MAY 28 — Although nationwide MCO (MCO3.0) with the restrictions on interstate and interdistrict travels, social activities, sports, and education has been imposed effective from May 10 to June 7 it does not appear to slow down the spread of Covid-19 infections. Hence, the just announced complete lock down from June 1, 2021 to June 14, 2021is a right decision, though a complete lock down of 21 days is more appropriate.
The graphs below summarises the worrying dynamic — despite MCO3.0, 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 accelerate 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 per cent. Therefore, a TPR value that is too high might indicate either insufficiency of testing or too wide spread of infection in the community. The latter means that no matter how much you increase number of tests if the spread in the community is too wide a TPR value under 5 per cent may not be achievable
According to the dataset provided by the Johns Hopkins University, the data indicate that while Malaysia has significantly increase numbers 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 per cent since the beginning of May. This observation strongly points to the possibility of the much wider community spread than what is detected.
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 continue, 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 – 250 Malaysians to the total death toll within the following 3 to 4 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 per cent, and the use of shipping containers to accommodate for the surge of deaths in Sungai Buloh and Selayang Hospital.
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, 2021 till June 14, 2021.
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However, past experience suggests that 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 impacts to individuals, households, and businesses that a full-blown MCO might cause. This is why, unlike MCO 1.0, which was roughly eight (8) 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 (3) 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 September 30, 2020, and a measure that was well-received by the people was the high uptake of the subsequent six months “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 bank, 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 rate by Bank Negara Malaysia (BNM).
As observed from income statements, the moratorium’s impact appears to be more significant with Maybank than CIMB bank. Maybank observed about 40 per cent 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 bank, 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 bank as it have 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 bank, 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 (RM2.43 billion), Hong Leong Bank (RM772 million), and RHB (RM651 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. Renters protections at least TWO (2) months
As some people or businesses may be owing to other individuals or organisations, i.e., 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 (2) 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 (3) 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 per cent 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 (3) 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 (2) months to the deserving B40s
As measured by the consumer price index (CPI) and reported by the Department of Statistics Malaysia, Malaysia’s inflation rose 4.7 per cent year-on-year in April 2021 — four years 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 per cent), insufficient incomes (79 per cent) - and the crisis has also led to another worrying consequence like mental health (75 per cent).
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 per cent 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.
Although lockdowns can be considered a short-term “circuit-breaker”, it is 7. Increase capacity and speed for testing through Federal and State Government cooperation
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 the State.
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 first dose through collaborative efforts between Federal and State governments
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 Ministry of Health 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.
* This is the personal opinion of the writer or publication and does not necessarily represent the views of Malay Mail.
