(This is a follow-up of PSB’s previous report ‘Battling Covid-19 in Malaysia’ published on April 8. It looks at the difficult decisions facing governments in reaching a balance between the well-being of the economy versus general public health in the face of the Covid-19 pandemic, and offers some views for moving forward and beyond the current Movement Control Order.)
MANY countries have imposed lockdowns, full or partial, as a measure against Covid-19. The primary aim is to achieve effective social distancing to curb and reduce, or delay transmission of the disease to reduce the burden on overwhelmed health systems, while buying precious time to develop vaccines
and immunisation strategies.
Although mandatory lockdowns and social distancing measures have proven to help curb transmission, they come at a steep social and economic price.
In Malaysia, the Movement Control Order (MCO), as a form of partial lockdown, has been in place as a cordon sanitaire in response to Covid-19 since March 18. It is currently in its third two-week phase, which was originally due to end tomorrow (April 28) but has now been extended a further two weeks to May 12. This is not surprising as transmission of the disease is not truly under control (a sustained period with zero new cases) despite government claims that the transmission curve is flattening.
As at April 23 in Malaysia, there were 5,603 cases, with 3,542 recovered cases (63.2 per cent), and 95 deaths (1.69 per cent). Globally, as at April 23, there were over 2,636,514 cases, with 708,798 recovered cases (26.9 per cent), and 183,389 deaths (6.95 per cent).
We must be aware that daily reported cases may not convey the true state of the virus’ spread. This is because the number of tests may not be sufficient. Take a simple example of 1,000 people infected, and the number of tests carried out is only 300. Therefore, the maximum number of daily reported cases is only 300, not the real 1,000.
As we enter the fourth phase of the MCO, the hope is the infection rate will peak within the next month and start to taper off and therefore the government can work towards partial relaxation and the eventual lifting of the MCO.
This is a crucial time as governments, businesses, and the public continue to grapple with the impact of a prolonged lockdown that increasingly bears down harder on the general economic wellbeing and people’s livelihoods, with the most impoverished and needy being hit the hardest.
The extremely difficult and complex balancing between the well-being of the country’s economy and general public health is the foremost challenge facing Malaysia and the rest of the world in modern history. It is a decision that needs to be made with consideration of local and global factors.
Lifting the lockdown — the economy and herd immunity
The main argument against prolonging lockdowns is that it could grind the economy to a complete halt, with catastrophic consequences felt for years to come. A global recession looms as more than half of the world’s population remains under lockdown conditions to varying degrees at great economic and social costs. The hard question world leaders face is whether to lift restrictions and allow economic activities to resume at the cost of human lives or to persevere with lockdowns and risk economic devastation.
We would suggest that the issue is not a dichotomic choice — have a lockdown or don’t have it. We believe the optimal lockdown policy can be an intermediate one. After an initial period of more severe lockdown measures, the lockdown should become less restricted, but should remain in place in a modified form for as long as the epidemic continues to pose a material threat to the health of society.
Herd immunity
The leaders of some countries believe in herd immunity. Sweden is the best example where the government has refused to place any form of lockdown on its population. It remains to be seen if Sweden’s gamble will be a pioneering success or a disaster. Another example is Boris Johnson, United Kingdom Prime
Minister, a recent survivor of Covid-19, who believes herd immunity could be a good way to control its spread. Similarly, both US President Donald Trump and ally Brazilian President Jair Bolsonaro continue to downplay the threat of the virus and encourage their people to get back to work.
Herd immunity is the belief that the spread of the virus should be allowed to take its expected natural course of infecting the majority and counting on a high rate of survivors, who will then develop natural immunity to the disease and hopefully cause the disease to naturally die out or render the dangers of its
spread negligible.
Covid-19 has a basic reproductive rate (R0) of about three, which means in a populatoon which is entirely susceptible with no one yet having immunity to the virus, every person who is infected will likely pass it on to three others or more. With this R0 number, the proportion of people who need to be infected for herd immunity to work is around 70 per cent of the entire population — herd immunity threshold.
However, if a proportion as high as 70 per cent of the population is infected with the virus, then the application of herd immunity is no longer a prevention option. Vulnerable members of society, such as older adults or people with chronic health conditions, could get very sick if infected. With about 10 per
cent of infected people needing to be hospitalised, hospital facilities and medical resources will be overwhelmed in every country.
