Coping with Covid-19: Malaysia

Malaysia's puzzle: How to save lives and the economy

While there are initial signs of flattening the curve, SMEs fear millions may be left jobless soon

Malaysian firefighters spraying disinfectant on a street during the movement control order due to the outbreak of the coronavirus in Kuala Lumpur last Tuesday. The number of new infections detected daily since the order was declared has oscillated be
Malaysian firefighters spraying disinfectant on a street during the movement control order due to the outbreak of the coronavirus in Kuala Lumpur last Tuesday. The number of new infections detected daily since the order was declared has oscillated between 100 and 200, aside from a few spikes. Encouragingly, the number of people who have recovered has risen, hitting 122 last Thursday. PHOTO: REUTERS

As the coronavirus cuts a swathe through Asia, The Straits Times bureaux report on how governments, hospitals and the man in the street are coping with the crisis. In the first of a five-part series, Malaysia bureau chief Shannon Teoh looks at how the government seems to be succeeding in controlling the virus but has not yet found the right economic formula to minimise the financial fallout. 

KUALA LUMPUR • It was after 8pm last Monday when sales promoter Amy Wong found out that her apartment at One City Tower would be under an enhanced movement control order (Emco) beginning at midnight. It left her family with no time to save perishables at their grocery stall in the nearby Chow Kit market before 3,200 people in the 502 units of their condominium were effectively isolated from the rest of the world after 17 residents tested positive for coronavirus.

“Because the government also ordered that all shops must be closed by 8pm, we did not have an opportunity to store our goods, and it was a total loss,” the 39-year-old said.

Ms Wong is already on unpaid leave, and now her 62-year-old father and younger brother are unable to put food on the table during the two weeks of total lockdown.

Thankfully, her auntie is able to drop off supplies at her home in the usually bustling but now eerily quiet commercial district of Masjid India in Kuala Lumpur.

But should the movement control order (MCO) in place since March 18 fail to “flatten the curve”, a nationwide Emco could see over 30 million others in Malaysia join the likes of Ms Wong and 10,000 others already in three such areas.

Whether broadening the Emco zones, or even calling an outright emergency, becomes necessary is still touch-and-go. The number of new infections detected daily since the MCO was declared has oscillated between 100 and 200, aside from a few spikes.

Encouragingly, the number of people who have recovered has risen, hitting 122 last Thursday.

While nobody wants to be infected by a potentially fatal disease – Malaysia’s mortality rate is 1.6 per cent – a narrowing gap between the rates of infections and recovery will ease pressure on the healthcare system and allow the government to consider loosening restrictions, or at least not increasing them.

WHO’s Malaysia, Brunei and Singapore head Lo Ying-Ru was reported by Reuters as saying “there are initial signs of flattening of the curve, but this could bounce back if control measures are lifted and if people don’t continue to take protective measures”.

To Malaysia’s credit, the rate of increase in new cases is slower than predicted. The Malaysian Institute of Economic Research forecast on March 23 that the total number of cases would hit 4,087 by the end of last month, but only 2,766 tested positive. JP Morgan estimated in its March 23 report that infections would peak in mid-April at 6,300, a figure Malaysia will miss unless there is a sudden increase. Malaysia has 3, 662 cases as of yesterday.

 
 
 

“These are early signs from the mitigating activities introduced by the ministry and other agencies in the past month,” Malaysia’s director-general of health Noor Hisham Abdullah said last Tuesday. “However, the next two weeks are crucial. It will decide whether or not the government’s MCO has produced the intended impact.”

TESTING TIMES

On March 15, the day before Prime Minister Muhyiddin Yassin announced a nationwide travel ban and curbs to non-essential activities, Malaysia recorded a sudden spike of 190 new cases, bringing the total to 428 and making its tally the highest in South-east Asia.

It made headlines and the country is regularly cited as the worst hit in the region. But this was a case of bad stats. On paper, Malaysia has a lower per capita infection rate than Singapore, which has had a far higher rate of testing at over 7,000 per million people compared to Malaysia’s figure of about 1,600.

For perspective, Indonesia, widely seen as an example of insufficient testing, had a barely credible 2,273 cases as of yesterday, fewer than Singapore’s 1,309. Yet the archipelago had racked up 198 Covid-19 deaths, as compared with the city state’s six.

Several experts believe that in countries where testing is not as widespread as in Singapore and South Korea, the number of positive samples is not a reliable data point for policymaking. Intensive care cases and those resulting in death provide a more accurate picture of domestic outbreaks.

“The way I look at it is, death rate is the ‘worst-case scenario’ which should be better for emergency preparedness,” Malaysia Medical Gazette managing editor Khoo Yoong Khean said last Saturday, when the toll had hit 57.

He said Malaysians should start worrying if the projected need for hospital beds, intensive care and ventilators exceeded capacity.

As of Friday, Health Minister Adham Baba said only 40 per cent of capacity – 6,917 beds and 634 ventilators – earmarked to treat Covid-19 patients had been utilised.

 
 
 

Data also showed that the increase in active hospitalisations was slowing and as of Saturday, only 50 patients were on respiratory support and orders have been placed for 800 more ventilators.

REBOOTING THE ECONOMY

However, most of the anxiety has been financial, and tighter or prolonged restrictions on business activities will have adverse effects on an economy that most are already expecting to dive into recession this year, leaving the budget 2020 estimate of 4.8 per cent growth seeming like a fantasy in hindsight.

The central bank has since released a revised projection of -2.0 per cent to 0.5 per cent gross domestic product (GDP) growth for the year, far more optimistic than most analysts.

Yet the government has so far been reluctant to spend. It boasts of a RM250 billion (S$83 billion) stimulus package of which only 10 per cent is from its own pocket.

Most of this has gone into direct cash handouts to more than half of Malaysians, as opposed to how other countries have focused on saving jobs by helping employers pay their wage bills.

The government insists its deficit will not breach 4 per cent of GDP, despite central bank deputy governor Abdul Rasheed Ghaffour saying last Friday that there is “fiscal space to support the economy during periods of economic slowdown”, pointing to how the government deficit rose to 6.7 per cent in 2009 after the global financial crisis.

Instead, the government has been enlarging the definition of “essential services” which are exempted from the economic stasis during the MCO, including even the manufacture of electronics and the entire oil and gas value chain. Less than 30 per cent of nearly 12,000 applications to continue manufacturing had been rejected as of last Monday. Despite this, official data shows applications for unemployment benefits are at a record high, tracking at least 60 per cent higher in the past two months as compared with last year.

 
 

Things are set to get worse as seven out of 10 small businesses polled by the Small and Mediumsized Enterprises (SME) Association said they will run out of cash by the end of this month, leading the group’s chief Michael Kang to predict that half its members will fold due to the coronavirus and leave a quarter of Malaysia’s 16 millionstrong labour force on the streets.

Unhappy with the stimulus measures – much of which are in the form of loan deferments and cheap credit to ease cash-flow issues – business interests have been lobbying the government.

“We have collated and considered all feedback, and certain areas have been identified for fine-tuning and improvements,” Finance Minister Tengku Zafrul Abdul Aziz said last Saturday, adding that further measures for micro-businesses and SMEs will be announced this week.

By this Friday, the government will also have to decide on whether to extend the MCO.

The Straits Times understands that the health authorities believe this is necessary, but many in the Cabinet want to ease the level of curbs if infections fall, allowing businesses to come out of enforced hibernation.

 
A version of this article appeared in the print edition of The Straits Times on April 06, 2020, with the headline 'Malaysia's puzzle: How to save lives and the economy '. Subscribe