PETALING JAYA: Malaysia’s decision to lift interstate travel restrictions and overseas travel for fully vaccinated Malaysians will augur well for the tourism and retail sectors, according to CGS-CIMB.
“We are positive on the news as the lifting of the interstate travel ban, which has been in place since Jan 13, 2021, will help spur economic and business activities,” it said in a report today.
Subsequently, the research house expects the government to ease international border restrictions over the next few months.
It opined that the reopening of interstate travel will spur tourism, which will benefit airlines, and airport, hotel, casino operators, REITs (from improvement in hotel occupancy and increased footfalls in malls) and brewers due to the uptick in tourism activities.
In addition, it foresees retail players such as Bonia and 7-Eleven to benefit from the reopening.
“On the whole, we maintain our view that recovery stocks are likely to gain interest in Q4 and the market could re-rate to our KLCI target of 1,629 points on the back of expectations of corporate earnings recovery in Q4’21,” said CGS-CIMB.
The research house stated that the decision to ease restriction does not come as a surprise as the prime minister had previously hinted that travel would be allowed once 90% of the adult population were fully vaccinated, which Malaysia achieved on Sunday.
“Furthermore, the timing of the relaxation of the interstate travel ban is also broadly in line with the national recovery plan and our expectations.”
Today, new Covid-19 cases stood at 6,709, a significant decline from a peak of 24,599 cases registered on Aug 26, 2021.
All local tourism activities are permitted from today onwards and those who wish to cross state lines no longer need to apply for police permits but are reminded to perform self-testing before travelling.
With the reopening, fully vaccinated individuals will be allowed to travel overseas without applying for My Travel Pass and those returning have to perform swab tests three days prior to the return and another swab test upon arriving in Malaysia. A 14-day home quarantine is also required for Malaysians returning to the country. However, Malaysia’s borders are still closed to foreign tourists.
Meanwhile, the country’s tourism industry is set to rake in major benefits following the government’s move to allow interstate travel for fully vaccinated Malaysians from today, said Bank Islam chief economist Mohd Afzanizam Abdul Rashid, Bernama reported.
He said growth in domestic tourism expenditure will be better next year compared to 2021, as the people had been constrained by the nationwide movement control order (MCO) since the middle of this year.
According to him, tourism is one industry that is poised to benefit quickly from the government’s move.
“Domestic tourism spending fell to RM40.4 billion last year from RM103.2 billion in 2019. Hence the situation is set to turn more positive with interstate travel now being permitted.
“For this year, perhaps in the fourth quarter the country would record a much stronger growth compared to the third quarter with the lifting of the interstate travel restrictions,” he told Bernama.
Mohd Afzanizam said the government’s move is important in terms of sustaining livelihoods and the economy as well as public health.
He said when the country’s economy was shuttered, many businesses experienced financial problems and some had to close down permanently. Similarly, individuals saw their income fall, with some who were in the T20 (top 20%) group being reclassified into the M40 group.
“Hence the move (to allow interstate travel) seems apt by factoring in the adult population’s vaccination rate of 90%.
“This means there’s a lower risk of infection as well improved immunity against the coronavirus. It also means the decision was made after taking into account the health aspect, not just based on emotions,” he said, adding that the public must nonetheless practise self-discipline in order to prevent the formation of new clusters and to keep the Covid-19 transmission rate low.
University of Malaya Faculty of Economics and Administration senior lecturer Dr Mohammad Tawfik Yaakub said interstate movements will help to restrengthen economic sectors via the cash flow from buying and selling – for example, in the retail, hospitality and food service businesses.
“This is the right move for reviving the domestic economy that was bleak previously due to the prolonged MCO period.
“I foresee the reemergence of the food service, retail and hospitality sectors. The rise of these three sectors will subsequently trigger the chain for comprehensive economic empowerment,” he said.
Hence, he forecast a stronger revenue growth for all sectors in the next one to two weeks.
Mohammad Tawfik noted that some constraints remained. For instance, the airline sector is being opened in phases both domestically and internationally, some shops would have to rethink their business strategies, and industries would remain cautious in expanding their workforce.
“The government does not limit the reopening to clusters or certain sectors. The announcement yesterday (Sunday) is on a full reopening, including for tourism — no more ‘bubble tourism’. This is seen as an economic boost,” he added.
Sunway University professor of economics Dr Yeah Kim Leng said the lifting of interstate travel restrictions was an eagerly awaited move towards a return to normalcy in the country’s social, business and economic activities.
He said it also signalled confidence that with most of the adult population fully vaccinated, the possibility of another virus resurgence will be less threatening in terms of causing the economy to be shut down.
“While many consumers and frontliners remain wary of vaccine breakthroughs and risk of being afflicted by the virus, the fuller reopening of the economy augurs well for a more sustained economic recovery and transition to the so-called ‘living with the virus’ phase,” he said.
Yeah said the small, but no less important, boost to domestic spending will strengthen the recovery that has been sustained thus far with strong production activities for exports.
“The domestic sectors that have languished due to the restrictions on travel, social and business activities such as retail, food and beverage, transport, travel, hospitality and tourism-related industries will see some relief in the coming months.
“The consumption boost will likely be gradual as consumers will likely adopt a cautious ‘wait-and-see’ attitude due to the still-high but falling infection cases,” he added.