cashflow: 1. Extend and remove limiting conditions of SME and 30% threshold for rental rebates for Tax Relief 2. Extend wage support and remove 500-person limit 3. Extend Utility Discounts and increase to 50% until Dec 2021 4. Extend Loan Moratorium till June 2021 and 5. Auto-renew and Waive all license/ permit fees for 2021 Most of the tenants/retailers in the shopping malls are also badly affected by the pandemic. How are your members helping the retailers to pull through these difficult times?

Mall operators have extended different modes of assistance from rental rebates and a multitude of tenants’ marketing assistance including packaging shopping perks with hotel / resort stays and theme parks, purchasing tenants’ shopping vouchers as giveaways, offering free promotional space, free promotions on the mall’s social media and other print as well as electronic media, joint promotions, free parking to attract and increase footfall, etc. Rental Discounts are tailored depending on the tenant’s needs, different trades require different schemes.

Also, the programmes need to be tweaked depending on which phase of MCO is current.

Even for existing tenants, mall operators have a different array of assistance and perks to attract new and retain existing tenants.

These include fit-out financial assistance, rent-free periods as well as the abovementioned marketing assistance programmes.

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their footfall following these current trends which may yet change again once infections are better controlled and the environment becomes safer.

To survive and thrive in the post COVID-19 landscape, what would shopping malls/landlords and retailers need to focus on?

Plan for the possibility of the pandemic to be around for a longer time and start contingency plans immediately. The main focus should be managing and preserving cashflow as sales revenue will be badly impacted for the long haul while the cost of doing business (operating costs) has lesser room to adjust.

What are some of the changes that shopping malls/ landlords and retailers must embrace if they want to keep customers coming back or in what ways can shopping malls create Malaysia Retailer Vol 8 No 4

reasons for consumers/customers to return to in-store shopping post-COVID-19?

There will be pent-up demand and shoppers are just waiting to come out again because malls are essentially places to socialise and are woven into the very fabric of our lifestyle and our community.

Uncertainty for the retail industry lies ahead and we can only react and make short term plans but we are confident that once the situation improves, shoppers will return. Malls and retailers alike will have to plan more promotions and incentives to encourage shoppers to buy and spend.

Malls will have to think out of the box to transform their tenancy mix and adopt new angles to attract back

Currently, as online purchases have increased, what do you think will be the shopping trend once the pandemic is over? How will this affect shopping malls and what does the shopping malls of the future (post-COVID-19) look like?

The growth of online shopping was already being experienced before the pandemic. However, due to this pandemic, the growth of online shopping has accelerated. However, as in other more e-commerce savvy countries, online shopping has limitations and the visitation to malls has been steadfast. Indeed many e-commerce platforms have diversified into brick-and-mortar premises to expand their reach.

Similarly, retailers and shopping malls have adjusted and adopted various programmes to complement online shopping by being collection points, provide delivery service and pick-ups at curbside, etc.

We are social creatures and need human interaction and camaraderie.

Shopping malls are avenues for such outings and get-togethers which online shopping cannot provide. In order to be sustainable in the long term, there must be an integration of online with brick-and-mortar shops but there will not be a switch to online shopping only because shopping malls are here to stay as they are an integral part of any societal community, especially our Malaysian lifestyle.

Any other observations or comments you would like to add?

Mall operators and tenant retailers are ultimately business partners and both parties must compromise and help each other through thick and thin to go through all adversities and good times together. Lives and Livelihoods Matter.

Sunway Malls is ushering in the festive season in the spirit of giving and gratitude with a ‘Blessed Christmas’, in retrospect of this year coming to a close and hope for a new beginning ahead. unway Malls aims to encourage the act of blessing others through blood donation to save lives and further increase supply for the national blood bank. Sunway Malls is working with various hospitals and medical facilities to provide peace of mind and a safe venue for blood donors. Collectively, Sunway Malls targets a total of 5,000 blood donations by year end.

Sunway Malls is embarking on ‘#KitaSupportKita’, an appreciation programme to give back to front line retail staff through dining vouchers, shopping vouchers or Sunway Pals points which can be redeemed at all malls.

“This year, we hope to spread the message of counting our blessings while giving back to those in need with cheer, joy and gratitude with a ‘Blessed Christmas’ at Sunway Malls,” said HC Chan, CEO of Sunway Malls & Theme Parks.

A clean and safe shopping experience remains top of mind for Sunway Malls, and a number of safety measures have been put in place in line with ‘Your Safe Space, Our Safe Space’.

Each Sunway Mall is decked up with festive Christmas trees, décor and ornaments, and shopping deals are aplenty with gift ideas from a variety of specialty stores ranging from fashion, beauty, home and living, digital lifestyle, food and

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beverages and much more. To add on to the festive cheer, shoppers will receive exclusive rewards upon spending in the mall during the season.

Sunway Pyramid will be bringing Santa to life through an interactive virtual Santa booth and lucky shoppers stand a chance to have their Christmas wish fulfilled.

Sunway Velocity Mall granted the wishes of three small local businesses run by single-parent families to bounce back and start a new by gifting them with household items, fulfilling their kids’ wishlists and assisting with business stocks worth a total of RM10,000. The Mall also visited Yayasan Sunbeams Home on 23 November 2020 and gifted all 136 children as well as 53 caretakers with a brand new pair of shoes from FUFA and XES. Meanwhile, Sunway Putra Mall is organising the Tree of Wishes, a

donation drive where shoppers can grant wishes and donate gifts for underprivileged children. The gifts will be presented to the children of Angel’s Children Home, a sanctuary for orphaned, abandoned, abused and neglected children in Kuala Lumpur on Christmas Eve. Shoppers at Sunway Carnival Mall can experience the magic of Christmas with Disney at the Main Atrium from 7 December 2020 onwards and collect all three Disney’s exclusive calendar designs.

Those who spend RM100 (RM50 for Sunway Pals members) in a single receipt from Dec 11 onwards will receive a Santa secret gift and they can also redeem a RM10 Parkson cash voucher when they spend RM250 (RM200 for Sunway Pals members) in two receipts from Dec 1 onwards.

At Sunway Big Box Retail Park and Sunway Citrine Hub, shoppers can redeem a Limited-Edition Snowman Mug when they spend RM200 in a maximum of two receipts. They can also join the festive ‘Grab and Win’ to redeem cash vouchers when they spend RM100 in a maximum of two receipts from Dec 7 till Dec 27.

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Sunway Malls Celebrates Christmas in the Spirit of Giving & Gratitude

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What’s The Impact of

?

Budget 2021 was tabled in Parliament on 6th November 2020 with the theme “Teguh Kita, Menang Bersama”.

Budget 2021 focuses on 3 key objectives, namely: 1. People’s well-being 2. Business continuity and 3. Economic resilience Budget 2021 is the biggest budget in Malaysian history, with a record spending of RM322.5 billion – an increase of 8.58% compared to the allocated budget in 2020. Overall, the budget consists of more than 20 targeted actions aimed at specifically benefiting Malaysians across all levels of society, many of whom have been seriously impacted by the COVID-19 pandemic, which resulted in the decrease or loss of income.

The consequences of the global economic downturn attributable to the COVID-19 pandemic are certainly felt through industries. A fiscal deficit of RM86.5 billion, or 6 percent of Gross Domestic Product (GDP), is projected by the government in 2020, the largest gap since the 2009 global financial crisis.

For 2021, the government has projected a deficit of RM84.8 billion or 5.4% of GDP. Not any better, the economic recovery is also estimated to be sluggish in 2021.

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FOR INDIVIDUALS As part of Budget 2021, the government announced a slew of tax relief incentives. These tax relief benefits will be of special interest to those who typically do not qualify for most cash handouts from the middleincome group or (M40).

The most significant tax cut is the decrease in personal income tax by one percentage point to 13 per cent for individuals earning between RM50,001 to RM70,000 per year. This will benefit individuals in the middleincome group affected by the current economic condition. Other valuable tax reliefs for which individuals can qualify are as follows:

• For Lifestyle Relief, the restricted

amount to be claimed for personal tax relief has increased from RM2,500 to RM3,000 and this relief has been expanded to include sportsrelated expenditure and electronic newspaper subscriptions. This will enhance the scope of income tax relief for lifestyle.

• The RM3,000 personal tax relief for

the Private Retirement Scheme Relief (PRS) has been extended for 4 years to Year of Assessment 2025. This will provide more time for individual taxpayers to contribute to their Private Retirement Scheme for their retirement in the future.

• Tax relief amounting to RM8,000

for the National Education Savings Scheme (SSPN) will be extended from

By Dato’ Seri Raymond Liew, Tax Practitioner & President of McMillan Woods, a global business advisory network

Year of Assessment 2020 to Year of Assessment 2022. This is to further encourage parents to save more for their children’s tertiary education.

