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(PDF) The impact of Covid-19 Movement Control Order on SMEs’

GEOGRAFIA OnlineTM Malaysian Journal of Society and Space 16 issue 2 (139-150)

© 2020, e-ISSN 2682-7727 141

The Covid-19 coronavirus spread has regrettably borne out downside scenarios to

global economy and people’s activities. China is the first country recorded the spread of the

virus with more than 80,000 people infected and World Health Organization (WHO) had

declared Covid-19 as a pandemic on March 11, 2020 (Congressional Research Service, 2020.

The virus outbreak has spread fast and expected to continue spreading to all parts of the

world. Currently, more than 140 countries have reported about 735,000 sickened cases

(Congressional Research Service, 2020; Craven et al., 2020) and the cases are increasing

exponentially in United State of America, Italy, Germany, France, Iran and other countries

(Segal & Gerstel, 2020). Nevertheless, the governments, businesses, and individuals still have

substantial ability to control the disease’s progressions through some specific actions (Craven

et al., 2020; Smith-Bingham & Hariharan, 2020).

Movement control, lockdown, confinement and social distancing are amongst the

governments’ effort to safeguard unprecedented public health and economic responses

(Craven et al., 2020). The coronavirus may not swing back fully once the outbreak has

relented (Craven et al., 2020). As such, Malaysia has implemented the Movement Control

Order (MCO) on March 18, 2020 to March 31, 2020 and later entended to April 14, 2020, in

conjuction with the Prevention and Control of Infectious Diseases Act 1988 and the Police

Act 1967, to cordon the chain of the virus. The order involved the closure of all government,

private and business premises except those in the essential services (the water, electricity,

energy, telecommunications, postal, transportation, irrigation, oil, gas, fuel, lubricants,

broadcasting, finance, banking, health, pharmacy, fire, prison, port, airport, safety, defence,

cleaning, retail and food supply) (The New Straits Times, 2020).

Impacts on economy and SMEs

Covid-19 is jeopardizing the economic well-being of peoples and institutions (Sneader &

Singhal, 2020). The pendemic does not only affect the global health condition but also

impending the structure of global economic order. Consequently, many economies are in the

dawn of recession (OECD, 2020). Congressional Research Service (2020) on their latest

global economics analysis reported the crisis had trimmed the global economic growth by

0.5% to 1.5% as at March 2020. Ernst and Young (2020) in their Global Capital Confidence

Barometer survey revealed that 73% of respondents have perceived severe impact on world

economy, while the other 27% perceived a minor impact. The extensive local and cross-

border movement control involving the shutting down of local, national and international

business entities are also affected world economy (Smith-Bingham & Hariharan, 2020). As a

result, millions of workers are rest under confinement and businesses are in short supply and

struggling to get back the normal track (Smith-Bingham & Hariharan, 2020; Sneader &

Singhal, 2020). Aviation, tourism, travel-related industries, hotels, restaurants are among the

highest disrupted sectors during the MCO, while the staple goods producer, groceries,

healthcare, pharmaceutical and agriculture companies are comparatively less vulnerable

(OECD, 2020; Segal & Gerstel, 2020).

The impact of coronavirus on worldwide SMEs business activities are tremendous.

Although stringent government policy and response to curb the disease is necessary, but most

businesses are expose to negative effects in either short or long-term period. Major hurdles

are cash flow problems, closure of operation, laying off workers, retrenchment and diluted

firms’ capacity for future expansion (Wahyudi, 2014; Craven et al., 2020; Smith-Bingham &

Hariharan, 2020). Changes of business strategies, operations and business conduct, as well as

pressures to search for new sources and opportunities for redevelopment are recognize as

crucial survival challenges for most SMEs (Cassia & Minola, 2012; Svatošovă, 2017; Syed,

2019). Nevertheless, the impacts might vary in accordance to the types of business activity,


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