State governments which refuse to comply with Putrajaya’s announcement to ease the movement control order (MCO) risk being slapped with billions of dollars in legal suits from companies seeking damages for being prevented from reopening their businesses, FMT has learnt from sources familiar with the Covid-19 crisis management.
This comes after several states under the opposition Pakatan Harapan announced their own version of the conditional movement control order (CMCO), including Selangor which introduced a “modified CMCO” prohibiting most businesses from re-opening despite the green light from the National Security Council (NSC).
NSC is the body which consults with the health ministry and other relevant ministries in the management of the MCO which has been in force since March 18, effectively bringing economic activities to a standstill except for some sectors.
A source in the Attorney-General’s Chambers (AGC) who spoke on condition of anonymity said state laws cannot supersede federal laws.
“States can issue guidelines and may even have their own laws but they cannot conflict with federal laws.
“Sarawak, for example, has the Protection of Public Health Ordinance but it can only complement federal laws, not conflict with them,” the source told FMT.
It said state governments have no power to unilaterally stop businesses which have been allowed to open under the CMCO.
“The main issue is if the state governments do not allow businesses to open when federal law says they can. The state governments could be sued by these businesses.”
Legal experts have told FMT that state governments have no choice but to accept the CMCO which came into effect today, as it is federal law.
Kedah, Penang, Selangor, Pahang, Kelantan, Negeri Sembilan, Sabah and Sarawak have to varying degrees expressed their reservations about the CMCO, with Selangor and Penang outright refusing to abide by the decision.
Many said they would stick to the partial lockdown until May 12, when the current phase of the MCO ends.
Yesterday, business groups urged states to toe the federal line and allow business activities to resume.
“It is important that business operations in all states resume concurrently as there are interlinkages between states.
“Stopping work in certain states will lead to major disruptions in the supply chain of goods and services and, at the same time, impact the livelihood of the rakyat,” said the Federation of Malaysian Manufacturers.
A similar stand was taken by the Malay Chambers of Commerce, which urged state governments to allow businesses to resume operation to help strike a balance between health and the people’s economic survival.
Earlier today, Umno vice-president accused International Trade and Industry Minister Mohamed Azmin Ali of failing to get consensus from state governments before allowing businesses to re-open.
“This failure indicates significant weaknesses in leadership, strategy and coordination related to the restoration of the economy,” said the former Johor menteri besar.
“This has complicated business and trade activity as Malaysia’s economy is by nature cross-border.”
But a source close to MCO procedures said state governments had been given “at least 48 hours’ notice” of the plan to ease restrictions on businesses.
Khaled also spoke of a “new narrative” where state governments would have more say.
“The era of the federal government having the final say is over,” he said.
Every state in Malaysia should cooperate by carrying out the standard operating procedures for the reopening of businesses and industries under the more relaxed conditional movement control order (CMCO) that started today, Senior Minister Datuk Seri Mohamed Azmin Ali insisted.
Azmin, who is also minister of international trade and industry, noted that some of the state governments in Malaysia have refused to cooperate and follow the federal government’s new SOP.
“Effective today companies from almost all sectors of the economy are allowed to operate following the government’s decision on April 29, 2020.
“Nevertheless, the government is aware that several states are not co-operating in implementing the Government’s decision,” he said in a lengthy statement.
Azmin urged state governments in the country to continue previous cooperation in fighting against the Covid-19 outbreak by now working together with the federal government to open up businesses.
“Hence, the state governments are urged to co-operate in executing the federal government’s decision to regenerate the economy. The government is confident that we, as a team, will succeed in winning the ‘war’ against the Covid-19 pandemic.
“We have worked shoulder to shoulder in implementing the MCO in our efforts to contain Covid-19. Now, we need to remain united and strengthen our collaboration towards our economic sustainability, securing our livelihoods and the well-being of the people,” he concluded in his four-page statement.
Earlier in the same statement, Azmin noted that several industry bodies such as the Federation of Malaysian Manufacturers and the Malay Chamber of Commerce of Malaysia have already urged for state governments not to impose direct restrictions to stop companies from resuming their operations from today (May 4).
“Should the state governments refuse to co-operate in implementing Act 342 which has been gazetted into law enforceable throughout the country, the state governments may face the possibility of legal action from various parties, particularly the industry players,” he said, referring to the Prevention and Control of Infectious Diseases Act 1988 which is the main law used to enforce and lay out regulations for the MCO in the country.
States acting without authority, says Azmin
States governments reluctant to comply with federal policy to re-open the economy were given a warning today that their actions “were not founded on lawful authority”.
The warning came in a statement by senior minister Azmin Ali, who said the federal government policy had already been made into law and was enforceable throughout the country.
Azmin, who is minister for international trade and industry, said state governments who did not comply faced the risk of being sued for damages by businesses. His comment reinforced an earlier report by FMT in which legal sources had also warned of such suits.
Azmin said the regulations made under the Prevention and Control of Infectious Diseases Act were specifically for preventing and controlling the spread of Covid-19.
It prevailed over the provisions of other written laws in respect of the prevention and control of infectious diseases.
The relaxation of restrictions on public activities was announced by Prime Minister Muhyiddin Yassin on May 1 and came after seven weeks of a national shutdown of activities except essential services.
However several states under the opposition Pakatan Harapan announced their own version of the conditional movement control order.
Kedah, Penang, Selangor, Pahang, Kelantan, Negeri Sembilan, Sabah and Sarawak have to varying degrees expressed their reservations about the CMCO, with Selangor and Penang introducing their own programme for reopening of business despite the decision by the National Security Council.
Many states said they would stick to the partial lockdown until May 12, when the current phase of the MCO ends.
Azmin said the CMCO differed from the previous MCO phases, whereby the CMCO enabled almost all economic sectors to restart in a controlled and prudent setting.
The government, he added, conducted various engagement sessions with the stakeholders of the economic sectors particularly, industry associations, local and international Chambers of Commerce as well as small and medium enterprises in order to gauge the impact on business sustainability, supply chain and employment.
“Therefore, the government’s decision to allow almost all sectors of the economy to operate in order to revive and revitalise the economy is expected to have a positive impact on the economic growth and financial position of the country, not only at the Federal Government but also for the states.
Azmin also said that should the state governments refuse to co-operate in implementing Act 342, they may face the possibility of legal action from various parties particularly the industry players.