Cities can’t recover as long as borders closed

Bernard Saw Bernard Saw Updated 3 years ago · Published on 22 Sep 2020 7:00AM · 0 Comments

A man fishing from a jetty at a seafront in Singapore facing Johor. Businesses in the southern state rely heavily on Singaporeans, who used to shop, dine and spend their stronger dollar across the border. – AFP pic, September 22, 2020.

BUSINESS recovery in major cities, such as Kuala Lumpur, George Town, Johor Baru, will be difficult as long as the country’s borders are closed to foreign tourists, said the Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM).

Though domestic tourism and the recovery movement-control order (RMC) have helped a little, many businesses will once more face cash-flow issues when the moratorium on loan repayments expires at the end of this month.

ACCCIM small-and medium-enterprise (SME) committee chairman Koong Lin Loong said many retail outlets, restaurants and coffee shops operating in areas that rely on high foot traffic have not even recovered 50% of their business compared with pre-pandemic levels.

Koong said even though some tourist hot spots, such as Langkawi and Semporna, are seeing fully booked hotels, this is due to the reinvigorated interest in local travel among Malaysians and is only temporary.

For the long term, businesses must still rely on foreign tourism, he said.

“It is difficult to sustain domestic demand, especially in big cities, such as Kuala Lumpur, Johor Baru and Penang. The situation is very bad.”

While businesses in these cities are doing better than counterparts in outlying areas because of higher average income and consumption in urban areas, they also have to deal with high overhead costs.

ACCCIM’s Koong Lin Loong says businesses must still rely on foreign tourism if they’re to survive in the long run. – The Malaysian Insight file pic, September 22, 2020.

“High overhead is another issue, in that sense, businesses in bigger cities face higher risks,” Koong added.

Of all the major cities, Johor Baru is having the toughest time, said the Johor South SME Association.

The group’s adviser Teh Kee Sin said the situation in Johor is likely worse than the rest of the country as many local businesses depended on Singaporeans.

“It’s not just 5% to 10% worse, if you go to any commercial area in Johor Baru, it’s like a ghost town.

“The situation is very bad because Johor Baru businesses depend on Singapore’s nearly six million population. 

“On social media, Johoreans are saying ‘It’s time to buck up’ or ‘time to stop relying on Singapore’ but in reality, how do we do that?”

Teh said many businesses will likely close in the coming months following the government’s announcement that the RMCO is extended until December 31.

This means the borders will remain closed to foreign tourists.

Locals at the waterfront in Penang. The economy may be reopened but as long as Covid-19 remains a threat, the borders remain closed. – AFP pic, September 22, 2020.

Putrajaya has also banned entry of people from 23 countries whose number of Covid-19 cases exceed 150,000. Exceptions are for certain categories of people, such as expatriates, professional visit pass holders, permanent residents and spouses of Malaysians.

“How to survive? It’s impossible. The services and tourism sector will be severely affected, which will have a cascading effect on restaurants, hotels, retail and more,” said Teh.

Singaporeans also enjoy a strong currency rate and the consumption of Johor locals could not be compared at the same level.

Additionally, Johor’s population is lower than Singapore’s, with only 1.3 million in the capital of Johor Baru.

“The consumption rate of locals doesn’t mean much.

“So, where do businesses look for alternative revenue streams? There’s none.”

About 10 million Singaporeans visited Malaysia last year. – September 22, 2020.

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