Lockdown MCO 3.0 — Survive to restart package

Policy recommendations towards a holistic Survive to Restart package by EMIR Research.

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Published in The Star, Malaysiakini, Focus Malaysia & MYsinchew, image by Malaysiakini.

ALTHOUGH the nationwide MCO (MCO 3.0) with restrictions on interstate and interdistrict travels, social activities, sports, and education had been imposed from May 10 to June 7, it did not appear to slow down the spread of Covid-19 infections.

Hence, the just-announced complete lockdown from June 1 to 14 is the right decision, though a complete lock down of 21 days is more appropriate.

The graphs below summarise the worrying dynamic – despite MCO 3.0, daily new infections have only accelerated, currently adding approximately 50,000 new infections in a matter of just one week.

Daily new deaths appear to have accelerated even faster (refer to figure below).

At the same time, we should be cognizant of the epidemiologists’ warning reiterated all the time that the number of confirmed cases is lower than the number of actual cases; the main reason for that is testing limitations.

Sufficiency of testing is evaluated by test positive rate (TPR).

Science recommends that TPR should remain at least under 5%. Therefore, a TPR value that is too high might indicate either insufficiency of testing or too wide a spread of infection in the community.

The latter means that no matter how much you increase the number of tests if the spread in the community is too wide a TPR value under 5% may not be achievable

According to the dataset provided by the Johns Hopkins University, the data indicates that while Malaysia has significantly increased the number of tests per day (from about 50,000 in the beginning of April to above 100,000 at the end of May), the TPR still remained above 5% since the beginning of May.

This observation strongly points to the possibility of the much wider community spread than what is detected.

Source: Data on COVID-19 (coronavirus) by Our World in Data  https://covid.ourworldindata.org/data/owid-covid-data.csvSource: Data on COVID-19 (coronavirus) by Our World in Data https://covid.ourworldindata.org/data/owid-covid-data.csv

The observed daily record-breaking total new cases recently, with the figure as of May 28 at 8,290 indicates an alarming trend. Given no intervention, if this momentum and trajectory continues, we might reach 10,000 new daily cases by the end of this week (and the month), nearing 600,000 in total.

At the same time, we shall expect to woefully add another 200 to 250 Malaysians to the total death toll within the following three to four days.

We do not know how much more the daily death rate could accelerate, considering a completely overwhelmed medical system. The healthcare capacity is by itself another powerful indicator of worsening pandemic spread. It remains true that Malaysia’s healthcare facilities have been pushed to the brink, with maximised ICU beds and more patients needing ventilator support. We have observed reports of the deployment of military-built hospitals, the establishment of “field ICUs” in Penang, where the capacity of critical care capacity was reported to have breached 100%, and the use of shipping containers to accommodate the surge of deaths in the Sungai Buloh and Selayang Hospitals.

Above a certain threshold (a combination infection, death, and recovery rate, healthcare capacity etc), the debate of lives vs livelihood becomes less balanced, and the issue tips considerably in favour of saving lives.

Lockdowns can be considered as a short term “circuit-breaker”. This is evident from the success of MCO 1.0; other less stringent versions of MCOs have been accompanied by numerous cases of non-adherence to standard operating procedures (SOPs).

At EMIR Research, we believe that this situation requires immediate, decisive, data-science driven, constructive and humane intervention.

EMIR Research released a press statement on May 21 titled “Suggestion for Covid19 Pandemic Management” which included the recommendation for temporary complete lockdowns, and provided suggestions to cushion the economic impacts to people and businesses, and other recommendations to battle the onslaught of the pandemic.

Targeted MCOs may not work when the virus is already very widespread in the community, at which point a temporary circuit breaker is needed to halt the movement of people simultaneously and therefore, the movement (and transmission) of the virus.

Thus, we thank and fully welcome the call by the Government on May 28 for a total lockdown beginning June 1 to 14.

However, past experience suggests that a slightly longer duration may be needed and therefore, we want to urge policymakers to consider extending the 14-day lockdown to at least 21-days in order to break the current alarming dynamic of Covid-19 spread in Malaysia. Thereafter, it can be a targeted lock down.

We are aware of the potential socio-economic impact to individuals, households, and businesses that a full-blown MCO might cause. This is why, unlike MCO 1.0, which was roughly eight weeks before it shifted to a conditional MCO (CMCO), the suggestion herein is only for 21 days, and is precisely why lockdowns must be paired with sufficient social and business safety nets, and other measures such as mass testing and an increase in vaccination pace.

