Businesses in urban and rural Malaysia during COVID-19 pandemic

Summary

Economic disruptions from COVID-19 have negatively impacted businesses in urban and rural areas. While many businesses have shut down, some have adapted to the movement restrictions by transitioning into e-commerce. This shift to digital solutions is galvanized by government initiatives such as digital entrepreneurship programs and upskilling for members of the public. Nonetheless, increased efforts are needed to adequately integrate and maintain the success of digitized businesses in rural areas.

What is happening?

The coronavirus pandemic has not only caused major economic disruptions, but also halted numerous businesses around the globe. Most businesses were ordered to close down during the lockdowns and had to face the financial repercussions of this economic stagnation. Malaysia was no exception, with the implementation of the Movement Control Order (MCO) as well as its various permutations of Conditional Movement Control Order (CMCO) and Emergency Movement Control Order (EMCO). Businesses faced a tough time plagued by the economic downturn and many were left with no choice but to close for good, while 67% of small businesses in Malaysia reported that COVID-19 left a major negative impact on their operations.

Multiple stores for rent and for sale. Photo credit: Felicia Phan

In the cities, streets once lined with brightly lit shops are now quiet. Empty storefronts are plastered with phone numbers beckoning potential renters or buyers to assume its space. Although few surviving stores remain open during the MCO, no customers are in sight. Dining-in is forbidden, so customers now queue outside or wait in their cars while ordering take out. Others opt for food delivery through one of the many delivery services available.

In rural areas, despite appearing safe from the virus, its socio-economic situation is far more severe. Local communities unable to travel more than 10 kilometres due to MCO restrictions impede both businesses and the community, because businesses look to these communities as a source of revenue, whereas for the community, traveling to the next town may be the only way to obtain essential goods.

In addition, rural businesses face another barrier wherein many villagers from rural communities do not carry smartphones nor have reliable mobile data plans. As a result, they are unable to check-in to establishments using the compulsory digital contact tracing app released by the Malaysian government – My Sejahtera. This leads to difficulties in ensuring clear contact tracing as well as problems with entering establishments safely.

These affect the revenues of businesses as well the safety of the community. The lack of foot traffic and customers have unsurprisingly led to the inevitable closure of more unfortunate establishments. Other businesses have opted to downsize in order to minimize running costs. Naturally, this reduction in workforce results in more Malaysians being unemployed.

How are Malaysians coping? 

Industries affected by MCO measures have to innovate for survival. In a news report by Channel News Asia, Malaysians shared about how they moved on despite the professional setbacks caused by COVID-19. Justin Yong, a former real estate negotiator, returned to his previous venture of selling charcoal-roasted meat, char siew. Together with his partner, Shervin Chong, they operate an e-commerce business through Whatsapp and other social media platforms. Jude Lorson, a former events coordinator, decided to pursue his interest of barbering with the free time available. Ahmad Farid Mat Misiah, a former project manager in the oil & gas industry, used his free time to upskill. Taking multiple online courses, he picked himself up and ensured that he remained competitive.

Digital check-in via the MySejahtera app is mandatory at business premises. Photo credit: Felicia Phan

Although many are experiencing negative impacts caused by the COVID recession, there are some businesses that have turned for the better. The BFM Evening Edition featured an online cake business called Buttery.my that was originally a passion project of its founders. During the MCO, a spike in interest towards cakes led to a surge in demand and the eventual success of their business. It was so successful that a brick-and-mortar cafe was deemed necessary to keep up with the influx of orders. This is an indication that not all businesses are doomed to fail during COVID-19.

What can be further done: Opportunities and risks 

For both urban and rural areas, the onset of COVID-19 makes the pre-pandemic way of handling businesses unfeasible. Businesses, big or small, must adapt to survive. With physical options being largely unavailable, most business owners must look beyond brick-and-mortar stores. Foraying into the digital world would be an optimal choice since it ensures the safety of Malaysians through social distancing while cutting down on the fixed costs of a physical store.

Bakeries, deemed essential services are allowed to operate throughout the pandemic, but must abide by strict safety guidelines. Photo credit: Felicia Phan

One such business that improved tremendously after investing in digital solutions is Diyaa Confectionary, owned by Sri Themudu. After initially struggling with the COVID-19 induced economic slump, Sri Themudu hired a photographer and videographer to showcase his products on Instagram. By converting his physical business into an e-commerce store through the utilisation of social media, he adapted to the shortfalls of COVID-19 restrictions. The digitisation of his business turned out to be a success and his revenue has increased three-fold.

This digitisation of businesses can be similarly applied to rural Small and Medium Enterprises (SMEs).The Malaysian government released a series of schemes and provided funding to support this goal. In March 2020, an additional US 4.72 million dollars was allocated from the 2020 Economic Stimulus Package to speed up the adoption of digitized solutions for rural SMEs. Named the Perkhidmatan e-Dagang Setempat (PeDAS) transformation programme, it aims to encourage the digitisation and implementation of businesses on e-commerce platforms by providing necessary training.

In addition, while businesses digitize, it is necessary for its workers to adapt and evolve along with it. Employees have to upskill and keep with the latest tools and functions available to maximize their business potential. Technology and social media are here to stay, and although once previously unimaginable pre-pandemic, the public has quickly adapted to e-commerce solutions during COVID-19. Furthermore, the public can enhance their professional development through Upskill Malaysia, an initiative by the government to nurture skills enhancement while encouraging lifelong learning. By increasing the competitiveness of Malaysians, it enlarges the possibility of a faster recovery from the recession.

However, despite these available opportunities, we must also consider the effective implementation of digital solutions for rural SMEs. While PeDAS is a valuable stepping stone, but more needs to be done to ensure the sustenance of digitized businesses within rural areas. Policies have to be revamped from the ground up to ensure that rural businesses are able to survive throughout the COVID-19 and in the long run.

Businesses in both urban and rural areas have experienced turmoil during the COVID-19 outbreak. Albeit facing a different set of problems, these businesses work towards the goal of surviving throughout the pandemic. Thus, it is important for them to utilize relevant resources available to achieve that goal.

Sources: Channelnewsasia; Digitalnewsasia; Youtube; Bfm; Upskillmalaysia; Voanews