By Aishah Mohmad Afandi & S.Kisho Kumari
KUALA LUMPUR, Jan 8 (NNN-Bernama) — As the number of COVID-19 cases continues to climb on a drastic manner, everyone is hanging on a fine thread hoping for the best.
For the frontliners, who are now on the verge of breaking point as hospitals are at its full capacity while temporary COVID-19 centres are now more packed than airports during the glory days, they are hoping for a circuit breaker to lower the infection rates.
As of Jan 7, the number daily infection has topped 3,000 and the Health director-general has warned that it could spiral up to 8,000 in March if this trend continues.
While the numbers send shudders to everyone’s spine, businesses on the other hand could not take another blow, especially for small and medium enterprises (SMEs) who are just regaining their momentum.
The economy losses RM42 billion per day during the movement control order (MCO) period and over 30,000 SMEs had closed its doors since March.
And as for the people, well. The future seems bleak.
What would happen next? Would they now lose their income that they just got back?
JOB MARKET
While statistics have shown unemployment has been on a downtrend since the reopening of economy post the three-month MCO from March to June last year, the rate is still relatively higher than average.
As of October 2020, the unemployment rate stood at 4.7 per cent or 748,200 people.
Not only that, those who have been retrenched due to business and border closures have dragged their feet into business ventures as some settle for a lesser salary which leads to underemployment.
The rise in gig economy, while it’s a convenient alternative for many; they are constantly under pressure as the market becomes more saturated.
Not only that, most of them can no longer survive on meagre earnings from jobs that leave them increasingly vulnerable since COVID-19 came into the picture.
Hence, calls for another MCO are unwarranted, as these people are just starting to gasp for air, and new lockdown measures will be far worse for businesses and the livelihoods of the people.
Not only that, the middle 40 per cent of the household income group (M40) who have been facing pressure since day one as salaries were cut and overtime is nearly non-existent will be hit worse.
With more family members relying on them and at the same time not being cut out for assistance such as i-Sinar will put a heavier burden on their shoulders.
This leaves us with a bigger question. Can our finances support it?
FINANCIAL PRESSURE
When the MCO was called for the first time, the government has acted swiftly in providing assistance to all Malaysians such as the blanket banking moratorium, cash assistance, as well as financial support to businesses.
The banking moratorium, which ended in September last year, has given extra liquidity and relief especially to those who lost their job due to the pandemic, as well as those who suffer from pay cuts.
As the assistance shifted to a targeted approach, which sees a 90 per cent approval, the economy has started to move upwards.
But as COVID-19 continues to be more aggressive in the community and businesses are tied to operating rules, those affected also opted to tap into their retirement savings in the Employee Provident Fund (EPF) under i-Sinar.
The fund said that they had approved 2.5 million out of 3.88 million application worth RM19.62 billion as of Jan 4.
It said the first month’s payout amounting to RM10.07 billion would be made in stages beginning Jan 5, 2021 while a majority of the remaining 1.4 million submissions, who have yet to be approved fall under the criteria outlined under Category 2, which will open for submissions from Jan 11.
With the EPF funds now having been tapped, what other sources of savings are left, especially for those in tough corners?
On the government’s fiscal position, Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz said Malaysia did not hesitate to expand its fiscal position in the near term to support the counter-cyclical economic recovery packages.
This includes the biggest budget ever in 2021 plus a special fund for COVID-19 worth RM38 billion which will be driven by local borrowings.
Budget 2021, meanwhile, was drafted on the assumption of oil price at between US$45 and US$55 per barrel.
Maybank Investment said the benchmark Brent crude is expected to trade at average of US$45.50 per barrel for 2021 on sluggish demand.
The federal government’s debt to gross domestic product (GDP) ratio as at end-November 2020 was RM818.2 billion or 56.8 per cent, following the move to increase the national debt-GDP ratio to 60 per cent.
The Finance Minister has also assured that the government has room to conduct additional measures to address the calling of the economy as the need arises.
In his new year address, Prime Minister Muhyiddin Yassin reassured that the government is ready to consider a strategic fiscal injection if the situation warrants it, like the previous economic stimulus packages.
He has said that strengthening the people’s well-being and driving the country’s economic growth after COVID-19 was one of the government’s five integrated strategies laid out for 2021.
Is now is the time?
CAN BUSINESSES SUSTAIN?
Sustaining the first round of MCO has been a miracle for many and as calls for another round of MCO grows stronger, a sigh of despair echoed through the space.
The SME Association of Malaysia is concerned that another round of MCO might lead to the folding of more local businesses and increase unemployment in the country.
Vice-president Chin Chee Seong said another round of MCO would “just kill more businesses which are currently just grappling with staying afloat.”
The Federation of Malaysian Manufacturers (FMM) has also issued a similar statement requesting for business and economic activities to be allowed to continue operating, albeit under stricter standard operating procedures (SOPs).
FMM president Soh Thian Lai was reported as saying that the federation supports a targeted conditional MCO which is more localised with stricter SOPs and travel restrictions but not a total lockdown similar to that implemented in March 2020.
The truth is, while all eyes are on the multinational corporation performance; the real economic movers are the SMEs that provide jobs to more than 75 per cent of the population.
Hypothetically, the higher the rate of closure of SMEs, the higher the unemployment.
With financial stress looming, the only way to address the call is by ensuring liquidity in household for the duration of the movement control.
REBALANCING ECONOMY AND HEALTH
We often hear “health is wealth”.
And today, we are at the crossroads.
It would be a difficult decision to rebalance between public health and the economy; but some things must be done for the betterment of the future.
As Malaysians, we need to play our part, as well observe the SOPs, while we await the arrival of the vaccine.
While rebalancing between the two, let’s not aggravate the dire situation faced by our frontliners who have been working tirelessly for a year and submerge them in the depths of despair.
— NNN-BERNAMA
