KUALA LUMPUR, 13 JULY: Due to the complexity of the country’s multiple supply chains, the government’s policy to combat Covid-19 should reassess the categorization of vital and non-essential services. Tan Sri Yong Poh Kon, a member of the Economic Club of Kuala Lumpur advisory board, said today at the KSI Institute Malaysian Economic Summit 2021 virtual conference that the classification has so far contributed to Malaysia’s economic stagnation.
“I believe we need a fresh narrative on what is vital and what is non-essential, because there are so many supply chains in this country,” said Yong, who is also chairman of Royal Selangor International Sdn Bhd.
“Plastic packaging was not required until later in the Movement Control Order (MCO) 1.0, which caused a disturbance in the supply chain because food, which is considered vital, could not be packaged.”
However, because the smelters in Penang that convert tin ore to tin are not allowed to work during this latest lockdown, the same issue with food packaging will resurface, as tin cans are unable to be made,” he noted.
Yong believes it is critical for the government to move away from the concept of vital and non-essential, and to share the pain of the lockdown fairly.
“You can reduce the capacity by 50% to 60%, have lots of room to distance yourself, and have solid standard operating procedures (SOPs), and then everyone can operate,” he said.
He went on to say that the economic costs of lockdowns should be shared because companies and businesses cannot bear all of the costs.
“At the moment, the salary subsidy is around RM15 billion for the previous 15 months or so, but the entire private-sector payroll of these seven or eight EPF contributors is over RM330 billion a year.”
“If the government subsidises RM15 billion, which is only 5% of our RM330 billion, the private sector would bear 95% of the cost,” he said, adding that the government might consider increasing the salary subsidy proportion, as numerous other nations did during the pandemic.
Meanwhile, Dr Jomo Kwame Sundaram, senior advisor at the Khanazah Research Institute (KRI) and a prominent economist, said that many of the government’s approaches are ineffective, and that the government should involve all of society in its efforts to address the pandemic’s impact, as the top-down approach is not appropriate in all situations.
“Stay-in-shelter orders are really brutal devices, which is why I believe we should avoid debating lives against livelihoods.” “I believe it is critical that people recognize that lockdowns at home are not the sole choice.” You need a whole-of-government strategy, as well as widespread participation from the general public. Consider the spontaneous assistance from members of society to provide welfare relief to the less fortunate in society, as well as the spontaneous volunteers of young people who assist with the vaccination campaign. If you do things correctly, you will mobilize everyone in society who wants to solve the problem. Unfortunately, we are using a top-down strategy that isn’t working.
“You can’t just turn an economy on and off, and the same is true for businesses.” That’s a disaster, especially if it’s an open-ended situation,” he continued.
Malaysia faces a huge fiscal policy dilemma, according to Jomo, whereas western countries have implemented robust countercyclical fiscal policies, borrowing when needed.
“We in Malaysia are hesitant, and rightfully so, because we have a situation where handing more money to such a government might spell calamity, with further corruption and abuse.”
People in Malaysia are naturally hesitant, but we must recognize that, in addition to vaccinations, counter-cyclical fiscal policies are aiding to the improvement of economic performance in the West.
“It’s critical to be courageous on fiscal policy; we can’t be kept hostage by credit rating companies and other entities,” he continued./n
