Rebuilding from the ashes of the pandemic

The rebuilding must start, hard and difficult as it may be, or the country risks staring at a long period  of depression


TODAY, Malaysia reopens almost all sectors of the economy under the most relaxed measures since the imposition of a punishable stay-home order by the authority on March 18.

Many will return to work under strict social distancing norms. Deserted streets, roads and highways will see the return of millions of cars — a stark contrast to an average of 400,000 vehicles recorded daily during the Movement Control Order (MCO).

Hundreds of thousands of shops will pull up the shutters, welcoming customers for the first time in 47 days, offering a glimpse of hope and a possible escape from an imminent financial ruin.

Restaurants will serve diners (in certain states), but under the condition of two people per table and the furniture spread 2m apart. Children who have been cocooned for almost seven weeks can walk out the gates for the first time.

Most parents will breathe a sigh of relief to let the children out after being holed up for almost two months.

Prime Minister Tan Sri Muhyiddin Yassin announced the easing of the lockdown last Friday, cutting short the current stay-home order which is in force until May 12.

The easing of economic activities was met with some stern objections. An online petition to urge the government to retract the Conditional MCO drew more than 300,000 signatures.

A few states have gone against the federal decision, citing they would perform their own health readiness evaluation before opening their economy. Unions have also said the move was too early as Malaysia has not fully contained the virus.

Bridging the chasm between health interests and cushioning a full-blown economic fallout is a challenge for the government.

Detractors argued health priorities precede economic considerations. Worries are that the next waves of Covid-19 spread will plunge the country into a health crisis, worse than what had transpired in the last 47 days.

The government, on the other hand, is trying to prevent Malaysia from sinking into “The Great Crisis”.

For each day the economy remains shuttered, the country loses RM2.5 billion in economic activities. Each sales and service transaction prevented under the MCO erases 6% revenues to the government, a tax which contributes about 10% of the government’s Treasury.

The more losses recorded by companies mean the less opportunity for the Treasury to collect corporate tax, leaving a hole bigger than the world’s largest open cast tin mine in Seri Kembangan in the government’s budget.

As of now, corporate taxes account for almost 30% of the Treasury’s revenue. The reality is grim.

Companies and sectors, which were running with one leg prior to the coronavirus pandemic, will see the other leg chopped off by the pandemic. More companies will finally be shuttered.

Already, unemployment is mounting. Thousands of people are already jobless. Domestic violence cases are on the rise, largely triggered by the financial strain on the breadwinner. More such cases are expected.

In the months to come, the situation will worsen. Thousands of new graduates are entering an almost “empty” job market.

Oil will not be the saviour. The country’s oil revenue is expected to be lower than during the 2014 oil price rout. Oil demand is hitting the lowest level in almost 25 years as four billion people globally are forced to stay home.

Malaysia also does not have the luxury of foreign reserves like China to feed the nation’s unemployed or the poor. The one-off handout in April had cost the government more than RM20 billion.

A repeat of a similar subsidy will not come any time soon. Excess liquidity will be as rare as rocking horse droppings.

The sad fact of the crisis remains. Some 105 families lost a father, a mother, a son, a daughter, a husband, a wife or a relative due to the pandemic.

They died alone in the cold hospital beds. Relatives watched the burial from a distance. Another over 6,000 people survived one of the most uncertain periods of their lives.

Nobody will forget the ones who perished or the sacrifices of the people who defended the nation during the coronavirus war.

But Covid-19 is not solely a health crisis of a global scale. It is a crisis that rips through the social and economic fibres of the nation.

At some point, the rebuilding must start, hard and difficult as it may be, or the country risks staring at a long period of depression and the deaths, sacrifices and efforts will be in vain.

Mohamad Azlan Jaafar is the editor-in-chief of The Malaysian Reserve.