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Consumers spending likely to normalise up to three months

FMM in The News - NEW STRAITS TIMES, KUALA LUMPUR, March 17, 2020: Consumers spending will likely take up to three months returning to its 'normalised' 2019 momentum after a temporary movement restriction imposed by the government effective tomorrow until March 31, 2020.

Retail Group Malaysia managing director Tan Hai Hsin said the most affected retail businesses will be small shop owners, including retailers without physical stores.

“This will affect their (retailers) cash flow in maintaining their businesses. It will also affect their ability to pay salary to their staff,” he told the New Straits Times (NST) today.

The group also expected closures of some retail shops in the next few months prior to the partial lockdown.

He said retailers who were dependent on foreign tourists had been severely affected since end of January 2020.

“These retailers include those operating in major shopping districts (such as KLCC area, Bukit Bintang area, Chinatown area), resort islands (Penang and Langkawi) as well as islands in East Malaysia, theme parks and attractions (Genting Highlands).

“International airports such as the Kuala Lumpur International Airport terminal 1 and terminal 2, Penang International Airport and Kota Kinabalu International Airport were also affected by the Covid-19 outbreak,” he said.

Tan said some of these retailers reported drop in sales as much as 80 per cent, citing that the partial lockdown will affect this type of retailers (that depend on tourists) even more.

“Foreign tourist arrival will likely to become zero in the next one month. Malaysians have also told not to travel locally. As a result, we may expect closures of some retail shops in tourist-dependence areas in the next two months,” he said.

Tan said the retail group estimated retail sale to drop by 3.9 per cent in the first quarter of 2020, excluding the impact on partial lockdown that was announced yesterday.

“Since the second-wave virus outbreak started in late February 2020, the decline in number of shoppers at popular shopping centres becomes obvious.

“Taking into consideration of the closure of retail shops in the next two weeks, retail sale growth rate for first quarter of 2020 may fall into double-digit red zone,” he said.

Tan said only grocery stores and pharmacies enjoyed higher sales in the last one month of the year. However, these two sectors may witness decline in sales as consumers had over-stocked the supplies after this month.

“For other retail sub-sectors (including fashion and fashion accessories, electrical and electronics, books and stationery, furniture and furnishing), they may not be able to gain back the losses incurred during the last two months because the disposable income of many Malaysian consumers have been affected due to the Covid-19 outbreak,” he said.

Meanwhile, the Malaysian Association of Tour and Travel Agents (MATTA) said a movement control order was lauded by the tourism sector as it was a bold and decisive move by the government to contain the Covid-19 outbreak.

MATTA president Datuk Tan Kok Liang said industry players were concerned that some hotels were closing down as their operations were not listed under essential services

“But if these hotels cease operations until month-end and guests are asked to check out by noon today, how are they going to fend for themselves,” he queried.

He said guests cannot be expected to proceed to the airport and catch the next flight home as easily as commuters taking a train home after work.

“If hotels are not classified as essential service under existing laws, then exceptions should be made.

“It would be problematic to kick out foreign tourists that we have welcomed with open arms earlier,” he added.

Tan said some tourists were long staying guests at hotels, and they included rich retirees and expatriates.

“It is sufficient to bar the entry of tourists without having to repatriate those already in the country.

“We also have to bear in mind that hotels are needed by transient workers such as oil and gas, shipping and airline crews,” he said.

The Federation of Malaysian Manufacturers (FMM) has expressed its full support of the need to contain the further spread of the outbreak in the interest of public health and safety.

However, FMM said the restriction of movement imposed on all private companies excluding the essential services may be too drastic a move as factories producing essential goods including the supporting supply chain of goods and services as well as companies with export order commitments need to continue operations.

It said the repercussion of a total shutdown of operations would have very damaging effects on businesses as well as the economy.

FMM has submitted the list of essential goods as well as goods that are part of the supply chain to be exempted from the Restriction of Movement Order.

“We strongly believe the collective action of all stakeholders including the business community that is most critical in ensuring that the situation does not escalate further and impact on the economy,” it said in a statement today.

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