• Medical treatment for parental

care has increased from RM5,000 to RM8,000. Individuals can also claim medical expenses relief for self/spouse/child for serious disease of RM8,000 (also includes medical check-up that increase from RM500 to RM1,000), which is an increased from the previous limit of RM6,000.

As a result, this will reduce the burden of medical expenses for taxpayers, their parents, spouses and children.

• Additional tax relief for disabled spouse increase from RM3,500 to RM5,000. This will reduce the financial burden of the individual taxpayer with a disabled spouse.

• Expenses incurred by individuals

for up-skilling courses certified by the Department of Skills Development of the Ministry of Human Resources are eligible for RM1,000 relief for Year of Assessment 2021 and Year of Assessment 2022. This is to encourage individuals affected by the COVID-19 pandemic to enrol for up-skilling and re-skilling to build up new skills.

• There is an increase in the income

tax exemption on compensation for loss of employment from RM10,000 to RM20,000 for each year of

15 service with the same employer or companies within the same group for individuals. The exemption will be considered if the IRB is satisfied that the loss of employment is due to health problems and will be applicable for Year of Assessment 2020 and 2021. This will help reduce the financial burden on individuals who lost their jobs due to the COVID-19 pandemic.

• A RM500 one-off payment would

be allocated to the Ministry of Health Frontliners as a token of appreciation and this amount will be fully tax exempted. This will motivate our Frontliners to be more dedicated in their task to curb the spread of COVID-19 in Malaysia.

TAX

• Malaysian citizens working abroad

who return to Malaysia under the Returning Expert Programme (REP) are entitled to a 15% flat rate income tax for 5 consecutive years and also import duty and excise duty exemptions for the purchase of CBU or CKD vehicles (subject to total duty exemption limited to RM100,000).

This is to attract skilled Malaysian professionals working abroad to return and work in Malaysia.

reduction in the contribution to their EPF from 11% to 9% for 12 months.

This will increase the disposable income of individuals. Besides that, EPF members are able to withdraw savings from their EPF Account 1 amounting to RM6,000 for 12 months (i.e. RM500 per month). This will assist members who have lost their jobs and will expect to alleviate the financial burden of approximately 600,000 affected contributors.

• Non-Malaysian citizens are also

• Bantuan Prihatin Rakyat (BPR)

entitled to the 15% flat rate income tax for 5 consecutive years if they meet the criteria, namely hold key positions in companies that relocate their operations to Malaysia for 5 consecutive years (limited to 5 noncitizen individuals per company), earning a monthly income of RM25,000 and above as well as be Malaysian Tax Residents. This will attract expatriates to consider choosing to work in Malaysia and also for companies to relocate their operations to Malaysia.

• Effective January 2021, employees have the option to opt for the FOR COMPANIES

• Human Resource Development

Fund (HRDF) levy exemption will be given for six months, effective 1st January 2021 for companies in the tourism sector that is affected by the COVID-19 pandemic. This will enable companies to use the funds allocated for payment of the levy to strengthen their cash flows.

• Private employers who hire fresh graduates for apprenticeship programmes will get an incentive of RM1,000 per month for 3 months and employers also can claim a grant up to RM4,000 for conducting training programmes for apprentices. This would encourage employers to hire fresh graduates which in turn will reduce

the unemployment rate among graduates.

• Double tax deduction on remuneration provided for the employment of senior citizens, ex-convicts, parolees, supervised persons and ex-drug dependents, which is due to expire in year 2020 is extended for 5 years to 2025. This will further encourage employers to provide career opportunities for this group of individuals so that they can earn a decent living.

• For the tourism industry, the wage subsidy programme will be extended for another 3 months, targeting companies operating in the tourism and retail sectors and the limit of employees per

rate of assistance ranging from RM350 to RM1,800 will be allocated to individuals including those who are still single based on household incomes ranging from RM2,500 to RM5,000 as well as the number of children.

• Meanwhile, for vulnerable groups

such as children, disabled workers, older persons, chronically ill patients, and persons with disability (OKU) who can’t work, the monthly rate incentives now range from RM150 to RM500 per person. (For children, maximum would be RM1,000 per family). application is increased to 500 employees. As the tourism sector has been badly hit by the COVID-19 19 pandemic, this will help to strengthen the cash flows of companies operating in this sector and to minimize retrenchment of employees.

• Meanwhile, an additional Prihatin Special Grant (GKP) of RM1,000 will be given to traders, hawkers, taxi drivers, e-hailing drivers, car rentals and tour guides in Sabah. This grant will help reduce the burden face by these individuals, whose operations had been badly affected due to the Movement Control Order (MCO) and Conditional Movement Control Order (CMCO).

Malaysia Retailer Vol 8 No 4

Market Info

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STAMP DUTIES

STAMP DUTY

• Full stamp duty exemption will be given to transfer of ownership document and loan agreement for the purchase of a first home where the property value increased from RM300,000 to RM500,000 and applies to sales and purchase agreement from 1st January 2021 to 31st December 2025. This will encourage Malaysians who have yet to own their own home to purchase a house, irrespective whether from housing developer or the secondary market.

from 1st January 2021 to 31st December 2025. This will alleviate the financial burden of the original purchasers of the abandoned houses and also to encourage developers to revived housing projects that were previously abandoned.

• The stamp duty exemption will also apply to abandoned housing projects that are certified by the Ministry of Housing and Local Government for loan agreements and transfer instruments executed

• The government will extend further for 5 years the stamp duty exemption period for life, flood and fire insurance products not exceeding RM100 under Perlindungan Tenang. This is

TAX INCENTIVES

• There are a few types of incentives available in Malaysia, namely Pioneer Status which is an income tax exemption on companies involved in promoted activities and products, Investment Tax Allowance for qualifying capital expenditure like plant and equipment used for approved projects against statutory income, Multimedia Super Corridor (MSC), where tax exemption applies to companies involved in promoted activities (generally IT related) and Reinvestment Allowance for companies in manufacturing and selected agricultural activities that reinvest for expansion, automation, modernization or diversification.

• Incentives for service sectors is applicable for companies that operate in Information and communications technology (ICT), Private healthcare facilities, Projects in transportation, communications and utilities sub-sectors approved by the Ministry of Finance, Research and development, technical Malaysia Retailer Vol 8 No 4

vocational training institutions, and tourism projects. For manufacturing sectors, tax incentives are applicable to companies operating in Aerospace industry, Automotive industry, Agricultural sector, High Technology companies, Industrialised Building System (IBS) sector, and Strategic projects.

• The income tax exemption on the grant received by Green Sustainable and Responsible Investment (SRI) sukuk issuers that is due to expire on 31st December 2020 has been extended for 5 years to 31st

to encourage individuals in the B40 group to have insurance and takaful coverage. The stamp duty extension of 5 years is also applicable to contract notes for Trading of Exchange Traded Funds.

INDIRECT TAXES

• Taxes will be imposed on all

cigarettes and tobacco products at all duty-free islands. In addition, excise duties at an ad valorem rate of 10% will be imposed on all types of electronic cigarette devices and non-electronic devices, including vaping products and also a rate of RM0.40 per ml for electronic cigarette liquids. This is to improve the revenue collection and ensure equal tax treatment on all types of cigarettes and other tobacco products.

December 2025 and this exemption has been expanded to include all SRI sukuk and bond which meets ASEAN Green, Social and Sustainability Bond Standards approved by the Securities Commission Malaysia (SC). This will further encourage the issuance of SRI sukuk and bond that meets green, social and sustainability standards in Malaysia.

• For the healthcare industry, the tax exemption of 100% of the value of the increase in exports of services (limited to 70% of Statutory Income) is extended for another 2

17 years until 2022. Private healthcare service providers are eligible to get this exemption when providing healthcare services to foreign patients either in Malaysia or from Malaysia provided at least 10% of total patients per year comprised of qualified healthcare travellers and at least 10% of the company’s gross income per year is derived from qualified healthcare travellers. As a result, this will promote the export of private healthcare services in Malaysia as well as attract highvalue healthcare travellers.

• To encourage manufactures of pharmaceutical products including vaccines to invest in Malaysia, the Government will provide incentives including preferential tax rate which is 0 to 10% in the first 10 years and 10% for the next 10 years.

• For the tourism sector, the sales tax exemption of 15% for the purchase of locally assembled buses including major bus components like chassis fitted engine and air conditioner to be assembled locally is extended to 2022 to reduce the financial hardship faced by tour bus operators. Besides that, the imposition of tourism tax is expanded to accommodation premises reserved through online providers to ensure equal treatment between tourists who make reservations for hotels directly with the hotel operators and through online platform providers.

