What Impact Has COVID-19 Had on Malaysian Business Sectors?

The COVID-19 pandemic has forced people to adapt to the new normal and fashioning protective masks is one of them.

After months and years of brutal lockdowns and minimal COVID-19 test positivity rates, we need to change our pandemic management and economic recovery strategy. While rising vaccination rates are helping some businesses, others are still struggling to recover. 

Malaysia's economy is being harmed by arbitrarily classifying industries as "essential" or "non-essential". Other non-essential industries have shown a significant drop in transmission rate, especially those adopting strict SOPs.

Retail

• In 2020, retail sales declined by -16.3%, the worst since the Asian Financial Crisis in 1998 with -20.0%.
• The worst decline for sub-sectors in 2020:

1. Fashion/Apparel: -49.6%
2. Department stores: -44.7%

• Since March 2020, 30 percent of malls have closed, displacing approximately 300,000 employees.
• A reduction in mall visitors was due to more work-from-home adoption and travel restrictions.

Prolonged store closures worsened market cracks, causing foreign brands and investors to withdraw, lowering spending and consumption. Many local enterprises have also collapsed, ending Malaysia's entrepreneurial scene. The most frustrating aspect for retail entrepreneurs is that the restrictions they face are not based on research or evidence.

Complicated circumstances have encouraged businesses to provide innovative curbside pickup, BOPIS, and self-checkouts. As a result, the industry is actively improving SOPs and adapting techniques.

Lockdowns have also hampered the creative industries (from visual arts to live performances). The cancellation and delay of shows have nearly halved artists' and venues' earnings.

Creative Industry

• Musicians' contracts are not renewed by the Malaysian Philharmonic Orchestra (MPO).
• The Kuala Lumpur Performing Arts Centre (KLPAC) relied solely on community donations.
• These “gig-workers” enjoy less government social security than other freelance artists.
• Filming and recording are not permitted.
• MBO, Malaysia's third-largest cinema chain, shut down due to an 85% drop in box office revenue.

Travel and Tourism

While unemployment is rising in many industries, insufficient travelling demand due to regulations has seriously affected the tourism and travel industry's recovery.

• AirAsia terminated 2,400 employees and only flew 8% of Malaysian routes.

• Malaysia Airlines had nearly 13,000 employees on unpaid leave.

• Only 70% of hotels have average occupancy rates below 20%.

• Aviation experienced RM13 billion loss and 11.3 billion loss in hotels since 2020.

Agriculture and Aquaculture

While the pandemic may have changed consumer patterns, supply chains may have been severely disrupted. A lack of consumer demand due to dine-in restrictions and seafood restaurant closures has resulted in lower seafood prices and stockpiles.

E-Commerce

Due to the pandemic, what was once an alternative became a need. In Malaysia, the fear of virus infections from cash handling and social interaction drove e-commerce growth, according to GlobalData (24.7% growth in 2020). Many consumers have never heard of QR codes before the pandemic. The sector grew so much that many who lost jobs can now seek employment as freelance drivers/riders.

• Malaysia's e-commerce industry shot up to 24.7% in 2020.
  
• The normalisation of digital or cashless payment.
  
• Substitution for those who lose their jobs as entrepreneurs and drivers.