The Malaysian Insight

THE extension of the conditional movement-control order (CMCO) in several states, along with the prolonged ban on interstate travel, will be less harmful to businesses now that most activities have resumed, economists said.

Things are picking up as consumers begin spending again, although the travel and tourism sector will likely continue to be the worst-hit, they added.

The impact of the cross-border travel ban will also depend on how the authorities decide to approve applications for such travel, said Phua Lee Kerk, chief strategist at Phillip Research Sdn Bhd.

“How many economic activities are approved for cross-state travel and how many are not, this is an important key,” he told The Malaysian Insight.

As an example of how cross-state travel helps the economy, especially the tourism and hotel sector, he gave an illustration of how an employee who travels to another state for work will drive the local economy by dining out and booking accommodation.

“Otherwise, small hotels will have difficulty sustaining themselves.

“Other economic activities that depend on travel will be impacted negatively because no one is coming to spend money.”

Phua believes the interstate travel ban is displaying its worst effects on the tourism industry.

The ban and the CMCO has been extended until April 14 for Selangor, Kuala Lumpur, Penang, Johor and Kelantan. In Sarawak, the CMCO has been extended until April 12.

The extension comes as the number of new daily Covid-19 infections begin to decline, dipping below 1,000, at 941 on March 29, for the first time since early December.

For January and February, daily cases had been in the 2,000s and 3,000s, peaking at over 5,000 around the end of January.

Small impact

Wong Chin Yoong, Associate Professor of Economics, Universiti Tunku Abdul Rahman holds a different view on whether the continued interstate travel will affect the economy adversely.

He said there are very few industries badly affected by movement restrictions at this stage, as most have resumed operations.

Kuala Lumpur and other cities are starting to see crowds out and about again amid new norms such as mask-wearing and physical distancing, he added.

“Shopping malls and restaurants are also full of people. Everyone is accustomed to living with the standard operating procedure.

“So, I think the level of impact from the extended CMCO will be small.

“But to know the actual impact, we will have to wait for the release of the first quarter gross domestic product figures in April.”

Externally, Wong said economic recovery was beginning to take place in other countries.

“China’s growth in the first quarter will almost certainly be very strong. Both manufacturing and non-manufacturing have performed very well.

“The same is true in the United States. An economic rebound is expected this year, not to mention the US$1.9 trillion (RM7.87 trillion) economic rescue plan.

“Therefore, I believe that neither foreign nor domestic economic recovery will be dragged down by extending the interstate ban,” Wong said.

The earliest state borders could reopen might be for the Hari Raya Aidilfitri celebrations in May, but the matter is still under consideration, Prime Minister Muhyiddin Yassin has said. – April 2, 2021.