The so-called essential services will remain resilient, while other industries continue to downsize
by RAHIMI YUNUS/ pic by BERNAMA
THE healthcare, food and beverage (F&B), agriculture and technology sectors are better placed to weather the storm brought on by the Covid-19 pandemic, while other industries continue to downsize operations.
SME (small and medium enterprise) Association of Malaysia president Datuk Michael Kang said the said sectors, which are considered as essential services, will remain resilient in the current challenging time due to sustained demand and despite the Recovery Movement Control Order (RMCO).
“In any situation, I think essential services including healthcare, F&B and agriculture are the best businesses as people still need them. The new norms, meanwhile, have pushed digitalisation and are driving future trends,” Kang told The Malaysian Reserve (TMR).
Kang said many companies in these sectors are still hiring amid the difficult situation, bucking the trend of major retrenchment generally seen in the economy. As the country continue reopening, he expects these sectors will pick up fast, driven by higher demand and technology adoption.
Malaysia has some 907,000 SMEs, providing close to six million jobs to over 65% of the country’s workforce. Kang said close to 89% out of the total SMEs are in the services sector such as retail, tourism and logistics, and about 45,000 are in the manufacturing sector.
The MCO, which started in mid-March, has severely affected airlines the most, as well as tourism and retail industries, as people were forced to stay home and all non-essential activities shut down.
Kang said affected companies have been struggling with tight cashflows due to low sales generated during the MCO.
Companies in essential sectors, such as glove makers and e-commerce, have been less susceptible to the Covid-19 impact and have, in fact, seen a market boom due to the outbreak.
The Department of Statistics Malaysia reported on Tuesday that the unemployment rate rose to 5.3% in May, the highest since 1990, with the number of jobless persons rising to 826,100.
The agency noted the labour force increased marginally by 1,800 to 15.71 million people in May, while employed persons fell 0.3% month-on-month to 14.89 million.
Putra Business School Assoc Prof Dr Ahmed Razman Abdul Latiff said sectors dealing with medical personal protective equipment, health-related equipment and mental health can better withstand the pandemic’s economic impact due to the stronger demand amid greater health precautionary measures imposed by the government and heightened awareness among the population.
He expects the technology sector to prevail amid the pandemic, particularly for tech services and products that enable the “new normal”.
“Technology services such as remote viewing and communication services/products, mobile phones and personal computers are set to gain as many educational institutions and corporations are preparing some form of transition to the new norm of online interaction between teachers and students and working from home,” Ahmed Razman told TMR.