While the country enters the third phase of the MCO from tomorrow until April 28, the gradual easing of restrictions on local businesses is crucial. – FILEpic

KUALA LUMPUR: The resumption of certain industries and businesses during the movement control order (MCO) would ensure the continuation of economic activities within the country while cushioning the impact post-COVID-19, says a prominent economist.

Prof Yeah Kim Leng of Sunway University Business School said while the country enters the third phase of the MCO from tomorrow until April 28, the gradual easing of restrictions on local businesses is crucial.

"The economic cost will be lower and consequently it will impact in a gradual normalisation of economic activities in the second half of the year. Therefore we might not need another stimulus package," he told Bernama.

The government last week gave the green light for some businesses to start their operations and following that, the International Trade and Industry Ministry's (MITI) official website temporarily crashed on the first day of applications (April 13).

MITI is the government agency engaging with stakeholders, including businesses, industry associations and small and medium enterprises (SMEs).

However, after further deliberations, the government decided to continue to ban barber, hairdresser and optical shops from operating in a bid to break the chain of COVID-19 infection and prevent mass movement that would create new clusters.

Yeah echoed the decision, and advised the government to gradually ease restrictions and not rush into completely lifting the MCO without the necessary health and safety guidelines and preparedness in place.

He added that a resurgence of the virus outbreak would overstress the already stretched public health system and result in more lives lost.

"High infection areas or red zones should remain closed and economic activities in safe or green zones allowed to open but in full compliance with safety measures such as providing personal protective equipment like masks, gloves and sanitisers for workers while maintaining safe-distancing," he said.

On the additional RM10 billion special stimulus package for SMEs, he said it would enable them to survive the extended MCO.

Yeah however said the shutdown cost borne by firms is much larger.

"We nonetheless expect a rise in bankruptcies and layoffs as some SMEs may not have adequate working capital or reserves to survive even with the wage subsidies and financial aid given.

"Besides a quick rollout of the package to reach the ailing SMEs, the government may need to provide additional and more targeted assistance to firms affected differently by the MCO such as allowing limited operations that do not jeopardise the national effort to break the virus transmission chain," he added.

The government on March 27 unveiled a RM250 billion economic stimulus package known as the Prihatin package to benefit the people. This amount includes the RM20 billion stimulus package announced by the previous government.

Also from the total amount, RM128 billion has been set aside to protect the welfare and well-being of the people in the country, RM100 billion allocated to help all businesses including SMEs affected by the global pandemic and RM2 billion to strengthen the nation's economy.

Separately, the SME sector, which contributes about 40 per cent of the country's economy, was given another RM10 billion in a bid to soften the impact of the MCO.