• For the free industrial zone and Licensed Manufacturing Warehouse (LMW), the current 10% limit on the sales value from value-added

and additional activities has been increased to not exceed 40% of the company’s annual sales value.

As a result, it will improve the competitiveness of companies in order to meet global trade dynamics.

• Principal Hub is a locally incorporated company that uses Malaysia as a base for conducting its regional/global business and operations to manage, control and support its key functions. Presently, the current incentive of income tax 0% to 10% for 5 years and renewable for another 5 years for applications with MIDA is due to end on 31st December 2020.

• In Budget 2021, it was proposed that the application period for the Principal Hub Incentive to be extended for another 2 years and also the minimum condition of the number of high value jobs, annual operating expenses and the number of key posts for renewal of the tax incentive for the second 5 years be relaxed. This move will attract more foreign companies to choose Malaysia as a base for establishing their Principal Hub. • New companies relocating to Malaysia are eligible to claim a special tax rate of 0% for 10 years/15 years for eligible capital expenditure between RM300 million to RM500 million/RM500 million and above.

directly to employers and 20% to local workers. This is to encourage the hiring of local workers to replace foreign workers.

• The tax incentives for the manufacture of Industrialised building system components – due to end in 31st December 2020 – has been extended for another 5 years and companies are only required to produce at least 3 basic components of IBS or IBS systems that use at least 3 basic IBS components to be given the Investment Tax Allowance of 60% on qualifying expenditure within 5 years to be set off against 70% of Statutory Income.

• For investments in equity crowdfunding, the tax incentives presently for Investments in Venture Capital (VC) is a tax deduction equivalent to the amount invested in the VC while for Investments in Venture Capital Company (VCC), it is given a tax deduction equivalent to the amount invested in the VCC and restricted to a maximum of RM 20 million per year. As for Angel Investors, a tax exemption is given to the investment amount made. In Budget 2021, it is proposed that a 50% tax exemption on the amount invested in equity crow-funding and the eligible amount for tax exemption is limited to RM50,000, capped at 10% of Aggregate Income.

• For the construction and plantation industry which have a high reliance on foreign workers, a special incentive of 60% for the monthly salary for 6 months will be provided with 40% channelled

SUMMARY CONCLUSION In conclusion, many have commented that the Budget 2021 is not good enough to assist especially the SMEs and should have included further changes like an automatic extension of the loan moratorium, waiver of statutory contributions like EPF (especially Employers’ EPF contribution) and to expedite the GST and income tax refunds due to slacking in businesses generally in order to ease their cash flow situation. Whatever the comments on the budget, it must have an immediate impact on both the ‘rakyat’ and the businesses for their survivals during these critical times.

Malaysia Retailer Vol 8 No 4

No Light Yet at the End of the Retail Tunnel The third-wave COVID-19 pandemic and the second Conditional Movement Control Order (CMCO) have dampened the spirits of Malaysian retailers.

For the third quarter of 2020, Malaysia’s retail industry recorded a poorer-thanexpected growth rate of -9.7% compared to the same period in 2019.

ccording to the Malaysia Retail Industry Report (November), the latest quarterly result was way below market expectation.

Members of the Malaysia Retailers Association projected the third quarter growth rate in September 2020 at -3.4%. This latest result was 185% worse than the earlier estimate. (Table 1) The Recovery Movement Control Order (RMCO) started on 10 June 2020 and it was extended until 31 December 2020. With strict social distancing measures enforced during the entire third quarter of 2020, shopping centres and retailers were not able to operate at full capacity

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Table 1: Year On Year Percentage Change In Retail Sales (Weighted), 2019/20 5

1.8%

0 -5

% growth

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-10 -15

-9.7%

-11.4%

-18.4%

-20 -25 -30 -35

-30.9%

Period Jul-Sep Jan-Mar Apr-Jun Jul-Sep Jan-Sep 2019 2020 2020 2020 2020

Source : MRA/ Retail Group Malaysia

Malaysia Retailer Vol 8 No 4

as compared to pre-COVID-19 period.

“Although almost all retail sectors were allowed to open for business during this period, Malaysian consumers were still wary of the virus spread. They travelled to retail shops for the basic necessities and chose not to shop around. The reduced take-home pays during this period also limited the purchasing power of Malaysian consumers,” the report stated.

For the first 9 months of this year, the retail sale growth rate was -18.4% compared to the same period a year ago.

COMPARISON OF RETAIL SALES WITH OTHER ECONOMIC INDICATORS For the third quarter of 2020, Malaysia national economy reported a smaller contraction of 2.7%, as compared to -9.7% for retail sales (at current prices).

The economy turned around after almost all economic sectors resumed operation.

The average inflation rate during the third quarter of 2020 stayed in the negative zone at 1.4%. The monthly decline was mainly due to drops in prices of transport as well as housing, water, electricity, gas and other fuels. On the other hand, the prices of food & non-alcoholic beverages increased during this period.

Private consumption growth rate

retraced to with -2.1% during the third quarter of 2020. Household spending recovered when nonessential retail stores were allowed to open since May. During the third quarter of this year, the Consumer Sentiment Index (by MIER) improved slightly to 91.5 points.

However, it was still below the 100-point optimism threshold.

Unemployment rate during the third quarter of 2020 reduced to 4.7%.

RETAIL SUB-SECTORS’ SALES COMPARISON All retail sub-sectors, except Other Specialty Retail Stores, reported another declining sales during the third quarter of 2020. (Table 2) The Department Store / Supermarket sub-sector recorded a negative growth rate of -6.2% during the third 3 months of this year.

Department Store sub-sector reported another disappointing result with a growth rate of -17.7% during the third quarter of 2020.

This was the worst-performing retail sub-sector during this quarter.

For the third quarter of 2020, retail sale of Supermarket and Hypermarket sub-sector dropped by 15.1%. This latest result was worse than the first two quarters of this year. The growth rate of Fashion and Fashion Accessories sub-sector slowed down by 12.5% during the third quarter of 2020. During the third 3-month period of this year,

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Retail Sub-Sector

1st Qtr

2nd Qtr

3rd Qtr

Department store cum supermarket

-8.5

-34.6

-6.2

Department store

-17.5

-62.3

-17.7

Supermarket and hypermarket

-3.0

-9.9

-15.1

Fashion and fashion accessories

-30.0

-44.2

-12.5

Pharmacy and personal care

-3.9

-26.2

-11.1

Other specialty retail stores

-17.9

-40.9

1.5

Source : MRA/Retail Group Malaysia

Pharmacy and Personal Care subsector recorded another negative growth rate of 11.1%, as compared to the same quarter a year ago, the report stated.

The Other Specialty Stores sub-sector (including photo shop, toys store, second-hand shop, optical store, children store, as well TV shopping channel) reported a marginal recovery with a growth rate of 1.5% during the third quarter of 2020, as compared to the same period last year.

NEXT 3 MONTHS’ FORECAST Members of the retailers’ association are still pessimistic on their businesses in the next 3 months. They estimate an average growth rate of -15.1% during the fourth quarter of 2020.

The department store cum supermarket operators are expecting their businesses to deteriorate further during the last quarter of this year with a growth rate of -14.3%. Similarly, the department store operators are expecting their businesses to remain in the negative zone with a growth rate of -13.0% for the last 3-month period of this year.

Supermarket and hypermarket operators expect their businesses

to remain in the red with a -14.2% growth rate for the fourth quarter of 2020.

Despite year-end holidays and festivals, the business of retailers in the Fashion and Fashion Accessories sub-sector is expected to stay sluggish. For the last quarter of 2020, they expect a growth rate of -24.2% in retail sale.

Retailers in the Pharmacy and Personal Care sub-sector are not expecting their businesses to turn around soon. For the fourth quarter of 2020, this sub-sector is expected to report a poor result of -12.6% in terms of growth.

The businesses of retailers in Other Specialty Stores sub-sector (including photo shop, toys store, secondhand shop, optical store, children store as well TV shopping channel) will not be able to maintain the recovery momentum in the next quarter.

For the last 3-month period of 2020, this sub-sector expects its business to drop by 24.2% as compared to the same period a year ago. (Table 3) For the last quarter of 2020, Retail Group Malaysia (RGM) revised the retail growth rate downwards further from -2.5% (estimated in September 2020) to

-18.2% (Table 3). This is lower than the estimate calculated from MRA members (at -15.1%) due to the prolonged second CMCO. The second CMCO was implemented in Klang Valley) from 14 October 2020. This movement restriction was later extended to other states in Malaysia. “Third-wave Covid-19 restriction on interstate travel, working from home as well as delay in school opening (20 January 2021) have led to reduction in shopping traffic in malls, commercial centres and foods & beverages outlets located throughout the country, “ the report added.

