What price will the country pay if the MCO is re-imposed?

A second MCO would put to waste all the efforts of the PENJANA stimulus plan to jumpstart the economy.

Malaysia’s economy could be badly impacted if the Movement Control Order (MCO) is to be reinstated. This was stated by Prime Minister Muhyiddin Yassin during a televised speech on July 20.

He said there was a possibility that the MCO would be reinstated to once again curb the spread of Covid-19 in light of the many new cases that have emerged.

Worse yet, 13 new Covid-19 clusters were declared throughout the Recovery Movement Control Order (RMCO) period which began on June 10.

“If there is a spike in new Covid-19 cases, this will prompt the government to reimpose the MCO, (which in turn will have a) massive impact on our economy.

“The closing of economic sectors can cause the country to lose at least RM2 billion per day and millions of workers to lose their income sources,” the PM said.

He also said that everything accomplished under the stimulus plan called PENJANA (Pelan Jana Ekonomi Negara) would go to waste if the MCO was re-imposed as the aim of the plan was to help boost the country’s gross domestic product (GDP) by 3% this year.

As of Aug 1, the total number of active Covid-19 cases is 8,985 with 213 patients under medication, and 125 deaths.

Academy of Science Malaysia fellow, Madeline Berma said that if the MCO was re-imposed, it would mean that the government would have to resort to borrowing money to help stimulate the economy.

She added that small and medium enterprises (SME) will be most negatively affected if the country has a second Covid-19 wave, followed by the reinforcement of the MCO.

Many SMEs will close and the unemployment rate would increase along with the poverty rate and also GDP ratio, to further widen inequality in the country.

“Therefore, we cannot afford to have a second wave of the Covid-19 as not only would it cost the country to lose billions of ringgit a day but would also push the economy to fall further into the domino effect, and risking people to lose jobs as well or taking pay cuts,” Berma said.

She also cited data that showed 42.5% of companies needed more than six months to bounce back from the previous MCO.

She said she was concerned that if a second lockdown was imposed, the country would see the emergence of a “new poor” group which would comprise of the self-employed poor (including small enterprise operators), the labouring poor, and the vulnerable poor.

“In addition, the loan moratorium that is ending in September this year would add more weight of burden and challenges for many companies as they may run out of cash liquidity, requiring them to borrow more or need other stimulus packages to sustain,” she added.

Mental health decline

Meanwhile, Dean of Universiti Utara Malaysia’s School of Economics, Finance, and Banking, Prof Russayani Ismail, said the effect of reinforcing the MCO could have a potentially bad impact on society’s mental health.

People could experience a sense of loss after staying at home for a long time and anxiety would once again set in.

“It is important therefore for the people to abide by the standard operating procedures (SOPs) and take all preventive measures,” she said.


As for the rakyat, the advice to have six months and more of emergency savings is still relevant to survive the impact of the Covid-19 pandemic.

With the PENJANA stimulus plan, the current situation is under control, but to survive the next coming years may prove to be harder if the people aren’t prepared enough to brace for the impact it would have on the economy.

This article first appeared in MyPF. Follow MyPF to simplify and grow your personal finances on Facebook and Instagram