MCO Phase 3 - Businesses getting restless

It's 15 April 2020 - Melaka Historical City Day! It's a public holiday for us in Melaka, to commemorate the declaration of Melaka as a historical city by UNESCO in 2008. Interestingly, this was inscribed together with George Town, Penang, but somehow it's only a holiday in Melaka. For the rest of Malaysia, instead of going back out into the world (and into the office, for most of us), instead today marks the start of MCO (Movement Control Order) Phase 3. This extension is from 15 April to 28 April 2020, and is expected to be a step up in terms of measures and controls implemented during the month long "Stay at Home" initiative.

For businesses, in principle only "essential" supplies and services are allowed to operate (this itself with some degree of ambiguity) with the approval of the Ministry of International Trade and Industry (MITI). Ironically, MITI takes care of the approval of "Internal"/local business activities too. As businesses are not allowed to cut pay, force staff to take unpaid leave, retrench / lay off staff, there is increasing financial pressure to remain in business through this MCO period.

For my company, being a multi-national semiconductor manufacturer, some of the departments which are not limited to that in Malaysia are able to operate (sometimes with reduced activities) by "Working from Home" (WFH). Of course, we have a manufacturing plant here, which I just realised also supplies parts for ventilators! So, for the respective production staff, work goes on....

However, many businesses in Malaysia are not in such a situation. From the start, there have been concerns from businesses on how to stay afloat. The key focus points / grouses:-

1. Cost-avoidance: Appealing to defer rental, loan repayments and other costs during this period
Coming from: Most SME's, typically in hand to mouth situation

2. Continued payment: Argument here is that the monthly payments are in fact a division of cost across the entire year, hence should be paid even during this time
Coming from: School bus operators (though they are open for negotiations), day care centers

3. Allowed to work: The strict requirements, including limited workforce and measures (sanitizing, social distancing) are no deterrent to several businesses who seek to restart activities to offset fixed costs
Coming from: Manufacturing, Agricultural sector

4. Government bail-out: Citing loss of income, appealing to the government for aid
Coming from: Taxi Association

As the prolonged MCO has shifted the economy back to first gear, it is crucial to have a plan to restart the businesses as soon as possible to minimize the effects of recession. Of course, the challenge is to clearly define which business could resume operations, and how to enforce this effectively.

Our company management has already drawn up some elaborate plans to ensure social distancing and the necessary precautions can be taken once the MCO is lifted. Still too early to deploy, as the end of the MCO series is not yet in sight, but good to know we have a very proactive management team!

Initially, MITI did announce that barbers, hair saloons would be allowed to operate, much to the surprise of the community. Unsurprisingly, most Malaysians did not understand how this sector of business could qualify as essential, and also how social distancing could be maintained (eg, while having a hair cut). Even the association of barbers themselves refused to go back into business, even though it was apparently allowed. Better to stay safe and healthy rather than take the risk! Eventually, this was retracted by the government.

On the other hand, there are many, many businesses that seek to restart, as there were so many applications to the MITI website over HERE that it crashed shortly after opening on Monday (13 April 2020). I don't have a breakdown of the applicants, so it could be a mixture of essential businesses which still needed MITI approval, or simply those who wished to try their luck.

Not everything is bleak and disastrous. For certain businesses, namely e-commerce (Lazada, Shopee) and logistics (DHL, FedEx, Grabfood, Food Panda), the MCO has temporarily put competition on hold and causes a surge in clients. Some are even adapting and evolving their businesses to the current situation, such as Lazada, which has started to sell produce from Cameron Highlands which would otherwise go to waste. With Hari Raya just around the corner, the annual Pasar Ramadans are no longer allowed to operate this year due to the CoVid-19 situation, however, the authorities are offering support to business owners to go online so that they can continue to sell food during the Puasa month - a yearly phase where there is a significant potential for income.

The only risks now are running out of inventory, hitting bottlenecks in the supply chain (ie, not enough delivery channels) and compromising quality of service. For now, people are switching because they have no choice - whether or not these business make a lasting positive impression and experience to permanently secure their new customer base is entirely up to how they perform in these times.

For us, I would say our manufacturing is somewhat affected, but we still manage to continue where our business partners, situated in other countries, are allowed to resume operations. Example, those in China are cautiously back to work, while on the other hand those in Philippines are basically in the same boat as us.

Are you a business owner who would like to share your experience in these troubled times, or perhaps you are a wage-earner like me who is dependent on the employer to bring us through?