KUALA LUMPUR: The government’s move to allow selected economic sectors to commence operations in stages amid the extension in the movement control order (MCO) is positive for private consumption and its spillover effects on the economy.
AmBank Group chief economist Anthony Dass told StarBiz that allowing certain selected economic sectors to resume operations would help private consumption to stabilise and is a positive move by the government.
It would also help in generating income for workers in the specific sectors and this would fuel private consumption which bodes well for the economy.
“We expected the MCO to be extended the whole of this month before a formal announcement was made.The move to allow selected sectors to resume operations has a positive spillover effect on the economy, not immediately, but over a period (of time), ” he added
AmBank is projecting the the country’s gross domestic product to grow by between 0.4% to minus 2%this year.
Bank Negara is estimating the economy to contract in a worst case scenario by 2% and in the best case scenario by a growth of 0.5%.
Meanwhile, Bank Islam chief economist Mohd Afzanizam Abdul Rashid(pic below) said the extension of the MCO was good for the economy as it would help it going.
“This will mean income for labour would normalise, especially those who earned overtime pay, daily wages etc. However, the main challenge is to ensure the strict adherence of MCO and regular sanitisation and social distancing.
“It could improve the business capacity from 45% (as what was indicated by Bank Negara) to slightly higher. It’s definitely GDP accretive and it should be able the mitigate the risks of further contraction on the economy. Manufacturing sector is one of the sectors that is allowed since it accounted for 85% of Malaysia’s exports and import.
“Construction sector is also allowed since the government is in the midst of implementing the infrastructure projects. Again, businesses need to really observe and comply the MCO and social distancing measures, ” he added. The government yesterday announced a further MCO until April 28 and allowed selected economic sectors to commence operations in stages under strict movement control order and healthcare guidelines. The first MCO was imposed on March 18 to March 31 and later by another two weeks to April 14.
Among the many sectors that are allowed to operate in the latest round of the MCO are automotive, machinery and equipment, aerospace, building projects and professional services.
Commenting on professional services, a senior lawyer says since law firms are allowed to operate, it should also be extended to the Inland Revenue Board and law office as well.
Prime Minister Tan Sri Muhyiddin Yassin in his speech said the selected sectors would be determined by a special cabinet committee that will be chaired by the senior minister of international trade and industry, and the senior defence minister. At midday, the Statistics Department announced distributive trade growth grew by 5.5% year-on-year (y-o-y) to RM109bil in February 2020, this was slightly higher than 5.4% y-o-y growth in the preceding month. Both wholesale and retail trade recorded a slower growth at 5.1% y-o-y and 6.4% y-o-y (January 2020: 5.2% and 6.7%) respectively. On the other hand, significant increase was observed in motor vehicle sales which jumped to 3.7% y-o-y (Jan: 1%).
As for retail sales, they grew by RM2.7bil or 6.4% y-o-y to RM45.3bil, the least since September 2015. The expansion was fuelled by retail sale in non-specialised stores (February: 7.5%; January: 8.1%) and retail sale of other goods in specialised stores (February: 7.6%; January 8.3%). Wholesale trade generated sales value of RM52.7bil in February, an increase of RM2.4bil or 5.1% y-o-y.