By Doreen Leong
MANY businesses were relieved when the government allowed them to start operating on May 4 under the relaxed conditional movement control order (CMCO) as long as they adhere to certain standard operating procedures.
The bad news is certain businesses are still a no-no. Essentially, these prohibited businesses are those involving large gatherings and physical contact where social distancing is difficult to control. These businesses include those in the entertainment sector such as theme parks, cinemas, karaoke centres, reflexology centres and more.
They will have to wait until June 9 under the extended CMCO before they are allowed to resume operations.
While the number forecast operators (NFOs) are conspicuously missing from the National Security Council’s list of the 23 categories of prohibited activities and businesses during the period, they have yet to open their doors to punters.
But the directive to remain shut came from the Ministry of Finance (MoF). According to news reports, all NFOs, namely Berjaya Sports Toto Bhd, Magnum Bhd and Pan Malaysian Pools Sdn Bhd (Da Ma Cai), have been directed to keep their operations closed until further notice.
For instance, according to The Sun Daily, Sports Toto Malaysia Sdn Bhd will remain closed throughout the CMCO.
Operations have ceased, in line with a directive from the MoF ordering NFOs to remain closed until further notice.
A notice on Magnum’s website states: “The government has extended CMCO, and all forecast operators will remain closed until further notice.”
But why so? They are not theme parks or cinemas which bring in the crowd. Basically, NFOs operate out of shop lots just like your sundry shops or “kopitiams”.
For the uninitiated, patrons normally have certain numbers in mind to bet on and they walk into the shops, write them on a piece of paper and pass it to the person manning the counters, just like what you see in banks.
The operators could easily set proper guidelines including temperature scanning and sanitising before one enters and limit the number of patrons at any given time. It takes less than five minutes (depending on how many numbers you want to purchase) to complete your transaction. This is faster than making your grocery purchases.
It remains puzzling that the government had said no to NFOs operating during the CMCO period. As it is, the government stands to lose millions in terms of tax with NFOs not operating.
Analysts have estimated that NFOs’ earnings will fall by 12% to 13% during the closure for 42 days. Now that this period has continued to almost three months, the earnings could only drop further.
The only blessing in disguise for these operators is that they can save in terms of operating expenses which account for more than 85% of their total costs. These costs are variable in nature which mainly consist of prize payout, betting duty and agency fees.
In terms of tax, the government could potentially lose close to RM100 mil in just the three months of closure. For instance, Berjaya Sports Toto, which generates about RM1.5 bil in a quarter, pays tax amounting to about RM43 mil while Magnum rakes in smaller revenue of RM660 mil in a quarter, paying some RM30 mil in taxes.
If we include figures from Pan Malaysian Pool, the taxes foregone by the government would have been close to RM100 mil.
For NFOs, they are already losing market share to illegal operators. According to analysts, although there are no official estimates of the market size for illegal NFOs, its market size remains large at an estimated twice the legalised NFO market despite stringent enforcement since the second half of 2018.
It is estimated that the government has lost more than RM2 bil in tax revenue due to illegal NFOs, and initiatives to push punters to switch to the legal NFOs could only improve the government’s fiscal position.
By no means am I advocating gambling. But there are people who find that placing a bet, no matter how small, gives them a sense of hope that it will be their lucky day and improve their livelihood. This is especially so when many people are losing their jobs or saw their pay being slashed.
At the end of the day, NFOs operate a business like any other and the government should act rationally to ensure there is a win-win situation for all parties.
This piece first appeared in Focus Malaysia. The views here do not necessarily reflect those of this portal.