How bad is Malaysian economy during this lockdown?

Its been 1 month since the total lockdown has been announced by our Prime Minister Tan Sri Muhyiddin Yassin. The struggle as a Malaysian has been carried out by all industries in Malaysia.

IHS Markit Manufacturing Purchasing Managers Index (PMI) composite indicator said Malaysia’s manufacturing performance declined to 39.9 in June from 51.3 recorded the previous month

The fall in Malaysia’s manufacturing PMI followed by the implementation of Movement Control Order (MCO) due to the increase in COVID-19 cases has affected production and manufacturing sectors.

“Malaysia’s manufacturing sector lost considerable momentum at the end of the second quarter following the reintroduction of stricter precautionary measures to curb the spread of COVID-19 in the country,” he said in the latest report.

Not only that, RAM Holdings have reported that the Sentiment of small and medium enterprises (SMEs) fell to the lowest level following the re-implementation of the MCO.

The credit rating firm said that in the RAM Second Quarter 2021 Business Confidence Index, SME sentiment plunged to its lowest level at 33.2 from 38.7 in the previous quarter.

“The index, which recorded readings of 50 and below, indicates a pessimistic state in the business outlook for the next six months.

“The survey, which involved around 180 firms, highlighted the plight of SMEs in an effort to survive in once again restrictions on movement and business closures in the form of PKP 3.0.

“Pessimistic companies in regards to sales are the most widespread among the retail and business services sectors, with 90 percent saying a weak economy is their main challenge.

“On the other hand, nearly 90 percent of manufacturing companies surveyed cited rising business costs as their main challenge” RAM said in a report last June

Besides that, according to Kenanga Research in their research note, almost no cars are expected to go on sale this month following the closure of showrooms and production halted during the first phase of the full Movement Control Order.

Based on the average vehicle sales price of RM70,000 per unit in Malaysia, the country’s automotive industry is estimated to lose revenue of around RM3.44 billion in June if the expected no sales are recorded this month.

While most manufacturers are introducing online purchasing platforms including e-showrooms, Kenanga said the constraints of the documentation process for loans and registrations can be the reason why sales transactions may be delayed.

“Only a few units can be registered through the e-Register system of the Road Transport Department (JPJ) for the purchase of vehicles with the loan having been agreed through a letter of commitment (LOU).” It said


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