Taking poor performance into consideration, as well as the much lower growth estimate for the fourth quarter, RGM revised its annual growth forecast downwards from -9.3% (estimated in September 2020) to -15.8% for Malaysia retail industry in 2020.

Retail Group Malaysia projects 4.9% growth rate in retail sale for 2021. “This coming New Year will remain a great challenge for the Malaysian retail industry,” the report stated.

Table 3 : Malaysia Retail Industry Quarterly Growth Rate, 2020 0 -5 -10

% growth

Table 2 : Year On Year Percentage Change In Retail Sales By Retail Sub-Sector, 2020

-9.7%

-15 -11.4%

(e) (e) -15.8% -18.2%

-20 -25 -30 -35

Period

-30.9% First

Second

Third

Fourth

Whole year

(e) - estimate Source : Retail Group Malaysia

Malaysia Retailer Vol 8 No 4

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Retailers, Malls Association & SMEs Urge Government for More Aid in Budget 2021 Shopping mall operators, retail stores and SMEs recently banded together to urge the government to revise Budget 2021 and add new measures to help the industry survive the pandemic and save jobs.

joint memorandum by four organisations – Malaysia Retail Chain Association (MRCA), SME Association of Malaysia, Bumiputra Retailers Organization and Malaysia Shopping Malls Association (PPK) – highlighted the “gravity of the situation with regards to the state of businesses in Malaysia” brought about by the lockdown followed by movement control order (MCO) and conditional movement control order (CMCO).

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Malaysia Retailer Vol 8 No 4

“The Budget has not lived up to the expectation for businesses that are hoping for a lifeline to sustain themselves through this unprecedented health and economic crisis,” the Associations said in a joint statement and added that the “current crisis is worse than Asian Financial Crisis in 1998 and Global Financial Crisis in 2008”.

It noted that SMEs provide employment of about 48.4% for Malaysians. “Based on the statistics from Social Security Organisation

(SOCSO), in August 2020, the manufacturing sector reported the highest loss of employment (24%) followed by the accommodation and food and beverages sector (15%) and wholesale and retail sector (14%).

These are the three worst-affected industries,” the Associations said in the statement.

Furthermore, the four Associations noted that 32,000 SMEs ceased operations between March and September despite the government’s economic stimulus packages.

“Without any sustainable and meaningful intervention by the Government, we fear that the number of business casualties will continue to rise to an unprecedented number and eventually lead to significant loss of employment for the rakyat,” they added.

“If these business fundamental issues are not addressed immediately, it is inevitable that the rate of loss of employment will increase abruptly from October onwards. This, in turn, will have a cascading effect on the economy due to the high rate of unemployment and when more companies fold, the Government will automatically lose a sizeable chunk of revenue from corporate income tax,” they said.

The Associations proposed nine measures for the Government to address the shortcomings of Budget 2021 to responding to the immediate challenges posed by the pandemic crisis.

THE 9 PROPOSALS

1

Tenant Relief Assistance through Financial Aid to Shopping Mall Owners & Landlords With shopping mall owners and landlords have incurred heavy losses during the MCO via rent discounts to help retailers that had to stay closed then, it will be financially difficult for them to continue subsidising rent during the CMCO period as they will encounter cashflow problems.

The Associations appealed to the government to give conditional financial relief to shopping mall owners and landlords to enable the savings to be used to help retailers in their premises, including by waiving or reducing land assessment tax and utilities payment such as by extending the previously-announced electricity discount (which expired in September) to December 2021.

They also appealed for direct financial aid to SME tenants to cover rental cost for at least two months during the CMCO and two months during the recovery period, and for the Government to grant tax rebates to landlords that give rent rebates or rent reduction to tenants.

2

Waiver of Statutory Payment for Businesses The four Associations pointed out that statutory payments is one of the biggest components of business costs.

In order for companies can continue to stay afloat, “We wish to propose to the Government to consider waiving all these statutory payment obligations until 31 Dec 2021 or for 1 year after the lifting of the MCO, whichever is later.”

They also proposed that this waiver should include the collection of music copyright royalty fees until the unresolved dispute between various collection bodies following the dissolution of Music Rights Malaysia Berhad reaches a settlement.

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3

Targeted Tax Incentive for Retail and Tourism Spending Acknowledging the government’s RM150 million allocation in the Budget to support online retail spending through the Shop Malaysia Online initiative, the four Associations noted that the government has not given any incentives for physical retail shopping or tourism.

“We urge the Government to consider granting individual tax relief in support of domestic shopping or tourism as follows: a. Individual tax exemption for a sum of RM1,000 monthly (or RM10,000 from May-Dec 2020) for shopping of goods and services, to be substantiated by relevant receipts; b. Individual tax exemption for a sum of RM5,000 to be substantiated by relevant receipts.”

4

Protecting Businesses through The Temporary Measures for Reducing the Impact of Coronavirus Disease 2019 (COVID-19) Act 2020 (“COVID-19 Act”) The Act, gazetted on 23 October 2020, was intended to assist businesses that have been affected by the measures taken by the Government to curb the spread of the virus. However, it does not provide adequate protection to businesses due to the limitations set out in its provisions, the group noted. Tenants are only protected from warrant of distress for arrears from 18 March 2020 to 31 August 2020 (Section 30). This means that landlords are allowed to recover rent via the same instrument from 1 September 2020 onwards tenants although businesses have been severely impacted by CMCO. As such, the Associations urged the Minister of Law to revise the Act in tandem with the current dire business conditions so that business owners who are affected by the Malaysia Retailer Vol 8 No 4

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22

CMCO can actually rely on these provisions to save their business.

5

Extending Wage Subsidy Programme (WSP) Noting the WSP’s success in enabling many businesses to keep their staff, the groups were grateful that this programme would be continued for another three months but noted that it was “highly unlikely that most businesses will have recovered by March 2021 based on the current economic climate”.

“We wish to appeal to the Government to extend the WSP up to six months for a grant of RM1,000 per employee who earns less than RM4,000 a month,” the group said and added that it “should also be extended to all businesses and all SMEs as the majority of them would cut costs by reducing their workforce if such assistance is not available”.

6

Tax Relief for Safety, Hygiene Spending In compliance with the COVID-19 SOP, the operating costs increased at least 10-20% due to the purchase of equipment including consumables and non-consumables and high frequency of sanitisation Malaysia Retailer Vol 8 No 4

of premises. In view of this, the group seeks tax relief for these expenditures incurred by businesses during this pandemic crisis.

7

Extend Bank Loan Moratorium to all until June 2021 The Associations urged for the blanket extension of the moratorium or freeze on repayment of bank loans until June 2021, as cashflow is the lifeline of businesses.

8

‘Travel Bubble’ to Restart Tourism Industry The tourism industry contributed RM84.16 billion to the Malaysian economy in 2019 but prolonged closure of Malaysia’s international borders will be detrimental to the recovery of the tourism industry and related industries that rely on tourism, the Associations pointed out.

“We strongly believe that it is imperative for the Government to embark on a ‘travel bubble’ programme with selected neighbouring countries to reignite the tourism industry.” The Associations said that allocations towards achieving this goal should be made in the Budget.

To minimise the risk of imported COVID-19 transmission, strict criteria including rigorous testing for tourists can be put in place prior their arrival into the country, they said.

9

COVID-19 SOP compliance certification for retail, restaurant premises The Associations noted that although a majority of businesses strictly adhere to COVID-19 SOP, there are some that remain noncompliant. To increase customer confidence, they suggested that the Government introduce COVID-19 SOP compliance certification for businesses. The certification will not only provide the safety reassurance for consumers to physically return to shops and dine in restaurants, but will also encourage full adoption of the SOP during this critical period.

The four Associations said they welcomed further engagements and dialogues with the Government through relevant Ministries to develop a sustainable solution to help businesses weather through the unprecedented crisis. “Together we can save lives and livelihood,” they added.

23 Market Info

Repayment Aid Remains Available For Borrowers Bank Negara Malaysia (BNM) assures borrowers that repayment assistance will continue until next year for borrowers whose income is affected by the pandemic. he central bank, in a statement, said that borrowers facing challenges have generally requested for reductions in monthly repayment instalments or extension of the moratorium.

“Borrowers who decline repayment assistance, for now, would still be able to apply for targeted assistance throughout 2020 and into 2021 if their financial circumstances change in the future.

A targeted approach to repayment assistance extends relief measures more sustainably, while lending strength to the economic recovery,” it said.

