PETALING JAYA: Another round of restrictions on economic activities will be devastating to the country.
The number of small and medium size businesses that will go under could double from current figures, estimated at 20%. In addition, the unemployment rate could breach the 5% mark, thereby raising the fiscal deficit closer to 10%, according to economists.
But the good news is that businesses are taking the necessary steps by observing all standard operating procedures (SOP) to prevent a second wave of the Covid-19 pandemic (see story on Page 3).
Economists said that imposing another movement control order (MCO) could also lead to a longer-term economic impact that would take the country years to recover from.
As such, they said it is extremely vital that enforcement continues aggressively to ensure compliance with all SOP.
Sunway University Business School professor of Economics Dr Yeah Kim Leng said while he expects a second MCO (if the situation warrants it) would be less severe, it would still be damaging for the economy considering current circumstances.
“Our economy has already incurred severe setbacks because of the first MCO. Another round will only inflict further damage,” he told theSun yesterday.
“More SME (small and medium enterprises) will close down, and while this can be averted through government aid, it will be at a fiscal cost. This is because another round of stimulus packages will have to be rolled out.
“This will increase our budgetary cost, and of course, we will have to bear with the damage for a longer period, and hence a slower recovery,” he added.
Countries such as China and South Korea, which had earlier seen the number of new cases dwindle to very low numbers, are now geared up for another wave of infections. The number of new cases have risen to double digits in both countries.
Health director-general Datuk Seri Dr Noor Hisham Abdullah had on several occasions said the progress the country has made in the Covid-19 battle was largely down to the initial implementation of the MCO in March, just as the number of cases was beginning to spike.
Under the current SOP, that was introduced following the easing of restrictions, should there be a new cluster or spike in the number of cases at a certain location, an enhanced MCO will be imposed only in that specific area, rather than nationwide.
Yeah said based on current developments in the country, the present SOP was sufficient, provided that the Health Ministry acts quickly to respond to new cases.
“If we can contain the spread, then we can avoid a nationwide MCO. Most importantly, Malaysians cannot be complacent, be they frontliners, businesses or consumers. It is very critical there is no resurgence in cases,” he said.
Universiti Tun Abdul Razak economist Prof Dr Barjoyai Bardai said it was incumbent on the Health Ministry to prepare for a possible second wave, and put all necessary measures in place immediately.
“By doing this, (with everyone) observing the SOP, I think even if there is a second wave, the infection rate won’t be as serious,” he said.
Barjoyai expressed hope that such measures would ensure that the situation in the country will not reach a point that requires another MCO, noting the extent its impact could have on the economy.
“If we implement another two-month MCO, I would say another 20% of SME will go under and it will force the government to come up with more stimulus packages.”
“Can the government afford it? Not another RM300 billion,” he said, referring to the various stimulus packages and economic revival plan introduced by the government so far.
Read this story on our iPaper: Second Covid wave must not happen or economy will be critically hurt if another MCO imposed: Experts