Extended MCO 2.0 Will Not Impact Critical Sectors

With cases still hovering around the three to five thousand range, the National Security Council has kept extending MCO 2.0 to now a solid 6 weeks. Chinese New Year, an active calendar month for Chinese retailers who expect higher sales are staring blankly into the wilderness. Undoubtedly there will be sectors being hit on the decision while there are those escaping the harsh predicament of MCO 1.0.

As highlighted by the Finance Minister, MCO 2.0 is a well studied plan that seeks to keep the country’s economy somewhat moving while still shutting down parts to curb the spread of infections. In this instance, the essential and critical sectors are still contributing significantly to the national Gross Domestic Product (GDP) even during the current Movement Control Order period, according to Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz.

Key sectors such as commodities, mining and agriculture are allowed to operate nearly at full capacity as they are capital intensive and require less physical worker interaction.

“MCO 2.0 is a dynamic plan. We have considered each sector based on its contribution to the economy,” he said.

During MCO 1.0 is was reported by the Prime Minister that for every day of lockdown, Malaysia was losing RM2.4 billion while the current situation affects the country RM700 million a day. A total lockdown will be a heavy burden, Zafrul adds that it has been highly challenging to balance the safety of people’s lives, and the security of their livelihoods as it involves many factors, requiring careful deliberation and thought, and constant review as the situation evolves. 

“We must also realise that there are harms that may be difficult to predict. The economy does not operate at the flick of a switch. There is no ‘turning it off’, and then ‘turning it back on’ as we see fit. Livelihoods depend on it,”.

Tengku Zafrul said it is inevitable that policymakers and market regulators talk about the economic effect of the lockdown from a macro perspective, behind those numbers are real people who are facing real survival issues as they face a tighter lockdown. This is especially true for the micro and small businesses: the restaurant operators, food stall owners, tailors, barbers, fruit sellers, laundry operators and countless more – people who draw income from daily demand for their goods and services.

The government’s biggest lesson from MCO 1.0 is the acknowledgement that a lockdown and ensuring the economy survives are not and must not be mutually exclusive. Due to that, over 70 per cent of the small and medium enterprises (SMEs) in Malaysia posted a loss in 2020. And if there is a strict lockdown, inevitably SMEs, or over 900,000 businesses nationwide will be severely hit.


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