PETALING JAYA: While other countries in the region are still cautious about easing restrictions for international travellers, Malaysia’s transition into the endemic phase from April 1 will speed up the normalisation of social, economic and business activities say economists.
“The early transition in the second quarter will boost consumer and investor sentiment and strengthen the country’s prospects of achieving the 5.5% to 6.5% gross domestic product (GDP) growth expected this year,” said professor of economics at Sunway University Dr Yeah Kim Leng, adding that further easing of Covid-19 restrictions would benefit both the tourism and retail sectors.
However, Yeah cautioned that the expected rise in retail and tourism spending will be constrained by quarantine restrictions in source countries like China, Japan and several neighbouring Asean countries.
“Nevertheless, the boost provided by the full opening of borders with key countries such as Singapore will sustain the recovery of the tourism and retail sector this year,” he told StarBiz.
Yeah also said Malaysia is deemed ready for the transition, as the country had already achieved high vaccination rates since the fourth quarter of 2021 and implemented booster shots to face the more transmissible Omicron variant.
Sunway's Yeah Kim Leng
“More importantly, the country’s hospitalisation capacity and medical resources to cope with severe cases remain sufficient to handle any spikes in both mild and severe infection cases.
“While a pull back from the transition cannot be ruled out, the country’s health and economic policies will have to be nimble and flexible to adjust optimally to prevailing circumstances,” he said.
Yeah added that the risks of being too early in transitioning into the endemic phase, have to be weighted against the costs of “scarring” or inflicting permanent damage to the economy due to the prolonged pandemic.
Meanwhile, Centre for Market Education CEO Dr Carmelo Ferlito said the role that closed borders can play in keeping the pandemic at bay has been tremendously overestimated, and re-opening at a faster pace will give Malaysia an important competitive advantage, not only in tourism, but also in investments.
“I know personally of multinational corporations which are holding investments for the past two years because the relevant managers cannot enter the country.
“Tourism and retail will be boosted, but let’s not forget the important long term effects on investments. This is a crucial and a welcome move,” said Ferlito.
He added that the government’s move will attract more foreign investments and also re-launch domestic investments.
“It is like a signal that the situation has changed for good, and therefore, there is no reason anymore to hold back investments,” said Ferlito.
On Tuesday, Datuk Seri Ismail Sabri Yaakob announced that Malaysia will reopen its borders to international travellers starting April 1.
He said visitors, as well as Malaysian returnees, who are fully vaccinated are not required to undergo quarantine upon arrival.
They, however, must undergo a RT-PCR test two days before departure and a rapid test (RTK) upon arrival.
Centre for Market Education CEO Dr Carmelo Ferlito said the role that closed borders can play in keeping the pandemic at bay has been tremendously overestimated, and re-opening at a faster pace will give Malaysia an important competitive advantage, not only in tourism, but also in investments.
CGS-CIMB Research said that the opening of borders is positive as this will spur economic activity and boost the tourism industry.
“The decision to no longer limit operation hours for businesses will also help to generate higher sales. Sectors that will benefit from higher foreign tourist arrivals are hotels and retail (via real estate investment trust or REIT sectors), consumer, gaming, transport, brewery and healthcare,” said the research unit.
However, this positive news is partially offset by concerns over the ongoing Russia-Ukraine war, rising inflation, labour shortage concerns, and political uncertainty.
Meanwhile, analysts at global bank Citi said the impact from Malaysia’s easing of restrictions for international travellers could be significant as tourism receipts before the pandemic accounted for 5.8% of GDP.
Currently, countries accounting for 57% of 2019 arrivals have reciprocal no-quarantine arrangements with Malaysia, led by Singapore (39%).
Citi analysts have pegged Malaysia’s 2022 GDP full year growth at 6.5% on optimism on the country’s imminent reopening of its borders.
The Citi forecast also incorporates additional boost to capital expenditure from reconstruction after the floods in mid-December, adding to earlier drivers from supply chain diversification and cyclical capacity tightness.
In a statement, Malaysia Airports Holdings Bhd (MAHB) said it is ensuring that all its international airports are ready to receive the influx of international passengers into the country once borders re-open on April 1, 2022.
The airport operator said it has been continuously working with the authorities, including the Health Ministry, to improve the process flow at airports, especially for the arrival process.
“We are looking forward to seeing good growth in our international passenger and aircraft traffic movements as this would contribute significantly to the group’s and airport community’s business performance. Among others, inbound tourism will also be rejuvenated and the spillover effect throughout the entire value chain will benefit Malaysia’s economy positively,” said MAHB managing director Datuk Iskandar Mizal Mahmood.