ALTHOUGH the whole country has moved into phase 4 of the national recovery plan, businesses are still weathering headwinds to stay afloat, trade associations said.

Under phase 4, public and private sectors are allowed to be fully operational with face-to-face meetings and interviews allowed.

Trade associations said besides the Covid-19 epidemic, the devastating floods last month have also dealt a major blow to many businesses.

The Malaysian Employers Federation (MEF) estimated that 5,000 businesses ceased operations last year while 61,360 people lost their jobs.

However, the number is still lower than 2020 figures, where a whopping 32,000 businesses folded while 107,000 job losses were recorded.

“Rebuilding and restarting will take time. It is not going to be easy as the lockdowns have put many companies out of business.

“Those that survived the lockdowns due to Covid-19 (but) hit by these floods may not be able to survive further,” MEF president Dr Syed Hussain Syed Husman said.

While the quantum of losses as a result of flooding is still being finalised, they are estimated to be around RM20 billion.

Syed Hussain said aside from damages, employers have also incurred medical costs and loss of business due to the loss of production time.

“The floods that impacted the nation caused a lot of disruptions to businesses. MEF hopes that we all can recover quickly from the impact of the floods and continue our efforts to put our economic recovery efforts on track,” he said.

“The floods happened during an already challenging period, when businesses were reopening after the long lockdowns.

“There is also emotional and mental stress at play. Losing so much is very hard for recovery. Of course all these will have an impact on the economy. The planned 2022 growth rate will be impacted,” Syed Hussain said.

He said while the government is doing its best to manage the double whammy of Covid-19 and the floods, a quick recovery cannot be easily expected.

“We need to heal from the devastating impact in many ways,” he said.

The Omicron variant has also emerged as a threat to the optimistic economic recovery projection for this year.

“The health minister’s statement that Malaysia’s daily Covid-19 cases could skyrocket past 30,000 by end-March if preventive measures such as suspending umrah trips to Saudi Arabia are not taken to curb the Omicron wave, is indeed very worrying,” he said.

He added that Malaysia’s economic recovery will also depend on global economic recovery, particularly that of its major trading partners.

“The International Monetary Fund forecast that the Malaysian gross domestic product (GDP) will increase by 6.0% and the World Bank projected GDP growth at 5.8%,” he said.

“The prospects of economic recovery are supported by the initiatives allocated in Budget 2022 and the 12th Malaysia Plan.

“The implementation of the various stimulus and aid packages helped the employers, especially the MSMEs (micro small and medium enterprises) to sustain  their businesses and retain their employees, thereby stabilising the labour market,” Syed Hussain said.

Trying times for tourism industry

The tourism industry was one of the worst-hit sectors due to the prolonged lockdown and travel restrictions.

Executive council member of the Malaysian Association of Tour and Travel Agents (Matta) Ganneesh Ramaa said not all agents have benefitted from the travel bubble programme.

“Since the opening of the travel bubble for domestic tourism on September 16, (the) market did well. Malaysians started to explore within the country instead of travelling abroad,” he said.

The Matta Fair, which was held in November last year, is a testament to it, as a majority of transactions were for domestic destinations.

“That said, only a handful of agents have benefitted from this, especially those based at destinations such as Langkawi, Sabah and islands,” he added.

Ganneesh said since travellers have been dealing directly with tourism service providers, there is less room for involvement of agents.

“This particularly does not benefit agents based in the Klang Valley, which is the largest market for domestic travel,” he said.

He said agents who have been solely focusing on international inbound tourists have not been able to operate since the first movement-control order (MCO) was imposed on March 18, 2020.

These agencies will not be able to reopen as long as international tourist arrivals remain restricted.

“These groups of agents are the most badly affected and are losing millions of ringgit by maintaining their workforce, fleet of vehicles and other overheads such as rental, utilities, communications costs, and statutory compliance costs during this pandemic,” he said.

“Most of them are currently closed temporarily. If this closure lasts for another six months, we believe most of them will be closed permanently.

“We won’t be surprised if Malaysian international inbound businesses are wiped out completely by then,” Ganneesh added.

Meanwhile, Bank Islam chief economist Dr Mohd Afzanizam Abdul Rashid told The Malaysian Insight that the number of Covid-19 cases, the floods, lack of foreign workers in key sectors such as manufacturing, plantation and services along with supply bottleneck could potentially affect recovery momentum.

“For now, the economic indicators such as Malaysia’s manufacturing PMI (Purchasing Managers Index) have been quite decent with the index staying above 50 points for three consecutive months between October and December last year.

“As a result, manufacturers have been quite sanguine about the outlook this year,” Afzanizam said.

“However, volatility in the equities market suggests that the situation may not be too smooth given the downside risks that remain prevalent.”

On the whole, he said the economy is expected to do well this year, although it is expected to be marred by uncertainties that mainly revolves around Covid-19 and the supply bottleneck in various industries.

Come January 25, it will be two years since Covid-19 hit Malaysian shores. The lockdowns since March 2020 have left many businesses in dire straits as they had to halt operations. – January 8, 2022.