CMCO extension to dampen economic recovery

Retail and tourism sectors remain the most affected as people are required to stay indoors


THE extension of the Conditional Movement Control Order (MCO) may see slower economic recovery in Malaysia with retail and tourism sectors remain the most affected as people are required to stay indoors.

UniKL Business School Assoc Prof Dr Aimi Zulhazmi Abdul Rashid said the hotel industry will continue to experience low occupancy rates due to the interstate travel restriction.

“Overall tourism industry in Sabah may be almost paralysed as it is one of the biggest contributors to the GDP of the state. Extension will certainly put Sabah in paralysis condition,” he told The Malaysian Reserve (TMR) yesterday.

Food stalls, especially in rural areas, are also affected as people may opt to eat at home or rely on delivery services.

“Some are still behind on the digital bandwagon, especially those in the rural areas and managed by older folks,” he explained.

In general, small and medium enterprises (SMEs) that already shifted online will now expedite their digital adoption to get new customers and leverage other applications like digital data storage.

Due to limited movement, Aimi Zulhazmi also said petrol stations are starting to feel the economic impact as fewer people are filling up their cars, as well as declining pump prices as crude oil price falters globally.

“The training sector, which slightly recovered prior to the current CMCO with allowable face-to-face training subject to standard operating procedures, has now stalled, especially the programme Penjana (shortterm Economic Recovery Plan) launched by the government through various agencies.

“The implementation will be difficult considering the minimal movements allowed.”

Another expert Assoc Prof Dr Baharom Abdul Hamid said the economic damage is quite widespread now.

“Now its impact is more widespread, from the services sector, not to forget education, especially private education, all the way from pre-school to varsity, are unsure how long they can sustain,” he told TMR.

This is unlike in the earlier MCO stage where only several sectors were affected such as logistics, public transportation, nano and micro entrepreneurs, especially in the food and beverage sector.

Meanwhile, the Malaysian Institute of Economic Research (MIER) stated any additional MCO may turn a V-shaped recovery trajectory to a U-shaped one.

It may also amplify the contraction of the real GDP between -3% and -4% relative to the 2020 baseline.

“In the absence of any further stimulus by the government, which is now focusing on Budget 2021, we expect an adjustment downwards of our economic forecast for 2020 from what was projected last April.

“MIER (is) revising down (its) real GDP projection in the worst case scenario for this year downwards to -5.5%,” it said in its third-quarter update of the National Economic Outlook 2020-2021 Report yesterday.

MIER said unemployment is expected to remain stable at around 3.7% to 4.5% from the impact of the Prihatin and Penjana stimulus packages, should the moratorium remain in place till year-end to support SMEs including the larger ones in terms of employment.