With a global population of 7.8 billion people, more than five billion will have to be infected, with a death toll in excess of 100 million. Clearly, the herd immunity approach would never be accepted in most countries.
Many proponents of herd immunity argue that, in a lockdown, when the economy is destroyed, the poor will suffer from a shortage of food and basic products and, depending on the magnitude of the crisis, even widespread deaths. In other words, many people will die not of Covid-19, but of other diseases and starvation. The protracted economic anguish will cause more suffering than the virus itself. Hence, in this context, a severe economic crisis can be just as dire from a socioeconomic standpoint and impacts everybody. These proponents believe this is about survival of the test, and those who need to die will die anyway, and it is, in fact, a way for population growth control.
The Malaysian approach with the imposition of the MCO is correct. Without the MCO, Covid-19 infestation would be exponential, resulting in a substantial number of people suffering severe or fatal sickness. With the MCO, Covid-19’s spread is effectively controlled, but comes with a heavy price, especially with a prolonged lockdown or suspension of so-called non-essential economic activities.
Daily positive cases in Malaysia – Source: Statistics 2020
Continuing lockdown until it is safe
Since implementation of the MCO, it has been reported that 97 per cent of Malaysians have complied and shown resilience in the face of the disease by remaining civil and calm, and adapting to new daily routines under lockdown conditions. That is not to say they are not feeling the pinch and hardships of the stalled economy, however current media reports indicate the current overall public sentiment is supportive of the position expressed by the Health director-general Datuk Dr Noor Hisham Abdullah that, “The war has not yet been won; we have not seen the end of Covid-19”, and therefore the fight must continue.
Malaysians have quickly overcome their initial qualms about the MCO as they now see signs that it is working to help curb virus transmission (new national cases are now down to double digits from previous triple digit high), with the hope that once the disease comes under control, the MCO will be lifted or at
least relaxed so that life can slowly return to normal.
However, people should realise there is a new normal. Dr Noor Hisham and health experts around the world agree the fight against Covid-19 will not be over in a matter of weeks or months, but could even be for years to come. So even if the MCO is lifted or relaxed, there will likely be new social norms for heightened hygiene practices and awareness (washing hands regularly, wearing protective masks etc), group gatherings, and socialising (and distancing), and broader practice and reliance on online platforms for conducting commerce, education, work, and recreation.
While Malaysia is just starting to see some positive signs in its Covid-19 fight, the global perspective remains alarming with infection rates on the rise in the USA, even though they appear to have reached a plateau in the worst hit places in Europe, like Italy and Spain. There is now a resurgence of second wave cases in early suffering countries (such as China, Japan, Singapore, and South Korea), which has prompted them to take renewed control measures. Countries in Africa with abysmal healthcare systems are bracing for the onslaught of the pandemic, which may lead to unimaginable loss of human lives.
With prospective vaccines still many months away, the World Health OrganisaSon (WHO) has warned that complacency is the real danger when dealing with this elusive and deadly disease, and that easing off on lockdown measures before the disease transmission is truly under control could backfire in the form of resurgence of cases and ultimately lead to the reimposition of lockdowns with more social and economic damage in the long run.
A sustained period of zero new cases has been regarded as a potential benchmark to ease lockdown restrictions and eventually a complete lift if it continues that way. There are differing views about how long the zero-period needs to be with some suggesting 14 days, while others 30 days or longer. Whichever the case, the assessment of whether the disease transmission is truly under control may be off its mark if there is insufficient and ineffective contact tracing and testing to reflect the true infection scope and rate. This is
made all the harder as there are many asymptomatic cases not tested.
The only way this risk can be mitigated is if the entire population is tested frequently and repeatedly until a vaccine and general immunisation is in place. This would involve a huge undertaking as testing facilities and expeditious methodologies must be broadly available and implementation must be properly regimented and adequately resourced. It is therefore critical that the testing capability and capacity for each country be maximised within a manageable level with the aim to reach proper testing coverage for the entire population.
Impact on M’sian economy
The Malaysian Institute of Economic Research (MIER) estimates that any additional two-week extension of the MCO would amplify the contraction of GDP by between 3 per cent and 4 per cent, relative to the 2020 baseline.
