An economist has warned that Kuala Lumpur facilities face the same fate as the century-old Coliseum Cafe in Jalan Tuanku Abdul Rahman if they do not turn their business around, downsize or close temporarily to save on operating costs.
Sunway University economics professor Yeah Kim Leng said the other alternative for businesses to stay afloat is to seek some form of government help.
The iconic Coliseum Cafe recently closed after being unable to maintain business since motion control began last March.
Yes, said the travel, hospitality, leisure, entertainment, and food and beverage (F&B) sectors have borne the brunt of the Covid-19 economic impact and have suffered huge losses since last year.
“These are dynamic companies and some like the F&B sector have faced massive challenges and competition from street vendors due to ongoing restrictions on movement.
“Hundreds of restaurants just couldn’t keep up with the ‘delivery and take-away-only’ model because they had to deal with high overheads such as rent, license fees and staff salaries.
“A longer lockdown will result in more closings and Kuala Lumpur will eventually become a ghost town.
“Those who manage to downsize or (temporarily) close early can at least hope for a speedy recovery and resume operations once the lockdown is over,” he added.
Yes, but cautioned that it would continue to be challenging after the lockdown as companies would have to continue to follow standard procedures.
He advised companies to find alternative resources to stay open or get government help and said there was no point in throwing good money after bad.
“The strategy now is for the government to step up vaccination as part of its national Covid-19 vaccination program.
“It is the fastest way to recover for all sectors of the economy,” he said.
Datuk Tan Kok Liang, president of the Malaysian Association of Travel and Travel Agencies (MATTA), who shared Yeah’s views, said achieving herd immunity is the solution.
“The tourism segment has become so fragile due to continuous travel restrictions and bans; it has made its way through all segments of the business, small and large.
“Most NGOs, including MATTA, have already pointed out the importance of achieving herd immunity as this will solve a large part of the problem.
“We hope that the tourism frontliners, which not only consist of hoteliers but also tour guides, tour operators, bus drivers, pilots, cabin crew and spa staff, will be vaccinated soon.
“Otherwise other subsectors will keep falling,” he added.
Restaurants across the country are already facing the negative impact of the pandemic, according to the Malaysian Muslim Restaurant Owners Association (Presma) and the Malaysian Indian Restaurant Owners Association (Primas).
The associations, which represent about 12,000 companies nationwide, said at least 20%, or 2,500 restaurants, shut down last year.
Another 50%, or roughly 4,750, is expected to close as their cash flow has dried up and overheads consume their capital and reserves.
“Ninety-five percent of the operators do not own the premises and have to pay rent, which can amount to thousands of ringgit,” said Presma President Datuk Jawahar Ali Taib Khan.
As an example, he cited a restaurant operator in Taman Tun Dr. Ismail, who has an average of 500 RM per day in sales, but has to pay 15,000 RM monthly rent.
Presma is advocating a general automatic three-month moratorium for restaurant owners, with a case-by-case review for an extension after this period without affecting their creditworthiness, and for landlords to grant a rent reduction for three months.