The proposed 21-days lockdown must be accompanied with the following:

1. Loan moratorium for THREE months

The loan moratorium provided significant relief to people with disrupted incomes and allowed more cash in hand. The first six-month moratorium ended on Sept 30,2020, and a measure that was well-received by the people was the high uptake of the subsequent six-month “opt-in” moratorium. When observing the income statements relevant during these periods (Q2 – Q3 2020 and Q2 – Q4 2020) for two major banks in Malaysia, Maybank and CIMB, although incomes were affected, both still registered significant profits. Although there were reduction in profits, these were still cushioned by the lowering of the expenses incurred, particularly for expenses that are interest related; which could be in line with the lowering of interest rates by Bank Negara Malaysia (BNM).

As observed from income statements, the moratorium’s impact appears to be more significant with Maybank than CIMB. Maybank observed about 40% in profit reduction (compared with the same period in the preceding year). This is due to lower interest income, however interest expense has also significantly reduced resulting in only a slight net interest income reduction compared to the preceding year.

For CIMB, the relatively larger reduction in profits appears to be mainly attributed to lower dividends received from its subsidiaries, partially offset by less loss on net interest expense. Net interest income does not appear to be a big profit contributor to CIMB as it has been experiencing net interest expense (loss) since 2019. In fact, its net interest expense was lower in 2020 (lower loss) compared to the same period in 2019.

When excluding the impact of dividends, less loss was observed. With the lowering of BNM interest rates, this results in lower interest expense borne by the bank.

When removing the impact of dividends for CIMB, it has actually recorded less loss compared to the same period in the preceding year.

Furthermore, we observe that once the moratorium has ended, based on financial standing in Q1 2021, the ease of recovery was evident, as Q1 2021 profits for Maybank have exceeded comparative periods in 2020 and 2019.

Evidently, Maybank’s ability to “recover” in terms of profits, appears to be higher compared pre-moratorium quarters for year 2020 and 2019 respectively. Q1 2021 income statement for CIMB bank has not been available at the time of writing.

While income is obviously affected, the costs for the banks have also generally reduced in line with the lower interest rates and government assistance.

Reduction in profits due to moratorium is unfavourable from the commercial perspective, but when compared to other industries with severe losses, or with the people who have lost their sources of income entirely, the relative comparison is clear: Banks, subject to their investments and business profile, may have a relatively bigger capacity to weather the impact of the short-term moratorium.

If we simply observe net profits for Q1 2021 at group level, we can observe examples of healthy profits from Maybank (RM 2.43 billion), Hong Leong Bank (RM 772 million), and RHB (RM 651 million).

Banks reviewed appear to show profits still in the hundreds of millions to billions of ringgit. In our view, this points to the banks’ capacity to extend assistance for the people. Banks appear to have the capacity to weather the moratorium, with its participation directly assisting the people who are in need the most. The relative reduction in profits to the banks attributable to moratoriums is incomparable to the relative socio-economic harm to the people in the absence of a moratorium, especially during lockdowns.

2. Renter protections at least TWO months

As some people or businesses may be owing to other individuals or organisations, ie not directly with banks (for example, with landlords), they too should be provided with a safety net through a form of renter’s protection for a minimum of TWO months during the proposed temporary lockdown. This is also in line with the EMIR Research ground research findings immediately after the first complete lockdown. At that time, the business owners reported that it is their inability to cover fixed costs due to dwindling incomes pushed them to the brink of survival. Unlike loan moratorium, assistance to landlords is probably needed in the form of subsidies, ensuring that they too are not pushed to the point of survival. If data allows, targeted subsidies (for those landlords whose rental income is the sole source of income) is preferred.

3. Wage subsidies for THREE months

This is necessary to provide “breathing space” for business owners and employers, allowing for better workforce retention. Studies on the impacts of MCO 1.0 showed that 68% of businesses reported no sales/income during the period.

Due to the collective impact of this economic safety net for both businesses and individuals, wage subsidies should be considered for a minimum of THREE months. The public sector should be completely excluded from this intervention. Wage subsidies should be limited only to private sector daily wage earners among the B40s.

4. Targeted direct cash transfer for TWO months to deserving B40s

As measured by the consumer price index (CPI) and reported by the Statistics Department Malaysia, Malaysia’s inflation rose 4.7% year-on-year in April 2021 — a four-year high.

We should also keep in mind that CPI being an aggregate measure does not entirely reflect each individual CPI component’s price movement, thus telling nothing about ground reality as the rakyat experiences it.

Since food is a necessity, the increase in prices is worrying for consumers. EMIR Research’s poll findings have shown that there is a high degree of worry towards socio-economic matters in 4Q’20 due to the pandemic – losing jobs (81%), insufficient incomes (79%) – and the crisis has also led to another worrying consequence like mental health (75%).