BNM has urged affected borrowers to come forward to apply for repayment assistance with their banks through the various channels available. “Banks are required to respond to applications for targeted repayment assistance within five days for individual borrowers and within 14 days for small and medium enterprise (SME) borrowers.

Borrowers who do not receive a response from their banks within these timeframes should contact BNMTELELINK (bnm.my/RAsurvey),” it said.

BNM said many borrowers are now able and have started to resume repayments which would help reduce the overall cost of borrowings. Those who require assistance have the opportunity to customise their repayment plans based on what they can afford.

It added that the financial resources of the banking system can be prioritised to help those

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most affected by COVID-19. As more borrowers who can afford to repay do so, more assistance can be made available to borrowers that need it.

The central bank said that borrowers affected by any Conditional Movement Control Order or Enhanced Movement Control Order can expect a prompt and seamless process even as banks in affected areas continue to operate under the appropriate standard operating procedures.

Bank Negara said more than 640,000 applications for repayment assistance were received as of 9th October 2020, with an approval rate of around 98%. Of those approved, it said 40% were granted an extension of the moratorium. These consisted mainly of individuals who have been recently made unemployed, as well as businesses in sectors that may still be experiencing significant operating constraints caused by the pandemic.

The other 60% received a reduction in instalments. Borrowers who have requested a reduction in instalments include those in the B40 group. These instalment

reductions put individuals and SMEs on a path to start paying down their loans, at levels which they are comfortable with.

About 50% of individuals who requested repayment assistance to date have a monthly income of RM5,000 or less. Meanwhile, 28% are those with a monthly income between RM5,000 to RM10,000.

Borrowers in other segments who need assistance are also being supported, including those who earn variable incomes, and those employed in sectors that have been hardest hit such as the tourism sector. “Applications for repayment assistance at any time before end of June, 2021 will also not appear on a borrower’s CCRIS records. There are no processing fees/charges associated with applications for repayment assistance for individual and SME borrowers,” BNM said.

Bank Negara urged the public to visit https://www.bnm.gov.my/tra for more information on whether they need targeted assistance and qualifying assistance.

Malaysia Retailer Vol 8 No 4

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Bill to Temporarily Reduce Impact of COVID-19 Gazetted The Temporary Measures Act to Reduce the Impact of Coronavirus 2019 (COVID-19) 2020 was gazetted on October 23.

his Act comes into force for two years from the date of publication in the Government Gazette on October 23, or as the date and period of effect as has been provided in any relevant part of the Act. Datuk Takiyuddin Hassan, Minister in the Prime Minister’s Department, said in a statement that the Government “had always been committed to and concerned with efforts to reduce the impact of COVID-19 not just from the health but also economic aspect for individuals and companies”.

He added that the implementation of the Act as a whole can benefit every individual and company that is affected by the economic aspect due to the spread of COVID-19.

The Act was passed in the Dewan Rakyat on Aug 25 and in the Dewan Negara on Sept 22.

He stated that contractual obligation disputes can be settled in an amicable manner without

T

involving legal processes in court but through the COVID-19 Mediation Centre that is set up under the Prime Minister’s Department.

The mediation service is open to everyone with disputes involving RM300,000 and below. The government, he stated, would also bear the mediation service cost for those in the B40 and M40 categories as well as those in the small and micro enterprises.

Among others, the Act will prevent developers from imposing late payment charges on unpaid property instalments by purchasers should they default from March 18 to Aug 31 this year.

Developers must also exclude March 18 to Aug 31 from the calculation of the defect liability period and the period for developers to carry out works to repair or make good of other defects in houses which have been purchased.

Also, no warrant of distress can be taken against tenants who have been in arrears of rent from March 18 to Aug 31.

Owners of goods will not be able to repossess goods under a hirepurchase agreement as noted in Section 16 of the Hire-Purchase Act 1967 for any default instalment for the period of April 1 to Sept 30 this year.

Queries on the mediation centre can be sent to pertanyaan@pmc19.gov.my.

Malaysia Retailer Vol 8 No 4

Mental Health Issues will be among Primary Productivity Disruptor According to a survey by Ipsos MORI for International SOS, mental health issues can cause a decrease in employee productivity. he survey also revealed that 33% of employers are anticipating mental health issues to contribute to productivity issues, with International SOS’s Workforce Resilience Council predicting that mental health issues will overtake COVID-19 concerns in the upcoming year.

Around 8 in 10 risk professionals believe that the health and security risks faced by the workforce increased this year – specifically for domestic employees (85%), assignees (81%), students and faculty (80%), business travellers (79%) and remote workers (77%).

Almost 1 in 3 business risk professionals see mental health issues being likely to cause a decrease in employee productivity in 2021, apart from those responsible for students and faculty, where this rises to 43%. Across the

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Workers Have Been Forced to Change Their Routines:

• Strain in work-life balance, e.g. employees coping with childcare and caregiving dual responsibilities.

• Some employees may be working in unfit working conditions, e.g. cramped conditions with distractions or forced to spend time in abusive or potentially violent home conditions. board, those based in Oceania are more likely than other regions to say they are concerned about the impact of mental health on productivity in the coming year.

Organisations could be faced with more employees on sick leave due to mental health issues than COVID-19 symptoms. While COVID-19 is seen to be creating new mental health issues, it is also seen by some as an opportunity to address what has been a growing employer concern for some time.

The survey noted that leadership in general, need to be more empathetic with the employees.

Working At Home and In Isolation Are Creating New Psychological Vulnerabilities Feeling isolated is a key issue among remote workers, leading to:

• Increased risk of anxiety, depression, and stress Over 40% of Americans struggle with mental

5

Expected Causes of Employee Productivity Decreases in 2021 Infectious diseases such as

91% COVID-19, malaria, dengue and zika, among others.

32% Country risk rating.

32% Transport concerns 30% Mental health issues 30% Security threats

health issues stemming from the COVID-19 pandemic, and this trend is being seen elsewhere.

• Age gaps are emerging Older employees face increased stress through lack of contact with stakeholders and heads of department, whilst younger employees face increased stress through lack of hands-on training and mentoring: 75% of

the younger workers are reporting mental strain.

• Inability to reduce stress through normal channels The prolonged lack of human contact will make communication channels increasingly difficult.

Leaders will need to lead by example and ensure frequent empathetic engagement with staff continues post pandemic.

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Market Info

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Market Info

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6 Key Findings on Southeast Asia’s e-commerce Market The onset of the pandemic has accelerated the adoption trends for commerce and digital payments as more people in the region embrace online shopping during this period, according to Zalora Southeast Asia Trender report. majority of consumers now expect these shifts to stay after the pandemic eases, according to the report. Many businesses are also identifying and adapting their strategies and operations to keep up with evolving consumer behaviour and trends, as a result of the pandemic.

The report examines the impact of changing industry trends, and recalibrates perspectives and strategies to help companies navigate the challenges brought on by COVID-19.

A

2

Google Search Results for Fitness Equipment in Q2/’20

The Future is Young and Female

Women in Southeast Asia contribute to 80% of all household purchases, outshopping men by 20%, and spending 40% more time on online retailers. Women shoppers are dominating and driving growth in segments ranging from luxury goods to fitness gear.

The region is also home to over 200 million Millennials and Gen Zs who are expected to comprise the largest shopping base in the years to come as they reach mid-20s and attain higher disposable incomes.

In countries like Malaysia and Indonesia, modest wear online sales have become CONSUMER PROFILES MEET SOUTHEAST ASIA’S LARGEST ONLINE AUDIENCE exceedingly popular as 5% Muslim shoppers begin to THE SAVVY 16% PROFESSIONAL experiment with fashion.

THE THRIFTY FASHIONISTA This has given way to 10% a rise of homegrown 22% designers catering to a 15% THE MODEST 8% niche market. Pop culture, MODERNIST THE STYLE ICON occupation, and hobbies also play significant roles 14% 5% in shaping Southeast 5% THE COOL KID Asia’s complex fashion consumer pool, according 2% to the report.

Cha pter 1: S outhe ast A sia

of population distribution

of population distribution

n Uses fashion to elevate status. n Brand conscious, but not

necessarily driven by trends.

n Craves exclusivity.

n Comprised of Millennials and Gen X. distribution within ZALORA base

n Fun and experimental.

n High fashion and shopping interests.

n Financially constrained and bargain-driven.

n Willing to take fashion risks.

n Made up of Gen Z and Millennials. distribution within ZALORA base

of population distribution

of population distribution

n Fashion chameleon who balances

trends with cultural and religious values.

n Trend-conscious but not

n Has strong ethical and moral compass.

trend-driven.

n Willing to invest in personal grooming.

n Has a discerning taste profile.

n Skewed towards Gen X and Millennials.

distribution within ZALORA base

n Strong sense of personal style.

n High disposable income.

n Features Gen X and Millennials alike.

distribution within ZALORA base

+375% +135% +4328% +94%

Dumbell

Singapore Malaysia Philippines Indonesia

+151% +54% +180% +48%

Yoga Mat

Philippines Singapore Malaysia Indonesia

+491% +384% +164% +123%

Though hard hit by the pandemic, fashion demand did not disappear. Instead, the PURCHASE FREQUENCY: THE FUTURE ISdemand FEMALE shifted, with the demand for categories such as sports and activewear, loungewear, children’s wear, beauty and home and living surged, alongside health and hygiene products.

