By Amanda Yeo

With the recent reintroduction of Conditional Movement Control Order (CMCO), tourism sector, small and medium enterprises (SMEs) and the low-income and vulnerable groups have begun expressing concerns over the catastrophic consequences of the partial lockdown.

Sabahans, in particular, are feeling the pinch from the pandemic as many are still struggling to recover from the effects of the strict restrictions imposed from mid-March through June 9.

The third wave of COVID-19 infections threatens to drown Sabah, the poorest state in Malaysia, as it would cause its poverty rate to increase to more than 19.5% based on the 2019 Poverty Line Income.

More tour agencies, hotels and SMEs are closing their businesses within these few months, which could result in an estimated 615,000 Sabahans slipping into absolute poverty, as majority of its low-skilled workers rely solely on daily wages to survive with no savings.

Despite the Sabah state government doing its best to minimize the economic impact by allowing more businesses to operate, many working Sabahans and local businesses have expressed their concerns of a challenging situation due to the continuous three-digit rise in daily COVID-19 infection numbers in the state.

To minimize the risk of infection, some businesses choose to close their shops temporarily. With reduced consumer spending, those who have yet to recover from the first MCO will be the most affected.

This is particularly obvious for the tourism sector which accounts for 15% of Sabah's gross domestic product. As the state halted flights from China and other foreign countries since Jan 30, total visitor arrivals plunged by 66.2% between January and July.

The closure of international borders has also led to majority of SMEs in the tourism sector specializing in foreign inbound tourists, transportation, ticketing and outbound tourism, having zero revenue for more than six months.

Although tourism industry in Sabah picked up gradually from July and August, the road to recovery has been slow as it is largely driven by foreign tourists, particularly those from China and South Korea.

Moreover, as the revenue generated from domestic tourism is much lower than international tourism, the stretch along Kota Kinabalu's Jesselton Point, where many travel companies are located, has become largely deserted.

The shutters were down for most of the sea and land tour agencies, and some even displayed signs for rent.

With the inter-state travel ban and the CMCO reintroduced, this poses a greater burden among hotels and tour agencies in Sabah. Many have been hit by a wave of cancellations, which eventually might force them to shutter either temporarily or permanently.

Not only the tourism sector, but SMEs from other sectors would also be hit by the current COVID-19 wave once again as consumers are likely to tighten their spending.

Based on the survey conducted by the SME Association of Malaysia in August, out of its 1,713 members, 20% are considering shuttering their business permanently over the next six months, while 22% have sufficient cash flow to last them for a month, 27% can sustain till November, and 31% until December.

Therefore, these worrying figures demonstrated that more SMEs in Sabah might not be able to sustain their business operations if the state government does not extend the loan moratorium and provide wage subsidies during the CMCO period.

Not only the employers, workers from low-income families are arguably more vulnerable today than in March. With the loss of jobs and incomes, they will fall deeper into poverty and debts. They might not even afford to buy daily necessities to sustain their living.

According to the food basket distribution data from Sabah Disaster Management Committee, the total number of food packs distributed throughout the state is 57,329 as of Oct 19, which benefited only 9% of the state's 615,000 low-income households. Some of the villagers in Semporna who fall under the targeted enhanced MCO (TEMCO) did not receive food packs for at least four days.

To ease aid delivery, the government should mark and include all the families onto their map, especially those who are living in the interior and squatter areas.

As many families are struggling to make ends meet, the food baskets should include essential items as well, such as baby diapers, milk formula, sanitary napkins or medicines in the rations.

With the CMCO now being extended to two more weeks until Nov 9, the Sabah state government should consider extending stimulus package – giving temporary relief for the SMEs, especially the tourism sector, low-income and vulnerable groups apart from addressing the issue of staff retention and preventing more Sabahans from losing their jobs.

Also, the Sabah state government needs to take into account on the moratorium extension request from hotel, tourism and SMEs associations. With an automatic three to six months of moratorium extension, the SMEs, the B40 and M40 in Sabah would have a breathing space to settle their bank loans once the pandemic is over.

Besides having the moratorium extension, the Sabah state government could modify the Wilayah Cakna initiative from the Ministry of Federal Territories by providing three-month rent exemptions to the SMEs in Sabah.

With the rent exemptions, they would have a lesser financial burden in meeting their operational expenditures which range from overhead, insurance, advertising and promotional as well as repair and maintenance.

As mentioned by my EMIR Research's colleagues in their recent article on "Economics of empathy in action via moratorium extension", now is the time for the Sabah state government not to think too much on what the rakyat want but what they need.

By advocating empathy in state policy-making, the Sabah state government would be seen as a caring (prihatin) government who is always down to earth, meeting the needs of the rakyat. 

(Amanda Yeo is Research Analyst at EMIR Research, an independent think tank focused on strategic policy recommendations based on rigorous research.)