Household income was also projected to fall by 12 per cent relative to the baseline, which amounts to RM95 billion. This fall would manifest itself in a sharp decline in consumer spending by 11 per cent, in spite of the drop in general consumer price level by 4.4 per cent.
Like most Asian economies, Malaysia is feeling the negative impact of global economic shrinkage, and the country’s financial crisis is largely due to the drastic decrease in exports because of the contraction in aggregate demand in other countries, such as Europe, China, and USA. The Word Bank, in its update report ‘East Asia and Pacific Economic Update April 2020’, predicted that Malaysia’s 2020 economic growth will be -0.1 per cent.
The Malaysian SME Association forecasts a significant portion of SMEs may face closure with potentially some two million job losses in the coming months. The government has been urged to provide more economic support and streamline bureaucratic procedures, which are bogging down access to relief promised under stimulus packages, which many regard insufficient to counter the effects of the prolonged lockdown and general economic slowdown.
Balancing the impossible equation — can it be done?
There is a myriad of complex factors to consider when trying to strike a balance between overcoming Covid-19 and restoring the economy before irreparable damage is caused.
A prolonged lockdown is economically not sustainable, but a premature lifting of the lockdown before the disease transmission is under control can backfire with a second wave of infection greater than the first as with Singapore.
This leaves slippery middle ground of easing off certain lockdown measures in a controlled manner (or as much as control as there can be) and slowly releasing the brakes on the economy.
However, systemic testing of the population must remain a goal during and after the lockdown until an effective vaccine and general immunisation is in place.
Why discuss easing the lockdown?
Nobody knows for certain when the pandemic will come under complete control. The only way that could happen is if a vaccine is found but that may be 18 months down the road. No economy can survive that long in a lockdown, so easing the lockdown is a necessity.
Covid-19 can kill, but so can the economic crisis. The longer the lockdown goes on, the more damage it does to society and the economy.
A health policy based on an extended MCO is economically unsustainable.
Eventually, the failed economy will also cause damage to public health. Hence, we need a unified health and economic strategy that allows for certain economic activities to be reopened while continuing to inhibit and control the virus’ spread. This strategy requires certain health and economic measures to be implemented in a synchronised manner.
The material exit strategy is to base the decision on a fundamental principle of economics, namely, to trade our way out between the two issues; economic well-being and public health.
What now?
Now that the MCO has been extended to May 12, it would be eight weeks of lockdown for Malaysians if the MCO is lifted then. The economic strain would be tremendous and it is up to the government to do its utmost to soften the impact for businesses and the people, without losing sight of the Covid-19
battle.
In PSB’s previous report, a number of measures were proposed for the government to combat Covid-19. Those included banning public gatherings, more targeted quarantine and isolation, better identification of clusters, implementing effective contact tracing for multiple generations, deferred penalties, achieving mass testing, adequate procurement, stockpiling and supply of medical equipment (including Personal Protective Equipment), incentivised local production, as well as disseminating free medical masks to the public.
Longer term goals include increasing quarantine stations, treatment facilities, investing in R&D, and collaborating with other countries to develop vaccines and immunisation strategies, utilisaSon of private hospital facilities, centralised dedicated media point to reliably disseminate Covid-19 information, and the development of management plans for the country’s healthcare and economy during and beyond the pandemic. Those proposed measures remain more relevant than ever and PSB urges the government to continue working towards them.
In the hope that the current infection rate in Malaysia will reach its peak within the next month and start to taper off, it is presumed that the government will continue to revise and consider partial relaxation of the MCO. This must be done with holistic consideration and planning so that Malaysians would not have endured the MCO in vain.
PSB would like to see the following additional measures and considerations. These are not exhaustive and intended to complement and/or supplement existing government measures and policy announcements.
Maintaining social distancing during and post MCO
If the MCO is relaxed, the safety protocol measures that have been established must still be followed such as social distancing, use of face masks, ban on group gatherings (whether public or private), and personal hygiene.
The public campaign and strict enforcement of these baseline measures must be maintained, especially during Ramadan, Hari Raya, and Gawai. All religious gatherings must still be strictly banned and movement to and from home towns and kampungs must remain controlled. The government’s initiaSve for online application of movement permission is commendable but it counts for naught if the processing is inefficient and enforcement is lax.
