Impact of Covid-19 on manufacturers

  • Economy
  • Monday, 27 Apr 2020

MANUFACTURING is a key sector for Malaysia. It drives a lot of our trade receipts and also helps to boost GDP and employment.

Every year, Malaysia is a destination for foreign direct investments in the manufacturing space. It comes in all sorts of industries and the range has diversified over the years that Malaysia is a large exporter of solar panels to go along with the traditional electrical and electronics products it finds its way in products sold throughout the world.

The movement control order (MCO) is having an impact on manufacturers as not all are classified as essential. Data reveals that investments implemented worth RM62.5bil that employs over 112,000 jobs are now severely affected by the MCO.

The uncertainty over the immediate health and future of manufacturing is a source of concern. The sector accounts for 22.3% of the country’s RM1.4 trillion GDP and losses from just the first 14 days of the MCO is estimated to be RM12.9bil. The overall length of the MCO is now going to be two months and the loss from just manufacturing is going to be far larger than initial estimates.

The loss of production and exports accounted from just the manufacturing sector for the first 14 days of the MCO is forecast at RM64.6bil and RM32bil respectively.

Therefore, the consensus to restart the manufacturing sector, along with other segments of the economy, is now picking up speed.

Losses by companies cannot be sustained for too long and there will be a tipping point when that will translate to employment.

As it is, the warning about job losses are mounting and that is something the government is trying hard to avoid. It is inevitable that people will lose their jobs but coupled with paycuts that are increasingly rampant, the resuscitating of the economy will be more harder than earlier estimated should the MCO period be prolonged. But these are times of a health emergency but the juggling between the welfare and health of the people is a delicate job for the politicians to make.

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