PETALING JAYA | The concern of manufacturers that they may be forced to lay off up to 30% of their employees is valid, economists said yesterday.
They expressed hope that a shorter movement control order (MCO) period could ease the financial stress of the manufacturers.
Universiti Tun Abdul Razak economist Prof Dr Barjoyai Bardai said the situation could improve for manufacturers, although economic implications from the MCO would be felt for 18 to 24 months.
“If things get better and the MCO is lifted after April 28, then maybe this may not be the case. So, we have to be hopeful.”
Barjoyai was responding to a survey by the Federation of Malaysian Manufacturers, which indicated that 63% of respondents would employ drastic measures, with 47% doing so within the next three to six months.
He urged companies to learn and adapt as soon as possible to the “new normal” where the business environment would be different.
“The market and the business environment will take time to adjust to this new normal. Until then, they will continue to suffer.
“The International Monetary Fund has predicted that Malaysia’s economy will bounce back to 9% growth in 2021.”
Barjoyai said entrepreneurs, micro-businesses, and small and medium enterprises must start reinventing themselves within the next 10 to 12 months.
Sunway University Business School professor of economics Dr Yeah Kim Leng advised employers to position themselves for recovery and avoid retrenchments.
“The MCO has impacted the Malaysian economy severely, and many have experienced a complete loss of business income, together with a sharp cutback of global and local demand.
“It’s no surprise that employers need to introduce some measures to survive, including optimising costs by retrenching their workforce or resorting to pay-cuts. Employers can also consider a temporary retrenchment of up to a year,” adding any decision should come with adequate compensation for employees.
He projected the economy to recover fully in two years, but warned that fear will also be a major factor in disrupting socio-economic activities.
“Even if Malaysia recovers in terms of infection rates, its economy will still be affected as it depends on the global economy and exports. However, China’s economy is recovering and it is hoped that demand can pick up, allowing Malaysia to ride on the back of China’s recovery.”
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