A tough call


In a Facebook post, Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz said the country’s economic growth and the fate of the vulnerable group should not be sacrificed in Malaysia’s efforts in combating Covid-19.

PETALING JAYA: The rising Covid-19 cases in Selangor are putting the government in a limbo as it may soon be forced to seek a balance between lives and livelihood.

A full-fledged movement control order (MCO) for the state that is being considered by the Health Ministry is bound to lead to economic stress and the aftermath cleanup will be another major hurdle.

As Malaysia’s most developed state, Selangor is the largest contributor to Malaysia’s gross domestic product (GDP) at around 24%.

MIDF Research economist Mazlina Abdul Rahman said the projected daily output loss to Malaysia’s economy due to a full-scale MCO would be around RM500mil to RM600mil.

This estimate was based on the assumption that the full-scale MCO in Selangor will be as strict as the first MCO in March last year where more than 50% of the economic sector was shut down and only selected essential economic sectors were allowed to operate.

“If another round of stricter MCO were to be implemented in Selangor, the adverse economic impact could be quite significant on Malaysia’s economy.

MIDF Research economist Mazlina Abdul Rahman (pic) said the projected daily output loss to Malaysia’s economy due to a full-scale MCO would be around RM500mil to RM600mil.MIDF Research economist Mazlina Abdul Rahman (pic) said the projected daily output loss to Malaysia’s economy due to a full-scale MCO would be around RM500mil to RM600mil.

“Weaker economic activities will potentially result in another round of rationalisation as companies, particularly for small and medium enterprises (SMEs) will struggle financially to maintain their business operations. This may disrupt the recovery process that we have seen so far, especially in the labour market, ” she told StarBiz.

Even if Selangor were to go into a full-scale lockdown, Mazlina said they believe the impact could be somehow lesser due to wider classification of essential sectors compared to the previous MCO and also the presence of stricter standard operating procedures (SOPs) now where businesses and consumers should have better clarity.

“To mitigate the impact, the government may then need to introduce another round of targeted stimulus packages which include wider coverage in wage subsidies, more grants for SMEs, loan moratorium and cash handouts, among others, ” Mazlina said.

In a Facebook post, Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz said the country’s economic growth and the fate of the vulnerable group should not be sacrificed in Malaysia’s efforts in combating Covid-19.

He said both the first MCO and MCO 2.0 were successful in containing the Covid-19 cases but it was the latter that achieved the target without affecting the economic growth.

“From the lessons learned from the first wave of Covid-19, no other country in the world fully shut down its economy in facing the second and third waves.

“Instead, they tightened their SOPs and limited social activities. This is also Malaysia’s approach, ” he said.

Zafrul stressed that Malaysia should not return to the first MCO approach with a total economic closure when the targeted approach of MCO 2.0 was also equally effective in reducing the spread without the negative impact on the economy and jobs.

It was estimated that if there was a total economic shutdown similar to March last year, the number of unemployed Malaysians would hit 1 million.

He added that this will also have an adverse impact towards the 2.8 million workers in the informal sector who are now in a vulnerable position.

The latest labour force statistics as of February showed that there are 777,500 unemployed persons.

“The MCO 2.0 approach and proactive measures by the Government has placed Malaysia on the path of economic recovery as seen by the smaller GDP contractions of 3.5% in January, 3.6% in February followed by a 6% growth in March.

“If a total economic closure is implemented such as MCO 1.0, it will derail the country from the economic recovery track and will affect the possibility for Malaysia to reach a growth of 6% to 7.5% this year as forecast by Bank Negara, the World Bank and the International Monetary Fund (IMF), ” he said.

As of 2019, the labour force in Selangor stood at 3.59 million people or 23% of Malaysia’s labour force.

The state also has the highest concentration of SMEs, about 20% of the total of close to 1 million SMEs in Malaysia.

Selangor has been topping Malaysia’s Covid-19 statistics with more than 1,000 new cases daily since May 5 and its numbers have been on the rise since Friday.

There were a total of 1,743 cases in the state yesterday, or 35.8% of the total of 4,865 new cases nationwide.

On Monday, Health Minister Datuk Seri Dr Adham Baba said if the MCO is unable to contain the spread, then a full MCO would be something that can be considered.

The Malaysian Employers Federation (MEF) supported the call for a stricter MCO but urged the authorities not to implement a full lockdown of the economy as such intervention would further stifle economic recovery.

Its president Datuk Dr Syed Hussain Syed Husman said while the impact of a blanket MCO would be devastating to businesses and the economy, it is understood that there is a dire need to curb the rising number of new daily Covid-19 infections.

“Any decisions towards this end must also take into consideration the interest of business and preservation of livelihoods.

“As responsible employers and citizens, we are doing our utmost to comply with the prescribed SOPs to curb the spread of Covid-19, ” he said in a statement yesterday.

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