Malaysia eases COVID-19 restrictions amid political turmoil after PM resigns
Nurluqman Suratman
16-Aug-2021
SINGAPORE (ICIS)–Malaysia on Monday eased COVID-19 restrictions, allowing more economic sectors such as non-essential manufacturing firms to re-open as fresh political turmoil continues to threaten the country’s recovery from the pandemic.
Malaysian Prime Minister Muhyiddin Yassin on Monday officially tendered his resignation after losing his majority in parliament, with no clear successor in sight.
The Malaysian ringgit fell to a year-low earlier on Monday on expectations that the Muhyiddin will step down.
At 14:30 hours Malaysia time (06:30 GMT) on Monday, the ringgit (M$) was trading at around 4.24 per US dollar, the lowest since July last year.
The benchmark FTSE Bursa Malaysia Kuala Lumpur Composite Index was down by 0.56%.
Muhyiddin earlier on Sunday announced that manufacturing firms previously not considered as providing essential services are allowed to operate based on the rate of fully vaccinated workers.
Previously, only firms under 12 manufacturing sectors – including oil and gas – were allowed to continue operating at 60% of capacity under the country’s total lockdown restrictions which began on 1 June.
Malaysia imposed a total lockdown from 1 June, initially for a fortnight, but has since been extended indefinitely until daily new cases fall below 4000.
The restrictions resulted in Malaysian oleochemical producers Emery Oleochemicals and Southern Acids Industries declaring force majeure on supply as their operations were not classified as essential industries.
Under the new plan outlined by the Ministry of International Trade and Industry (MITI) on Sunday, non-essential activities in the manufacturing, construction, mining and quarrying sectors can operate at full capacity if 80% to 100% of workers are fully vaccinated.
Operations are allowed to resume at 80% of capacity for those with 60-79% of workers fully vaccinated and at 60% of capacity for those with 40-59% of workers fully inoculated.
As of Sunday, 72.9% of the country’s adult population had received at least one dose of a vaccine, while 45.9% of the adult population had received both doses and completed the inoculation process, according to Malaysia’s Special Committee on Covid-19 Vaccine Supply (JKJAV).
The Malaysian government plans to vaccinate all Malaysian adults by October this year as the country’s COVID-19 daily infection rates continue to grow rapidly.
Malaysia recorded 20,456 COVID-19 cases on Sunday, its fourth straight day of more than 20,000 cases, bringing the total to 1.4m.
Another 282 more deaths were reported, bringing the death toll to 12,510, according to the Health Ministry.
The country’s GDP contracted by 2.0% on a quarter-on-quarter seasonally adjusted basis in the April-June period of this year, reversing the 2.7% growth in the first quarter of 2021, in the wake of its COVID-19 restrictions following the surge in infection numbers.
On a year-on-year basis, the country staged a 16.1% rebound in the second quarter, mainly aided by low base effects.
Malaysia’s political turmoil and growing concerns about a softer global growth momentum could further impede Malaysia’s economic recovery pace in the near term, despite the national vaccination program making significant progress, said Singapore-based UOB Global Economics & Markets Research.
The Malaysian economy is projected to expand between 3.0% and 4.0% in 2021, according to the country’s central bank.
The country’s real GDP contracted by 5.6% in 2020.
Focus article by Nurluqman Suratman
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