In rural areas where online applications are not possible, the government must prevent large groups queuing to apply for travel passes as seen in recent times in Pakan. It is ridiculous to disallow two people to travel together in one car and yet force hundreds to congregate together for a travel permit.
Staggered lifting of MCO by area
The Ministry of Health has already put in place a colour coding of areas to grade the seriousness of infection. While red areas (41 cases and above) and yellow areas (1 to 40 cases) should remain under stricter control measures, there can be staggered relaxation of green areas (zero active cases) under
controlled conditions.
Close monitoring and up to date data collection must be done to ensure responsive action when areas improve or further worsen.
Staggered lifting of MCO by business sector
A similar grading system could be applied to business sectors by identifying those whose inherent nature and practice present lower infection risks due to operating in more isolated areas or work spaces are more spread out.
Businesses that can demonstrate the capability to effectively and safely adhere to stringent distancing criteria should also be allowed to apply for resumption of operation but must immediately cease upon discovery of any infection and report all actual or suspected cases.
Other economic activities must only be allowed in a way that is consistent with the objective of controlling the spread of the virus. Non-essential business and services that inherently involve close contact such as barbers and hair salons, retail, sports, and recreational venues should not be allowed to resume operation unless they are in a green area and capable of adhering to baseline measures.
Border and zone controls
In learning from countries like China, which are seeing a resurgence of infections that are mostly imported, stringent border controls must remain in place with all inbound travellers, whether by air, sea, or road, to be screened and quarantined; and treated where necessary. For Sarawak, this includes interstate travellers and enhancing security along the Indonesian border.
Taking care of migrant workers
Singapore has now become a standout case for overlooking the management of migrant workers. Malaysia should not repeat the same mistake and must now vigorously do mass testing of migrant worker communities and take corrective measures against often cramped and unhygienic living and working conditions. Effective communication on the Covid-19 situation and support of migrant workers could assist relations with their home governments and help Malaysia maintain a viable workforce in the long run.
Tourism post-MCO
The Malaysian tourism industry has been hit hard, costing about RM3.37 billion losses until March. However, regardless of the large losses incurred, it is not the time to open up, and the ban on travellers from overseas must still be maintained with selective relaxation for countries that have shown recovery from the pandemic. In the meantime, the government has no choice but to step in to save the tourism industry from collapse.
As for the airline industry, the government should not step in to bail out any single airline but permit the airlines to rationalise and merge for economies of scale and eradicate inefficiencies, particularly state-owned Malaysia Airlines.
Food security and national stockpiling
At a time when production worldwide comes to a halt due to lockdowns, supply of basic items become a major issue. Thailand and Vietnam are reported to be puting a ban on rice exports. Immediate action is required from the government to step up national food stockpiling and PSB advocates at least doubling national reserves to a minimum of six months and working with like-minded countries to keep supply lines
open amid the disruption.
Malaysia needs to focus more on local food crops to be more self-sufficient and less dependent on imports. The Finance Ministry should provide investment incentives to atract farmers and corporations to invest in producing rice, vegetables, and fruits, and to venture into livestock.
Reducing financial burden of businesses
PSB recommends the government maintain the goal of financial relief to prevent otherwise sound businesses from going down under, and hence, to keep workers from unnecessarily losing jobs. The Federation of Malaysian Manufacturers has said 63 per cent of members are likely to retrench workers, with 47 per cent having to do so in the next three to six months.
The government needs to stop overwhelming businesses with taxes during this trying period. Immediate measures should be taken to lower the tax burden, including corporate tax, sales and service tax (SST), stamp duties, customs duties, etc, on businesses, and to consider suspending some taxes for a period
of time.
The Malaysian Palm Oil Board (MPOB) should stop collecting cess from the palm oil industry when the palm oil price is so low and plantation companies are suffering under the MCO. PSB also calls on the Sarawak government to stop collecting royalty cess and levies from the timber industry.
Bank assistance and loans
Banks are in the best position to provide much needed assistance to the economy. As financial institutions, banks provide financial sustenance — the backbone and foundation of commerce and industry. Banks are already implementing automatic loan moratoriums for individuals and SMEs as directed by Bank Negara Malaysia. This is commendable.
