PUTRAJAYA should come to terms that the Covid-19 virus is here to stay and find a way to live with it instead of implementing continuous lockdowns that may lead to full-blown financial and political crises, a credit ratings agency said.

In a research paper, chief economist of Malaysian Rating Corporation Berhad (Marc) Firdoas Rosli said achieving zero positive Covid-19 cases in the near future is ambitious and the government should implement measures to recoup economic losses.

“Lockdowns incur qualitative and qualitative costs, are grossly inefficient and may lead to full-blown financial and political crises.

“While the gross domestic product losses are enormous, the intangible costs are much higher and would only be realised in time.

“The government should quickly recoup output losses and place the economy on a stronger recovery path. It is possible to recoup the economic losses in GDP in the fourth quarter of 2021,” Firdoas said in the paper titled “Lockdown without being locked in”.

Malaysia has implemented three lockdowns since the start of the pandemic last year. While the first movement-control order successfully flattened the pandemic curve, subsequent lockdowns were not as effective.

Cases in Malaysia have trended in five figures while the death toll continues to rise despite the rolling lockdowns.

Marc said while lockdowns may have been effective in other countries, Malaysia should not look at it as a benchmark but rather as a template.

“The real policy change is to phase it out entirely over a long period of time or improve the existing lockdown implementation.”

To that effect, Firdoas proposed measures such as letting business owners determine their own “new norm” while the government puts in place “floor” level standard operating procedure instead of blanket SOP that are inefficient and punitive.

In the case of food and beverage outlets, Marc suggested that they should be encouraged to operate outdoors rather than indoors to avoid crowding.

For shopping malls and shop lots, it suggested an increase in exit and entrance points and automatic tills.

Meanwhile, hairdressers and beauty salons should be allowed to operate without any time constraints so that SOP can be adhered to.

“Contrary to popular belief, we believe that the government should promote businesses to expand instead of restricting supplies, financial support to invest and improve channels of supply during the pandemic is of high priority.”

The first lockdown in March last year cost the government RM2.4 billion a day while the second lockdown in January this year cost RM700 million a day.

The third lockdown in June has cost the government RM1.3 billion a day in losses.

The economist said in the aftermath of the first lockdown, Malaysia’s GDP contracted by RM60.3 billion or 17.2% on a year-on-year basis and more than 300,000 people suffered job losses.

In January, Marc had estimated Malaysia’s GDP to grow by 5.6% but it subsequently revised the forecast to 3.9%.

“We forecast that the overall national output losses due to lockdowns in 2021 will amount to at least RM23.2 billion.”

Most of Malaysia is currently in the first phase of the National Recovery Plan.

Under the plan, economic sectors will reopen in phases subject to three indicators, the number of daily Covid-19 cases, percentage of population that is fully vaccinated and the healthcare system must no longer be critical.

To transition to phase two, daily cases must be below 4,000 and 10% of the population must be fully vaccinated. For phase three, cases must be below 2,000 and 40% must be fully vaccinated and for phase four, cases must fall below 500.

Perlis, Perak, Kelantan, Terengganu, Pahang, Penang, Sabah and Sarawak are the only states to have transitioned to phase two.

Prime Minister Muhyiddin Yassin said the government is expecting most states will transition to the final phase of the plan as early as October. – July 29, 2021.