National Vaccination Programme is key success factor to economic, financial recovery - Economists

Malaysia is set to kick off its COVID-19 vaccination exercise on Feb 26 and has targeted to complete three phases of the immunisation programme by February 2022.

Bank Muamalat Malaysia Bhd economist Izuan Ahmad said a successful implementation of the programme is of utmost crucial to provide sufficient coverage against the virus, as well as to instil overall positive sentiment across the consumer and business communities.

Despite the latest extension of the Movement Control Order 2.0 for the Federal Territory of Kuala Lumpur, Selangor, Penang and Johor until March 4, 2021, he said the recovery of economic growth for the country is still expected to undergo its due process.

“More economic sectors, including some non-essential ones, have recently been allowed to operate within a strictly controlled environment.

“As such, more economic activities have re-commenced operations, providing more employment and business trades that ultimately enhance private consumption contribution towards the country's economic growth,” he told Bernama.

Izuan said in terms of foreign direct investment (FDI), the positive sentiment arising from smooth implementation of the national vaccination programme is also expected to boost incoming of more FDI into the country.

In line with the projected improvement in global trade activities within this year, the FDI is also a crucial contributor towards achieving the country's economic recovery plan, with anticipated boost in export income within the near term, he noted.

Bank Islam chief economist Dr Mohd Afzanizam Abdul Rashid said the start of the Malaysian vaccination programme will be the main premise for the reopening of the economy.

A successful vaccination programme rollout and the eventual herd immunity to be achieved tentatively by first quarter of 2022 (1Q2022) would mean that consumer and business confidence should improve as the rate of infection could be reduced over time, he said.

“When the reopening of the economy can happen in a convincing way, more businesses would be allowed to reopen and consumers would be able to transact with a peace of mind, while they would also have more options to buy stuff via online platforms.

“In a nutshell, the economic recovery would be more sustainable,“ he said.

As such, Afzanizam opined that it is of utmost important to get everyone onboard for vaccination and the awareness campaign would need to happen in order to educate the public on how the vaccine would work and what it means by vaccination.

“In this days and age, the proliferation of social media would mean delivering positive and accurate information will be very challenging. So the government need to step up its effort to communicate these messages and information to the general public,” he said.

Meanwhile, CGS-CIMB analyst Ivy Ng Lee Fang, in a research note, said successful execution of the vaccination programme and the removal of the MCO in all but three states and the capital is likely to be viewed positively by the market as this reduces corporate earnings risk concerns.

“We are of the view that the market will re-rate and shift to stocks that will benefit from the economic recovery should the execution of the vaccination programme progress smoothly and according to the timeline spelt out by the government.

“However, there could be potential hiccups along the way. Among the concerns is that the number of vaccine doses may not be sufficient to meet the tight deadline,” she said.

The government has so far only provided detailed timeline on the deliveries of Pfizer-Biotech vaccines but not for the other four vaccine types, she noted.

For Malaysia’s Pfizer vaccine order, the first batch of one million doses (for 500,000 people, at two doses each) is slated to arrive by end-February, with another 1.7 million doses in 2Q2021, 5.8 million doses in 3Q2021, and 4.3 million doses in 4Q2021.

“Nonetheless, we believed that a successful execution of the immunisation programme will be key to lifting market sentiment. We keep our FTSE Bursa Malaysia KLCI (FBM KLCI) target of 1,759 with our top three stock picks continue to be Inari, Public Bank and Telekom Malaysia,” she added.