Zafrul: MCO 3.0 conditions less restrictive, economy will continue to grow

Finance Minister Datuk Seri Tengku Zafrul Tengku Abdul Aziz explaining about the economy during MCO.

PUTRAJAYA: Malaysia’s economy is expected to continue improving as conditions under the third movement control order are not as restrictive as those under the first MCO.

Having learnt from the first two movement control orders, Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz said keeping the economic sectors open under MCO 3.0 was important as it has been shown to be crucial in helping the vulnerable and mitigate the blow on incomes and employment.

“Lack of jobs and income during MCO 1.0 led to more hardship among the people.

‘It is crucial to keep the economy open to ride the global recovery, ” Zafrul said at a media conference here yesterday.

From its Covid-19 fund for 2021, the government has RM17bil left to spend on ongoing stimulus packages that have been announced. It has spent RM10bil from the allocation for 2021.

Zafrul said what has been earmarked to be spent on mitigating the impact of the pandemic was sufficient but should there be a need to open the fiscal tap, it would devise additional targeted assistance packages.

He also said the economy was on track to meet the projected official full year growth of between 6% and 7.5%.

The decision to keep the economic sectors open during MCO 3.0 would have a telling effect on reducing the impact on the vulnerable and affected segments of the population.

As the economic sectors continue to operate, it would also reduce the long-term impact on businesses.

Having gone through two MCOs, the impact from both are starkly different.

The stifling MCO 1.0 led to unemployment rising from 3.3% in February to 5.3% in May 2020, where 826,000 Malaysians were without a job.

With the economy on the mend and under MCO 2.0 when businesses were allowed to operate, unemployment has since gradually improved to 4.7% in March 2021.

Analysis on what unemployment could reach if the economic sectors were shut under MCO 3.0 revealed that the number of people without work would puncture the one million mark from the current 753,200.

Government data also showed that the social cost since MCO 1.0 has been high.

Some 2.8 million informal sector workers have lost their jobs and that RM78bil have been withdrawn from EPF accounts under the i-Sinar and i-Lestari programmes, leaving 2.6 million EPF members with less than RM1,000 in their Account 1.

Also, 53% of workers surveyed by the Department of Statistics revealed they were badly affected by the restrictions of MCO 1.0 and 68% of businesses said they did not have sales or income during the first MCO.

MCO 2.0 had a softer impact as Malaysia’s GDP in the first quarter of this year fell marginally by 0.5% compared with a contraction of 17.2% in the second quarter of 2020 when MCO 1.0 was underway.

All sectors of the economy showed growth in the first quarter this year, helped by real GDP bouncing upwards by 6% in March as the number of Covid-19 cases dropped.

On the sales tax exemption for cars that ends in June 30, Zafrul said the ministry was studying the data to decide whether to continue with it.

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