Should MCO be extended?

While healthcare professionals say more time is needed to break infection rate, economists and businesses looking to survive are hoping for some easing of the order


MALAYSIANS will find out today whether the government will prolong the Movement Control Order (MCO) to curb the spread of Covid-19 that has disrupted lives and businesses since March 18.

The prime minister is expected to announce the government’s decision later today, but opinions are split on whether the current second phase of the MCO, which is scheduled to end on April 14, should be extended.

While doctors and healthcare professionals say more time is needed to break the infection rate and are promoting an extension, economists and businesses looking to survive are hoping for some easing of the order.

The Academy of Medicine of Malaysia said the MCO should be extended beyond Hari Raya Aidilfitri, which will be celebrated mid-May, to include Hari Gawai and the Harvest Festival.

“The risk of spreading the virus, particularly to the elderly, in a ‘balik kampung’ exodus is very real.

“Risks associated with crowding at R&R (rest and recreation) stations during this exodus and the subsequent return to urban areas will also need to be taken into consideration,” it said in a statement.

For public health reasons, the ban on non-essential interstate travel must continue leading up to and beyond the Aidilfitri period, according to the academy.

Academy of Sciences Malaysia fellow Dr Madeline Berma said university students, many of whom have been kept in place on campuses since the MCO was enforced, should remain where they are until the emergency is over and exams should be conducted online.

Economic analyst Dr Aimi Zulhazmi Abdul Rashid said an extended MCO is necessary for Malaysia and some form of movement restrictions should be continued until the Ministry of Health is satisfied that the pandemic is under control.

He said China, where the coronavirus began, needed four months to get things under control and even with the lifting of curbs on movement, activities have not returned to pre-pandemic levels.

Aimi said the government should consider health safety to be the priority for the time being, at least while the benefits of the government’s Prihatin Rakyat economic stimulus package can help tide people over during the MCO period.

However, for businesses that are already reeling from lost revenues due to the MCO, any further restrictions could be catastrophic.

Malaysia Retail Chain Association (MRCA) VP Datuk Liew Bin said not only companies will be affected, but any extension of the order would be bad for the economy.

He said if the MCO is not lifted on April 14, the government should consider allowing sectors currently not listed as essential services to reopen under a new set of Standard Operating Procedures (SOPs) that will minimise the risk of infection.

“Supermarkets have started limiting the number of customers entering their premises to enforce social distancing, this can apply to restaurants too.

“I think the government at least can let some retail businesses resume their operations, especially for the green zone, definitely not (the) red zone,” he said.

Economists are warning that any prolonged MCO will bring the country into a recession, if it cannot cope with the increased risk of a global liquidity crunch even as domestic business sentiment grows weaker.

Cashflows for many businesses are already drying up and will need more fiscal injections from the government.

AmBank Group chief economist Anthony Dass said for now, there is a 40% probability that the country may go into recession with a -1.1% in growth.

“Even prior to the outbreak of the virus and fall in oil prices, the manufacturing sector was in recession, impacted by US-China trade tensions.

“Besides, overall business confidence was weak, affected by the slow implementation, lack of clarity on policies, policy consistency issues, poor engagement between the authorities and businesses, and domestic political noises,” Dass told The Malaysian Reserve.

Bank Negara Malaysia (BNM) said last week it expects GDP at between -2% and +0.5% in 2020, dragged by weak global demand, supply chain disruptions and Covid-19 containment measures both abroad and domestically. Loans also grew slower than the economy last year at 3.9%, against full-year GDP growth of 4.3%.

Now, impacted by Covid-19, weak commodity prices and domestic challenges, the economy is expected to fall into a technical recession in 2020, Dass said.

“Our GDP projection of +0.4% to -2% is based on the MCO lifting in April and is followed by selective relaxation going forward.

“And assuming if the lockdown turns much longer without any partial relaxation, we could expect the policymakers to likely provide more stimulus measures to support both consumers and businesses. That could probably lead to some compromise in terms of public debt target of 55% and/or greater focus on off balance sheet, a move to contain the downside risk.”

BNM said any increase in credit losses from the current loan levels will be well within the capacity of banks to absorb, without impairing credit flows to the economy.

Most businesses have earnings buffers of over four times their debt servicing obligations, its deputy governor Jessica Chew Cheng Lian added.