Retail Franchises during MCO
An affiliation of business communities has urged the Malaysian Government to implement the Covid-19 Bill/Act that was broadcasted live via Facebook on the 29th of April. The Covid-19 Bill/Act enforcement was initially proposed to come to the aid of businesses and, in turn, saving jobs. Datuk Seri Garry Chua mentioned that “Enforcement of the Covid-19 Bill/Act will ultimately help to save three million jobs in the country”. With hopes that the act will be implemented soon, the enactment will involve the prevention of businesses that are facing financial constraints from collapsing and will retain financial stability for at least a temporary period until the end of 2020. The enactment of the Covid-19 Bill/Act will also demand protection towards business owners from legal suits and disputes when they are incapable of fulfilling contractual obligations, as sustaining the business itself is weighing down on the owners. They have also appealed for the act to provide clauses for rental and to allow for the sharing of financial burden between owners and tenants of shopping malls, shop lots, offices and factory for reductions in the rental. The appeal for the enforcement of the Covid-19 Bill/Act is introduced as a temporary relief for business owners and workers alike.
1. Prohibition to take legal action
Appropriate measures need to be spelled out in the proposed Covid-19 Bill/Act to certain contracts that prohibit certain legal actions to be taken between counterparties and/or their guarantors if the inability of the counterparties to perform such contracts is to a material extent caused by COVID-19. This includes not only leases (rent) but it also applies to the supply of constructions materials, the performance of private corporate bonds, the performance of the provision of goods and services for events, the performance of goods and services related to tourism, the performance of private hire purchase related to the factoring service provider and repossession of goods used for the purpose of trade and business.
2. Sharing of financial burden
On the sharing of financial burden, business owners would implore that the rentals be based on Gross Turnover (GTO) sharing for mall and shop rentals during these challenging times until normalcy is in place. If this is not favorable, the Government should consider an 80% tax rebate for rental reductions to landlords. The rental reductions would help to ensure business sustainability for all involved.
3. Standard of Operating Procedures (SOPs)
Allow departmental stores and restaurants to operate under strict SOPs mirroring Hong Kong methodology of no more than 4 persons on a table and not more than a certain number of guests in the restaurant.
4. Wage subsidy
The current terms and conditions that limit to 200 employees per company to claim wage subsidy should be removed by SOCSO because of all employees regardless of sector pay EIS. Furthermore, to qualify for the wage subsidy, we appeal to the Government to remove the conditions attached to the mutual reduction (i.e. pay-cut) of wages between employers and employees to sustain business survival in the private sector.
5. Private sector
Employers must be given the right to manage its workforce and reign in wage reduction, as the employers see fit. Ultimately, it is the employers who are in charge of the employee wage welfare. The next 6 to 12-month business will certainly drop due to adverse market conditions hence no businesses can guarantee employment and full wage. Adjustments due to unforeseen circumstances will need to be made based on market conditions. Urgent action for approval on 18 May 2020 The government should implement this Bill/Act without any delay to protect businesses when Parliament convenes on 18 May 2020.
To sum up the pertinent points:
1. The relief imposed by law will save jobs, businesses, companies, and investments which will then continue to multiply the Economy.
2. Contracting parties will not waste Time and Resources fighting in court over-application of the doctrine of frustration or meaning of Force majeure Clauses. Hence there will be legal certainty resulting in commercial certainty.
3. Preserve legal rights such as the right of legal action by stopping limitation. This Bill/Act is only a temporary measure till the end of the year (or extended as and when the needs arise). When the Bill/Act is passed, the contractual obligations will continue unabated.
Organized by, listed in alphabetical order:
1. ASEAN Retail-Chains & Franchise Federation (ARFF)
2. Branding Association of Malaysia (BAM)
3. Bumiputra Retailers Organization (BRO)
4. Federation of Malaysian Fashion, Textile, and Apparel (FMFTA)
5. Malaysia Budget Hotel Association (Mybha)
6. Malaysia Digital Chamber of Commerce (MDCC)
7. Malaysian Hairdressing Association (MHA)
8. Malaysia Retail Association (MRA)
9. Malaysia Retail Chain Association (MRCA)
10. McMillan Woods Association/Network of Accountants
11. Persatuan Usahawan Maju Malaysia (PUMM)
12. SME Association of Malaysia (SME Malaysia)