SHOPPING malls nationwide expect to incur losses in excess of RM2 billion, taking into account the recovery period and loss of purchasing power, after the movement control order (MCO) is lifted, said the Malaysia Shopping Malls Association.

Its president, Teo Chiang Kok, told The Malaysian Insight said it will take a considerable time for rehabilitation and recovery and for shoppers to return.

“With the extension of the MCO, our losses would be way in excess of RM2 billion.

“After the MCO, we can expect a slow pick up as shoppers would have depleted their discretionary spending budget.

“They will also be cautious in their spending due to uncertainty in employment and other factors,” he told The Malaysian Insight.

The government enforced the MCO on March 18 to control the Covid-19 pandemic.

It was originally planned for two weeks but a growing number od infections has caused the MCO to be extended to April 14 – and many believe it is unlikely to be lifted then too.

Under the MCO, shopping malls are ordered to be closed except for supermarkets to allow people to buy food and essential items.

On Friday, Prime Minister Muhyiddin Yassin announced a RM250 billion economic stimulus package to mitigate the effects of the pandemic.

He said “no one will be left behind” in the relief measures. 

Of the RM250 billion, RM128 billion will be spent on welfare while RM100 billion is earmarked for businesses, including small and medium enterprises (SMEs).

Teo said even before the crisis, the shopping industry in Malaysia has suffered from weak spending in the last two years.

He said this was due to many factors, such as the rising cost of living resulting in lower disposable income.

“There was also the recent political uncertainty, a weak global economy, weak ringgit, increasing cost of doing business, and now Covid-19 which has depleted tourism spending in more than 35% of tourism expenditures.

“This was followed in quick succession by the MCO for a month, making it a perfect storm.”

Challenges ahead for malls

He said the biggest challenge is taking steps to survive and recover, with the added burden of no business or sales under the MCO. With continuing overheads, managing cash flow is the main issue.

“The only avenue is to reduce cost, otherwise businesses will fail and employees will lose their jobs.

“Irrespective, all businesses will still have to bear fixed overhead costs of salaries, essential operational services like air-conditioning, cleaning, and security whether we partially open or close during the MCO.”

He said the foremost objective of the government stimulus package should be to enable business to survive so that lay-offs are kept to a minimum and nobody goes hungry or desperate.

“For businesses at this juncture, the key immediate need for survival is for positive cash flow and reduction of cost of doing business.

“For the individual, it is important that there is cash for sustenance. To this end we need the government to help preserve cash flow for businesses as well as for individuals to survive.”

Teo said many of their mall members have introduced several win-win solutions, such as direct assistance for tenants in the mall, which can resume operations when the MCO expires.

“This includes shopping vouchers for giveaways as part of the mall promotion activities.

“These have two-pronged advantages for the tenant; firstly, the vouchers add to the tenant’s sales and secondly, the recipients of such vouchers are compelled to visit and spend in the tenant’s shop.”

To ease their burden, he said the malls are allowing tenants to operate with reduced business hours or limited services.

“Other services would be to offer free parking for shoppers, rent rebates or waivers and shortened business hours to save on staffing and operations costs.”

He said shopping malls will need to curate appropriate and targeted action plans, including rent rebates, on a case-by-case as many critical factors are involved.

“For example location, business tolerance, owners’ directions. There are also wide differences in the rental structure for different categories of tenants and different malls, so each mall will have to derive different win-win accommodations with their tenants.

“Increasingly, malls have been announcing initiatives to assist their tenants, including waiving or rebating rent during the MCO period.” – March 29, 2020.