Still a long road to recovery, say business groups

 

MCOs and district and border closures will continue to weigh heavily on the economy.

PETALING JAYA: The economy may not sink back to the depths it plumbed during the second quarter of last year, but business groups see the country continuing with its struggle to come up for air.

They say recovery is still a long way off.

In its quarterly economic report, the Socio-Economic Research Centre (SERC) said 2021 will be a year of recovery, with the worst effects of the pandemic likely to be overcome.

“But I continue to see very uneven performances in some sectors that warrant continued monitoring by the government to make sure the recovery is broad-based and sustained going into next year,” said SERC executive director Lee Heng Guie.

Shaun Cheah, executive director of the Malaysian International Chamber of Commerce and Industry, said the various movement control orders imposed this year had been more relaxed than in last March. Because of this, he told FMT, the hit taken by the economy would not be as devastating.

With most companies remaining open, cash flow has been less disrupted this year and there should be fewer closures.

However, Cheah said the lack of movement due to district and border closures would continue to weigh heavily on the economy as a whole.

“Economic activity depends a lot on the movement of people, with domestic tourism providing a trickle-down effect to the broader domestic economy,” he said.

“Industrial sectors are producing and exports are strong, but it’s the domestic economy that’s crucial in overall economic revival to replenish the country’s coffers.”

Cheah said most of the smaller tourism players would end up folding, with those managing to survive unlikely to get back on their feet until 2023.

Nigel Wong, secretary-general of the Malaysian Association of Tour and Travel Agents, said it would be wrong to say the bad times are behind the tourism industry. It was currently at “rock bottom”.

While other industries may be faring better, prolonged restrictions on interstate travel have made meaningful recovery difficult, with consumer demand tending to come and go, he said.

“With both the first MCO and MCO 2.0, what we saw was a spike in hotel bookings once movement was allowed but the demand petered out. It’s likely to be the same this time around.”

He said everyone in the industry was eager for the possibilities that mass vaccinations would bring and was “looking forward to better times”.

“The only thing we can hope for right now is that this MCO 3.0 remains short and that the government can contain the virus in that time. The concern would be that if we can’t contain it now, future travel, when there are school holidays or long breaks, could be affected.” - FMT