Border reopening offers hope for Malaysia’s sectoral recovery

Covid-19 requires a different response and new ways of doing business such as digitalisation of marketing and sales 


MALAYSIA has been in Covid-19 lockdowns for two years, shutting out movements into and out of the country. 

According to Malaysia’s Institute of Strategic and International Studies analyst Calvin Cheng, the country’s economy suffered the most during the first Movement Control Order (MCO) implementation — when it fell to -17.2% in the second quarter of 2020 (2Q22) and affected Malaysia’s total GDP to shrink by 5.6% in 2020, compared to 4.4% in 2019. 

The easing of Covid-19 restriction naturally brought about the nation’s economic recovery. The recovery process is further enhanced with the international borders reopening as announced by former Prime Minister Datuk Seri Ismail Sabri Yaakob on April 1, 2022, hence enabling the country to transition to the endemic phase. 

The Malaysian Reserve (TMR) spoke to several industry players to get an update on sectoral progress since borders reopened. 

For the transportation sector, Pan Malaysian Bus Operators Association (PMBOA) president Datuk Mohamad Ashfar Ali said since borders reopening, ticket sales are only 70% of the pre-Covid level. 

“Border reopening has benefitted PMBOA members who operate cross-border buses. However, ticket sales are only 70% of a pre-Covid level, (but) I believe 70% passenger load is better than no passenger load,” he told TMR. 

Additionally, he also mentioned to TMR that he had sent a letter to newly appointed Transport Minister Anthony Loke on several suggestions to assist bus operators including addressing several unresolved issues such as the conversion of the Interim Stage Bus Support Fund scheme to the Stage Bus Service Transformation Programme Scheme for all buses and the imposition of excessive terminal fees on bus operators by terminal operators; repealing the second driver requirement and addressing the transportation industry’s critical driver shortage. 

On repealing the requirement for a second driver at the beginning of the journey, he stated that this requirement should be cancelled and replaced by having the second driver be available only at an agreed point along the journey after 300km or four hours, whichever comes first. 

Meanwhile, to address the industry’s critical driver shortage, he suggested that the Transport Ministry or the Human Resources Ministry establish a scheme to provide free training through driving schools to those interested in becoming bus or lorry drivers. 

He believes that this initiative will reduce the current shortage of drivers and be able to meet the needs of the entire transport industry, in line with the government’s policy of making Malaysia a logistics hub for e-commerce. 

“At the same time, it also gives the transport industry more options of selecting better quality drivers and weeding out bad drivers as an effort to reduce road accidents in the long run with more drivers. 

“Additionally, school leavers or unemployed get the opportunity to learn to drive to earn a living,” Mohamad Ashfar said. 

On the tourism end, Buddy Backpackers co-founder Nazrin Ismail said the border reopening on April 1, 2022, aided his company’s recovery after two years of significant losses. 

“When the border reopens, there is a glimmer of hope that the economy will recover and make a strong comeback. It allows us to conduct trips and revive our business, as well as allows us to expand even further. We used to focus only on Asean countries, but we have now expanded our travel destinations to Europe such as Switzerland and Italy. 

“We believe that the border reopening means that people will be able to travel normally again, to visit places they have wanted to visit after being stuck in the same place for two years. We sincerely hope that everything will be fine and that things will return to normalcy as soon as possible,” he added.

He also hopes that the new government will assist entrepreneurs in the tourism industry in reviving their businesses.

“We are aware that many agencies have closed permanently due to financial constraints. We hope that the new government will provide some financial assistance like grants and zero-interest loans for business recovery,” he said. 

Furthermore, he added that to entice foreign visitors into Malaysia, the government should improve local facilities and provide special benefits for tourists such as providing unlimited passes and discounts, as Japan has done, as well as protecting the local environment. 

As for the property sector, Real Estate and Housing Developers’ Association Malaysia (Rehda) president NK Tong said Covid-19 certainly created many challenges for the housing industry as it did for all sectors, requiring a different response and new ways of doing business. 

“One of the obvious outcomes was a big push into the digitalisation of marketing and sales, which continues till this day. During the multiple MCOs, showrooms were closed, so marketing and sales had to be conducted online through social media platforms. 

“In addition, the effects of disruptions in the supply chain during the pandemic can still be felt today. Over the last 21⁄2 years, construction costs have risen significantly, driven by general inflation and increases in commodities and energy prices that impact construction materials. This has been further exacerbated by the disruption of the supply of construction workers, which continues to be a major problem in the housing industry. 

“Developers have responded by looking at cost optimisation strategies and the need to build in more buffers to the construction schedule. However, the reality is that such actions can only have a very limited impact and the prices of new homes can only continue to escalate higher if the bottlenecks of rising construction costs and the lack of construction workers are not addressed immediately,” he explained. 

Previously, the National Property Information Centre (Napic) stated in its semi-annual report that the overhang situation in Malaysia improved during the first half of 2022, dropping 7.5% to 34,092 units. 

According to Napic’s data, Johor had the largest overhang in Malaysia with 15,423 units, followed by Kuala Lumpur (4,279 units) and Selangor (2,248 units). 

Developers have responded by looking at cost optimisation strategies

On how the border reopening benefitted the sector, he stated that it has generally created positive economic sentiments including in the property industry. 

“Industry’s confidence is restored as most sectors saw improved business volumes, which also led to an increase in confidence of the general public. This ‘feel good factor’ certainly helps in giving those who have been waiting on the sidelines a greater desire to commit to buying their dream home in the near future. 

“However, growth and recovery are slow given the aforementioned issues. Rehda reiterates our commitment to finding solutions to these issues and is open to discussions and engagements with the government and other industry players to mitigate them. 

“Concurrently, we will continue to encourage our members to uphold our nation-building role of providing quality, affordable homes for the rakyat,” he told TMR. 

Meanwhile, Rehda’s VP, Datuk Ho Hon Sang said the border reopening presented Malaysia with a good opportunity to attract potential foreign homebuyers and ease the country’s foreign labour shortage issue. 

“Since the current foreign home-ownership level is low and there are no speculative activities, easing of criteria for foreign home buying would also benefit the industry. 

“Furthermore, foreign labour shortage issue should ease with the gradual arrival of foreign workers. Construction material costs have mostly cooled off from the peak but remain at elevated levels. Any measures from the government to ease the cost of doing business for developers would help reduce construction costs which would in turn contain house price inflation,” he further added. 

Ho had previously stated that the market is in an unprecedented period due to labour shortage issues and rising cost issues such as construction material cost, structure, sales and marketing, and company operating costs. 

As for automation and optimisation, Ho said there is a higher focus on it now compared to pre-Covid time. 

“Developers had to adapt very quickly during months of MCO and as a result, everyone is more receptive to a certain level of working offsite using technology,” he said to TMR. 

  • This article first appeared in The Malaysian Reserve weekly print edition