The Cost of MCO 2.0 : Malaysia Loses RM2.4 Billion A Day Throughout MCO – 40% of The Country SMEs Will Be Gone

Malaysia has suffered RM63 billion losses due to MCO

The country is losing RM2.4 billion daily throughout the implementation of the Movement Control Order (MCO).

Prime Minister Tan Sri Muhyiddin Yassin said the total losses suffered by the government since March 18 were RM63 billion.

“If the MCO continues for another month, the total loss will be another RM35 billion.

“This will bring the total loss to RM98 billion… almost RM100 billion”

Two-thirds of M’sian businesses say no income during MCO, Stats Dept survey reveals

About two-thirds of Malaysian businesses say they have no source of income throughout the movement control order (MCO) and had to use their own reserves to keep afloat.

In an online survey conducted by the Statistics Department of Malaysia (DOSM), 67.8% of respondents said they have not brought in any income during the MCO.

“About 12.3% of companies still earn some income through online sales and services, while another 9.8% were earning income from sales in physical premises and stores, ” DOSM said in a statement on Friday (May 8).

Two-thirds of the respondents (68.9%) also reported having to fork out their own savings as the main source in paying off operational costs during the MCO.

More than half of the respondents (53.4%) said they were only able to last another one or two months, should they have to offer paid leave facilities to workers during the MCO.

The high cost of not understanding the economy

With the enforcement of the second movement control order (MCO 2.0), the debate about saving lives or saving the economy has returned. It seems we are forced to choose between a lockdown which can help save lives while harming the economy and keeping the economy open but with the possibility of increasing the number of Covid-19 cases and deaths.

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However, after one year of dealing with the pandemic, we can conclude that such debate is unnecessary.

First of all, there is growing scientific evidence showing there is no correlation between lockdowns and Covid-19 deaths. Second, the economy is not an abstract entity but rather it is made of human lives too. The choice is, at best, lives vs lives.

The implementation of effective and non-harmful policies needs to be based on a sound analysis of the trade-offs, with a serious look into the unintended consequences produced by such policies.

The way in which the government reacted to the rise in Covid-19 cases shows exactly the opposite: An instinctive reaction not based on evidence and rooted in a distorted view about the economic system, seen as something that can be switched on and off according to the needs of the moment.

Out of 144,518 confirmed Covid-19 cases in Malaysia, there were 563 fatalities, or 0.389%. Most probably that’s not the actual number because surely there are undetected cases and some of the deaths recorded as Covid-19 deaths were actually due to different reasons but by chance the patients were also Covid-19 positive.

But, even if the said percentage was valid, it means that 99.611% of the Covid-19 patients in Malaysia did not die.

However, based on this data, a lockdown that will affect the lives of many was decided upon.

While it has to be recognised that the international trade and industry ministry and the Malaysian Investment Development Authority worked hard to keep the economy alive, in particular to keep on the recovery pace, this decision by the government was poor under many perspectives.

It has now come back to the distinction between essential and non-essential sectors, where such distinction is faulty too.

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It has to be noted that every kind of job or business is essential. It is essential in the sense that it puts food on the table for workers and their families.

While the government can eventually decide that we can do without cutting our hair – and this is a dangerous ethical decision, not a technical one – and even if we agree that we can avoid cutting hair for two weeks or a month, what is not understood is that hair salons will not be earning money during that time period, while at the same time they are requested to keep on paying wages and rents.

For those small businesses which survived the first round of lockdowns, this time around they might not be able to do so.

If a hair salon ceases operations, all the connected businesses and people will suffer.

That is why the economy has to be considered as an organic and interconnected whole, not just a sum of pieces.

If a restaurant, forced to carry out takeaways only, sells fewer chicken meals, this will gradually fall back on the entire chicken supply chain. And if that restaurant closes down and people lose jobs, the consumption related to it is lost.

The longer the MCO, the bigger the domino effect. And the domino effect will also involve sectors that are labelled as essential. The supply side works to fulfil a certain demand, and if you cut down demand, then supply will rescale too.

Business leader says longer MCO will lead to chaos

Two business leaders have cautioned against an extension of the two-week lockdown in some states which comes into force on Wednesday.

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Koay Chiew Guan, immediate past president of the Small and Medium Enterprises Association of Malaysia, said: “Two weeks is still okay, hopefully they don’t prolong it. If they do, it will be more troubling, the whole country will be thrown into chaos.”

During the MCO lockdown, only essential services and five economic sectors will be allowed to operate: manufacturing, construction, services, trading and distribution, as well as plantations and commodities. Workers in non-essential services must work from home.

The restrictions apply to Penang, Selangor, Kuala Lumpur, Putrajaya, Labuan, Melaka, Johor, and Sabah from Jan 13 to Jan 26.

Koay said government subsidies on rent and salaries, or a loan moratorium, would have been appreciated to account for the drop in income many businesses will experience.

“Hardest hit are the small companies and businesses, like restaurants, they have no customers for dine in, so for them it will be more hardship.”

30% to 40% of the country’s SMEs “will be gone”

Michael Kang, president of the SME Association of Malaysia, said he hoped the government could come up with effective wage and rent subsidies.

Kang predicted that 30% to 40% of the country’s SMEs “will be gone” if the MCO were to be extended for another two months.

He said businesses suffered losses of an estimated RM2.4 billion each day during last year’s MCO and SMEs had already had to burn “a lot of cash” during the period.

He hoped the government would find a long-term solution to the Covid-19 crisis instead of resorting to continued lockdowns.

“We need a solution to live with Covid-19. Not MCO,” he said. “It’s not like Covid-19 will disappear with the MCO.”

Source : FMT

Source : Astro Awani

Source : The Star

Source : FMT

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