Malaysia will have no curfews or military rule during the state of emergency, says Malaysian Prime Minister Muhyiddin Yassin on Jan 12.

Before the prime minister's live speech at 11am, Malaysia’s King Al-Sultan Abdullah declared a state of emergency across the country in a bid to curb the spread of Covid-19.

According to palace comptroller Ahmad Fadil Shamsuddin in a palace statement, the emergency will last till Aug 1, or earlier, depending on the state of the rate of infections.

The country is now facing a third wave of Covid-19 infections. On Jan 7, Malaysia reported 3,027 new Covid-19 cases, which is a record high in the number of daily infections, one day after reporting 2,525 new cases.

The number of new cases prompted a top official at Malaysia's Health Ministry to estimate that the number of Covid-19 cases could hit as high as 8,000 a day by mid-March.

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On Jan 11, Malaysia saw 2,232 new Covid-19 cases, bringing the total number of Covid-19 cases so far to 138,224. The country has also seen a total of 555 deaths due to the Covid-19 pandemic.

See: Malaysia to impose new movement restrictions for two weeks from Jan 13 amid soaring number of Covid-19 cases

The decision to declare a state of emergency was made after a 45-minute meeting between Sultan Abdullah and Prime Minister Muhyiddin at the national palace on Jan 11.

In his speech, Muhyiddin says “the civilian government will continue to function. The emergency proclaimed by the King is not a military coup and curfews will not be enforced”.

He added that the government will continue to function as usual.

“I give my assurance that the government machinery and public service will not be affected by this emergency declaration.”

Muhyiddin was also careful to emphasize that Malaysia remained open for business, saying that the state of emergency will give the country “calm and stability”.

“We remain committed to good governance… The government has a… strategy for economic recovery since March 2020 and it will be incorporated in Budget 2021,” he says.

The way OCBC's economist Wellian Wiranto sees it, the MCO restrictions and state of emergency has made it "even harder" for Malaysia's economy to reach the 6.5-7.5% gross domestic product (GDP) target that the government has set for 2021, now that its recovery momentum has been stymied.

"[This makes it tough to envision any grand fiscal largesse to counter the blow, even as the declaration of state of emergency gives it some wiggle room," says Wiranto. "Hence, Malaysia would continue to have to lean more heavily on monetary support. Bank Negara is likely to cut its overnight policy rate (OPR) once more on Jan 20."

As at 11.41am, Bursa Malaysia’s benchmark index, FTSE Bursa Malaysia KLCI, is trading 20.73 points lower, or 1.25% down at 1,596.52 points.