WHEN CHINA GETS FLU, MALAYSIA GOES ‘HALF DEAD’ – WHAT SOLUTIONS CAN MAHATHIR’S ‘BRILLIANT’ AZMIN BRING TO THE TABLE? IN JUST 3 FEW WEEKS, 95,000 HOTEL CANCELLATIONS – IMAGINE HOW TERRIFYINGLY SHARP THE ECONOMIC SLOWDOWN & MASSIVE THE KNOCK-ON DOMINO EFFECT

The impact of COVID-19 on the economy of China and the world is hard to estimate, and naturally Malaysia will not be exempted given the fact much of the country’s economy is closely linked to China’s. Many local businesses, in particular those dependent on Chinese supplies and demands, are beginning to feel the chill. It is imperative that the government come up with effective measures soonest to mitigate the coronavirus’ impact on the local economy.

China is also one of the biggest sources of tourist arrivals to Malaysia. With Chinese tour groups canceling their trips, those in the tourist industry including travel agents, hoteliers and transport service providers will be the hardest hit. The country has set a goal of 30 million tourist arrivals for Visit Malaysia Year 2020, with approximately 10% from China alone. Following the rapid spread of the coronavirus, many travel-related businesses have been caught unprepared. It has been reported that nearly 5,000 Chinese tour groups have canceled their trips to Malaysia, and this translates to roughly RM440 million in lost tourist revenue between late January and March.

Chinese nationals are not the only ones canceling their trips, as some countries have already issued travel advisories to their citizens to stay away from Asian destinations. It is therefore an uphill task for the tourism ministry to woo tourists from other countries to offset the sharp decline in Chinese arrivals.

The biggest problem encountered by the operators now is liquidity because large sums of cash have been disbursed to hotels and transport service providers and they urgently need cash flow now to stay afloat, without which many companies may have to start laying off their workers very soon.

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These companies hope to keep their workers in employment through this crisis. The months of July and August are traditionally peak summer holiday season for visitors from Greater China and it is generally believed this whole outbreak will have been put under control by then. Nevertheless, before that happens, travel-related operators still need government help to weather the crisis.

Distress signals have also been sent out by companies in the transport and hospitality industries, and those in these two sectors have pinned their hopes on a stimulus plan from the government, hopefully by this week, to cope with the impact from the coronavirus outbreak. It is hoped that the economic stimulus package will produce the desired effects within three to six months. Meanwhile, they also hope the government will lower the Human Resources Development Fund (HRDF) and EPF contribution rates, as well as easier loans from banks and more substantial incentives to help them promote their products and services. They also urge the government to minimize the tourism tax for the time being.

In addition to the tourist industry, the coronavirus outbreak also squeezes the supply of raw materials for local manufacturers, especially in the automotive and E&E industries. Malaysian manufacturers in general rely heavily on Chinese imports, and if the crisis extends beyond the first quarter, global supply chains will take the brunt given China’s dominant position in global supply chains and the fact alternative sources may not come by readily.

The effects of the outbreak on the country’s economy are far-flung, and relevant government departments must introduce effective measures to arrest the downward spiral, in particular the finance and economic affairs ministries. In the meantime, the domestic trade and consumer affairs ministry must also take the preemptive move to ensure steady supply of imports in averting possible shortage of daily necessities and the ensuing inflationary pressure. The government can no longer afford to be hesitant and inert. The country’s economy has been underperforming for over a year now and the viral outbreak will only make things much worse. It’s time for the government to do something! MYSINCHEW

Stimulus package must be activated fast

THE government must immediately activate the stimulus package that was earlier proposed to assist sectors affected by the 2019 novel coronavirus outbreak.

Malaysia Association of Tour and Travel Agents (Matta) president Datuk Tan Kok Liang said the move is crucial, particularly for the retail and tourism sectors, which are currently experiencing a huge drop in sales and revenue as a result of the outbreak.

He said cancellation of more than 95,000 bookings for hotel rooms worth RM40 million has been reported so far at various tourism spots all over the country.

Tan, who attended a meeting with Finance Minister Lim Guan Eng yesterday, said the ministry is still studying the initiative, which is expected to be finalised and announced latest by next month.

“We can see that the number of visitors has been dropping tremendously at tourist spots and shopping malls. So, do not take too long to review (the proposal).

“The government needs to decide immediately, so we can focus on promoting Malaysia,” he told a press conference in Kuala Lumpur yesterday.

Tan said among the cities which have seen a drastic drop in footfall are Penang, Johor Baru, Kuala Lumpur, Kuching and Kota Kinabalu.

He added that the government should consider a higher quantum this time, compared to the 2003 SARS outbreak, which saw RM8.1 billion rolled out to mitigate the impact of the disease.

Tan said the inflation rate, which has increased over the years, has to be included in the equation, while consumers’ behaviour should also be taken into account.

The Visit Malaysia 2020 campaign is envisioned to achieve RM30 billion in receipts this year, with 100 million tourists expected to arrive in the country, higher than the RM92.2 billion receipts and 28.1 million visitors recorded in 2019.

Earlier this week, Prime Minister Tun Dr Mahathir Mohamad had shared his concerns over the dwindling tourist footfall due to the impact from the Chinese market which has been affected by the coronavirus outbreak.

To cushion the coronavirus impact on the industry, Tan said the government should also consider tax deduction for companies that support human resource activities held at MICE (meetings, incentives, conferences, exhibition) events.

Tan said the government could also consider personal tax relief of up to RM2,000 for domestic tour packages.

“These packages must be purchased from companies licensed by the Ministry of Tourism, Arts and Culture, which covers residents tax payer, spouse and children for a specific time period.

Tan said the proposals are expected to be submitted to the Finance Ministry soon.

Domestic tourism expenditure has increased by 11.4% to over RM92 billion in 2018. Out of 221 million domestic visitors, 74 million were tourists staying overnight away from home, while the rest were day-trippers.

Tan said Matta is expected to initiate a special exhibition to promote domestic tourism this April, namely Matta Fair “CutiCuti Malaysia”, as part of its effort to mitigate the situation.

He said the exhibition, while not expected to offset losses from the Chinese market significantly, would at least contribute to the recovery of the industry as a whole.

The two-day exhibition, to be held from April 4 to April 5, is projected to generate between RM20 million and RM30 million of sales transactions.

Tan said the event, which will be held at the Kuala Lumpur Convention Centre, is expected to house 200 booths.

He said Matta is also offering a 40% discount to exhibitors that are taking part in the programme, including hoteliers, airline companies and travel agencies. Any shortfall in inbound tourist arrivals could be compensated by domestic tourism.

He also added that Matta is expected to collaborate with its counterparts from Asean countries, as 69% of the total tourists are from South-East Asia.

Matta Fair “Cuti-Cuti Malaysia” will be jointly supported by Tourism Malaysia and Malaysia Airlines Bhd.

Meanwhile, the Matta Fair, which was normally held in March, has been deferred to May 1 to 3, 2020. THE MALAYSIAN RESERVE

MYSINCHEW / THE MALAYSIAN RESERVE

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