Malaysia’s Economic Battle Is Just Getting Started

Anil Prabha

June 5, 2020

With all that has been going on in the world these days, ASIA BLOCKCHAIN REVIEW decided to catch up with George Koshy, Partner, Transaction Advisory Services Leader at Ernst & Young, for his unique take on things in Malaysia.

Firstly, thank you for taking the time to talk to Asia Blockchain Review. So how has 2020 been so far, in your opinion? 

The COVID-19 pandemic has taken over as the “most significant event” in the global calendar of events since January 2020. The pace of restarting economic activities will be dependent on when countries can get the pandemic under control and how countries can prevent future waves of infection. Malaysia targets to lift her Conditional Movement Control Order (CMCO) on 9 June 2020 and we anticipate economic activities to resume gradually. An early indicator of Malaysia’s resumption of export activities is the recent news that major Japanese electronics firms are resuming production activities soon. 

The Covid-19 global pandemic is pretty much the only thing that people are talking about these days. Recently, EY released a report entitled “Economic impact of COVID-19, A Malaysian Context”. What’s your take on it from a macro perspective? 

From a macro perspective, we anticipate three (3) different economic recovery scenarios – a V, U or L-shaped recovery. For Malaysia which is an export-driven open economy, , we anticipate a V or U-shaped recovery, subject to the global demand for commodities and semi-conductors (manufactured electronics), the global economic situation, the discovery and commercialization of appropriate COVID-19 vaccines, regulatory interventions and Government fiscal assistance to assist impacted business sectors, and pragmatic measures to jump-start the Malaysian economy. 

The Malaysian Institute of Economic Research, in a press statement on 24 March 2020, predicts that the real GDP growth of Malaysia in 2020 will drop from 4.0% to – 2.9%, with up to 2.4 million job losses, of which 67% will be from the unskilled workers category. This looks pretty sobering. What’s your opinion on this development? 

Bank Negara Malaysia estimates that Malaysia’s GDP is expected to be in the range of 0% to -2.5% in 2020. As this pandemic is still evolving and has been unprecedented in its scale and speed, the extent of its adverse impact is uncertain and yet to be determined. 

Governments around the world, including Malaysia’s, recognize the severe impact of this pandemic on business and the economy, and are committing significant economic stimulus packages to assist affected businesses, displaced workforce and communities. With the “new normal” and the accelerated shift to technology-based automation, the displaced workforce needs to re-skilled. 

Furthermore, Bank Negara Malaysia projects Malaysia’s GDP growth to range between -2.0% to 0.5% in 2020, due to, output losses as a result of the COVID-19 pandemic, the implementation of the Movement Control Order (“MCO”); and commodity supply disruptions both domestically and internationally. How do you think Malaysia will cope? 

Given the current economic situation, it is expected that Malaysia’s recovery to pre-crisis levels may gradually resume in 2021 and pick up in 2022, subject to global economic recovery, level of Government stimulus support and regulatory interventions to mitigate the impact. 

With COVID-19 disrupting the global supply chain, multinationals are now looking towards diversifying their supply chain from a single dominant source in Asia. We anticipate Malaysia is poised to benefit from near-shoring and re-shoring of Asian trading activities, supported by her strategic central location in Asia and ASEAN, in addition to her world- class global aviation and shipping ports, and high-tech logistics and warehousing facilities.

Be sure to catch Part 2 of this interview with George soon!

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About the author
Anil Prabha

Editor In Chief

Anil started his career in journalism all the way back in 2003. After traversing the sphere of editorial, corporate communications and advertising, he has now come full circle and is back in the world of journalism. He believes in the power of the written word, and its ability to enthrall, delight and inform the reader.

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