However, certain big corporates may also need help with cashflow for this difficult period. Banks should consider extending similar loan moratoriums to deserving corporates. Banks should be flexible with respect to requests for loan restructuring or rescheduling by businesses, including big corporates. Where banks take too long to approve such applications, the usefulness of the assistance programme
will be stifled.
Similarly, when extending new soft loans to businesses, especially SMEs, during this time, banks should be more flexible and faster with approvals for timely disbursements of much-needed loans.
Other financial institutions such as MBSB Bank, Bank Simpanan Nasional, Exim Bank, SME Bank, Agro Bank, Bank Rakyat, MIDF, and Bank Pembangunan should also be mobilised quickly and employed urgently to extend financial assistance especially to small and micro firms, which are in calamitous need to stay viable and afloat. Small rural industries and agriculture firms that continue to operate will help to ensure continued food production and food supply, and keep food prices at acceptable levels.
Like all other businesses, banks are expected to make profits for their shareholders. However, during such an unprecedented critical time, banks should contribute emphatically as a national service. The motto for banks this year should be to serve the country as loyal corporate citizens by helping faltering businesses as well as their aggrieved individual customers, instead of aiming to continue to make normal profits. When these assisted entities prosper again, the banks will stand to reap profits again.
Where businesses, particularly SMEs, cannot even afford to pay interests for soft loans, banks should either consider a blanket waiver on interest in the interim or for the government to bear such interest on their behalf.
Re-opening of schools last
The health and safety of students are far more important than their learning process and examinations. PSB lauds the Education Ministry’s stand that schools will not immediately reopen right after the MCO ends.
It is also good that major exams are postponed or cancelled, even though the effects of all students potentially repeating a year will also be cumbersome.
PSB notes there are proposals schools can reopen soon and classes can be split into smaller groups for social distancing. This is not possible in cases where schools do not have enough rooms to accommodate these splits. It is not conceivable that some schools can resume teaching while others remain
closed. This option is not considered viable.
Schools should only be reopened when the Ministry of Health is absolutely confident that it is completely safe. In the interim, many schools have been able to adapt by taking education online. The government needs to identify and extend support to schooling communities that lack resources to do so. Support for schooling of children of front-line workers must also continue.
At the same time, the government must encourage or incentivise employers to allow their staff flexible work from home for parents of students who cannot be left unsupervised.
The EducaSon Ministry can introduce a scheme for schools to pass on any savings from reduced overheads by reducing school amenity fees and allowing school fees payment extensions without penalty.
When schools eventually re-open, the Education Ministry must have in place the School Management Post MCO Guide, which provides public guidelines on health safety and standards to be strictly followed. This should ideally include protocols to implement a strict repeated testing regime of the entire schooling community as well as requirements for transparent reporting of suspected and actual cases and swift response measures.
Colleges and universities should also follow the same guidelines when they reopen.
Efficient and responsible government
Although Malaysia is well endowed with natural resources, it is not as well blessed with substantial financial resources. Hence, the country must do what it can with the available resources and ensure that these resources are utilised efficiently and transparently, without leakages.
PSB condemns politicians and political parties taking advantage of the crisis with self-promotion when giving aid to those in need. In particular, it is disgusting to see politicians advertise themselves or their own political party when they deliver food aid bought with public funds. These politicians are cheating the people and the recipients by deceiving them that the aid is from the politicians or their party when, in fact, the aid is bought with public funds.
PSB also condemns the uneven distribution of aid where opposition parties have submitted lists of hundreds of names of needy families to the Resident’s or District Offices to no avail, while government politicians are seen daily in the news media handing out government aid as if they were the benefactors.
Conclusion
For the first time since the Great Depression of the 1930s, all advanced and developing economies are in recession. While economists expect the global economy to partially recover in 2021, there will still be many months of suffering to endure.
PSB urges all communities including the government, political leaders, private sector, and NGOs to band together to meet the perilous predicament the country is facing.
This is a global crisis. We are all in it together. It is time for all Malaysians to show solidarity as a nation.
The views expressed herein are based on publicly available information and provided as a public service. In giving our comments on the MCO and its impact, PSB does not profess to be experts. We are only trying to help by presenting our views and we hope that such views may be of some assistance to the authorities in dealing with the issues covered. We merely wish to have a safe and healthy country to live in. The only way we will be able to achieve this is by having one united approach to surviving these trying times.