Even Though Malls May Operate, Economists Say Confusing Policies Make The Retail Sector Not Necessarily Rise Again

Central Park Mall Jakarta. (Photo: Unsplash)

JAKARTA - The government has again allowed malls or shopping centers in DKI Jakarta, Bandung, Surabaya and Semarang to operate after being closed for more than a month. However, visitor capacity is limited to only 25 percent. This is because the government is still implementing PPKM level 4.

The government seemed to hear the screams of mall managers asking for violations during land and level 4 weeks. Both mall managers and retailers admitted that their financial condition was bloody. Even the reserve funds are depleted so that there is a threat that 84 thousand employees are threatened with termination of employment or layoffs if the mall continues to close.

Can easing help the retail sector bounce back?

Center of Economic and Law Studies (Celios) economist Bhima Yudhistira said the easing did not necessarily help retailers rise from their slump. Moreover, according to him, the policy on PPKM this time is very confusing.

"Even though there is an easing of PPKM level 4, the regulations have not been able to encourage the recovery of the retail sector, especially malls. The extension of PPKM with loosening of malls is actually quite confusing for retail businesses," he told VOI, Tuesday, August 10.

For example, said Bhima, malls are allowed to open but with a capacity of 25 percent of visitors. Instead of opening their shop, according to him, business actors will choose to remain closed. Meanwhile, at this time, they are tightening their belts so they really take into account their expenses.

"Tenants prefer to close rather than force them to open but the turnover is low. For employee operational costs and renting a place, it can't be closed yet," he explained.

Not to mention, said Bhima, that there is a mandatory requirement for the COVID-19 vaccine to further limit the number of mall visitors. Meanwhile, based on data from the Ministry of Health as of Monday, August 9, the number of people who received the second dose of the COVID-19 vaccine was only 24,212,024 from the target of 208,256,720.

Furthermore, Bhima gave an example, for example in Jakarta, the progress of vaccination is already high above the national average. However, keep in mind that visitors are not only those who have a Jakarta ID card, many commuter employees or visitors outside Jakarta also go to malls and restaurants.

"The requirements for vaccination to enter the mall are considered burdensome for consumers. This means that it cannot be only in one area where the vaccination rate is high, then the condition must be vaccinated when going to the mall," he said.

Need help from the government

Seeing this condition, he sees that the government needs to provide rent assistance for small entrepreneurs in shopping centers. According to him, this assistance can ease the burden on business actors.

"The minimum rent assistance is 30-40 percent of the rental fee for one month until August. The government borne VAT rental assistance is not enough because most tenants pay annual contracts before the pandemic," he said.

Then, said Bhima, the government also needs to provide cash social assistance of at least Rp. 1 to Rp. 1.5 million per beneficiary family with the number of families receiving the aid increased to 15 to 25 million.

Then, said Bhima, the government also needs to provide support or support for MSMEs that switch to buying and selling online. According to him, the government can provide a free internet subsidy of 1GB per entrepreneur during peak hours from 8 am to 6 pm.

"Encourage the extension of loan restructuring for MSME business actors who have difficulty paying principal and interest installments. If necessary, write off or write-off for micro business loans, which are already very difficult to pay principal and interest on loans," he said.

Bhima said that without financial support from the government, many tenants still chose to close during this level 4 PPKM violation. As a result, mall managers stumble and threats of layoffs and policies for employees to be laid off cannot be avoided.