11th January 2021 - 4 min read
Several associations have stepped forward to warn that the reimplementation of a total movement control order (MCO) will lead to a potential breakdown in the Malaysian economy.
The chief executive officer of EU-Malaysia Chamber of Commerce and Industry (EUROCHAM), Sven Schneider said that while the organisation supports the government’s decision to combat Covid-19 by using proven strategies, it was not in favour of a full lockdown. According to him, a restrictive MCO will not benefit Malaysia’s recovering economy, with most businesses still restructuring and recuperating from the impact of the first lockdown.
“Among the many challenges most businesses faced during the full lockdown were substantial revenue and financial losses, logistics challenges and supply chain interruptions as well as retrenchments, to name a few,” said Schneider. He further said that despite these losses, many businesses have abided by the standard operating procedures (SOP) set by the government, with some even adopting stricter internal measures.
Instead of resorting to a full lockdown, Schneider said that a targeted conditional MCO – with stricter SOPs for travel and social activities – would be more appropriate. This, then, will allow businesses to continue rebuilding and stimulating the economy again.
The Federation of Malaysian Manufacturers (FMM) also shared a similar sentiment, with its president Tan Sri Soh Thian Lai opining that business and economic activities must be allowed to continue, but with stricter SOPs. “We support a targeted conditional movement control order (CMCO) which is more localised coupled with stricter SOPs and travel restrictions but not a total lockdown similar to that implemented in March/April 2020,” said Soh.
Like Schneider, Soh also emphasised that many businesses are still reeling from the impact of the first lockdown, with most having yet to recover to pre-Covid-19 levels. “Should a second total lockdown be instituted, there is grave fear over the collapse of the business sector and economy, given that several major states serve as the country’s economic hubs,” said Soh, adding that a lockdown lasting for four weeks and more will reduce business sustainability by about one to three months.
Soh also raised questions about the government’s ability to continue providing financial aid to businesses, particularly wage subsidies and loan moratoriums, if a second total lockdown was implemented. This is especially the case with most of these key aids nearing the end of their provision period.
Meanwhile, the SME Association of Malaysia, vice president Chin Chee Seong said that another round of MCO will “kill more businesses which are currently just grappling with staying afloat.” This, in turn, may once again cause an increase in the unemployment rate of the country.
“Although we appreciate the need to strike that delicate balance between saving lives and saving livelihoods, a second round of total lockdown would be disastrous for SMEs, which would then be forced to lay off employees,” said Chin, who is also the national president of Malaysia Cross Border E-Commerce Association.
Chin further urged for a more efficient processing of applications for grants and incentives for local SMEs. While there are various forms of financial assistance from the government – such as the SME Digitalisation Grant and PENJANA Smart Automation Grant – the application process posed some challenges. “Many applicants have experienced long processing times, taking months in some cases, before their applications were matched and approved,” he said.
Chin also suggested for more entrepreneurship and digital training programmes to be introduced, especially for the Malaysian youth community. Additionally, businesses should be encouraged to hire more fresh graduates with the provision of more employee-centric incentives and financial packages.
“The SME Association hopes that with all the necessary financial initiatives in place and acceleration in the handling and processing of applications by the relevant government agencies, the economy would begin showing signs of recovery by the second quarter of 2021,” said Chin.
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