Without a doubt, life post the Movement Control Order (MCO) and Conditional Movement Control Order (CMCO) will change dramatically, even with the Recovery Movement Control Order (RMCO) now in effect. Even as the dust settles – companies as well as individuals and industries at large will experience paradigm shifts with everyone now facing “The New Normal”. What are the possible ramifications that will face us? What can still be salvaged and how can we at best move forward? YES (PropertY PeoplE PlaceS) Paper gathers the thoughts of key opinion leaders and captain of industries for their analysis, views and strategies in this open-ended dialogue for unprecedented times.
Interviewees: Datuk Chang Kim Loong, Wong Kuen Kong, Datuk Michael Kang, Sr. Lim Boon Ping, Ar Saifuddin Ahmad, Siva Shanker
The immediate thing the government should do is to protect businesses and people’s rights, obligations and entitlements in legal contracts. The government must offer legal protection in the form of “time freeze” or *moratorium* for those rights under all legal contracts during the lockdown period and perhaps, even a reasonable “extra time”, so that the weaker party is not being taken advantage of by the other covenanting party. That is why I am proposing a “Legal Shield On Contracts” – something equivalent being implemented in several countries, the nearest being Singapore.
“Every cloud has a silver lining and the sun will shine after the rain. Together, we shall prevail.”
What in your view will be the impact post MCO — also given the extended MCO and CMCO on your industry? Please share the worst and best case scenarios.
Most developers would put on hold new property launches by six to 12 months after the pandemic is contained. The main focus will be to expedite construction activities in order to catch up with the delay due to the temporarily suspension under MCO and CMCO. The immediate impact on the property and construction industry would be the shortage of construction foreign workers as many have gone back to their own countries and may not return due to quarantine issues, etc. Raw materials and supplies for the construction industry will also be delayed due to closure of production factories. Even if projects are allowed to start work with the Ministry of International Trade and Industry’s (MITI) approval, there will be additional costs incurred in complying with the stringent Standard Operating Procedure (SOP) of MITI such as safety controls, wearing of mask and sanitisation of workers. It will also take at least two to three months for site construction to resume to normal speed. As such, the handing over of Vacant Possession (VP) to buyers may be delayed.
Property sales will take more than two months to generate more new sales as firstly, we need to tidy up the sales gallery and show houses that have been abandoned for some time. Secondly, less buyers will commit due to the fact that many are jobless, retrenched or have undergone pay cuts. Thirdly, due to the sentiment of a looming economic recession, most banks will be stringent on their mortgage loan approvals and buyers will not be able to obtain financing for their purchases. The bottom line is the negative impact on developers’ revenue, profit as well as cash flow besides having to pay fixed overheads and expenses. However, amid all these problems and uncertainties, there is also an opportunity to purchase property either for one’s own occupation or investment as prices are at their lowest due to the economic recession. There are already many special offers or packages in the market so prices of properties will definitely come down.
What can be done to cushion the blow following the after effects post MCO and CMCO?
The way of doing business or sales of property will never be the same as before. Property developers will have to work harder in coming out with strategies to push sales with the launch of new products amid unprecedented market conditions. They will have to go into digital marketing, online advertisement and sales through social media. We hope that government will be able to come out with effective housing policies and guidelines to help the developers to dispose of their existing unsold stocks such as expediting the Bumi release process, reduction of development charges and other compliance costs for development while lowering down the threshold for foreign buyers, etc. Authority approvals for building plans and Advertising Permit and Developer’s License (APDL) need to be expedited and fast tracked in order not to delay new product launches. Constructions at site will also need to be operating at high speed and have to work round the clock to catch up with the delay. To ease developers’ cash flow in order to pull through the aftermath of MCO and CMCO, perhaps the government could look into reducing corporate tax rates and the reduction or waiver of Employees Provident Fund (EPF) contributions. After the MCO and CMCO, the top priority would be to generate adequate liquidity or cash flow to manage business operations.
What do you think the “New Normal” will be? What more can be done to stimulate growth in your industry and what more can be done to heal the damage already incurred?
Things are never going to be the same again for a long time to come, even with RMCO in place now. For survival sake, the ways of doing business will be adjusted to the current MCO situation even after CMCO has been lifted. As for the nation, there will definitely be less traffic congestions as compared to “The Old Normal”. With “The New
Normal”, many will still continue to work from home and, with social distancing in place, social activities will be reduced. Social distancing now will become “The New Normal”. It has been proven that we can work from home so more flexible work cultures and lifestyles have emerged.
What in your view will be the impact post MCO and CMCO — also now that RMCO is in place? Please share the worst and best case scenarios.
With the shutdown, there’s no income. The impact post MCO and CMCO will see the economy going down with many losing their jobs. A majority of businesses will lay off their employees and many industries — especially the service industries will not be able to sustain while 40% to 50% of retail outlets will shut down. If the landlord of rented properties are not going to give discounts, then around 50% of Small and Medium-sized Enterprise (SME) companies will probably shut down. Consumer spending behaviour will also be affected.