Following the announcement by the National Security Council on the list of sectors that are allowed to operate during MCO 3.0 for the period 1 – 14 June 2021, Ministry of Finance would like to clarify that the continued opening of these sectors is crucial to safeguard the wellbeing of the rakyat and to ensure the supply chain continuity for essential products and services.
While there is a need to contain the COVID-19 pandemic efficiently, there is also a need to prevent any disruption to the manufacturing value chain that could threaten the continued production of goods and services feeding into essential industries such as food, health/medical equipment, pharmaceuticals, goods such as soap and detergents (especially in the context of maintaining hygiene during this pandemic) and telecommunications. Learning from lessons of MCO 1.0, the Government has also allowed the related value chain of essential goods, such as packing and labelling, to operate.
Supply chains are complex ecosystem comprising people, operations, technologies and information connecting the producer and the buyer through a network of entities and resources. For the supply chain to function smoothly, all of these elements need to work in tandem to ensure efficiency.
The recent MKN decision on the sectors that remain open during MCO 3.0 include economically strategic industries such as the aerospace industry, Oil & Gas, Manufacturing and Electrical & Electronics (E&E) sectors.
For the E&E sector, for example, the Government recognises the fact that thousands of components manufactured by this sector enable critical infrastructure globally, such as healthcare and medical devices, water systems and energy grids, as well as transportation and telecommunication networks. The E&E components produced in
Malaysia have also facilitated e-commerce and remote working in the new norm.Malaysia is also a key player in the E&E global value chain. The E&E sector represents 40% (or RM386 billion) of Malaysia’s annual exports, and approximately 7% of global semiconductor trade. In one instance, Malaysia is critical as the sole production site for aluminium substrate for all hard drives being produced by a factory in Johor, for onward feeding into the company’s global supply chain. Additionally, in 2020, about RM15 billion of fresh investments in the E&E sector had been approved, set to create 20,000 more jobs for Malaysians.
As such, even the short-term closure of the E&E sector could disrupt supplies from Malaysia, and jeopardise essential goods in not only Malaysia but also the rest of the world, particularly during these challenging COVID times. It will also have the longterm impact of diverting trade and investment from Malaysia, and hurting Malaysia’s competitiveness in the global value chain. We already experienced this through MCO 1.0, when various Malaysian manufacturers reported that their orders had been diverted to other producing countries including China.
To mitigate COVID-19 transmission risk, the Government, through enhanced monitoring and enforcement, will ensure that Malaysia’s factories strictly comply to SOPs which limit physical presence at the workplace to 60%.
Generally, the services sector, which contributes 57.3% of 1Q 2021 GDP, is also not allowed to operate. Although the Government has allowed various sectors to operate, the Government has instructed more sub-sectors to temporarily close. For example, in the retail sector, only 11 categories of essential retail, such as supermarkets, have been allowed to operate, while more than 20 other categories including electrical shops, jewellery, barbers, car showrooms are not allowed to operate. In the construction sector, only critical construction, maintenance and repairs are allowed to operate. These are in line with the Government’s focus on reducing mass gatherings and mobility.
The Ministry of Finance would like to take this opportunity to remind everyone that the whole-of-nation approach is crucial to beat this pandemic. As such, all rakyat and businesses are requested to play their part and strictly comply with SOPs to help break the chain of transmission.
Ministry of Finance, Malaysia
31 May 2021
