THE IMPACT TO THE MALAYSIAN ECONOMY

Pandemic has affected many lives globally, forcing everyone to accept a new norm of sops
and lockdowns. Malaysia is also no stronger to lockdowns, having implemented various
MCOs to combat the pandemic since the start of 2020. Efforts by the goverment with
multiple modifications to the MCO such as RMCO,CMCO and EMCO intended to minimise
the impact on the economy.

The impact of mco on Malaysia’s economy can be seen via high unemployement rate and
depreciation in Malaysia Ringgit against USD. In 2019, the unemployment rate of Malaysia is
3.3% which means there are 508,200 individuals unemployed. The covid-19 pandemic has
seriously impacted the Malaysian ecoomy. This can be shown by comparing the
unemployment rate is 3.2% but there is a continuous increase in the unemployemnt rate until
May 202 and it reaches 5.3%. This is not a good phenomenon because there is a negative
trend in the labour demand.

One of the sectors in Malaysia that is severely impacted by the mco is tourism sector. The
total tourist arrivals in Malaysia were decrease as of mid-2020. It is acknowledge that the
tourism sector in Malaysia plays an important role in economic growth by promoting foreign
spending on goods and services in Malaysia. If the number of tourist continously decrease,
some of the tourism industry will be forced to shut down due to unbearable losses and
unable to pay workers salaries. For instance, the economic activities in the manufacturing
and construction sectors were put on hold in order to control the spread of COVID-19 in
Malaysia. That is why financial support from the government to the affected sectors is
important.

On the other hand, the relative level of economic health can be determined by the foreign
exchange rate. This is because the foreign exchange rate plays a fundamental role in a
country’s level of trade. Malaysia’s exchange rate for March 2019 is RM4.08 in exchange for
1 USD and it has depreciated to RM4.26 in exchange for 1 USD in July 2020. Weaker
exchange rates will lead to cost-push inflation as the cost of imported raw materials are
rising. This will impact almost all the sectors especially the manufacturing sectors in
Malaysia as most of the machineries are imported from China and Japan. Weakened
currency adversely affects the purchasing power of Malaysian Ringgit as more Malaysian
Ringgit is required to exchange for the US Dollars. This means that living standards of
citizens in Malaysia decrease due to lower purchasing power.
The Ministry of Higher Education (MOHE) has announced temporary suspension on all
physical learnings during the MCO period. Later, the MOHE relaxed its policies in order to
allow the resumption of learning so that students can continue their study without any
disruption. However, all learning was executed in an online medium which is a new
experience to most of the students in Malaysia. To ensure optimal learning experience, I
would like to suggest free e-text books to all Malaysian students particularly the college and
university students. In addition to this, I also suggest provision of laptops to the real hard-
core poor students and tablets vouchers to all Malaysian students regardless of their families
background. It is acknowledged that not every student has their laptop or tablet at home. It is
hoped that the initiatives can reduce the burden for the parents to provide necessary
equipment for the children to have an optimal learning experience during the MCO periods.