Triple digit growth is seen across these categories in the last two quarters.

SOUTHEAST ASIA: A DIGITAL For example, inJACKPOT? the recent 10.10 sales campaign, Zalora saw a 400% increase in the children’s wear category, and 220% in the beauty category.

Shopp ers In S outhe ast A sia

There’s no denying that women are indeed top spenders in the history of retail. And although it sounds like there might be a slight gender-biased skew to this, in Southeast Asia, it comes with sound reasoning. Here’s why.

The roles of women in Southeast Asia have changed tremendously over the past few decades. From multi-corporation CEOs to key political figures, the women of today are increasingly empowered, turning the tables against their male counterparts before ultimately becoming key decision-makers. To put things into perspectives, findings from the 2016 MasterCard Index of Women’s Advancement revealed that more women than men enrol in tertiary education across Southeast Asia. Additionally, many of these modern and empowered women are Millennials – individuals who have fully harnessed and embraced the wonders of the Internet. Inherently, this means that the average Millennial woman is seemingly delaying childbirth and marriage; shifting their gaze from conventional familial goals to pursue careers.

CUSTOMER DEMOGRAPHIC

Customer Age 5%

n Young and tech-savvy.

n Stays ahead of trends with

an expensive taste.

n Includes Gen Z and Millennials.

distribution within ZALORA base

9

Zalora Southeast Asia Trender Report

MILLENNIALS Born between 1982 and 1995 GEN-Z Born between 1996 and 2019

16%

21-25

24%

Unlike anywhere else in the world, Southeast Asians are not a homogenised community. Instead, they are often influenced by its myriad of races and religions, forming unique attributes that are specific to each country.

26-30

20%

31-35

17%

36-40

18% Above 40

Customer Gender

GEN-X Born between 1965 and 1980

BABY BOOMER Born between 1946 and 1964

In the context of retail therapy, this newfound liberation has given way to a more spendthrift shopper, with an even more discerning taste.

According to Melissa Senduk, Group Creative Director of Thailand-based e-commerce platform Orami, Southeast Asian “women contribute to 80 per cent of all household purchases, outshopping men by 20 per cent, and spend 40 per cent more time [browsing] online retailers.” At ZALORA, the liberated Millennial woman’s (as well as Gen Z-ers, for that matter) purchasing habit is validated by an 80 per cent sale representation, in comparison against a low 20 per cent by men. A polarised disparity, to say the least, representing an even larger untapped market value of $2.4 trillion.

Below 21

of population distribution

Malaysia Retailer Vol 8 No 4

Singapore Malaysia Philippines Indonesia

Resistance Band

KEY FINDINGS

1

Fashion & Lifestyle Categories Have Shifted

FEMALE 80%

MALE 20%

While that may sound daunting, there are factors businesses and investors alike should be mindful of when it comes to decoding the Southeast Asian consumer.

For one, with increased access to education comes rising urban affluence, allowing for a more discerning yet spendthrift shopper than ever before. Consequently, this led to a mobile-first mindset, as consumers become more digitally savvy with the widespread availability of the Internet. It’s no wonder that through this advancement Southeast Asians are becoming early adopters in their own right. By filtering trends from not only in the East but also the West, Southeast Asian consumers have shaped their own unique voice, meeting at the cross-section where local tastes and preferences meet.

But how much have those tastes and preferences changed today? What does this mean for the retail landscape in Southeast Asia? In the next chapter, we discuss the evolution of consumerism within the region as we enter the next stage of the “New Normal”. n

Source: Google Trends Data, April 2019-June 2019 vs April 2020-June 2020.

Source: ZALORA GROUP

Zalora Southeast Asia Trender Report

10

27

3

Making and Delivering Sustainability Commitments is Key

Percentage of customers willing to pay at least 5% more for sustainable products APPAREL

Cash is Starting to Lose Its Throne

5

Devices Used For Purchase

86% Mobile phones

Singapore

Philippines

Malaysia

Indonesia

63%

61%

56%

55%

Percentage of customers willing to pay at least 5% more for sustainable products BEAUTY & SKIN CARE

Singapore

Philippines

Malaysia

Indonesia

63%

67%

60%

60%

The majority came from Singapore and the Philippines, where 63% and 61% respectively claim they will “definitely purchase sustainable products”.

With sustainability becoming more than just a lifestyle, consumers today are not just demanding for variety, but also for the longevity of businesses’ commitments.

The report shared that 90% of customers who took part in the survey presented some level of interest in shopping for sustainable products, with more than 50% willing to pay a premium for such items. The majority came from Singapore and the Philippines, where 63% and 61% respectively claim they will definitely purchase sustainable products.

Source: ZALORA Sustainability Customer Survey, August 2020.

4

Immersive Commerce is the Future

Bridging the gap between the offline and online experience is a must for every brand and retailer – from payments to brand experience and potentially augmented reality. The use of content in commerce can also contribute to increased sales.

12%

2%

Desktop

Tablet

Malaysia

Indonesia

Philippines

41% Credit Card 37% Wallet Pay 17% Cash On Delivery 2% Other Payment 2% Bank Transfer

64% Bank Transfer 17% Credit Card 15% Cash On Delivery 2% Other Payment 4% Other Payment

67% Cash On Delivery 26% Credit Card 3% Bank Transfer 3% Wallet Pay 1% Other Payment

While cash payments continue to be preferred over e-payments in Southeast Asia due to low user confidence, the region is seeing the latter’s emergence due to an acceleration of digitisation. With 250 million smartphone users in the region, e-wallets are fast replacing conventional banking methods. For example, 49% of urban commercial bank customers within the region are already using e-wallets.

6

Home Comforts Google Search increase for Home Décor Singapore +7% Malaysia +10% Philippines +6%

Google Search increase for Plants Singapore +43% Malaysia +97% Philippines +227% Indonesia +80%

With more time spent indoors due to prolonged social distancing, it makes sense for consumers to want to elevate their living spaces to meet demands of living, working and playing at home.

For many, this “nesting” or investing in their own homes makes for a comforting alternative to travel and high-end designer purchases on which they would normally spend.

Recent Google results showed that plant searches online grew by 43% in Singapore, 97% in Malaysia and 80% in Indonesia. Illustratively, Zalora has launched its own home and living offering on its Filipino website, and during the 10.10 shopping event, the category achieved triple-digit growth, up as much as 400% in some regions.

Source: Google Trends Data, April 2019-June 2019 vs April 2020-June 2020

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Developing Resilience to Handle the Global Pandemic Crisis

By Dr Victor SL Tan

ne of the greatest capacity of human beings is resilience: the ability to adapt and bounce back from adversity.

What comprises resilience? A good way to understand resilience is to look at how palm trees survive the storms. Palm trees are so resilient that they bend with the wind and do not break. The palm trees can even withstand hurricane as its roots are widely and deeply spread. In fact, with fiercer winds, the roots will stretch and grow stronger. The palm trees have an inbuilt system of resilience to enable them to overcome the hardiest of weather and conditions.

Likewise, we can build resilience in people to withstand a crisis and the toughest of environment.

Companies can use the 5As framework of developing resilience in their teams.

O

1

ANTICIPATE

In our consulting work during the Asian Financial Crisis, 19981999 as well as the Global Financial Crisis, 2008-2009, we noted that companies which anticipated the possible impending recession or financial meltdown were better prepared for them. Anticipation is not about mere prediction or having a crystal ball to read into the future. It is about preparing for change and in case of an Malaysia Retailer Vol 8 No 4

unexpected turn of events. While no one can predict the future, one can undertake scenario planning. To enable companies better anticipate the possible changes that are coming, leaders can look at industry trends, competitor analysis, as well as PESTEL (Political, Economic, Social, Technology, Environment and Legal) analysis. They should take into consideration these inputs in

building a risk management system as well as have a solid contingency plan to fortify the company against any future crises.

2

ADAPT

Many people who went back to work after the MCO realised that the workplace and business landscape had changed. Besides social distancing, sanitisation,

29 temperature taking and contact tracing, there are many other safety regulations to observe. The marketplace is also very different with business slowing down and in a tight cash flow situation. Companies are cutting down costs, including retrenching of staff, while the remaining ones have to multitask and adapt to the additional roles and responsibilities.

