KUALA LUMPUR: The economy will regain momentum following the decision by the government to end the Conditional Movement Control Order (CMCO) in almost all parts of the country.
Economists believe that the government's move to revert to the Recovery MCO in all states and the Federal Territories, except for Kuala Lumpur, Selangor and Sabah, will help the country avoid further income losses and unemployment.
Sunway University Economic Professor Dr Yeah Kim Leng said the shift from CMCO to RMCO would also prevent any further slide in consumer and business confidence.
"With the CMCO lifted in many states, the economy will be able to resume its recovery momentum, as well as reduce income and job losses.
"The shift to the RCMO will also prevent any further slide in consumer and business confidence, which is essential for a sustainable pick-up in consumption and investment activities."
To boost confidence among investors and stakeholders, Yeah said it was imperative for the country to continue its efforts to break the transmission chain of Covid-19.
He said this could be achieved through commitment by the government to immediately procure Covid-19 vaccines, whose safety and efficacy had been proven.
"For confidence to be sustained, the fight to break the transmission chain of the virus is critical. Full resources, including quick procurement of a safe and proven vaccine, must be committed."
Bank Islam chief economist Dr Mohd Afzanizam Abdul Rashid said reverting to the RMCO was a positive move for the economy.
"Domestic tourism is likely to be the main beneficiary, especially since December is a holiday and festive season.
"Demand for hotels, food and beverage, transportation and retailers is expected to see a sharp improvement.
"This would lead to better gross domestic product (growth) in the final month of 2020."
Senior Minister (Security Cluster) Datuk Seri Ismail Sabri Yaakob had, on Saturday, said the government would incur RM300 million in losses in GDP if it were to extend the CMCO.
Afzanizam concurred with Yeah that the procurement of a Covid-19 vaccine would solidify the economic revival.
"Should Covid-19 vaccines be procured next year, it would elevate business and consumer sentiments, leading to livelier economic activities next year."
Yeah and Afzanizam also agree that it is important that the 2021 Budget, with an allocation of RM322.5 billion, which is in the committee stage at the Dewan Rakyat, be passed.
"To accelerate the economic recovery, the stimulus measures and spending plans enacted in the 2021 Budget must be expeditiously implemented and brought forward, if possible, to ignite a big demand boost to the still-weak economy.
"Further initiatives by the government to enhance the ease of doing business, reduce bureaucratic delays and facilitate business start-ups and investment activities are also needed to sustain the recovery of the private sector activities.
"While political uncertainty is unavoidable, ensuring policy consistency and commitment to business-friendly policies, and adopting a consultative approach to policy and administrative rule changes, will go a long way in overcoming the negative impact of political uncertainty on investor and business confidence," said Yeah.
If the 2021 Budget was not passed, Afzanizam cautioned that it would be "not good" for confidence building in investors and stakeholders.
"They should expedite the process so that the country can benefit from the multiplier effects as a result of government spending
, which would be higher compared with monetary policy."
The Federation of Malaysian Consumers Associations said the goverment's decision to lift the CMCO would create a balance between the need to ensure the livelihoods of the people and efforts to combat the virus.
"At this juncture, we have to gradually loosen up the measures in line with the health situation of the country.
"This is important to have a balance between protecting the people from the virus and efforts to revive the economy.
"What is important is to ensure that everyone complies with the standard operating procedures to prevent a recurrence or surge in cases," it said.