Omicron reignites fear, but ‘No’ to mass lockdown

Impact will be on import and export activities because once there is a lockdown, transport charges will go up due to limited flights


INDUSTRY players and economic experts said “No” to large-scale lockdown amid heightened concern on the new Covid-19 variant, Omicron.

Economic activities’ restrictions due to the lockdown could derail all efforts that have been spent in the past months to bring economic recovery and business stability to the country.

Federation of Malaysian Manufacturers president Tan Sri Soh Thian Lai said there is renewed concern on the current situation as well as its potential threat to the effectiveness of the Covid-19 vaccines and impact on businesses.

“The industry would, however, support any need for targeted controls should there be any spike in infections due to the new variant. In the event there needs to be any targeted lockdowns instituted, then the industry would really need very clear guidelines and standard operating procedures (SOPs) on operations allowed to operate,” he told The Malaysian Reserve (TMR).

Omicron was first reported to the World Health Organisation by South Africa on Nov 24 and it has since been discovered in other countries outside Africa, including Belgium, Hong Kong, Britain, Germany, Italy and Israel.

According to Health DG Tan Sri Dr Noor Hisham Abdullah, Malaysia has yet to detect cases of the new variant.

Soh said nevertheless, robust Covid-19 SOPs and preventive measures have been put in place by companies, including the testing of workers based on risk assessment.

SME Association of Malaysia national VP Chin Chee Seong said it is still early to judge, but looking at restrictions taken by certain countries in response to the new variant, he said it obviously would affect Malaysia too.

The impact will be towards import and export activities because once there is a lockdown, the transport charges will go up due to the limited number of flights.

“The likelihood is the government will continue to provide support for SMEs (small and medium enterprises) through Budget 2022 as planned. A lot of allocation has been put there. Now, the government needs to find the money.

“To be frank, there are many grants and also subsidies from the government are very slow. Some of the SMEs don’t even get it even after two years.So, it is hard for the government to introduce another financial aid at the moment,” he told TMR.

Bank Islam Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the new variant will have a negative impact as the immediate impression would be another round of lockdown measures will make a comeback.

“If that happens, it will affect the recovery momentum. We have learned that vaccination is key to how we can curb the virus spread and its severity. And the government is prepared to launch the booster shot. In that sense, the country is in the know on how to respond accordingly.

“Lockdown will affect economic activities as what we saw in the second quarter of 2020 (2Q20), 4Q20 and 3Q21, whereby the GDP would experience another round of contraction,” he told TMR.

When asked what kind of government financial response and capability is needed, Mohd Afzanizam thinks it would be fairly the same where economic activities would need to be restricted in order to curb the spread.

“Embracing the new norms such as working from home and adhering to the SOPs are the way to go,” he said.

Apex Investment Services Bhd CEO Clement Chew said recently, the market has been gravitating towards reopening and Omicron is a jolt to investors’ confidence.

He said there is likely to be an overhang until markets are able to understand the implications of Omicron.

The markets want to find out the severity of the new variant in terms of hospitalisations and deaths, and also on how it responds to vaccines and treatments.

“Renewed curbs and lockdowns will force investors to review their assumptions for demand, growth and earnings. There is likely to be a downward adjustment in forecasts if lockdowns are re-imposed.”

“We already see some countries re-introducing restrictions on inbound travel. Unfortunately, the sentiment for sectors such as hospitality and airlines will be hit again,” he told TMR.

Chew said most governments have run wider fiscal deficits to provide stimulus for their respective pandemic-hit economies.

“Most governments will not favour re-imposing extensive lockdowns of their economies. Closing their borders to visitors may be a more likely scenario. It is a wait and see situation for now.

“If lockdowns are imposed, the government may be forced to extend cash aid and defer loan repayments again,” he said.