Staff who work from home and have online meetings via Zoom or Microsoft Team have to adapt to the new way of working. With restrictions when doing offline sales, staff have to adapt to doing sales online using social media and digital marketing to promote their products and services. In view of the impending recession, many buyers or consumers are withholding their purchases. The “new normal” has begun and employees have to accept and embrace it.

To stay afloat, companies need to be creative in finding new ways to do business, even in this restrictive and challenging environment. Charles Darwin said it best, “It is not the strongest of the species that survive, nor the most intelligent. It is the one that is most adaptable to change.”

3

ALIGN

It is important that companies have an intimate understanding of the changing needs of the marketplace.

Companies need to align their business focus on the new marketplace.

Some companies seize the opportunities that are available instead of mourning over lost ones. For example, in the midst of the coronavirus pandemic in the United States, car manufacturers such as GM and Ford have modified and aligned some of their unused production lines to produce medical devices such as ventilators.

Resilience is often is about doing

whatever it takes to bounce back from the downturn, even if it means developing new products to align to the pressing current market needs.

4

ADVANCE

The coronavirus pandemic has impacted many businesses and industries. Many things have changed and people cannot go about doing things the old way. Progress is not possible if people are stuck in the past and are not willing to move out of their comfort zone.

This global pandemic has indeed “moved the cheese” of many companies and industries.

To advance, they cannot regress into the past; they need to progress confidently into the future. For many people, moving forward with new technology and new ways of working is frightening. Courage is not the absence of fear but the advancement towards uncharted frontier in fear, and triumph over it.

5

and healthy through monitoring of compliance with the required SOPs. In essence, the resilient framework calls for companies to undertake the 5 A’s – anticipate, adapt, align, advance and accomplish in the various areas under people and culture, process and operations, policies and strategies; and technology. They should do this first in the context of preventing problems. Should problems still arise, they should then respond to them effectively.

ACCOMPLISH

Companies are facing a crisis with uncertainties as no one can say for sure when this pandemic will end. Most experts can only say that the pandemic will end when an effective vaccine is found and administered widely.

Meanwhile, companies need to accomplish many goals to stay on their business recovery path.

They need to manage their cash flow and control their cost. They have to explore creative ways to generate revenue through new products and services using modern technology. In such challenging times, the morale of staff may be affected. As such, companies should keep their communication open to win the trust of their people.

Only with the commitment of their staff can companies keep up their productivity. While pursuing these goals, companies should also not let up on keeping their employees safe

Dr Victor SL Tan is the CEO of KL Strategic Change Consulting Group. He is a Management Consultant and had been involved in turnaround management for companies during the Asian Financial Crisis and the Global Financial meltdown. He is the author of 11 change management books.

His latest book is on Leading Positive And Profitable Change.

For feedback, email him at victorsltan@klscc.com or contact him at 012-390 3168.

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Digital Transformation Guide A Business Survival Kit For Micro, Small And Medium Businesses The Digital Productivity Nexus (DPN) of Malaysia Productivity Corporation (MPC) recently released its Digital Transformation Guide (DiTG): A Survival Kit, which targets micro, small and medium enterprises across all sectors as a means to grow their business.

s the country is currently going through the recovery phase from the COVID-19 global pandemic, only businesses that remain agile resilient will survive, leaving the micro and smaller players in vain, and their businesses no longer viable.

Director General of Malaysia Productivity Corporation (MPC), Dato’ Abdul Latif Abu Seman,

said that MCO has forced many businesses to relook at their business sustainability. “‘Business as usual’ no longer applies to them. To ensure business continuity, the micro and small businesses need to quickly shift to digital platforms. With DiTG, small business owners are given a step-by-step guide, must-do-list to transform and survive, then thrive in the new age.”

Dato’ Abdul Latif Haji Abu Seman.

PIKOM Advisor Shaifubahrim Saleh.

A

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Dato’ Wei Chuan Beng, Champion of Digital Productivity Nexus said, the COVID-19 pandemic and resultant disruption to business activity has turned perception and opened eyes to the advantage of digital transformation, giving rise to a noticeable sense of urgency for digital adoption by the SME community.

The DiTG is a generic framework for these businesses to help them transform from their traditional way of doing business to digital migration as the way forward towards business viability and sustainability.

Meanwhile, PIKOM Advisor Shaifubahrim Saleh, stated that digitalisation “is a prominent platform to boost productivity growth and economic competitiveness in a country’s long-term growth. Comparatively, high-productivity nations adapt quickly to changes through technology advancement.

They involve the willingness to acculturate new ways of producing goods & services, resulting in new ways of doing business”.

The digital transformation

31

Roadmap for Digital Transformation Roadmap for Digital Transformation Begin transition

5-STEP PROCESS

Migrate to new

BIZ MODEL by investing in digital platform

New Digital Businesses

to DIGITAL by purchasing cloudbased apps and services

Adopt digital

PROCESSES

Traditional Micro & SMEs

Secure FINANCING via alternative and digital sources

roadmap or framework is anchored on a central strategy built around 5 main aspects of doing business – Financing, Digital, Talent, Processes and Business Model. Each is interlinked and inter-dependent in a company’s journey towards becoming a digital-enabled business.

According to the Guide, the transformation journey for traditional businesses starts with securing financing via alternative and digital sources in the absence of sufficient own capital.

The funds are for investing in digital and cloud-based tools as the

Hire or train TALENT in digital apps and tools

and automation for all business aspects

first step towards digital migration.

Investment is also needed to train owners and employees of businesses in such digital apps as well as for the business migration to a digital platform – stages which may not be linear, but could be concurrent depending on the nature of business or the enterprise itself.

The final stage in this journey would be full digital adoption for the demand and supply sides, and operations of the business and this would nominally include digital marketing and digital procurement as well as automation and adoption of IR4.0 technologies.

Financing Options Decide the best way to raise funds, ie via equity financing, loans or grants Go Digital Assess which cloudbased and other digital tools are applicable and suitable for the business by exploring based on cost efficiency measures.

Talent Audit Assess talent requirements based on the nature of business as well as training requirements. If required build an effective and efficient Digital Workforce.

The Right Business Model Explore the option for a gradual migration. This would include an online presence, ie social media, website, followed by digital marketing knowhow that includes an online marketplace with an e-commerce site with payment gateway.

Work Through Process Assess which tasks are easiest to migrate online, then consider subscribing to cloud-based tools.

Digital Transformation Guide (DiTG): A Survival Kit is available online at https://bit.ly/DPNDiTG2020 or email halimahton@mpc.gov.my or shaifu@pikom.org.my

“Memacu Produktiviti Negara” | “Driving Productivity of the Nation”

Malaysia Retailer Vol 8 No 4

Updates / News

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Ambank Islamic Awarded Best Islamic Corporate Bank Malaysia 2020 mBank Islamic Berhad was awarded Best Islamic Corporate Bank Malaysia 2020 by Global Banking & Finance Review.

Eqhwan Mokhzanee, Chief Executive Officer, AmBank Islamic, the award underscored the bank’s commitment in providing a suite of value-added Shariah-compliant wholesale banking solutions and services, formulated to help our clients to evolve in line with market changes.

“These included being a utility bank for e-wallet platforms and introduced a bespoke solution to facilitate fintech player’s online acquisition and on-boarding of new customers”.

Dato’ Sulaiman Mohd Tahir,

A

From left: Raja Teh Maimunah Raja Abdul Aziz, Managing Director, Wholesale Banking, AmBank Group, Dato’ Sulaiman Mohd Tahir, Group Chief Executive Officer, AmBank Group and Eqhwan Mokhzanee, Chief Executive Officer, AmBank Islamic with the Best Islamic Corporate Bank Malaysia 2020 Award by Global Banking and Finance Review.

Group Chief Executive Officer of AmBank Group, said Islamic banking has grown consistently

over the years, and AmBank Islamic has played a pivotal role to drive the growth in this sector. “We will continue to make further strides to achieve our goals and maintain our position as one of the nation’s leading Shariah-compliant bank especially in the space of corporate or wholesale banking.”

GBAF, established in 2011, is a UK-based financial portal and print magazine. GBAF Awards reflect the innovation, achievement, strategy, progressive and inspirational changes taking place within the Global Financial community. The awards were created to recognize companies of all sizes which are prominent in particular areas of expertise and excellence within the financial world.

Ambank Launches New Cash Rebate Credit Card mBank and Visa recently entered into a strategic partnership to elevate its credit card propositions and offerings to the market, the first among local banks in the industry.

