Part A (40 marks)

Answer all questions

Government urged to table Covid-19 bill to save retail, services and manufacturing sectors

By Kalbana Perimbanayagam - April 29, 2020

KUALA LUMPUR: A coalition of Malaysian business associations is calling for an urgent enactment of a Covid-19 Act.

The group of more than 10 associations said the Act should be put in place as a temporary measure until December to avoid legal disputes over contractual obligations in the post-Movement Control Order (MCO) period.

They said the Covid-19 Bill is crucial because more than 40 per cent of businesses in the retail and services sectors will not survive the financial impact brought about by losses and the high stakes involved in rental, salaries and other contractual commitments.

The bill, when enacted will protect these sectors against collapse, they said. The coalition urged the Malaysian government to emulate similar enactments of Covid 19 Acts in Singapore and the United Kingdom.

The coalition comprises entities such as the Asean Retail-Chains & Franchise Federation (ARFF), Branding Association of Malaysia (BAM), Bumiputra Retailers Organisation (BRO), Federation of Malaysian Fashion, Textile and Apparel (FMFTA), Malaysia Budget Hotel Association (Mybha), Malaysia Digital Chamber of Commerce (MDCC), Malaysia Hair Dressing Association (MHA), Malaysia Retail Association (MRA), Malaysia Retail Chain Association (MRCA), Persatuan Usahawan Maju Malaysia (PUMM) and SME Association of Malaysia (SME Malaysia).

MRCA president, Datuk Seri Garry Chua said it was the first time in history that various Malaysian business associations banded together to appeal for help for 30,000 businesses.

He said the effort will ultimately help to save three million jobs in the country.

"It is of paramount importance for a Covid-19 Bill/Act, similar to the Singapore Covid- 19 (Temporary Measures) Act to be put in place to protect business owners from legal suits when they are unable to fulfill their contractual obligations or sustain their businesses post-MCO.

"The act is necessary to enable businesses to receive temporary relief as many business owners will be unable to fulfil their contractual obligations leading to disputes and legal actions against one another.

"We implore the government to consider implementing a Malaysian version of the Covid-19 Act, which is temporary and retrospectively effective from the start of the MCO on March 18 till the end of the year," said Chua via a live e-Conferencing platform today.

He said businesses in the retail, manufacturing and service sectors have contractual commitments; and a temporary act could avoid unnecessary trouble for everyone if the act is spelt out correctly.

He said such legislation will prevent certain legal actions to be taken between counter parties and their guarantors, if the inability of that counter party to perform such contracts is related to the Covid-19 pandemic.

"The bill should also extend to the supply of construction materials, performance of private corporate bonds, performance of provision of goods and services for events, performance of goods and services related to tourism, performance of private hire purchase related to factoring service providers and repossession of goods used for the purpose of trade and business," Chua said.

Meanwhile, MRA president James Loke said the legislation was important to combat the adverse effects of the Covid-19 pandemic on the nation's businesses. He said the act would protect the present job market.

"The retail and franchise industries and related businesses are facing unprecedented uncertainties due to the ongoing MCO. It has brought big losses to businesses and workers are being laid off.

"Many retailers operating at shopping malls and rented premises are already feeling financial pressure as they have to still pay their workers' salaries, utilities and rental, despite not having any business.

"The act should detail out clauses for rental, other expenses and allow for sharing of financial burden between owners and tenants of shopping malls, shop lots, offices and factories, as well as (have details on) reductions in rental.

"You cannot expect every landlord to be kind enough to understand (a tenant's) predicament and give a waiver or extension period to pay up " Loke said.

He said business owners could implore for a Gross Turnover (GTO) Rent to be in place to tide them through during these challenging times until normalcy is restored.

"If this is not favourable, the government should consider an 80 per cent tax rebate for rental reductions to landlords. The wage subsidy should also be recapped by the government."

Loke said the current terms and conditions which sets a 200-employee per company limit to claim wage subsidy should be removed by the Social Security Organisation (SOCSO) because all employees, regardless of what sector they work in pay Employment Insurance System (EIS).

He said private sector employers must be given the rights to manage their respective workforces and reign in wage reduction, as the employers see fit.

"Ultimately, it is the employers who are in in charge of the employee wage welfare."

Loke said in the next six to 12 months, businesses will be affected by adverse market conditions and they will not be able to guarantee employment and full wage.

Questions

1.                  Outline at least FOUR major issues as described in the article above.

[12 marks]

2.                  Suggest ways these parties can help to alleviate the issues faced by retailers:

a.      Retailers themselves

b.      Government

[14 marks]

3.                  Forecast the possible impact of COVID-19 on Malaysian retailers should the pandemic continue to wreak havoc for another year.

[14 marks]