Image credit: Malay Mail
PETALING JAYA: The nationwide movement control order (MCO) will stretch an already fiscally strapped government and will badly affect businesses still reeling from more than a year of restrictions, two economists have predicted.
Geoffrey Williams of the Malaysia University of Science and Technology and Center for Market Education chief executive officer Carmelo Ferlito told FMT they believed many businesses would be greatly disappointed by yesterday’s announcement of the nationwide order.
The order is effective from tomorrow until June 7.
In making the announcement, Prime Minister Muhyiddin Yassin said: “With daily cases exceeding 4,000 and active cases at 37,396 as well as 1,700 deaths reported as at May 10, Malaysia is facing a third Covid-19 wave that could trigger a national crisis.”
In March, he promised that there would be no more “blanket” restrictions.
Williams said the announcement did not come as a surprise, but would be a “further kick in the teeth” for struggling businesses.
He noted that sectors like services, recreation and the arts contracted in the first quarter of the year as a result of the MCO imposed in January.
“The publication of the HIDE list and the closures of the malls and other cluster places are just keeping people away.
“Only 30% of managers being allowed in offices will be hard for many companies. This is going to affect businesses badly,” he said.
He said with many people and businesses burning through their reserves in order to survive and the government already claiming there was little fiscal space left to provide assistance, creative measures would be needed to keep Malaysians afloat.
“With no fiscal space, the government must now consider unconventional monetary policies, print some money and provide direct cash handouts or end the self-imposed fiscal limits and raise debt.”
Ferlito said the announcement capped off a “crazy” few weeks that businesses had to endure and would be “devastating” for hospitality industries.
“Policies have changed from day to day, and from minister to minister,” he said.
“Businesses are frustrated by this lack of consistency, and confusion is bad for business. This is on top of the sense of exhaustion felt by an economy forced to work on a stop-and-go strategy.”
Despite assurances that all economic sectors would be allowed to continue, he said, restrictions of any kind would adversely affect even the industries with fewer limitations.
“The economy, the market, is made up of supply and demand. You cannot hope for businesses to survive if you shut down demand and allow only the supply side to operate.”
Ferlito then gave the example of how a farmer, who is able to operate as usual, will feel the adverse effects too if downstream stakeholders like restaurants and supermarkets face restrictions.
Source: https://www.freemalaysiatoday.com/category/nation/2021/05/11/mco-3-0-will-ravage-struggling-businesses-say-economists/