PUTRAJAYA has left many important issues uncovered in its Covid-19 National Recovery Plan, including identifying solutions for the informal sector and the lack of a post-pandemic new economic model, said economists.

They told The Malaysian Insight that the four-phased recovery plan presented by Prime Minister Muhyiddin Yassin did not include protecting the social sectors or indicate how Malaysia would be positioned to resume trading and investing internationally.

They added that the recovery plan took too much time for the national economy to restart.

Universiti Malaya economics professor Rajah Rasiah said the government should protect the informal sector and its workers.

“Their very livelihood is threatened by the crisis. A lot of them are not properly enumerated to access subsidies and do not qualify for loans to benefit from moratoriums,” he said.

He referred to the second phase, predicted to start at the end of June, that focused on economic sectors while social sectors stayed closed.

Phase 2 will begin when the average number of new Covid-19 infections falls below 4,000 and 10% of the population are vaccinated.

“The blanket classification of essential and non-essential sectors also does not address the issue of in which sectors and geographical spaces these infections are spiralling.

“In fact, a proper scrutiny of the latter may allow the economy to grow in sectors that are largely unaffected by the surge.”

He said the government should identify the sectors and items based on the incidence of Covid-19 infections.

“After all, the government allows non-essential items to be sold when outlets are also selling essentials.

“It is from the geographical spaces of Covid-19 hotspots that shops or factories specialising in non-essentials should be earmarked for closing.

“This way, the non-essential goods or services businesses can operate to not only support economic growth and their livelihoods but also provide input for essential goods producers.”

He said the four phases appeared too long for Malaysia to reinsert itself into the world economy smoothly.

Under the plan, Phase 4 will begin after October, when all economic sectors will be fully reopened. This is provided the nation has been successful in bringing down the Covid-19 cases, and a large portion of its population vaccinated.

“We can quicken the transition to Phase 4 to September by raising the vaccination rates and handling the standard operating procedure (SOP) in Covid-19 hotspots mostly identified in factories.

“Domestic investments have cooled down considerably in 2021 and the Department of Statistics had reported on June 18 that Malaysia’s foreign direct investment (FDI) contracted by 54.8% to RM14.6 billion in 2020, which is the lowest figure since 2009.

“The increased uncertainty arising from a massive spike in Covid-19 infections and deaths so far in 2021 quite obviously would have resulted in a further fall in FDI.”

No details

Socio-Economic Research Centre (SERC) executive director Lee Heng Guie said that the economy suffered a little less in the current full movement-control order (FMCO) compared to the first MCO last year.

“During MCO 1.0, both the domestic engine and the export engine collapsed in totality as globally, everyone is dealing with this pandemic.

“But the export sector has recovered since the second half of last year, thanks to the good demand for electronic chips, gloves, crude palm oil etc.

“This provides (our local manufacturers) some lifeline during the buffer time.”

However, there is a fear of order diversion in that foreign industries may go for neighbouring countries that have fewer supply chain disruptions.

“Some of the non-essential sectors that are not allowed to operate are essential to the essential sector and that affects the supply chain, which causes orders to not fulfil and stocks stuck in warehouses,” Lee said.

Economist and honorary professor at Universiti Malaysia Sarawak (Unimas) Madeline Berma agreed that there are loopholes in the Covid-19 exit plan.

“It does not have a monitoring and evaluation mechanism, there are no details in terms of its target, output and outcomes.

“It does not include plans to address key challenges during the pandemic such as food security, the ‘lost generation’ in education and social safety net measures,” she said.

She added that the government must identify priority sectors based on their potential to increase risk transmissions, the value of the sector to the broader economy and their role in promoting well-being and the livelihoods of the vulnerable.

“Malaysia also needs to plan for a new economic model post-Covid-19 that focuses on resilience and efficiency,” Madeline said.

On June 15, Muhyiddin unveiled the plan comprising four phases of an exit strategy to help Malaysia bounce back from the Covid-19 pandemic.

He said that the current full movement-control order, which is scheduled to end on June 28, is under Phase 1. He said the government would consider moving to Phase 2 if the average daily cases of Covid-19 drop to below 4,000, 10% of the population has received two doses of the vaccine and the public health system was no longer at a critical stage.

In Phase 2, Muhyiddin said economic activities would be opened up in stages by allowing up to 80% employee capacity on the premises. Social activities and inter-state travel will still be prohibited under Phase 2, he added.

Under Phase 3, all manufacturing activities will be allowed to operate subject to strict SOP and capacity limits. However, certain high-risk activities will still be prohibited such as organising conventions, and wherever social distancing measures are difficult to practise such as in pubs, spas and beauty salons.

Finally, the government will move to Phase 4 once it achieves average daily Covid-19 cases of below 500, 60% of the population has received two doses of vaccines and the public health system is at a safe level.

Phase 4 is the final stage of the plan, where all economic sectors will be opened, with more social activities allowed, including inter-state travel and domestic tourism. – June 25, 2021.