25 Nov Business Events Barred, Industry Players Burdened by High Operating Costs
- Business events industry reports revenue loss of 90% during pandemic compared to 2019
- High operating costs continue to burden businesses, while companies strive to avoid retrenching workforce
- Call for reduction or elimination of fees and taxes to help ease situation
The pandemic and restrictions on face-to-face events have severely impacted the business events industry with revenue losses reported at 90% compared to 2019, but it is the operating costs to keep businesses afloat that is now a huge burden to industry players.
“While industry players are told they cannot hold business events during the Conditional Movement Control Order (CMCO), exhibition and convention centres still have to pay bills required to keep their venues and businesses open. The situation is taking a toll on business events industry players who are struggling to stay afloat,” says Malaysian Association of Convention and Exhibition Organisers and Suppliers (MACEOS) President, Francis Teo.
The three main types of utilities operating costs industry players are burdened with are:
- Connected Load Charges imposed by Tenaga Nasional Berhad (TNB) as a penalty for businesses that do not meet the minimum electricity load usage. Although a six-month 15% discount on electricity consumption was granted for the affected hospitality industry, this had expired in September.
- Indah Water Konsortium sewage bills, which for some businesses, can run up to RM10,000 a month, a fixed rate imposed regardless of whether venues are operating or not.
- Annual fixed assessment fees by local councils.
Teo hopes that the Government will help to reduce the burden of industry players during the pandemic by eliminating the Connected Load Charges penalty, reducing tariffs for sewage bills, and lowering the assessment fees.
“It doesn’t have to be a blanket reduction for everyone. The Government could implement it on a case-by-case basis, upon application by the affected companies,” he proposes.
Echoing the sentiments of the Malaysian Association of Hotels (MAH), Teo also urges the Government to consider providing electricity bill discounts of 50% up to June 2021 to allow industry players to recover from the losses this year. It was noted that TNB had a 46% decrease of profit after tax (PAT) at RM1.4 billion for 1HFY2020 compared to the previous year and should shoulder a lower PAT due to current economic conditions.
He says: “Having to pay for these various bills is putting further pressure on an industry that is already stretched to its limits. The reductions proposed will really help to keep our operating costs low, especially since we are not allowed to hold business events until the foreseeable future. This in turn will allow us to avoid retrenching people unnecessarily.”
Teo also commented that although the wages subsidy programme as part of efforts to avoid staff retrenchment has been extended till the end of the year, employers still need to fork out up to RM3,400 or 85% of the salary for eligible employees earning RM4,000 or less. With Business Events not allowed to take place, business events organisers and suppliers have no source of income to be able to keep paying RM3,400 per skilled employee to keep them retained. Moreover, there is no subsidy for highly skilled employees earning more than this minimum amount.
While the government has encouraged Business Events suppliers to go virtual, this is only a fraction of the revenue that can be generated and is not enough to keep companies afloat during this period. We are losing skilled and experienced talent from this industry each day. The long term impact is a mammoth loss to business events and our economy.
Teo hopes that the Government will allow business events to be organised during the CMCO, assuring all stakeholders of industry players’ strict adherence to Standard Operating Procedures (SOPs). The opening of business events in Selangor, Kuala Lumpur, and Penang especially — Malaysia’s economic powerhouse states and in which most business events are concentrated — are critical to ensure business continuity for the industry and economic revival for the nation.
“With the MICE SOPs already approved by the Malaysian National Security Council (NSC), business events should be allowed to continue to be organised, adjusting participant numbers according to alert levels and venue size. By allowing small groups to meet, the industry can maintain the minimum numbers needed to preserve and support the entire business events ecosystem,” Teo says.
This coincides with the recent announcement of the temporary closure of MITEC, the largest exhibition venue in the country with retrenchment of 90 staff due to the high operating costs and inability to hold business events during this movement control order.