MOF: Closing of all sectors may disrupt essential goods and services


PETALING JAYA: Certain sectors are being allowed to operate during the movement control order because the Finance Ministry wants to ensure there is supply chain continuity for essential products and services, as well as for the wellbeing of the public.

While noting there is a need to contain the Covid-19 pandemic efficiently, the Finance Ministry said there was also a need to prevent any disruption to the manufacturing value chain.

Such a disruption could threaten the continued production of goods and services that feed into essential industries, it added.

According to the Finance Ministry, these essential industries were food, health/medical equipment, pharmaceuticals, goods such as soap and detergents, and telecommunications.

“Learning from the lessons of the first movement control order (in March last year), the government has also allowed the related value chain of essential goods, such as packing and labelling, to operate, ” it said in a statement yesterday.

The Finance Ministry said supply chains were complex ecosystems comprising people, operations, technology and information technology 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 ministry said the recent National Security Council (NSC) meeting had decided to allow strategic industries such as aerospace, oil and gas, manufacturing, and electrical and electronics (E&E) to continue operating.

As an example, exemptions were given to the E&E industry because thousands of components manufactured by this sector enabled critical infrastructure globally such as healthcare and medical services, water systems, energy grids, transportation and telecommunications networks.

The Finance Ministry also said that Malaysia was a key player in the E&E global value chain, representing 40% or RM386bil of Malaysia’s annual imports and approximately 7% of the world’s 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 RM15bil 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 not only in Malaysia, but also the rest of the world, ” it added.

Totally shutting the E&E sector could also have the long-term effects of diverting trade and investment away from Malaysia and hurt the country’s competitiveness in the global value chain, said the Finance Ministry.

“We already experienced this in the first MCO when Malaysian manufacturers reported that their orders had been diverted to producing countries including China, ” it added.

The ministry said the government, through enhanced monitoring and enforcement, will ensure that factories strictly comply with the standard operating procedure which will limit physical presence at the workplace to 60% of staff.

It added that the services sector would not be allowed to operate despite contributing 57.3% of the GDP (gross domestic product) in the first quarter of 2021.

Though essential retail outlets such as supermarkets have been allowed to operate, the Finance Ministry said there were more than 20 categories under retail that were barred, such as electrical shops, jewellery shops, barbershops, car showrooms and others.

The Finance Ministry also noted that only critical construction work such as maintenance and repairs were allowed to operate during the two weeks of the total lockdown that begins today.

“These are in line with the government’s focus on reducing mass gatherings and mobility.

“The Finance Ministry would like to remind everyone that the whole-of-nation approach is crucial to beating this pandemic.

“As such, all rakyat and businesses are requested to play their part and strictly comply with the SOP to break the chain of transmission, ” it added.

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