A WEEK into the nationwide Movement Control Order (MCO), with some semblance of a new “normal” of emptied streets, are we ready to declare light at the end of the tunnel? Not yet.
Experts are counselling caution. Universiti Malaya epidemiologist Datuk Dr Awang Bulgiba Awang Mahmud has warned of at least four more waves of infections from recent mass gatherings, requiring six weeks, not two, of the MCO before we can declare that the pandemic has been brought to heel.
The need to “flatten the curve” of the virus’ spread is paramount, so while any possible extension of the MCO is much unwelcome news, we may have little choice. The virus will have to be contained, no matter the costs.
And the costs will only mount, even if the MCO ends as scheduled at month’s end. Prime Minister Tan Sri Muhyiddin Yassin’s address to the nation yesterday, with a slew of additional financial relief measures, testifies to how the government is responding dynamically as things develop. There is no question that the economy will be badly hit.
A local observer of business trends sadly noted: “It is going to be a great recession; all commodity and asset values will diminish as there is no effective demand. We expect more companies will go bankrupt and a lot of people will be unemployed.”
Small and Medium Enterprises (SME) Association of Malaysia president Datuk Michael Kang recently said that up to 10 per cent of local SMEs may go bust in coming months. Given that SMEs reportedly employ 10 million Malaysians, that’s a million newly jobless Malaysians.
The knock-on effects of a rise in joblessness would gut consumer demand, dealing business confidence a body blow. Worse may be that ours would not be a unique set of circumstances. Indeed, as Covid-19 spreads globally, Malaysia’s grim economic reality looms large, globally.
Our open, export-dependent economy would find little if any avenue for succour. Which is why major economies in Europe and the United States are desperately seeking ways to quickly put money in consumers’ pockets. Helicopter money, it is called.
The US is looking at the ballpark of US$2 trillion in emergency stimulus to jumpstart an economy likely to be ravaged by Covid-19. Companies, big and small, everywhere will be on the lookout for government bailouts to tide them over their coming liquidity crunch.
The last time that happened, just over a decade ago, multinational banks and conglomerates such as General Motors were the big beneficiaries.
This led to political backlash, the severity of which is still rumbling through rising political populism in much of the West.
This Leader believes the government would need to do much of the stumping up to shore up the economy in the immediate aftermath of Covid-19. It has to be a well-considered package that puts scarce financial resources where they are likely to have the quickest impacts and multiplier effects.
Given the outsized role in terms of employment generation of SMEs and their particular vulnerabilities right now, a lifeline to them may be necessary. The MCO is a must. Whether it will be extended or not, SMEs need help, the sooner, the better.
Further government stimulus, expected by month’s end, would hopefully address this.