KUALA LUMPUR: Economists say reopening most businesses after more than a month due to Covid-19 infection is a timely move.
A longer wait could have resulted in further decline in economic growth and losses in revenue.
Political analyst and veteran economist Professor Dr Hoo Ke Ping said it was a much-awaited move because businesses could no longer sustain without income, using their reserves and aid from the government.
"The longer we wait, the higher the stakes are with more workers out of jobs and companies shutting down. It's a good decision but hopefully the public will take precautionary measures, as the Covid-19 threat is still looming close.
"Reopening is good but it must be according to the standard operating procedure set by the government to ensure there will not be any more disruption to the social, medical system and country's economy."
On economic recovery, Hoo said the hardest-hit sector — tourism — may not see much recovery any time soon, even as businesses reopen on Monday.
Hoo said the government had been practical and quick in its actions, including introducing the stimulus packages that helped tackle finance issues of households to some extent.
"However, with our tourism industry being badly hit with about 20 to 30 per cent of tourism-related businesses such as hotels, tour agencies and food and beverage outlets closing down, it has a significant impact on the nation's economic growth.
"Our revenue from the tourism sector alone has been cut by half, maybe even more. The government needs to fill this gap, but otherwise the recovery should be a fast one," he said, adding that the present fiscal deficit was at 4.7 per cent.
He said Malaysia was an export-oriented country and that was an advantage for the economic and recovery process.
"The government, however, needs more revenue to make up for the losses incurred during the MCO."
Hoo said among the options the government could consider to strengthen its financial situation would be to re-introduce the Goods and Services Tax (GST) in a few months.
"This is one way that the government can recoup the losses of more than RM60 billion, excluding additional costs incurred in crisis management. The GST is a feasible option for the government to consider because the system is already in place, they just have to reactivate it (since it was used for a short period in the past)," he said, adding that the economy in the third quarter was expected to have a weak rebound, at the least.
He said the government must give due consideration to the idea, otherwise a second wave of infections might cause the country more damage.
In the current state, Hoo said, the country would most likely see a one to two per cent of gross domestic product growth come year end.
Sunway University Business School of Economics Professor Dr Yeah Kim Leng said the announcement was a welcome relief for businesses and companies that had not been allowed to operate.
However, he said, they would need to comply fully with the operating guidelines so as not to cause a re-emergence of the virus given that Covid-19 had been suppressed but not eliminated.
"With the relaxation of restrictions for firms and businesses, the economic costs and damage due to bankruptcies and layoffs will certainly be lower.
"We can look forward to a gradual recovery of the economy provided that the risk of a second wave of infections is not there. Otherwise, the economic cost to businesses will increase exponentially and the country's GDP growth would be lowered significantly."
Yeah said the economic recovery locally and globally was expected to be subdued and gradual until a cure or vaccine was found.
"Given the 'new normal' environment whereby restrictions on public gatherings and safe distancing necessitate changes in social and economic behaviour, as well as new working arrangements, many industries such as tourism, hotels, restaurants and retail will continue to face a sharp decline in demand and business activities."
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