Coronavirus: Flip-flops in aid policies dent faith in Malaysian govt as it looks to reopen economy

Malaysian army personnel patrolling an area under lockdown in Kuala Lumpur, on April 29, 2020.
Malaysian army personnel patrolling an area under lockdown in Kuala Lumpur, on April 29, 2020.PHOTO: EPA-EFE

KUALA LUMPUR - A flurry of reversals in aid policies to soften the blow of Malaysia's coronavirus outbreak have sown doubt in the government's handling of the crisis, with a petition calling for Prime Minister Muhyiddin Yassin to reverse Friday's decision to ease restrictions aimed at curbing infections garnering 360,000 signatures by Saturday evening (May 2).

The move to relax the Movement Control Order (MCO) from Monday (May 4) ahead of its May 12 expiry has sparked criticism over the haste of reopening the economy while the daily rate of infections are still in double digits nearly seven weeks since the partial lockdown began on Mar 18.

New infections rose back to triple digits, at 105, on Saturday for the first time in two weeks to bring the cumulative total to 6,176.

The central bank and Malaysia's banking association said on Thursday (April 30) that hire-purchase and fixed-rate Islamic financing were not exempt from accrued interest during the six-month moratorium on bank loans that began in April.

This was a departure from the understanding when the measure - which the government said was worth RM100 billion (S$32.9 billion) in liquidity - was first announced on March 24.

While the authorities had not explicitly said these debts would not accrue interest during the moratorium, several financial institutions had initially told customers the payment periods would simply be deferred for six months without any increase in repayments and this was echoed in an FAQ by Bank Negara - which has since been taken down.

"When the finance minister is not an elected representative but a banking representative?" asked former law minister Azalina Othman. The Umno supreme councillor from the ruling coalition's largest party Umno was referring to Finance Minister Tengku Zafrul Aziz's decades in finance and previous job as chief executive of CIMB, one of the region's biggest lenders.

The widespread fury over the apparent about-face was exacerbated when the Social Security Organisation (Socso) revealed on Twitter on the same day that it was no longer accepting applications for the Employee Retention Programme (ERP), as "there are no additional funds."

The ERP pays out RM600 per month for workers earning under RM4,000 monthly put on unpaid leave. Socso is the insurance fund for low-salaried workers.

But the statement was retracted, with Human Resources Minister Saravanan Murugan saying Saturday that Socso is still processing applications involving 230,652 workers up to date.

Although he did not address the controversy directly, the statement implied that the government's estimate of 33,000 benefitting from the RM120 million ERP allocation was a gross miscalculation.


Datuk Seri Zafrul was also left to plead with banks on Saturday to "consider waiving accrued interest (for hire purchase loans) or profit (for fixed-rate Islamic financing) during the six-month moratorium".

But The Straits Times understands that banks would have faced both cashflow and regulatory issues from the payment holiday, which led to the sudden reversal.

These events have triggered fears that authorities have underestimated the impact of the coronavirus on the economy, and whether the Muhyiddin administration rushed into restarting an economy that has operated at slower than half-pace during the MCO.

"The extra spending announced earlier was only meant to last a few months. If the government has bought into a quick V-shaped recovery, then they have underestimated the severity of the crisis," economist Hafiz Noor Shams, who formerly served at the finance ministry, told The Straits Times.

Risk consultancy Bower Group Asia's director Adib Zalkapli believes the confusion over the aid packages "has somewhat undone the good work started by the PM".

"From the people's perspective, there was a guarantee then that the government would manage the economic impact of the MCO," he said.


Additionally, even while PM Muhyiddin announced the MCO relaxation on Friday morning, authorities raided foreign worker enclaves in Kuala Lumpur which have been under lockdown, detaining over 500 undocumented migrants. This was despite an earlier government vow not to detain any illegals who come forward for Covid-19 screening.

Galen Centre for Health and Social Policy executive director Azrul Khalib called the move "a contradiction from the public health perspective" to take such aggressive measures to block a potential spread of infections while easing off on other restrictions.

Former premier Najib Razak has also called for the easing of curbs to be done "slow and steady."

"When we do it at one go, it will risk the health services," he said, suggesting that one week of preparation be undertaken before businesses resume to avoid new waves of infections as seen in Japan and Canada.