THE whole world is in a state of panic. Only a couple of countries have clarity and clear communication on the steps they will take at each stage of the spread of the coronavirus Covid-19. Malaysia is not one of them.
The Prime Minister has announced, in response to a major spike in Covid-19 cases, decisive steps from 18-31 March to arrest the spread of the virus. This “two-week partial lockdown” is a welcome statement of intent but there must be some indication of what will happen next if the epidemic still is not checked. It would help the people to prepare themselves.
It is also good the National Security Council (NSC) will be meeting daily to monitor the situation. The Prime Minister will chair this meeting. With the Economic Action Council (EAC) and all his other responsibilities, the Prime Minister will be stretched in the performance of his duties.
There should therefore be a small committee headed by a scientist to advise the Prime Minister on the steps that need to be taken, so that NSC meetings will not be discussing issues and making decisions on the hoof. The background work would have been done.
In Singapore there is a Covid-19 crisis committee comprising a number of ministers, all highly competent, but I would not suggest we do the same in Malaysia. Our ministers have not even mastered the brief in their ministries, let alone have the ability to address a crisis objectively without weighing political impact.
Nobody believes you if you said blithely everything is under control and there is a sufficient number of beds to treat Covid-19 patients. With all that is happening around the globe, what people want to know is what would happen if there was a huge spike.
With a staggering number of new cases in the last couple of days, bringing the total to 553 as of yesterday, there are now calls for a lockdown, going beyond the containment that has informed Malaysia’s approach hitherto. There is already panic buying and empty supermarket shelves.
At what levels would our capacity and resources be stretched? What are we going to do to ensure we do not reach those levels? What stage are we at, in containing the virus, and what are the next steps precisely — no waffling — we will take to control it should the numbers of the afflicted spread further and faster than at the first stage?
The number of deaths in Hubei province where it all started is about 3,000 but the situation in China is stabilising. It might be useful to go through what China did, even if belatedly, to achieve this.
Outside China, the number of deaths is increasing, especially in Italy and Iran. What did they not do and have not done? In America, unsurprisingly with Trump, the situation is a shambles. Blame the foreigners is his instinctive political approach. It does not address the spread of the virus in his country.
There are some in Malaysia who are tempted to do the same as the Trump blame game. This all coming from outside does not get us anywhere as it has not America.
The WHO has officially declared the spread of coronavirus a pandemic. In a global population of 7.5 billion, the top end estimate of deaths by scientists is 75,000.
Malaysia must take a rest from all the politicking that has been taking place and apply all that energy, in an organised and more calm manner, at getting a hold on managing the epidemic.
Competence and clarity give confidence. Mushy statements without clear facts promote panic. Panic will absolutely stretch resources and screw up the economy even further than Covid-19 has already.
The impact on the economy is debilitating. It beggars belief for anyone to say the Malaysian economy is doing just fine. It is not, has been slowing down and will slow down further with the dislocations and contractions caused by the pandemic.
There is a credible forecast of a 80 per cent chance of a global recession, as bad as if not worse than that which followed the 2008 Western Financial Crisis.
Much has been said about the collapse of financial
markets but more impactful on ordinary people is what is happening in the real economy: loss of jobs and incomes, being put on part-time work or asked to take leave without pay.
Take a look at the UK budget. Take a leaf from the combined push both by the Treasury and the Bank of England, although we must avoid the kind of political mismanagement of Boris Johnson.
Better, look at what Singapore is doing, not just in managing the pandemic, but in its economic response to the crisis. The island state which is so dependent on the world economy, is taking the hit, but is planning for the upturn, as can be seen from its Budget 2020.
At the same time, Singapore is working on a further stimulus package which will emphasize workers keeping their jobs. It is in the enviable position of being able to draw on its reserves, the last time it did so being in the 2008 Western financial crisis.
Malaysia is not as well blessed, but it must make what it can with available resources which should be utilized efficiently, always a problem in the country’s administration, and without leakages - in other words, corruption, which is a curse on this country.
So there must be a firm hand, and clean hands, in managing the economy out of the damage caused by Covid-19, and other things previously.
The Prime Minister has made a stab at addressing the challenges, ands there are some welcome initiatives such as the fund for those losing their income. He has also introduced discounts on electricity tariffs, that would affect 10 million people and enterprises, at a cost of RM500 million. The RM2 billion infrastructure development push is another positive effort.
What is most welcome is the strengthened and better focused Economic Action Council (EAC), with executive powers to pursue short-term projects and to monitor on a daily basis economic and financial developments. It puts in clear light the failure of the large and moribund EAC under the previous government.
The government’s priority must be to help ordinary people first, in whatever sector they may have previously been employed, but based on a needs basis, quite clearly the sectors badly hit such as tourism, air transportation, restaurants and retail.
The reduction in EPF contributions for those earning RM5000 and below proposed in the February economic stimulus package (ESP) will not encourage greater spending at a time people fear for their jobs. The government should cover the reduction to ensure their EPF savings remain intact if the government wishes to encourage their private consumption.
The government must bring down prices of essentials by doing away with APs which jack up prices to unconscionable levels. The rentier gains to the few must end if the government really wants to be fair to the lower income. APs must be removed. There are tens to hundreds of them issued by three ministries.
There are so many wish lists on what the ESP should do which it is not possible to get into in detail here. But they all finally converge on one issue: the fiscal deficit that would be incurred by whatever stimulus package.
It has also been underlined that the deficit will only be made worse by the halving of the oil price against the assumption of Budget 2020.
As the oil revenue constitutes a highly significant portion of total government revenues, the deficit would thus be further accentuated by the ESP.
While not throwing caution to the wind, we must not allow ourselves to suffer from fiscal deficit paralysis. We need to do something.
Every country is under the cosh. The fear of upsetting the country’s credit rating must be balanced by the need not to allow the economy to be driven to a standstill - which will affect our rating anyway.
If we have a bigger and more imaginative ESP with no leakages and good implementation and tracking, we have a chance of fending off a recession. That ESP must recognize global demand is weak and should concentrate on domestic consumption and investment, and have measures to assist people and companies adversely affected by Covid-19.
There is one silver lin
ing in the cloud. There is ample liquidity in the domestic banking system for the government to draw on for the ESP, without having to go to foreign markets and being exposed to currency risk.
Some small banks have ability to expand their loan book by about 15-18 per cent of loan assets. If this is extrapolated to the loans outstanding in the domestic banking system of RM1.77 trillion as at January 2020, there is plenty that can be mobilized to finance disciplined government borrowing.
Indeed working on the basis the banking industry’s RWCR (risk weighted capital ratio) is 18.4 per cent, against the minimum requirement of 12 per cent, what is available from the domestic system is RM867.5 billion.
Banks of course are loath to take up sovereign debt because of the low yields, but in a national emergency they could be cajoled to put their shoulder to the wheel. The government must show financial discipline and be accountable. Perhaps Bank Negara Malaysia too can be made to contribute to the national effort by being more creative in its prudential requirements, especially in an upturn in economic activities for which the ESP is designed.
We are in it together. This is a crisis.
The writer, a former NST group editor, returns to write on local and international political affairs.