KUALA LUMPUR: Malaysia’s retail business may have dropped by more than 50 per cent last month due to the Covid-19 pandemic.
Stepping forward is Tan Sri Jeffrey Cheah, arguably one of the first business leaders who back moral statements with practical action to help businesses cope with tough conditions arising from the pandemic.
Cheah, founder of Sunway Group, offered a RM20 million rent free to non-essential trade retailers at its malls in light of the 14 day Movement Control Order (MCO).
The rental exemption is for tenants at Sunway Pyramid, Sunway Velocity, Sunway Carnival, Sunway Putra Sunway Big Box Retail Park, Sunway Giza and Sunway Citrine.
The move by Cheah, a newly-selected member of the government’s Economic Action Council (EAC), raised speculation that such rental rebates would be part of another economic stimulus package to be announced by Prime Minister Tan Sri Muhyiddin Yassin on March 30.
The Malaysian Employers Federation (MEF) executive director Datuk Shamsuddin Bardan said the government really needs to assist retailers to manage three big cost items i.e. rental, payment of wages and payment to statutory contributions.
“The government can mediate with landlords and tenants to bring down cost of rental. The landlords may be incentivised with lower tax rate or given tax free status for income derived from rental for 2020,” Shamsuddin told the New Straits Times.
Malaysia Retail Association (MRA) said retail businesses had been adversely affected by the pandemic.
“Sales have dropped by as high as 60 per cent in February. We envisage a 90 per cent drop in March due to the MCO,” said MRA president James Loke.
MRA represents 20 per cent or RM22 billion of the country’s retail market, with a membership of over 150 major retail and related companies, covering more than 10,000 retail outlets and employs more than 150,000 staff.
A little over a week into the MCO announcement to curb the spread of Covid-19, shopping mall owners nationwide have been heeding the pleas of the retailers by giving rental rebates.
Over the past two days, a few well-known shopping mall owners announced waivers in rental charges.
Besides Sunway Group, Bangsar Village, Resorts World Genting, Paradigm Mall and Pavilion Reit Malls have joined the bandwagon.
In an email to its tenants, Resorts World said: “The management has decided to extend its support by granting all tenants base rent free tenancy for the MCO period.”
Eng Lian Enterprise Sdn Bhd, which owns Bangsar Village, stated in a circular that “the management has decided to waive rental charges during the MCO period for all tenants except supermarket and pharmacies which remain open as essential services.”
Prior to the MCO, Imago Mall in Kota Kinabalu, Sabah was leading the pack in efforts to shield its tenants.
It was among the first to halve rentals for all its tenants, with effect from February 1 to March 31.
Sarawak’s Everrise Departmental Store Sdn Bhd announced a rental waiver for the two-week MCO period.
Design Village Outlet Mall in Penang said no rental would be charged on its non-essential tenants, and no penalty would be imposed on all events that were cancelled during this two week period.
Meanwhile, the Malaysia Shopping Malls Association (PPKM) welcomed the proactive move by shopping mall owners such as Sunway.
PPKM, however, noted that the move did not involve the whole shopping mall industry.
It expects the shopping mall industry to lose more than RM750 million, excluding turnover statistics from the retail sector, during the 14-day MCO.
“The estimate includes super-regional malls, regional malls, neighbourhood malls, premium outlets, and shops that are allowed to stay open during this period, and excludes stand-alone hypermarket centres or supermarket centres in the street,” PPKM said in a statement last Monday.
PPKM is appealing to the government to provide urgent relief for retailers, tenants and mall operators to preserve cash flow and maintain employment.
According to PPKM, shopping mall members need to curate targeted action plans including any rental rebates, on a case-by-case basis, as many critical factors are involved such as location, business tolerance, owners’ direction and rental structure.
Previously, local retailers had appealed to all shopping malls and shop house landlords to give tenants a six-month rebate from 30 to 50 per cent from February onwards due to the Covid-19 outbreak.
Five Malaysian retailers association, in a joint statement issued on February 17 said: “The move, similar to what shopping malls and landlords in Hong Kong and Singapore had done for their tenants, will allow retailers in Malaysia to ride out the effects of the outbreak.”
The associations are MRA, Malaysia Retail Chain Association, Bumiputra Retailers Organisation, Asean Retail-Chains & Franchise Federation and Branding Association of Malaysia.
“As rent makes up a high proportion of retailers operational costs, this is the time that landlords need to be ‘socially responsible’ by helping tenants to protect jobs for the greater good of the Malaysian economy,” they added.