LOGAN Terence Gomez was going to open his neighbourhood deli-restaurant in Bangsar, Kuala Lumpur in March when the Covid-19 pandemic hit.

To keep his business from going under, Gomez waived his salary and instituted a 40% pay cut for his five staff members.

The deli is open but it can only do deliveries and takeaways. It still cannot offer dine-in service because of a lack of funds, said Gomez. 

“Before the pandemic, we projected sales of RM60,000 per month but now we are only earning RM17,000.”

Gomez is one of the thousands of Malaysians who have suffered steep pay cuts after the Covid-19 pandemic devastated the economy.

Although business and consumption are starting to recover, the professionals The Malaysian Insight spoke to said they are worried about servicing their loans once the moratorium ends in September.

Some of them said they considered asking their banks to restructure their loan payments, taking advantage of the moratorium extension for selected individuals.

“I’m kind of prepared with savings to help service my housing loan, but I most likely will have to speak to the banks on loan restructuring,” Gomez told The Malaysian Insight.

A senior lawyer who wanted to be known as Alfred said he is going to further tighten his belt come October when he has to start repaying his property and personal loans.

Law firms like his were badly affected by the pandemic that forced a near total shutdown of the country during the movement-control order (MCO) from March 18 to May 12.

The MCO shuttered the courts and cut off income for law firms until June 10 when they were re-opened. 

Initially, Alfred’s firm instituted pay cuts on the assumption that the MCO would last for two weeks and the company would pay back the deductions once business returned to normal. 

But as the lockdown stretched to two months, the firm decided to make pay cuts permanent until year-end.

“We decided that across the board, all employees will take a 25% pay cut because our cash flow was affected, as all our clients were hit by the pandemic.

“It’s a justified decision to keep the firm afloat because letting people go is something we really, really want to avoid,” said the 37-year-old, who is also taking care of his parents.   

Michael Ong, who works in an auction firm, said he took a 30% pay cut as the company recalibrated its business plans and growth strategies.

“We have seen some attrition in the company with a reduction in our manpower. Targets and business goals that were previously set, now seem unlikely by the end of the fiscal year,” said Ong.

Dev, whose company is involved in the local cinema and movie theatre industry, also saw zero income during the eight weeks of MCO.

“We had a 20% pay cut across the board to maintain our cash flow. The management reviews the situation every month to see whether it needs to be continued.”

Better frugal than sorry

To help families survive the loss of income during the MCO, Putrajaya announced a six-month moratorium on bank loan payments that will end next month.

But following repeated appeals from the public and civil society groups, the government said the moratorium will be extended for selected individuals, such as those who lost their jobs or took pay cuts.

Prime Minister Muhyiddin Yassin said those who had their pay cut would get their monthly payments reduced proportionate to their income.

For the time being, Alfred does not think he needs to approach the banks to help reduce his loan repayments.

“If I need to, I will make further adjustments and spend a lot less. This is the new normal.

“We can’t just spend like we used to and I am looking at ways to cut back.”

He is servicing a personal and housing loan.  

Ong said he worried about servicing his property loan if business does not improve in the next six months.

“While my current salary still allows me to sustain my expenses, in the long run, I may have to dig into my savings to service the loan instalments if the situation persists.

“Should the need truly arise, I will approach the bank to discuss a possible payment plan restructure.”

Dev, the marketing manager, said he and his wife have cut back on luxuries, such as eating out, to stretch their incomes.

“The moratorium helped a lot and I channelled the funds to other uses, such as a higher electricity bill and groceries.”

He is confident that he and his wife will be able to start repaying their car loans once the moratorium ends but insists that the family will be as frugal as possible. 

“We are still thinking of cutting back and saving more money to be able to manage the loan instalments and expenses better.” – August 6, 2020.