Labour market uncertainty remains, and the people’s social safety net has also become more vulnerable. The unemployment rate went up by 0.1 percentage point to 4.8% in 4Q’20, with a higher number of unemployed at 760,700. In the same quarter, skill-related underemployment had also increased from 1.76 million to 1.89 million.

Studies on the impacts of MCO 1.0 have also shown that 9 out of 10 self-employed individuals in the B40 group, and that 6 out of 10 households reported the inability to provide sufficient food for their families.

In tackling the cost of living matters to support the rakyat in affording at least basic necessities to survive on a daily basis given the high number of Covid-19 infections and the impact of lockdowns, where many could be affected in terms of earnings and employment, additional cash aid to the needy should be considered. Thus, an expansion in beneficiary coverage should be considered for eligible B40 households, especially for daily wage earners and gig economy workers.

5. Revamp current process for SOPs

One of the successes of MCO 1.0 is its stringent adherence to standard operating procedures (SOPs). There is an urgent need to tighten current SOPs and monitor adherence diligently. There is probably even a need to revamp some of the current SOPs. One critical area that Malaysian epidemiologists and exposure science specialists must give the most scrupulous attention to is vaccination centres that must continue to operate even under the complete lockdown. Given the accumulated empirical evidence pointing to the high possibility of airborne nature of COVID-19 transmission, current SOPs may need to be revised accordingly:

– Consider making high efficiency masks compulsory in the vaccination centers as well as encourage wearing other protective wear for those who are vaccinated.

– The first priority should be given to outdoor settings—consider utilising highways or parking lots for organising drive through vaccination centres.

– For vaccinations requiring indoor settings, ventilation, air filtration and purification technologies is a must, with adequate capacity for the venue. Carefully examination of the venue is required to ensure that there are no cross-drafts of air as this will facilitate particles spread from one person to another.

6. Crystal clear communication to ALL

A coordinated effort to ensure clear, streamlined and non-conflicting information is provided to the people, and whenever possible, to provide directives in advance. The messaging has to be positive in tone, by not merely outlining what can and cannot be done, but by providing the reasoning based on science and hard data, through an effective communication style suitable for the masses.

7. Increase capacity and speed for testing through Federal and State Government cooperation

Although lockdowns can be considered a short-term “circuit-breaker”, it is crucial to detect and isolate carriers in the community. Without a mass testing and isolation programme to match short-term lockdowns, these carriers re-join the community once movement restrictions are relaxed, sporadically igniting clusters and cumulatively triggering the next wave.

It is, therefore, crucial to increase the testing capacity via updated test kits (valid for the latest variants) and the necessary infrastructure and manpower. The speed, sensitivity, accuracy, mobility, and cost of these test kits are crucial elements for success. Isolated asymptomatic cases must be adequately quarantined and re-tested before their release from individual quarantine.

8. Contact tracing system that enables data sharing amongst critical stakeholders both at Federal and State level.

Current and future resources must be allocated to ensure the safety and integrity of data quality gathered by apps such as MySejahtera, and ensure transparency in complete data sharing between all stakeholders at the Federal and State level.

This benefits predictive technologies such as the Hotspots Identification for Dynamic Engagement (HIDE). As with any systems based on artificial intelligence, the quality of its output is significantly dependent on the quantity and quality of the data provided.

9. Vaccinate as many people with the first dose through collaborative efforts

Subject to vaccine types, there have been various reports suggesting single dose effectiveness in reducing infectivity, and the reduced risk in developing symptoms. Though it has been reported that more vaccine supplies are expected to arrive in the coming months, should there be further hiccups or delays, this strategy may be considered in light of the need to vaccinate as many people as possible

For the vaccine supplies already available, it is critically important to vaccinate the registered recipients even ahead of scheduled time—the above-mentioned drive through arrangements might facilitate this strategy.

10. Enable public-private partnership, empower general practitioners (GPs)

Instead of mass hiring under the Health Ministry to supplement the needs of an additional workforce, it is worth considering empowering existing medical practitioners in the private sectors and general practitioners (GPs).

According to a statement by the president of The Federation of Private Medical Practitioners Associations, there are at least 8,000 GPs in Malaysia and assuming each GP treats 10 to 20 symptomatic patients daily, thousands of early cases of Covid-19 can be attended to. This reverts back to the role of GPs as gatekeepers of the healthcare system, prior to access to more intensive care at hospitals.

11. No politics from anyone. Just pandemic and economic management for ALL.

Malaysia has arguably reached a point where the argument tips significantly in favour of saving lives. The issue transcends all political narratives. There are no justifiable grounds to politicise any part of this pressing matter. This is a national security issue, and Malaysia is unmistakably at war. Therefore, this calls for a political sabbatical, where all sides of the political divide must show solidarity to address this national crisis.

