AN economist has warned that Kuala Lumpur establishments risk facing the same fate as the century-old Coliseum Cafe in Jalan Tuanku Abdul Rahman if they do not turn around their business, downsize operations or temporarily close to save on operating costs.
Sunway University economics professor Yeah Kim Leng said the other alternative for businesses to stay afloat was to seek some form of government aid.
The iconic Coliseum Cafe closed recently after it was unable to sustain its business since the start of the movement control order in March last year.
Yeah said the travel, hospitality, recreational, entertainment as well as food and beverage (F&B) sectors had borne the brunt of Covid-19’s impact on the economy, suffering tremendous losses since last year.
“These are dynamic businesses and some like the F&B sector have faced massive challenges and competition from street hawkers due to the prolonged restriction on movement.
“Hundreds of eateries simply could not compete with the ‘delivery and takeaway only’ model as they had to deal with high overheads such as rent, licensing fees and staff salaries.
“A prolonged lockdown will contribute towards more closures and Kuala Lumpur will eventually become like a ghost town.
“Those who manage to downsize early or close (temporarily) can at least hope for early recovery and resume operations once the lockdown has ceased,” he added.
Yeah, however, cautioned that it would continue to be challenging post-lockdown as businesses would still have to comply with the standard operating procedure.
He advised businesses to find alternative resources to stay open or seek government aid, saying that there was no point in throwing good money after bad.
“The strategy now is for the government to ramp up vaccination under its National Covid-19 Immunisation Programme.
“It is the fastest way for all sectors of the economy to recover,” he stressed.
Malaysian Association of Tour and Travel Agents (MATTA) president Datuk Tan Kok Liang, who echoed Yeah’s views, said achieving herd immunity was the solution.
“The tourism segment has become so fragile with continuous travel restrictions and lockdowns; it has cut through all segments of the business, small and big.
“Most NGOs, including MATTA, have already voiced out the importance of achieving herd immunity as it will solve a big part of the problem.
“We hope that tourism frontliners, which consist of not just hoteliers but also tour guides, tour operators, bus drivers, pilots, cabin crew and spa workers, will be vaccinated soon.
“Otherwise more sub-sectors will continue to fall,” he added.
Already facing the adverse effects of the pandemic are restaurants throughout the country, according to the Malaysian Muslim Restaurant Owners Association (Presma) and Malaysian Indian Restaurant Owners Association (Primas).
The associations, which represent some 12,000 businesses nationwide, said at least 20% or 2,500 restaurants went out of business last year.
Another 50% or some 4,750 are expected to close as their cash flow has dried up and overhead costs are eating into their capital and reserves.
“Ninety-five per cent 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.
He cited as example a restaurant operator in Taman Tun Dr Ismail who averages RM500 per day in sales but has to pay rental of RM15,000 per month.
Presma is appealing for an automatic three-month moratorium across the board for restaurant owners, with a case-by-case review for extension after that period without affecting their credit score, and for landlords to grant relief on rentals for three months.