DEWAN Bandaraya Kuala Lumpur’s (DBKL) new licensing requirement for product advertising is causing much concern among shopping mall operators and business owners in the capital.

“The DBKL administration has decided that all product advertisements in the city of Kuala Lumpur with the intention of promoting a business activity must have a product advertising licence,” said the notice sighted by The Edge.

It is not clear if the rule, which came into effect in August, applies to all signages, say industry sources. Would businesses have to obtain a licence for every promotional poster? “By [that] definition, advertisements may cover the posters we put up in our premises … what we put on the wall or behind the counter changes very frequently, sometimes on a weekly basis. So how will the licensing work?” laments an industry source who received the notice from DBKL.

It is learnt that a number of shopping mall operators have received the notice, which City Hall says is meant to “ensure that no advertisements are illegally displayed”.

Business owners contacted by The Edge say this new requirement is on top of the permit they have to obtain for their signboard.

The new licensing requirement falls under the Advertisements (Federal Territory) By-laws 1982. A source says although the business community knows about the by-law, the requirement has not been vigorously enforced.

It is understood that a number of industry associations have come together to seek a dialogue with DBKL to obtain clarification.

In a brief phone conversation, a senior DBKL officer confirmed to The Edge that the notice was not sparked by any recent amendments to the by-law. “The regulation has been in existence — there is no new law whatsoever. We are concentrating on those advertisements along walkways, on glass walls and below escalators, for example. This will be (fully) enforced from January. We are looking at those (advertisements) inside shopping malls but not inside the premises [shops].”

Would notices visible from common walkways and corridors require a licence? The officer said further queries are to be directed to Oracle Synergy Sdn Bhd, which manages the licensing process for DBKL.

Oracle Synergy is a one-stop conduit for businesses applying for premise, signboard and composite licences. It is jointly owned by Hamyzar Toha and Abu Bakar Yusop, according to filings with Companies Commission of Malaysia (CCM). For the financial year ended Dec 31, 2015, Oracle Synergy made RM3.86 million in net profit on revenue of RM8.77 million, CCM data shows.

The contact person named in the DBKL notice had yet to respond to queries by The Edge at press time. An Oracle Synergy staff acknowledged the upcoming enforcement of the licensing requirement for product advertisements, but said questions on the fee structure should be directed to DBKL.

At press time, DBKL’s media unit had yet to respond to queries via email and phone.

Separately, an official from DBKL’s licensing department says City Hall has received applications for product advertising licences and some of them have been approved. The licence has to be renewed yearly. While the licence may cover multiple pieces of advertisements, a fee of RM120 a square metre is applicable for each piece. In other words, the application needs to specify the size of each piece of advertisement.

How does this impact businesses? When contacted by The Edge, a major retail player said it was unaware of the latest announcement but opined that the cost would not be crippling to the retail chain.

“[The impact] depends on how big the particular business is and how much it advertises,” a source says.

In any case, the added licensing requirement is yet another blow for retailers, which are faced with slower consumer spending and rising business costs.

For DBKL, the potential revenue is small relative to its annual budget. In mid-November, it presented a RM2.87 billion budget for 2017, with 60% earmarked for operating expenditure and the rest for development purposes.

Still, any additional revenue is useful.

According to the Public Accounts Committee (PAC), DBKL collected RM52.09 million from the licensing of advertisements and business signboards from 2010 to May 2013.

However, as at December 2012, DBKL’s uncollected fees for premise signage advertisement and billboard licences amounted to RM128.14 million and RM10.21 million respectively, the PAC said in a Nov 2, 2016 statement.

The PAC was set up after the Auditor-General reported that the licensing process was inadequately managed. The issues identified by the PAC range from the difficult application process, errors and bugs in the information management system as well as lax enforcement.

In its statement, the PAC urged for improvements to be made across the tender process for the licensing management system and operators as well as more stringent enforcement of advertising rules in areas within DBKL’s jurisdiction.

It is not clear whether DBKL’s recent licensing notice is related to the PAC report and recommendations. What is certain is that there is a need for greater clarity so that businesses and City Hall are on the same page.

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