The current rise of Covid-19 cases is sparking a debate on whether the MCO should be implemented again or not. Learn the impact of MCO reinforcement on our country.

Malaysia’s economy could be badly impacted if the Movement Control Order (MCO) is to be reinstated again, according to the Prime Minister, Tan Sri Muhyiddin Yassin, during a televised speech on July 20.

With new cases emerged and country’s daily Covid-19 infection have spiked to double-digits over the last few days with additional 13 new clusters throughout the Recovery Movement Control Order (RMCO) period which began on June 10, we are looking at the possibility of the MCO being enforced again to curb the spread of the virus.

“If there is a spike in new Covid-19 cases, this will prompt the government to reimplement the MCO, (which in turn will have a) massive impact on our economy. The closing of economic sectors can cause the country to lose at least RM2 billion per day and millions of workers to lose their income sources,” – Tan Sri Muhyiddin Yassin, Malaysia’s Prime Minister.

He also explained that all the government and non-governmental help under the Pelan Jana Ekonomi Negara (PENJANA) stimulus will go to waste if the MCO is reimposed because of the aim for the package to help boost country’s gross domestic product (GDP) by 3% this year.

As of yesterday (28 July), the latest number of Covid-19 new infections in the country is 39 cases, making the total active cases reached 212 cases. 

Impact to the economy and business

Academy of Science Malaysia fellow, Madeline Berma said that this matter could lead the government borrowing money to help stimulate the economy.

She added that small and medium enterprises (SME) will be most affected if the country has a second Covid-19 wave, followed by reinforcement of the MCO. SMEs will close and the unemployment rate would increase along with the poverty rate and also GDP ratio, to further widen inequality in the country.

“Therefore, we cannot afford to have a second wave of the Covid-19 as not only would it cost the country to lose billions of ringgit a day but would also push the economy to fall further into the domino effect, and risking people to lose jobs as well or taking pay cuts,” – Madeline Berma, Academy of Science Malaysia fellow

She also cited data that stated 42.5% of companies need more than six months to bounce back after previous the MCO. 

One of her concerns is if a lockdown is imposed, we might encounter a “new poor” group which comprises of self-employed poor (including small enterprise operators), labouring poor, and vulnerable poor .

“In addition, the loan moratorium that is ending in September this year would add more weight of burden and challenges for many companies as they may run out of cash liquidity, requiring them to borrow more or need other stimulus packages to sustain,” she added.

Mental health decline

Universiti Utara Malaysia’s School of Economics, Finance, and Banking dean, Prof Russayani Ismail, said the effect of reinforcing the MCO could bring a bad impact on the mental health of our society.

People could experience a sense of loss after staying at home for a long time and anxiety would set in.

“It is important therefore for the people to abide by the standard operating procedures (SOPs) and take all the preventive measures,” she said.

Overall

As for the rakyat, the advice to have six months and more of emergency savings is still relevant to survive the impact of the Covid-19 pandemic. With the PENJANA stimulus package, the current situation is under control, but to survive the next coming years may prove to be harder if we aren’t prepared enough to brace for impact.

 

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