Tengku Zafrul: No total lockdown to prevent unemployment


NO OTHER country in the world has completely shut down their economies in the face of the second and third waves of Covid-19, said Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz (picture).

Instead, other countries are only tightening their standard operating procedures (SOPs) and restricting social activities only.

This is also Malaysia’s approach to prevent unemployment and a harder hit on vulnerable groups, he said.

“With the full closure of economic activities such as (under) Movement Control Order (MCO) 1.0, the number of unemployed people is expected to reach one million.

“It also will negatively be impacting the income of 2.8 million informal sector workers who are currently in a vulnerable state,” he said in a Facebook post yesterday.

“In general, the two MCOs (the first MCO and MCO 2.0) have succeeded in reducing Covid-19 cases significantly, but MCO 2.0 achieved this target without adversely impacting the country’s economic growth,” the minister said further.

Khazanah Research Institute (KRI) research associate Adam Manaf Mohamed Firouz said the vulnerable groups must be equipped with fiscal aid if total lockdown is the only viable option.

He said small businesses and low-income households, as well self-employed workers and those unable to work from home, would also be hard-hit.

“Any assistance is urgently needed, including automatic loan moratoriums and cash aid. Cash aid must be sufficient as replacement income, rather than mere supplements,” he told The Malaysian Reserve (TMR).

For greater cost-efficiency and impact, rather than just specifically targeting those officially in poverty and in the bottom 40 group, he said the government should be targeting incurred risks such as unemployment and pay reduction.

“These kinds of measures already exist under the Social Security Organisation, such as the employment insurance system and wage subsidies, but they need to be widened and extended to more workers, including the self-employed.

“A total lockdown would better contain the spread of Covid-19 cases, but it is hardly a magic bullet. Testing, tracing and isolation efforts of cases have remained ineffective, and urgently need to be ramped up,” he added.

“A two-week full lockdown may be insufficient to reverse the number of active cases, but it would still be better in slowing the spread of Covid-19 than the status quo.”

KRI’s early estimate (based on the 2019 official statistics) indicates that around 800,000 households are at risk of falling into absolute poverty, just from a monthly income loss of RM800 per household.

This means a total of 1.2 million households (or 16.9%) would be in absolute poverty.

“A total lockdown would mean higher income loss and thus, more widespread poverty. However, in reality, the number of households living in dire straits could be much higher as economic hardships have long continued since the release of the official poverty statistics in 2019.

“For example, the Federal Territories Minister Tan Sri Annuar Musa announced in February 2021 that 30,000 households in Kuala Lumpur (KL) live in absolute poverty. This is a 30 times increase from the official 2019 KL poverty number. The government needs to closely monitor the current incidence of poverty during this pandemic,” he explained.

Institute for Democracy and Economic Affairs senior fellow and Centre for Market Education CEO Dr Carmelo Ferlito said obviously the poor will be the most affected if total lockdown is implemented.

“Lockdowns are regressive. The poor are the ones who get their job cut first. Small businesses are the ones that cannot stand 15 months of shutdown.

“Businesses are financially stressed. Furthermore, uncertainty and a total lack of strategy are adding depression. Small businesses will close, others will move,” he told TMR.

“We just need to stop lockdowns and implement a different strategy, centred on temporary beds, research, mass and frequent testing, and home treatments. It is useless, lockdowns don’t solve the problem, they delay it,” he said.