Dr Rais Hussin is President and Chief Executive Officer at EMIR Research, an independent think tank focused on strategic policy recommendations based on rigorous research.

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Diterbitkan di Sinar Harian.

Presiden dan Ketua Pegawai Eksekutif EMIR Research, Datuk Dr Rais Hussin Mohamed Ariff mendesak kerajaan agar melanjutkan tempoh pelaksanaan penutupan penuh sektor sosial dan ekonomi atau ‘total lockdown’ fasa pertama selama 14 hari kepada sekurang-kurangnya 21 hari.

Rais berkata, tempoh berkenaan perlu diikuti dengan cadangan kepada kerajaan untuk menampung beban ekonomi yang dipikul oleh masyarakat sepanjang pelaksanaan tersebut.

Menurut beliau, antaranya adalah mengadakan moratorium pinjaman selama tiga bulan bagi menampung perbelanjaan dan keperluan golongan masyarakat yang terkesan.

“Pengurangan keuntungan akibat moratorium tidak baik dari perspektif komersial, tetapi jika dibandingkan dengan industri lain yang mengalami kerugian teruk atau dengan orang yang kehilangan sumber pendapatan sepenuhnya, perbandingan relatif jelas. Bank bergantung kepada pelaburan dan perniagaan mereka profil, mungkin mempunyai kapasiti yang lebih besar untuk mengatasi kesan moratorium jangka pendek.

“Sekiranya kita melihat keuntungan bersih untuk Q1 2021 di peringkat kumpulan, kita dapat melihat contoh keuntungan yang sihat dari Maybank (RM 2,43 bilion), Hong Leong Bank (RM 772 juta), dan RHB (RM 651 juta).

“Bank yang ditinjau menunjukkan keuntungan yang masih dalam jumlah ratusan juta hingga berbilion ringgit. Pada pandangan kami, itu menunjukkan kemampuan bank untuk menghulurkan bantuan kepada rakyat,” katanya dalam kenyataan, pada Jumaat.

Rais yang juga Pengerusi Perbadanan Ekonomi Digital Malaysia (MDEC) itu berkata, bantuan lain kepada masyarakat juga perlu diberikan seperti perlindungan penyewa sekurang-kurangnya dua bulan, subsidi upah selama tiga bulan serta sasaran wang tunai langsung untuk dua bulan kepada B40 yang layak.

“Kajian mengenai kesan PKP 1.0 juga menunjukkan bahawa sembilan daripada 10 individu yang bekerja sendiri dalam kumpulan B40 dan enam daripada 10 isi rumah melaporkan ketidakupayaan untuk menyediakan makanan yang mencukupi buat keluarga mereka.

“Dalam menangani masalah kos sara hidup rakyat, bantuan tunai tambahan kepada yang memerlukan harus dipertimbangkan. Oleh itu, peluasan liputan benefisiari harus dipertimbangkan untuk isi rumah B40 yang layak terutama bagi pekerja yang mendapat gaji harian dan pekerja ekonomi,” ujarnya.

Selain itu, menurut Rais, kerajaan juga disarankan memperbaharui proses semasa untuk prosedur operasi standard (SOP), penyampaian komunikasi yang jelas kepada umum, meningkatkan kapasiti dan kepantasan untuk ujian pengesanan Covid-19 melalui kerjasama kerajaan Persekutuan dan negeri.

Tambahnya, antara cadangan lain adalah vaksinasi kepada masyarakat seramai mungkin dengan dos pertama, memperkasakan penglibatan barisan hadapan dalam sektor swasta dan awam serta ketepikan agenda isu politik dalam krisis pandemik Covid-19.

Pada Jumaat, Sidang Khas Majlis Keselamatan Negara (MKN) memutuskan untuk melaksanakan ‘total lockdown’ fasa pertama di seluruh negara bermula 1 Jun sehingga 14 Jun ini bagi membendung penularan Covid-19.

Menurut satu kenyataan, sidang khas itu yang dipengerusikan oleh Perdana Menteri, Tan Sri Muhyiddin Yassin itu turut memutuskan semua sektor tidak dibenarkan untuk beroperasi kecuali sektor ekonomi dan perkhidmatan perlu yang akan disenaraikan oleh MKN.

Dr Rais Hussin merupakan Presiden dan Ketua Pegawai Eksekutif di EMIR Research, sebuah organisasi pemikir bebas yang berfokuskan kepada pencernaan saranan-saranan dasar strategik berteraskan penyelidikan yang terperinci, konsisten dan menyeluruh.

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