THE government recently announced steps towards national recovery, whereby it aims to exit the Covid-19 pandemic in four phases.
But, the transition must be accompanied by a comprehensive plan, developed with an understanding of the crisis and the Malaysian context, with clear targets and feedback for course-corrective measures – all based on science and economic theory.
The famous economic identity suggests the increase of money as a solution to a “normal” financial crisis. But this is where the current pandemic-induced crisis fundamentally differs.
The main problem is reopening the economy, coupled with the great amount of uncertainty and hiccups that subsequently rest on our ability to manage the pandemic.
Therefore, we suggest the following strategy, based on 3+1 main strategic thrusts:
1. Protecting lives and livelihoods;
2. Education emergency response;
3. National reconciliation; and,
4. National economic recovery plan.
The first three strategic thrusts are immediate, short-term responses to eliminate the uncertainty associated with the pandemic as quickly as possible and minimise the negative impact on the rakyat.
The last strategic thrust focuses on what can be done to stimulate economic growth immediately once the pandemic uncertainty is over and the economy can reopen at full or near-full capacity on the basis that the first three thrusts are followed through successfully – which could be at the start of 2022.
This article covers the first strategic thrust, while the subsequent thrusts shall be covered in sequential releases.
Protecting lives and livelihoods
The first thrust concerns the immediate and drastic actions needed to protect lives and livelihoods through three goals: extension of a full lockdown, extension of social and business safety nets, and pandemic management strategies.
Protecting lives and livelihoods must be the first and foremost thrust, as this forms the prerequisites prior to the transition into subsequent phases of the movement control order (MCO) and phases towards exiting the pandemic, aligned with the intention of the government.
The three main goals with their corresponding objectives are as follows:
Extend full lockdown
Objective 1: taking lessons learnt from the relationship between lockdowns and the downward progression of cases locally and in other countries, the total duration of MCO 3.0 should be at least until July 13 – six weeks in total.
Objective 2: ensure MCO 3.0 strictness that it is indeed only essential sectors of the economy that are allowed to operate, decided by a task force comprising the International Trade and Industry Ministry, Health Ministry, and Science, Technology and Innovation Ministry.
Extend social, business safety nets
Objective 1: an automatic loan moratorium for all micro, small and medium enterprises (SMEs), and B40 and M40 households, and a targeted moratorium for other individuals, for at least three months, or a 50% loan payment reduction for six months.
Objective 2: wage subsidies for three months for the private sector and daily wage earners.
Objective 3: targeted direct cash transfers for three months to deserving B40s and low-M40s, especially daily wage earners and gig economy workers.
Objective 4: renters’ protections for at least three months.
Objective 5: lift the debt-to-gross domestic product ratio ceiling to 65% as a temporary measure until the pandemic is over.
Objective 6: implement tax-cutting measures on a temporary basis, with some exceptions.
Corporate income tax should be reduced from 24% to between 18% and 20% across the board. The tourism sector should be zero-taxed for two years. The sales and services tax threshold for tourism operators should be increased from RM500,000 to RM1.5 million.
Income tax should be reduced by 50% across the board – which is out of the progressive schedule of 0% to 30% – except for those earning RM300,001 and above, for example.
For those who do not qualify to pay income tax, the Inland Revenue Board could, under the broader oversight of the Malaysian Social Protection Council, tentatively access the Bantuan Prihatin Nasional and Bantuan Prihatin Rakyat databases prior to the implementation of a single social protection database in the future.
Otherwise, every working adult should be encouraged to register and open an income tax account.
The government should consider imposing a one-off/yearly windfall tax on the glove and commodities sectors to counterbalance the reduction in corporate tax. At the same time, it should consider introducing a capital gains tax for dividends amounting to RM1 million and above.
Focus resources on fast-tracking immunisation drive, expanding testing
The National Pharmaceutical Regulatory Agency should consider expanding the list of vaccines granted conditional emergency approval, while its priority and diligence on safety evaluations are well-placed and should not be questioned. It is also noted that it may not solve the issue in the near term due to overall global production limits.
In addition to increasing the number of vaccination centres (PPVs), the government should expedite decentralisation strategies, such as the designation of general practitioner clinics and private hospitals as PPVs, rolling out drive-through vaccinations, and the use of government vehicles to help bring vaccines to the elderly and people living far from jab sites.
One of the indicators of sufficient testing is a positive rate of below 5%. However, this is still subject to sampling bias. Therefore, in addition to increasing testing, there is a need to widen sampling quality.
Mapping Malaysia’s pandemic journey in terms of three dimensions – daily cases, daily tests and the positivity rate – indicates that the country needs to carry out at least 150,000 to 200,000 tests a day.
Following the completion of the focus on vulnerable groups in the earlier phases of the inoculation programme, it should gradually shift its focus to as many economic actors as possible in the months of June to mid-August, making for 1.5 months to 2 months’ focus on economic sectors.
The focus should be on manufacturing and other essential sectors that are vital economic contributors, but integral to historical and potential clusters.
This coincides with the Public-Private Partnership Covid-19 Industry Immunisation Programme, which is considered Phase 4 of the National Covid-19 Immunisation Programme, and should be extended to cover as many economic sectors and businesses as possible, ensuring mid-tier companies, micro enterprises and SMEs are prioritised. It should not be limited to manufacturing.
From June to mid-August, non-essential sectors should stay under lockdown until and unless members have been fully vaccinated.
Rela, the armed forces, the Civil Defence Force and local community associations can be deployed to supplement healthcare workers in efforts including mass testing programmes, and assisting in quarantine centres and vaccination campaigns. – The Vibes, June 22, 2021
Rais Hussin Mohamed Ariff, Margarita Peredaryenko, Jason Loh and Ameen Kamal are part of the research team at Emir Research, a think tank focused on strategic policy recommendations
The second part will discuss the strategic thrusts related to education emergency response and national reconciliation
