WITH Singapore staring at its deepest ever recession, Malaysia will face correlating setbacks due to our entwined economies.
The city state downgraded its 2020 gross domestic product forecast for the third time yesterday to a contraction range of -7% to -4% from a prior estimate of -1% to -4%.
As the Covid-19 pandemic continues to force businesses to be closed or run at half pace, Southeast Asian economies are bracing for an economic fallout that could match, or may be even worse, than the 1997-98 Asian financial crisis.
The International Monetary Fund, World Bank and the Asian Development Bank have already forecast sharp declines in regional growth in Asian countries.
An immediate issue at hand is the likely huge loss of jobs among Malaysian workers in Singapore. Most take on semi-skilled jobs in the service, transport, building and manufacturing sectors but there are also a sizeable number of Malaysian professionals employed across the Causeway.
It has been pointed out that Singapore will only issue work permits to Malaysian workers whose services are deemed essential. As the number of Malaysians in such services is unavailable, it unknown how many will get to continue working there.
Close coordination by the two governments is needed to address the plight of these Malaysian workers based in Singapore. Ministerial intervention and inter-governmental dialogue could help mitigate the job losses by Malaysians.
On a larger scale, Malaysia and Singapore are an integral part of the regional and global production chain that has been disrupted by the pandemic.
Both will do well to work together and speedily restore the compromised chain. While each country will introduce domestic solutions to counter the downturn, their mitigation measures should not come at each other’s expense.
Up until now, we have not heard from our government on the extent of the scale of damage to our economy due to this economic disruption. Far more pressing will be the measures needed to address it.
With most exports to Singapore set to be reduced, Malaysian firms will do well to seek markets that are less impacted by the pandemic. The government can also help them sustain themselves by spurring domestic consumption.
