By Ranjit Singh
THE Conditional Movement Control Order (CMCO) which came into effect on May 4 may result in the economic losses caused by the Covid-19 pandemic to be limited to two quarters, says Dr Yeah Kim Leng, professor at Sunway University.
Yeah, who is also deputy president of the Malaysian Economic Association (MEA), identified the quarters as the second and third, and told FocusM that CMCO would have a positive impact on the economy as businesses could operate and workers could earn their wages.
“The CMCO will ease the country’s economic losses and limit contraction to perhaps two quarters. Depending on the success in suppressing the virus spread and the pace of economic recovery in other parts of the world, growth is expected to normalise next year.
“Together with quick and effective implementation of the three stimulus packages, the early approval for almost all sectors and businesses to restart will limit the downturn but a resurgence of the virus infections remains a threat to the economic recovery,” said Yeah.
He added that the CMCO will ease the loss in production, productivity and income for businesses and workers across all sectors of the economy although certain industries such as travel, food and beverage, leisure and hospitality, and retail will face a sharp decline in demand due to changes in consumer behaviour.
Meanwhile, Socio Economic Research Centre (SERC) executive director Lee Heng Guie told FocusM that it was too early to assess the economic impact of the CMCO.
“For the first quarter GDP assessment, the MCO was only implemented for 13 days (March 18 to 31). Therefore we would not see the real impact of the MCO on the first quarter GDP which will be announced on May 15.
“I think the real impact would be felt in the second quarter of 2020. However, at this juncture, it is too early to fathom the impact of the CMCO on the economy as it has been only two days since it was implemented,” said Lee.
Bank Islam Bhd chief economist Dr Afzanizam Abdul Rashid said the CMCO would be positive for the economy as the move could rejuvenate the economy and prevent further job losses.
“The CMCO should be positive for the economy as businesses would gradually become operational. This would mean that they need workers and therefore, there would be income for the employees who previously could not come to work.
“However, we need to be mindful of the possible resurgence of new Covid-19 infection cases. As such, strict adherence to social distancing and personal hygiene is critical to ensure the economy to be fully operational in the future,” said Afzanizam.
On May 4, the government had eased the Movement Control Order (MCO), which was imposed on March 18. However, seven states – Kedah, Penang, Pahang, Negeri Sembilan, Sabah and Sarawak – said they will continue to restrict movement.
The MCO was imposed to limit movement amid the Covid-19 pandemic which has infected more than 6,000 people and claimed 107 lives thus far. Economic activities were severely curtailed which resulted in huge economic losses and retrenchments. The government had estimated that each day of the MCO caused losses of around RM2.4 bil.
Bank Negara Malaysia sees the gross domestic product (GDP) coming in between -2% and 0.5% for 2020. The question that remains is whether this projection could be revised with the early lifting of the MCO via the CMCO. – May 6, 2020
