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Reacting to reports that Prime Minister Muhyiddin Yassin is poised to announce a partial emergency, Carmelo Ferlito of the Centre for Market Education and Goh Lim Thye of Universiti Malaya said an emergency in any guise would impede economic recovery.
It is believed that Putrajaya will resort to an Emergency declaration to help it fight Covid-19 and to put a stop to political squabbles.
Ferlito said it would be an “exaggerated reaction” that would be of no help to the already stagnant economy.
“I think it is a very questionable move considering the number of cases and deaths are far from being an emergency,” he told FMT.
“It will be a hard punch on both democracy and the economy. It will create political uncertainty, pushing investors away from the country,” he said.
Ferlito feared the move would cause multinational corporations to leave the country and added that the government should not be making decisions without consulting stakeholders.
“An emergency status goes precisely in the direction of not involving stakeholders,” he said.
“This is a very harmful situation as the democratic process is already under discussion and the economy is at bay.
“We need a relaxed environment now to make sure that the country comes out of this moment.”
He said Malaysia could adopt a clear and effective policy against Covid-19 without having to suspend democracy.
Meanwhile, Goh said an emergency would further damage businesses already struggling to cope with the conditional movement control order (CMCO) that has been enforced in certain states.
He warned that the move would likely further contract economic growth.
Last Wednesday, the International Monetary Fund (IMF) forecast that the Malaysian economy would shrink by 6% this year, worse than its June forecast of a 3.8% contraction.
Worried by the likelihood of a state of emergency, investors sent the FBM KLCI down by 4.16 points, or 0.3%, to close at 1,494.64 yesterday.
Bank Islam chief economist Mohd Afzanizam Abdul Rashid said it was too early to predict if the benchmark index would bounce back when trading resumes on Monday.
Commenting on KLCI’s drop, Shankaran Nambiar of the Malaysian Institute of Economic Research (MIER) said the current absence of adequate information could create unnecessary anxiety in markets.
“There is an urgent need for clarity on the situation,” he said.
“This is something we hardly need with the already depressed economy.”
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