Kuala Lumpur, (27 March 2020) – All businesses during a pandemic are like beachfront properties in a hurricane”, as quoted by Derek Thompson from Atlantic.
During a pandemic like Covid-19, agility is paramount. Procrastination has no part to play as the virus moves with the speed of light, so to speak, and one cannot be afraid of making a decision, afraid of the consequences of an error or of being fearful of bearing the responsibility for an error. The call to action has to be at the forefront and the greatest error is not to move or to be paralysed by the fear of failure, to paraphrase a top WHO official.
Business veterans have not been spared from the consequences of Covid-19, whether they helm large or smaller scale businesses. There are many cries for help and for immediate action to be taken by relevant parties and authorities to save businesses from shutting down and more workers from getting laid-off. The F&B, Hospitality and Tourism industries face the most dire consequences, with a projected decline in revenue of 83% and no idea as yet as to how long this Covid-19 driven downturn is going to last.
The F&B, Hospitalty and Tourism industries are already hard hit by this Covid-19 pandemic. Employers are bleeding and employees are in distress. Despite the drop in revenue, obligations remain, including payments to landlords, utility companies, banks, the taxman, suppliers and not forgetting wages. The potential percentage of business failures is growing every minute and employees will be out of a job if these businesses fail.
F&B, Hospitality, Tourism establishments and their workers simply will not be able to survive this disaster without the appropriate help and support from the authorities and the Government. Time is of the essence if these industries and the jobs of the service staff within them who work so hard to serve others are to be saved.
This is a time for all parties – the relevant authorities and the F&B, Hospitality and Tourism industry as a whole – to come together to act as one. Mutual support and assistance is needed to combat this crisis together in order to keep the industries and businesses afloat and to avert a potential loss of hundreds of thousands of jobs in the F&B, Hospitality and Tourism industries.
We need to act fast in an effort to lessen the casualties from this crisis. The industry players have come together to work on a wishlist of ways in which we can collectively act to save these industries.
There must be ONE VOICE, ONE COMMITMENT. Please lend a hand. Let us overcome this adversity as ONE.
HAPA WISH LIST
CONTEXT
• SMEs matter in Malaysia – they are the largest contributor to our country’s GDP and form the backbone of the country’s economy.
• Immediate intervention, action and assistance by the Government is crucial at this stage to ensure the survival of SMEs in Malaysia.
• Based on the Statistics Department information:
– 98.5% of businesses in Malaysia are SMEs, of varying size and across all sectors, translating to 907,065 such establishments.
– SMEs contributed 38.3% of Malaysia’s GDP, equivalent to RM521.7 billion versus the country’s total GDP of RM1.36 trillion.
– Of this RM521.7 billion, the services sector contributed 62.4% of SME activities or RM325.5 billion.
– SME GDP grew 6.2% compared to the Malaysian GDP of 4.7% and non-SME GDP of 3.8%.
– Of this 6.2% growth in GDP, the F&B and Accommodation sub-sector contributed to an 8.6% growth.
• Some further numbers based on information from the Statistics Department:
– Some 204,800 F&B establishments generate an annual gross revenue of RM103.2 billion.
– This sub-sector employs some 1.03 million people, incurring an annual wage cost of RM14.58 billion.
• As such, an important driver like the F&B and Hospitality industry should be given the importance it deserves.
IMMEDIATE NEEDS
Of paramount importance is the survival of the F&B and Hospitality businesses over the coming six months:
1. FINANCIAL RELATED
• Waive all accrued interest and penalty charges applicable during the loan moratorium period.
• Ensure loan moratorium announced covers loans irrespective of whether it is taken from from banks, hire-purchase companies or leasing companies.
• Reduce the bank loan rates to BLR + 0%.
• Provide F&B and Hospitality businesses interest free or soft “crisis mitigation” loans to assist their cashflows and enable businesses to survive over the next 6 months.
• Ensure speedy approval and disbursement of loans via commercial banks within 3 days without assessing credit scoring.
2. EMPLOYMENT RELATED
• Allow unpaid leave and reduction in salaries during the MCO period.
• Provide a subsidy to cover 80% of employees’ salary for those earning below RM4000 per month.
• Suspend EPF, Socso and HRDF contributions from employers for 6 months.
• Provide Grants to subsidise the cost of wages for 6 months.
• Provide relief with regard to foreign worker levy for one year since the F&B and Hospitality industry relies heavily on foreign workers for its daily operation.
• Direct insurance companies to consider consequential loss claims made by companies and individuals due to force majeure.
3. TAXATION RELATED
• Defer monthly income tax and corporate tax payments for 6 months.
• Thereafter, allow for a 6-month instalment payment scheme for income tax and corporate tax.
• Reduce corporate tax by 15% for Assessment Year 2020.
• Allow revision of profit estimates for 2020 for the industry.
• Expedite the refund of the excess corporate tax previously paid.
• Waive SST for 6 months for the industry, and thereafter introduce a softer version of SST for all.
• Defer payment of licenses (Entertainment/Liquor/Music) for the industry 6 months.
• Suspend tourist tax for the hotel and tourism industry.
• Reduce import tax for machinery by 15% for 6 months for the industry as they are subject to high tax.
• Suspend import tax on ingredients such as meat, seafood, dairy, alcohol and such like for 6 months.
4. PREMISES RELATED
• Suspend rental payments to landlords for 6 months in parallel with the 6 month loan moratorium by banks.
• Suspend service and maintenance charges from landlords for 6 months.
• Provide a 50% rebate for 6 months payments to TNB, Syabas, Indah Water, Astro, Indah Water, assessment, quit rent and public liability insurance.
5. OTHERS
• Institute strict pricing control on ingredient costs as this forms a significant component of the final price of the food item.
• More clarity on relief measures to avoid any disconnect between what authorities say and what implementing agencies do. There must be consistency across all agencies especially banks, utility providers, Customs and Inland Revenue.
