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PETALING JAYA: Businesses in Selangor are preparing for the tough days ahead as the state is under a conditional motion control order (CMCO) as of today.
While the Malaysian Retail Chains Association (MRCA) laments an expected drop in sales, one economist argued that a “targeted closure” of only locations with a high infection rate would be preferable.
MRCA President Shirley Tay said the retail and service industries would be hit the hardest.
“Although companies can still operate, we expect to see a big drop in sales, especially in restaurants where dining options are restricted,” he told the Sun yesterday.
He said the biggest concern now is whether the government will extend the CMCO beyond October 24.
“If that happens, it will cause permanent and irreversible damage to small and medium-sized businesses that are already in an extremely fragile state.”
Tay said authorities could have taken early action to prevent the spread of Covid-19 from Sabah to the peninsula.
“As Selangor is Malaysia’s economic powerhouse, the government can and should do more now to help companies that are severely affected by the second CMCO and more importantly ensure that there are strict control measures in place, especially if it is large-scale enterprises public events such as elections. “
Tay added that although the companies were “mentally prepared” for the CMCO, they are not financially prepared for another lockdown.
He said closing schools and daycare centers would force employees to leave work to care for their children, leaving employers in a difficult situation.
“This will inevitably affect productivity, as most companies already operate at a minimum cost level and cannot afford to hire more workers.”
He said quick information and clarity from the government are especially crucial now to allow companies to respond.
Economist Datuk Dr. Rajah Rasiah said that Selangor contributes about 40% of Malaysia’s gross domestic product (GDP) and therefore any lockdown would have an impact on the national economy.
He agreed that bans on eating at home and outdoor activities will have a negative impact, but noted that it was inevitable given the rise in infections.
“Personally, I would have preferred a targeted closure of the red clusters, with heavy restrictions, rather than a statewide closure,” he said.
The Asia-Europe Institute economics professor at Universiti Malaya added that the worst impact will be felt by the transport and hospitality sectors, as well as entertainment and food and beverage outlets.
“The government should extend the stimulus and loan repayment moratorium to help small and medium-sized businesses and workers. I don’t think Malaysia will manage the forecast GDP growth of 3.7% this year and 4.5% in 2021. The latter is only possible if we achieve control of the pandemic, “Rajah added.
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