Empty streets and malls as Malaysia locks down for two weeks

Kuala Lumpur

MALAYSIA began a two-week national lockdown on Tuesday as the finance minister warned that this year's economic growth forecast of 6 per cent to 7.5 per cent may have to be revised down due to the new lockdown measures.

There were police checkpoints on road junctions around the capital Kuala Lumpur as the authorities tackle a wave of Covid-19 infections that has hit record levels in recent weeks.

Prime Minister Muhyiddin Yassin called it a "total lockdown", though essential services are allowed and some factories can operate with a reduced workforce.

The latest outbreak has been more severe, partly due to highly transmissible variants. It has also strained the health service, prompting some in the capital to question whether enough has been done.

"For me, the lockdown should have been carried out during Ramadan when there were fewer cases and people didn't move around as much," said bank manager Muhammad Azril Maridzuan, referring to the Muslim fasting month that ended in mid-May.

"Now, people are moving around more. So it's a little late but a lockdown is okay to reduce our infection rates," he said.

Traffic appeared lighter in parts of the often congested capital with cars moving smoothly around the landmark 88-storey Petronas Twin Towers.

Another resident also worried about the scope of the latest curbs.

"I think even with the new restrictions, the airports are still open so there is still a potential that Covid can spread even while the people are struggling (under lockdown) right now," said Siti, a 25-year-old food delivery rider, who declined to give her full name.

The number of new daily Covid-19 cases has been greater than India's on a per capita basis, though infections have come down since hitting a record on Saturday.

Malaysia reported 7,105 new infections on Tuesday, bringing its total cases to 579,462.

Malaysia on Monday announced an additional RM40 billion (S$12.8 billion) stimulus package ahead of Tuesday's lockdown for which Finance Minister Tengku Zafrul Abdul Aziz said the government may have to borrow more to fund the stimulus.

He added that the other options are to save on expenditure and use dividends or income from the government ecosystem, which includes statutory bodies and state-linked companies.

On the two-week lockdown, he said that there will be a revision of economic growth given the closure of some major economic sectors.

"There will be an impact to deficit due to the revision in GDP," Mr Zaful said at a briefing on Tuesday.

Malaysia's economy contracted for the fourth straight quarter in the first three months of 2021, albeit at a slower pace. The government and the central bank expect GDP to expand 6 per cent to 7.5 per cent this year after a 5.6 per cent contraction in 2020. The fiscal deficit is projected by the government at 6 per cent.

"The bond market is somewhat concerned about the risk of a widening in the fiscal deficit, which could result in higher bond supply," said Winson Phoon, head of fixed-income research at Maybank Kim Eng Securities in Singapore.

"But subsequent to the stimulus package announcement yesterday, investors took comfort from the fact that the measures are largely non-fiscal."

The government will need a few days to ascertain the daily cost of the restrictions, Mr Zafrul said. A similar lockdown in 2020 cost the country an estimated RM63 billion.

"We will continue to support where we can, responsibly, as the government," he said, responding to criticism that Monday's package isn't sufficient to help the people. "We need to balance the short-term needs to the long-term success of the economy, which will help all Malaysians." REUTERS, BLOOMBERG

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