Tuesday, October 27, 2020

Still standing, businesses fear death knell of ‘MCO 2’ amid spike in Covid-19

Businesses which have managed to recoup some of their losses fear that a second MCO would bury them.

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The recent spike in Covid-19 cases in the country has led to fears within the business community that the movement control order (MCO), which forced companies to shut down for almost three months as part of efforts to contain the pandemic, could be reintroduced.

The nationwide lockdown was eased in June, allowing the public to resume their daily activities with laws on health SOPs in place.

Now, four months later, businesses are not keen on going through that episode again.

The MCO brought companies to their knees, many of which were caught unaware by the economic lockdown.

Tens of thousands of Malaysians have either lost their jobs or taken a pay cut.

The hospitality industry has been among the worst hit. With borders remaining closed, the industry has had to rely heavily on the domestic market and hotels are still reporting layoffs.

The top executive of an international chain of hotels recalls how the occupancy rate at his hotel in Selangor was already taking a dip as early as January, when Malaysia first started reporting local coronavirus cases.

“We were at 50% occupancy at the beginning of this year; by March we were lucky to even hit 20%,” he told MalaysiaNow.

In the first quarter of 2020, his company closed dozens of its hotels in China, the epicentre of the pandemic which has so far killed more than a million people worldwide.

In Malaysia, the hotel group was also forced to stop operations in Penang and Melaka, which would usually be brimming with tourists from Singapore and other parts of the world.

Hotels were forced to take any opportunity they had to fight the death sentence on their business, including to avoid mass layoffs of staff.

That was the case when the government enlisted help from hotels to turn their spaces into quarantine centres for Malaysians returning from abroad.

“That helped us survive,” the hotel boss said.

But the recovery phase of the MCO, known as the RMCO, also came with several problems.

“Once we were open for diners and domestic bookings during the RMCO, the sight of government personnel in PPE in our lobby made some customers flinch and walk out.”

‘Revenge shoppers’

Angie Choong’s company was one of many retail businesses not listed as an essential service. This meant that it could not maintain its brick-and-mortar presence throughout the MCO.

“There was little we could do but secure the inventory and the stores,” Choong, a senior retail manager at a global fashion brand, told MalaysiaNow.

“We still had to pay wages but the government wage subsidy programme helped,” she said, referring to Putrajaya’s rescue packages which included a top-up on lost income for staff.

The silver lining was, of course, the nature of online sales which have lower overhead costs.

Yet, Choong is among thousands of businesspeople who are not looking forward to a second lockdown.

That would mean an inability to cash in on a public eager to make up for the lost experience of shopping since March.

“Yes, we can mobilise our staff to back-end fulfilment of online orders,” she said, “but what really helped cashflow was when the first MCO was lifted and people were out of their homes in a wave of revenge shopping.”

And like other fashion businesses, Choong’s company will be affected if people spend only on what they really need.

For one, the lockdown has made people realise that they can make do with less.

“So if a second lockdown comes, we may not make it,” she said.

For hotels, diners, like “revenge shoppers”, have made a comeback since the RMCO.

And that’s something they hope to cling on to for now.

“Dining outlets in hotels have been doing very well during the RMCO,” the hotel boss told MalaysiaNow, adding that he is certain his hotel too would not survive a second lockdown.

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