Smooth virus jab roll-out crucial to economic recovery, experts say

KUALA LUMPUR – The national vaccination programme is one of the key factors to achieve success in the country’s planned economic and financial recovery this year, said economists.

Malaysia is set to kick off its Covid-19 vaccination exercise on February 26 and has targeted to complete three phases of the immunisation programme by February 2022.

Bank Muamalat Malaysia Bhd economist Izuan Ahmad said a successful implementation of the programme is crucial to provide sufficient coverage against the virus, as well as to instil overall positive sentiment across the consumer and business communities.

Despite the latest extension of the movement control order (MCO) for Kuala Lumpur, Selangor, Penang and Johor until March 4, he said economic growth for the country is still expected to recover.

“More economic sectors, including some non-essential ones, have recently been allowed to operate within a strictly controlled environment.

“As such, more economic activities have re-commenced operations, providing more employment and business trades that ultimately enhance private consumption contribution towards the country's economic growth,” he told Bernama.

Izuan said the positive sentiment arising from smooth implementation of the national vaccination programme is expected to boost incoming foreign direct investments (FDIs) into the country.

In line with projected improvement in global trade activities within this year, FDIs are a crucial contributor towards achieving the country’s economic recovery plan, with an anticipated boost in export income in the short term, he noted.

Bank Islam chief economist Mohd Afzanizam Abdul Rashid said the beginning of the Malaysian vaccination programme will be the main premise for the reopening of the economy.

A successful vaccination programme roll-out and eventually achieving herd immunity by the first quarter (Q1) of 2022 would mean that consumer and business confidence should improve as the rate of infection can be reduced over time, he said.

“When the reopening of the economy can happen in a convincing way, more businesses would be allowed to reopen and consumers will be able to transact with peace of mind and have more options to buy products on online platforms.

“In a nutshell, economic recovery would be more sustainable,“ he said.

As such, Afzanizam opined that it is of utmost importance to get everyone onboard for vaccination and awareness campaigns will need to be launched in order to educate the public on what the vaccine is and how it works.

“In this day and age, the proliferation of social media means that delivering positive and accurate information will be very challenging. So the government needs to step up efforts to communicate these messages and information to the general public,” he said.

Meanwhile, CGS-CIMB analyst Ivy Ng Lee Fang, in a research note, said successful execution of the vaccination programme and the lifting of the MCO in all but three states and the capital is likely to be viewed positively by the market as this reduces corporate earnings risk concerns.

“We are of the view that the market will re-rate and shift to stocks that will benefit from the economic recovery, should the execution of the vaccination programme progress smoothly and according to the timeline set by the government.

“However, there could be potential hiccups along the way. Among the concerns is that the number of vaccine doses (acquired) may not be sufficient to meet the tight deadline,” she said.

The government has so far only provided detailed timeline on the delivery of Pfizer-BioNTech vaccine, but not for the other four, she noted.

 For Malaysia’s Pfizer vaccine order, the first batch of one million doses (two doses each for 500,000 people) is slated to arrive by end-February, with another 1.7 million doses in Q2 this year, 5.8 million doses in Q3, and 4.3 million doses in Q4.

“Nonetheless, we believe that a successful execution of the immunisation programme will be key to lifting market sentiment. We stick to our FBM KLCI target of 1,759, with our top three stock picks being Inari, Public Bank, and Telekom Malaysia,” she added. – Bernama, February 17, 2021