KUALA LUMPUR – A senior economist and a political analyst have agreed that there is no need for the government to declare a state of emergency to battle the Covid-19 pandemic, saying the movement control order (MCO) is more than enough to protect the public.
Prof Yeah Kim Leng told The Vibes that the emergency proclaimed by the king yesterday morning at the advice of Prime Minister Tan Sri Muhyiddin Yassin could be seen in a negative light by investors.
“This may be seen in a negative light largely because the pandemic may not require an emergency to handle. The government is facing pressure from the opposition, so people, who tend to put two and two together, believe that (the emergency may have a political motive) – they will be unhappy.
“Also, this raises the political risk. Under emergency rule, investor confidence in the country will start to come under the spotlight. The nation will be subjected to greater scrutiny by investors.
“There will also be the typical knee-jerk reaction in the financial market, but as long as the emergency is not protracted, it will end,” said the academic, adding that emergency rule is not constructive to the functioning of markets and the economy.
He warned that the longer the emergency goes on, the worse its impact will be on Malaysia’s financial system.
It will be a slow-acting and gradual erosion of confidence, he said, given the consequences of political uncertainty and instability, which will lead to a gradual decline of the country’s economy.
However, Yeah noted that foreign and domestic investors will have a better grasp of the situation and are unlikely to react negatively in the short term, but will definitely raise concerns in the long run.
New investors, on the other hand, may adopt a wait-and-see attitude until they are more confident of the political stability in Malaysia.
PM called for emergency to protect his office
Singapore Institute of International Affairs senior fellow Oh Ei Sun warned that the emergency declaration could easily be abused by the ruling coalition due to its broad interpretations.
“For example, Muhyiddin said the emergency could be broadly defined. Hindering a pandemic could also be widely defined. I believe the proclamation of emergency can be construed to be against the pandemic-fighting effort.
“And then, what happens to MPs flipping to the other side or simply not supporting Muhyiddin, would that be considered as a pandemic-fighting effort?
“There are too many unknowns left for the government of the day to interpret or decide, and that is usually selfishly done. We still have to see how it rolls out.”
He believes that the emergency declaration is simply a pre-emptive move by Muhyiddin to stop any political challenges from his erstwhile ally of convenience, Umno, as well as the opposition.
Oh stressed that the Perikatan Nasional administration had gone overboard with the emergency declaration, pointing out that the MCO is more than enough to handle the pandemic, the country is not being invaded, and there is no public disturbance.
As to the economic downturn, it is not as bad as the one in 1998, which did not require the government to enact emergency laws.
“So, it’s very clearly a political move from the Muhyiddin side. I need to be very careful, it is from the Muhyiddin side or by Muhyiddin, because you know, I can’t be seen to criticise the king, right?” said Oh.
“I think that is an overblown move. And it is very wrong to have the emergency till August and so on. Essentially, the government of the day will still be kept in power during this period.
“It could imply a suspension of civil rights. The fact that I’m talking about all this, I don’t know what will happen to me – well, suspension of civil rights would potentially also proscribe freedom of expression and so on.”
Economy expected to begin normalising in 2nd half of 2021
Yeah predicted that the nation’s economy will begin to normalise and recover on the back of the Covid-19 vaccine being deployed next month at the earliest, and that growth will be below 6%, unlike the previous estimate of 6.5%.
“A reimposition of all these restrictions, given their negative impact on the economy, is likely to see corporate performance and earnings being rated downwards, but it is temporary until greater clarity on how long the imposition of the MCO will last. It will affect the first quarter.
“There’s light at the end of the tunnel, given that the vaccine is available, and that should be the priority of the government in order to contain the pandemic effectively. If the roll-out of the vaccine can be expedited, then the pandemic will have a shorter duration.
“The negative impact of the pandemic will have a shorter duration, confined to another quarter or two, before the pandemic is effectively suppressed. Once mass vaccination is rolled out, then we can have a handle on the public health crisis. Once we are on top of this, then the economy can normalise.”
Finance Minister Datuk Seri Tengku Zafrul Tengku Abdul Aziz, in a press statement, gave an assurance that most economic sectors and markets will remain open despite the emergency declaration.
He said Malaysian capital markets will remain open to support and facilitate fundraising, trading and investment, with all regulatory functions in place throughout the movement controls, as well as the emergency ordinance period.
The Securities Commission, together with Bursa Malaysia, will continue to monitor developments, to proactively manage and mitigate risks in the marketplace, and will introduce additional precautionary measures.
Tengku Zafrul added that Bank Negara Malaysia will continue to actively monitor conditions in the financial markets to ensure that there is sufficient liquidity in the foreign exchange, bond and money markets, and that market conditions remain orderly. – The Vibes, January 13, 2021
