KUALA LUMPUR – Malaysian restaurateurs are appealing to a minimum three-month automatic loan moratorium and restructured repayments without denting their credit score as at least 4,750 business owners are at risk of calling it quits.
Malaysian Muslim Restaurant Owners’ Association (Presma) president Datuk Jawahar Ali Taib Khan said in a statement that restaurant owners are also hopeful that they will be granted a rent relief of three months.
Presma and Malaysian Indian Restaurant Owners’ Association (Primas) found at least 2,500 of its members have either quit or sold their businesses since the first movement control order in March last year.
Currently, he said another 4,750 are at risk as their cash flow has dried up and most are seeing their operation expenditure eating into their capital and cash reserves.
“Some 95% of restaurant operators do not own the premises they are in so they still have to pay full rental despite the severe drop in business.
“For example, an operator in TTDI is averaging RM500 per day and needs to pay RM15,000 in monthly rent.
“Another example is a famous vegetarian franchise in Jalan Masjid India – one of Malaysia’s most expensive areas to rent – is only garnering sales of RM160 a day and needs to fork out RM13,000 in rent despite being given a discount.”
He said one average, each of the association’s members has a liability of RM1 million with the banks, which includes business loans, mortgage, and vehicles.
“If food operators give up business at this rate, the banks will not get repayments, and this frailty will cost the banks a RM10 billion in non-performing loans, if 10% or 1,000 Presma members failed to pay up.
“Banks don’t lose money in the medium term by extending automatic moratorium as suggested by profits of the top banks in 2020 and Q1 2021. Banks merely suffer from short-term accounting losses due to the delay in collecting repayments.
“Food operators, on the other hand, are losing their business and suffering negative cash flow. Banks are not waiving loan repayments. They will get their profits back, when we pay them back.
“We need the automatic loan moratorium now in order to survive. If we don’t survive and the NPLs balloon to RM10 billion, it will become the banks’ problem. By then, it will be too late.”
He added that landlords who received a moratorium should pass the benefit along to their tenants, calling for the government to provide clear guidelines on the matter.
“Section 7 of the Prevention and Control of Infectious Diseases Act 1988 provides that if a tenant is unable to pay the rent due to the total lockdown, the landlord shall not be able to sue the tenant, provided the tenant can prove his negative cash flow.
“This relief was scheduled to be in force from March 18 to and has since been extended to June 30. The government should also provide guidelines on how this section should be operationalised.”
Yesterday, the government extended the lockdown period to June 28. Malaysia has been in various movement control orders since March last year. – The Vibes, June 13, 2021
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