Resumption of economic activity: Clear guidelines needed


  • Analyst Reports
  • Friday, 03 Apr 2020

WE have just gotten news that the government is forming a special Cabinet committee to bolster its stimulus package and strike a balance between economic priorities and effective enforcement of the movement control order (MCO) due to the Covid-19 pandemic.

Firstly, there is not much to the economic stimulus package. It should perhaps be renamed as a survival package. How the SMEs are going to get through this extremely difficult time and how the people are going to judge the performance of this government in the next general election remains to be seen.

The government has made the right decision in allowing the director-general of the Health Ministry to manage the pandemic without interference from the politicians. In times of crisis, the nation needs a calm and level-headed leader to come forth and save the situation.

Our ministers should refrain from putting their foot in their mouth because this pandemic has reset the ‘new’ normal. In this crisis, there is no place for a lack of intellectual capacity, populist policies (that might counter the MCO’s efforts) or cheap publicity stunts.

On a side note, though, I thought the “Doraemon” advice was a good distraction for a nation under quarantine. It did bring a smile to our faces.

This special Cabinet committee must include the private sector from the supply chain side and set out clear guidelines for the resumption of economic activity – both during the MCO (essential services) and post-MCO periods.

As a guideline, it would do us well to refer to Singapore, South Korea and Japan to pick out their best practices. It is never too late to learn from other people’s experience.

Here, I would like to highlight a couple of real stories that have played out in the first two weeks of the MCO.

First on the list is the supply chain disruption for essential services. When the MCO was announced, the list of essential services that was allowed to operate was also announced. Many factories had to apply to the International Trade and Industry Ministry or Miti for permission to operate. It was announced that they had to submit their forms with the condition that they reduced their workforce by half in view of the safety directive from the Health Ministry.

Many factories did not get approval from Miti in the first week, so they stayed closed. In the meantime, the Human Resource Minister came up with the statement that all salaries must be paid during the MCO period.

Many workers took advantage of this statement, packed their bags and left for their hometowns. Now that the MCO has been extended for another two weeks, employers are facing a big problem in asking them to return to work. Can employers not pay the workers because they refuse to work then?

A factory producing the much-needed hand sanitisers had supply chain problems because its suppliers of alcohol, bottles and cartons were not allowed to operate in the first week. Some started operating in the second week, but the carton factory couldn’t start because the workers refused to come back to work. The alcohol factory simply refused to start operations for whatever reason. Production has since slowed down to half the normal capacity as the supply chain has been disrupted.

The same factory had another problem as it had received a big purchase order of hand sanitisers in February from overseas. It was already producing and shipping the goods in March when the government came up with the directive to ban the export of essential products. It checked with Customs on whether it could ship its products out but was informed that approval was necessary from Miti. However, nobody could be contacted on this.

Then, due to the congestion of containers stuck at the ports (for whatever reason), the Transport Minister got involved. Importers were crying foul that their import shipments of much-needed face masks and other essentials had not been cleared by the port authorities.

The Transport Minister also announced that export orders should be fulfilled by Malaysian factories after the Federation of Malaysian Manufacturers or FMM sent out an SOS.

However, the latest news from FMM is that this is not happening due to stringent action undertaken by the relevant enforcement agencies. It must be the Customs department and port authorities seeking Miti’s approval. So, who is in charge of approving the export of essential products here?

To add to the chaotic situation, local “essential” manufacturers that require local logistics companies to transport their goods must get approval from the Domestic Trade and Consumer Affairs Ministry. Miti must have been swamped with too many requests and as such, refused to accept any new applications to operate during the MCO after March 24. What if the MCO is extended for another two weeks till April 28? This would be a mind-boggling problem, wouldn’t it?

To date, according to our Health Ministry director-general, our pandemic curve is flattening, which is a good sign that social distancing does indeed work. We are hoping that the MCO till April 14 would be sufficient to flatten the curve of the second wave. If necessary, the MCO might be extended till April 28.

That would be fine with most people, as long as normal economic activity is partially resumed and the supply chain – especially for the production, transportation and sale of essential products – is up and running.

It is the post-MCO period that this Cabinet committee must think through thoroughly. It would be wise to get the advice of supply chain experts and coordinate thoroughly with all the ministries. However, as the health of the people takes priority, the Health Ministry’s directives would take precedence over all other ministries. The second-most important thing would be the seamless resumption of economic activity with strict safety practices in place.

This Cabinet committee could learn a thing or two from its Singaporean counterparts on this. First, practising social distancing in public places and at work is a must. Restaurants must reduce customer capacity by half and advocate a space of one metre between them. Offices ought to have flexible lunch hours from 11.30am to 2.30pm, which would mean sending out staff in three batches. This would also complement the seating capacity of restaurants.

All religious gatherings should be banned until the threat of the third wave is negligible as decided by the Health Ministry. As a matter of fact, any gathering of 10 people or more should be strictly prohibited. If we can get through June without any sign of the third wave, then we will be in good shape.

We should continue with strict personal hygiene practices both at home and at work. This would be to avoid another virus pandemic in the future.

Next, all economic activity should be resumed. The supply and demand equation will sort out the sharp fall in consumption. Let the SMEs adjust to the new challenges.

Most of all, the government must ensure the safety of its citizens during this pandemic and economic disaster, and assist the real economic producers by providing a seamless supply chain solution thereafter. As we were operating just fine before the pandemic, let things go back to the way they were before. The more the various ministries jump in to regulate, the messier it would be.

And for the time being, just let the health director-general speak. He seems to be doing just fine.

The views expressed here are the writer’s own.

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Tan Thiam Hock , MCO ,

   

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