Malaysia Announces 2-Week National Lockdown Amid Virus Fight

Malaysia announced a two-week nationwide lockdown to curb a relentless surge in Covid cases.

Only essential economic and service sectors will be allowed to operate from June 1-14, the Prime Minister’s Office said in a statement Friday, days after Prime Minister Muhyiddin Yassin had ruled out a repeat of last year’s lockdown. The government will soon announce an aid package for those affected by the new restrictions, according to the statement.

Virus cases have set records for five straight days, with Saturday’s tally of new infections crossing 9,000 -- a level that even tops the 8,000-mark the government hadn’t expected to reach until next month. The outbreak, made worse by the emergence of new virus variants, has stressed the healthcare system and prompted the government to tighten restrictions last weekend.

“It makes sense to announce such measure given the higher number of new Covid cases and how that may impact our healthcare capacity,” said Mohd Afzanizam Abdul Rashid, chief economist for Bank Islam Malaysia Bhd. “There is urgent need to break the chain of infection as soon as possible.”

The government will increase vaccination and provide resources to the health ministry to boost the capacity of hospitals, the PMO said. About 3% of Malaysia’s population is fully vaccinated, though the government aims to achieve herd immunity by year-end as vaccine supplies improve.

The decision to close the economy may have been expected by some investors following the string of record new cases this week. Malaysia’s benchmark equity index rose 2% this week, ending four straight weeks of losses.

“Markets will likely get a jolt from this new series of lockdowns, but I sense investors have already been anticipating tighter measures,” said Geoffrey Ng, director of Fortress Capital Asset Management Sdn. “This move may just allow for the market to look beyond the next few weeks of tough economic challenges in anticipation of increasing vaccination of the population and possible recovery thereafter.”

Other highlights:

  • Plantations and commodity sectors will be allowed to operate, Defense Minister Ismail Sabri Yaakob said in a briefing on Sunday.
  • Restaurants and eateries can remain open but dining-in is barred.
  • Manufacturing-related sectors, including producers of aerospace parts and food and beverages, can operate with 60% workforce, the trade ministry said on Sunday.
  • Movement has been restricted to within a 10-kilometer radius, and only two people per household may go out to buy necessities, while a maximum of 3 people can step out for medical emergency reasons.
  • The government plans to re-open economic sectors in the second phase of the lockdown if infections decline. This second phase will last for four weeks.
  • Sectors allowed to reopen in the second phase are those that don’t involve large gatherings and where physical distancing is possible.
  • If the second phase succeeds, the movement control order that is currently in place will be imposed. While social activities aren’t permitted, nearly all economic sectors will be allowed to operate subject to a cap on physical presence at the workplace.

The Finance Ministry Thursday said the impact of the restrictions announced last weekend on the nation’s gross domestic product is estimated at less than 1%.

The Southeast Asian economy contracted for the fourth straight quarter in the first three months of the year, albeit at a slower pace. The government and the central bank expect the economy to grow 6% to 7.5% this year after a 5.6% contraction in 2020.

A hard lockdown last year cost Malaysia 2.4 billion ringgit a day, and the economy posted its slowest growth in decades in January-March quarter.

“In light of further restriction in the economic activities as well as uncertainties over the duration of the full lockdown, economic recovery is expected to be timid,” Bank Islam’s Afzanizam said.

©2021 Bloomberg L.P.

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