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Malaysia: all operations ceased except essential services

Apr 10, 2020 Malaysia
Malaysia: all operations ceased except essential services
As Covid-19 continues to spread, the country already has more than 4 200 infected and the economy is stopped, apart from 10 key essential services
Malaysia, with confirmation of 4 228 cases of Covid-19 infections and 67 deaths, is currently in Movement Control Order phase 2 (MCO2), which is in application since the 1st April and will last until the 14th April. 

Only 10 essential services and their chains are allowed to operate during MCO2: Food; Water; Energy; Communications and Internet; Security and defence; Solid waste and public cleansing management and sewerage; Healthcare and medical including dietary supplement; Banking and finance; E-commerce and Logistics confined to the provision of essential services.

The level of disruption is high in the country: “Basically all operations have ceased except the 10 mentioned industries”, we are told by the Malaysian Footwear Manufacturers' Association. They continued: “The direct impact of MCO not only disrupts the intricate supply chain but also the availability of merchandise for Raya season in May 2020”.

All footwear factories and footwear retailers have their operations stopped since the 18th March, except for online retail. With MCO2 implemented all companies' staffs are not allowed to travel to work, and working from home, when possible, is the practice.

As the situation gets worse, the local government has introduced Economic Stimulation Package for SMEs. However, companies are already facing difficulties: “The companies have ZERO income for March & April, but need to pay full salary, utilities bill, rental & other fixed expenses; they are running out of cash flow. We hope the government allows factories to operate with minimum manpower”, the Malaysian Footwear Manufacturers' Association commented.

(Updated by 7th April 2020)

The footwear industry in Malaysia is mainly located in Ipoh, Klang Valley, Jahor Baru and Penang. Over the last decade the country has gone from a slightly positive trade balance in footwear to an increased deficit currently in excess of 500 million dollars. According the World Footwear Yearbook in 2019 Malaysia produced 38 million pairs and exported 14 million pairs. The internal consumption reached 127 million pairs and imports totalled 103 million pairs. More information about the World Footwear Yearbook HERE.

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