The cash rebate credit card was launched to meet the new normal needs of customers, with a unique proposition that rewards cash rebates on groceries, pharmacy and online spends (including eWallet reloads), aimed to address present consumer spending behaviours on essentials. With this credit card, customers get up to 8% cash rebate on these categories.

“With the current spending behaviours, we are launching a card which would suit our cardholders’

A

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needs. Hence the reason why we have specifically chosen these three categories – groceries, pharmacy and online to make essential spend more affordable for our customers,” said Aaron Loo, Managing Director, Retail Banking, AmBank.

Customers can enjoy cash rebate on their necessities when they buy groceries at various prominent grocers and pharmacies, among others. In addition, customers will be rewarded with unlimited 0.1% cashback on all other eligible retail spending.

The new card also offers a 10% credit card interest rebate. Customers can enjoy all these attractive features at no fee, as the annual fee for this card is waived.

From left: Aaron Loo, Managing Director, Retail Banking, AmBank, Dato’ Sulaiman Mohd Tahir, Group Chief Executive Officer, AmBank Group and Ng Kong Boon, Visa Country Manager for Malaysia at the official launch of AmBank Cash Rebate Credit Card in partnership with VISA.

VISA Country Manager for Malaysia, Ng Kong Boon, said, “The pandemic has accelerated the adoption of digital commerce. The top categories of spending include essential goods, which is aligned with the cashback rewards that we are giving our cardholders.”

Updates / News

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Sephora Singapore Partners with Atome in Offering Buy Now, Pay Later Payments Ahead of a planned roll out in Malaysia, French prestige beauty retail giant Sephora Singapore has partnered with ‘buy now, pay later’ service Atome to offer customers flexible payment options across its e-commerce website, mobile app, and brick & mortar stores in Singapore.

Alia Gogi, President of Sephora Asia, said: “We’re delighted to partner with Atome in introducing ‘buy now, pay later’ flexible payment options to first our Singapore – and later Malaysian – customers, enhancing their shopping experience both online and in our stores.”

Sephora is the world’s leading prestige beauty retailer with over 2,600 stores in 38 markets, offering customers a unique retail experience with innovative services and nearly 300 beauty brands. Atome, a leading “buy now, pay later” technology company headquartered in Singapore, launched its service in December 2019 and now partners 1,500 online and offline retailers across verticals including fashion, beauty, homeware and lifestyle.

Atome has since expanded to Malaysia, Indonesia, Hong Kong and Vietnam.

David Chen, CEO of Atome, said, “We’re thrilled to be able to offer Sephora customers in Singapore, and later Malaysia, a safe, easy and flexible payment experience, especially as we enter the festive end-ofyear shopping season.”

Work in Style from Hotel Take Your Productivity up a Notch with Work-fromHotel Packages in Selangor and Kuala Lumpur A shift of atmosphere once in a while would not hurt, especially amidst a global pandemic which led many people to be in a state of caution and worry most of the time.

Working from home has now become a new norm but to some, home may not be the best place to focus on their work. There might be a lot of distractions and to some, the repetitive work environment is not exciting enough.

Maybe it is time to hop-on the rising trend of working-from-hotel for a change and a boost of productivity. Several hotels in Selangor and Kuala Lumpur are offering work-from-hotel packages to improve work productivity and get things done amidst comfort and quality service hospitality.

And if you need to take a break from the work, you can use the facilities at the hotel’s fitness centre or spend the night at the hotel at a discounted price.

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Updates / News

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Sony’s Plant in Penang to Close After 36 years, 3,400 Workers Affected The Sony manufacturing plant in Penang will cease operations next September, after 36 years in operation.

Close to 3,400 workers, of which 1,800 are Malaysians, are expected to be laid off, State International and Domestic Trade Committee chairman Halim Hussain recently told Free Malaysia Today, an independent news

portal. The other 1,600 are foreigners. “Some of these employees will be transferred to Sony’s factory in Bangi.

The state government will be helping those who have been retrenched to find new jobs,” he added.

Halim said the plant will be closing in stages and will fully cease operations next September. “This is part of Sony’s plan to restructure its operations globally.”

He believed that the closure is a necessary transitory process, given the fierce competition in the multinational manufacturing industry.

Halim said that with the state drawing RM10 billion in foreign direct investments (FDI) this year, more than 9,000 jobs will be generated in the near future and there was hope for those retrenched. “The state government will not leave these retrenched workers stranded. With the 9,000 jobs generated, there will always be work for them to find.”

Yayasan Petronas Contributes RM2.5 Million Worth of Medical Equipment and PPE to Sabah Hospitals Petronas, through its corporate social responsibility arm Yayasan Petronas, is contributing RM2.5 million worth of medical equipment and Personal Protection Equipment (PPE) to hospitals across Sabah to support the efforts of medical front-liners in managing the recent rise in COVID-19 cases.

Yayasan Petronas will be providing medical equipment which includes powered air purifying respirators, high flow nasal cannula, four-parameter vital sign monitors and high-end physiologic monitors for the nursing care, emergency and trauma, intensive care and paediatric intensive care wards.

The contribution will be channelled in stages to public hospitals in Kota Kinabalu, Keningau, Tawau, Sandakan and Lahad Datu.

Commenting on the effort, Yayasan Petronas Chairman, Tan Sri Ahmad Nizam Salleh, said: “In collaboration with the State Health Department, it is my hope that our modest contribution will help

Malaysia Retailer Vol 8 No 4

aid the Sabah state in overcoming the third wave of infections soonest.”

In early October, Yayasan Petronas contributed 1,504 bottles of hand sanitiser, 2,500 pieces of surgical face masks and 2,390 medical gowns to the Queen Elizabeth Hospital (QEH) in Kota Kinabalu. The Foundation also contributed two units of ventilators to the hospital in August.

These contributions are in addition to the provision of critical medical equipment and supplies worth RM20 million to aid the country’s hospitals, healthcare frontliners, and high-risk groups in mitigating the spread of the COVID-19 pandemic in March this year.

As at 30 June 2020, the initiatives and efforts undertaken by the Petronas Group to support the nation in mitigating the spread of COVID-19 stand at about RM40 million – which includes contributions from Petronas’ employees amounting to RM6.4 million.

35

Mah Sing Ventures Into Glove Business Mah Sing Group Berhad recently diversified into healthcare by venturing into glove manufacturing via Mah Sing Healthcare Sdn Bhd. Minister in the Prime Minister’s Department, Datuk Seri Mohd Redzuan MD Yusof witnessed Mah Sing Healthcare entering several agreements with multiple parties which officially kick start the new venture.

The new venture is part of the Group’s plan to expand its manufacturing division by venturing into the healthcare sector, leveraging on its experience as a plastics manufacturer over the past four decades, and is supported by potential synergies to be derived amongst the Group’s gloves business, plastic business and property business.

Mah Sing Healthcare will be converting a warehouse in Kapar, Klang into its first glove manufacturing factory. The factory is located within an industrial area equipped with ready infrastructure, allowing for a swift and easy set-up of the production lines. With a build-up of about 228,800 sq ft, Phase 1 of the factory could house 12 new production lines with a maximum capacity up to 3.68 billion pieces of gloves per annum – at a speed of 38,000 pieces of gloves per production line per hour.

Mah Sing Healthcare has already signed the letter of award to purchase new machinery for 12 production lines. The first 6 production lines are expected to be ready for operation as early as 2Q 2021, followed by another 6 production lines expected to be ready by 3Q 2021. It also entered into letters of intent with several raw material suppliers for supply of both Nitrilebutadiene rubber and latex raw materials when operation commences.

Robinsons Begins Liquidation of Malaysian Stores Robinson Co (Malaya) Sdn Bhd has begun the liquidation process of its two stores in Malaysia, located at The Gardens Mall and Shoppes at Four Seasons Place.

Datuk Robert Teo Keng Tuan of RSM Malaysia has been appointed as interim liquidator. The provisional liquidator will now take control of the company’s assets and assess options to realise value in order to maximise returns to creditors. Subject to confirmation, the liquidators are hoping the stores will remain open for the coming weeks to facilitate final sales for customers before they are shuttered.

Globally, retail buying patterns are seeing significant shifts from offline to online spending with the Global E-Commerce Industry 2020 report showing that Asia Pacific will produce nearly 63% of all digital sales this year.

Furthermore, demand for department store concepts has weakened significantly with reports showing a drop in retail sales, recording a negative growth rate of 8.5% in Malaysia for Q12020, as compared to the same period a year ago.

In Malaysia, the retail industry recorded the worst growth rate in 33 years with the outlook remaining negative for the remaining months of the year as consumers are expected to tighten their spending.

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