SINCE the imposition of the Movement Control Order (MCO) in the middle of last month to contain the spread of Covid-19 in the country, the government had allowed eleven essential services sectors to operate as usual.
However, other sectors including construction and several other businesses have been asked to halt their operations during the implementation of the first and second phase of the MCO.
For the third phase of the MCO which began five days ago, the government via the International Trade and Industry Ministry (MITI) had approved other sectors namely construction, electrical and engineering as well as industrial work and machinery to return to business.
According to statistics released by the ministry, with the additional three sectors given the greenlight to operate during the MCO Phase 3: an estimated two million jobs are up and running which would bolster the local economy.
EQUITY PERSPECTIVE
The local equity market began to show signs of bearishness since the middle of January when Covid-19 started to ravage the city of Wuhan in China, causing major disruption to the global supply chain.
When China began to show early signs of recovery in February, other countries including Italy and Malaysia are still grappling with the virus which has caused a downturn in their economy,
With an expected contraction in the global economy this year, construction remains one of the potential sectors which could provide a lifeline to the local economy with the expected hike in government spending.
The expected increase in government spending will spur the construction sector, undoubtedly one of the major beneficiaries of the move.
The sector, which is well known for its multiplier effect, could create more jobs for locals, thus, pushing the people’s purchasing power higher.
From the equity perspective, since the MCO was implemented; the index point dropped to 127.78 as investors are unsure of the market direction as well as the uncertainty surrounding the resumption of business.
As MITI announced the much-awaited decision to allow construction sector resume its business allowing workers back to work, the index shares went up to close at 160.79, recording 46 gainers and eight losers with 614.74 million shares traded worth RM166.78 mil at Friday’s close.
Research notes, meanwhile, are optimistic on the outlook of the sector with stocks such as Serba Dinamik, Sunway Construction and Crest Builder are categorised as “buy” and “outperform” with its long term outlook.
Among the ongoing multi-billion ringgit construction project in the country includes Bandar Malaysia, the MRT Sungai Buloh-Serdang-Putrajaya as well as hundreds of property developments nationwide.
With the resumption of the sector under MCO 3, constructions sites of these projects would be buzzing again with activities, along with the economy which had been hit hard by the virus, when 1.3 million people involved with the construction sector out of work.
According to a recent survey carried out by the Department of Statistics Malaysia, 11.8% of workers involved in the construction sector lost their job while another 9.8% had no choice but to take leave without salary.
Majority of them are in the B40 group, including those who earn daily wages, many of them foreign workers.
However, the pertinent questions behind the government’s decision to gradually open several sectors for business during this period of MCO remained, how safe is it?
Will this decision expose people to a higher risk of infection?
FOREIGN LABOUR
MITI in a statement said companies listed under sectors allowed to operate must follow the standard operating procedure that has been set by the Ministry of Health.
“The operations approval also depends on the level of compliance on the conditions set by the ministry of health as well as other enforcement agencies. This is in line with the promises that had been agreed upon by companies when they made their application to continue its operations during MCO,” it said.
Its minister Datuk Seri Mohamed Azmin Ali had issued a stern warning to companies disobeying the SOP, their approval will be rescinded.
While MITI and the companies involved are optimistic on resuming business, Malaysians nevertheless, are generally concerned with the government’s latest decision, especially on its long-term impact on the overall COVID-19 situation in the country and the possible emergence of new clusters involving construction workers.
This is because, the construction sector employed many foreign workers including a fair amount who are undocumented, hence, making efforts by the authorities to trace, isolate and treat those who got infected with COVID-19 a more arduous and difficult task.
In 2019, it was estimated there were about six million foreign workers in Malaysia or 18.6% of the country’s 32.6 million population.
About 2.27 million of the foreign workers are legally employed in Malaysia while the rest are illegals.
HEALTH PRECAUTIONARY STEPS MUST BE TAKEN
He added that the ministry has been working closely with non-government organizations, such as Mercy Malaysia and the United Nations High Commissioner for Refugees (UNHCR) to ensure foreign workers and refugees are protected under the Covid-19 preventive and control measures undertaken by the government.
As the threat of recession draws nearer, the local economy must continue with the carefully-planned initiatives to ensure the country can weather this “storm” and emerge stronger as ever.
For the economy to succeed in overcoming the challenges, it needs to doggedly battle Covid-19 and any impacts associated with the virus, while at the same time waiting patiently for the world to find a vaccine, which by some account could be a year away. – April 19, 2020, Bernama
