07/29/2021, 15.38
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Fears of a new economic crisis in Malaysia

by Steve Suwannarat

At least 300,000 small and medium-sized enterprises in the manufacturing sector are likely to close by the end of the year. The government is reluctant to impose a new national lockdown, even though some 17,000 new coronavirus cases were reported today. According to a manufacturers’ association, some 1.2 million Malaysians are out of work.

Kuala Lumpur (AsiaNews) – Until recently, Malaysia better handled the economic impact of the COVID-19 pandemic than other countries in Southeast Asia; however, the health emergency is beginning to badly affect its export-oriented trade and manufacturing sector.

As coronavirus cases rise across the region, foreign markets are shrinking and multinationals move production elsewhere, leaving the Malaysian economy in dire straits.

Under the circumstances, domestic demand cannot fill the gaps left by medium- and long-term decline at the international level.

Out of 900,000 small and medium-sized enterprises (SMEs) that make up the backbone of the country’s manufacturing sector employing half of the active population, 150,000 closed last year, and another 300,000 might follow this year if the current lockdown (in force until 1 August) were extended.

Last year the manufacturing sector shrank by 3.9 per cent compared to 2019. Things could get much worse this year; for this reason, the government wants to avoid a new nation-wide lockdown, which could be very bad for the economy and employment.

The Small and Medium Enterprises Association of Malaysia (Samenta) is concerned about the numbers, including the 1.2 Malaysians who are out of work.

SMEs generate more than US$ 42 billion in economic activity per year, more than half of the entire manufacturing sector (US$ 75 billion).

At present, the government is planning a gradual restart of production activities when the number of cases drops below 4,000 cases per day.

For now, however, that is distant goal, given that today's figures reached a new record with more than 17,000 new cases.

This is happening despite the fact that more than 500,000 doses of vaccine were administered each day for the last three days.

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