Commentary: Malaysia goes slow on COVID-19 reopening for good reason
A look at economic headline figures suggest Malaysia’s management of the coronavirus has been impressive, says Stewart Nixon.
KUALA LUMPUR: Four months have passed since I first highlighted the underappreciated success of Malaysia’s COVID-19 response.
During that time – which includes the tail end of the first movement control order (MCO) – only 25 deaths and around 3,300 infections were recorded.
The number of infections totalled 9,354 on Sep 1, with fewer than 20 new daily cases over the past two weeks and just three deaths since late July.
Simply put, Malaysia has quietly continued its shrewd handling. Too few observers have given it due acknowledgement.
Central to Malaysia’s continued success has been its cautious, evidence-based approach to easing restrictions underpinned by expert advice from home and abroad.
It has listened to the World Health Organization (WHO) and increased the sophistication of its public health interventions, meanwhile observing the resurgence of infections in countries determined to restore the pre-COVID normal.
Businesses and schools reopened under strict operating procedures mandating temperature screening, social distancing, sanitiser provision and check-in registration.
Testing has been expanded and tracing apps unified. Masks were made compulsory in enclosed public spaces.
Text alerts and enforcement activities have continued to reinforce the need for vigilance.
It also benefits from decades of experience responding to unanticipated virus outbreaks and managing endemic diseases like dengue – for which the vigilance of governments and citizens is a feature of everyday life.
Malaysia’s recent decision to extend its recovery MCO (RMCO) until end 2020 is the latest example of its pragmatic approach. The government will not rush reopening while new clusters continue to be unearthed and a small minority of residents flaunt the rules.
It highlighted the WHO’s expectations of a prolonged pandemic and the risk of “super-spreader” outbreaks in taking a safety first approach.
The announcement has been met with little fuss among Malaysians, welcomed by medical experts and divided economists over the economic consequences.
As an economist, I have serious concerns with the popular health versus economic characterisation of pandemic responses and have previously argued that complementarity is a better objective.
Economists arguing for a wholesale reopening not only fatally downplay the economic consequences of a health catastrophe and disregard human behaviour, they also ignore statistics showing economic recovery in Malaysia.
MALAYSIA’S ECONOMY IS RECOVERING RAPIDLY
Malaysia’s gross domestic product (GDP) fell 17.1 per cent in the second quarter of 2020, its worst quarterly performance since the Asian Financial Crisis. It provides a frightening but entirely expected headline given around 55 per cent of the economy was locked down throughout April and only gradually reopened thereafter.
But the monthly figures provide cause for optimism – with April (-28.6 per cent), May (-19.5 per cent) and June (-3.2 per cent) roughly tracking Malaysia’s progressive lifting of various MCO measures; with two-thirds of June under the RMCO arrangements.
Remarkably, Malaysia’s industrial production index for June was down just 0.4 per cent year-on-year despite strict operating procedures, labour shortages in growth sectors (like medical supplies) and the free-falling global economy.
Trade too had its worst quarterly fall (15.1 per cent) since the Global Financial Crisis, but the rebound in June and July was strong. Exports were 5.3 per cent higher year-on-year while imports fell 7.2 per cent.
Deferred trade from earlier months may account for some of the recent boost, but Malaysia’s increasing trade surplus is indicative of its resilience vis-à-vis its trade partners.
The labour market is also showing signs of recovery after unemployment jumped almost 2 per cent to 5.3 per cent in May.
It is too early to declare May the peak, even though unemployment fell to 4.9 per cent in June alongside slight improvements in the participation rate and overall employment levels.
The early returns under the RMCO’s “new normal” appear promising and don’t immediately support calls for further reopening. After all, if the economy can operate at close to normal currently then why risk further relaxation?
Yet the counterargument, that low infection numbers remove the need for restrictions altogether and the economy would fare even better without the safety brace, remains popular.
THE CATASTROPHIC COUNTERFACTUAL
A greater appreciation of health and economic interlinkages can inform this debate.
Malaysia’s 17.1 per cent headline GDP loss was about the same as Italy’s (-17.3 per cent). Italy suffered an earlier, devastating outbreak, recording 34,800 more deaths than Malaysia over that three-month period.
It may seem crude to put a value on lives lost but policymakers do when considering road safety, social impact assessments and insurance valuations. There is no Malaysian or international standard value of a statistical life (VSL), with those used in developed countries ranging from US$2 million to US$10 million.
Using a US$5 million VSL for illustration, 34,800 deaths equates to over US$174 billion – or almost double Malaysia’s first quarter GDP. The counterfactual benefit of lives saved – at 200 per cent of GDP – dwarfs the 17.1 per cent lost.
Government policies need to keep citizens vigilant in what may prove a lengthy battle against COVID-19. Examples around the world suggest Malaysia’s safe approach of retaining the RMCO is prudent.
Europe’s emerging infection resurgence exemplifies concerns with lockdown fatigue and the dangers of unquarantined tourism.
Australia’s experience highlights how quickly the virus can spread in a community that hasn’t fully embraced “new normal” behaviours.
Vietnam demonstrates the dangers of enthusiastically encouraging domestic tourism.
It is in this context that the RMCO arguably serves its greatest purpose – in providing an ever-present reminder that behaviours – like social distancing, personal hygiene, wearing masks, limiting and registering movements and transferring activities online – must stay.
It imposes penalties on those who do not comply – including businesses that may otherwise revert to risky practices to save costs and boost turnover.
It limits international travel to essential and safer pursuits and allows foreign citizens to stay (and in some cases re-enter) and contribute to Malaysia’s recovery.
The Malaysian government takes its public health responsibilities seriously. “The government will continue striving to curb the spread of the pandemic and urging the people to adopt the new normal, including complying with the stipulated standard operating procedures (SOP) in their daily lives,’ Prime Minister Muhyiddin Yassin said earlier in August.
ARRANGEMENTS CAN BE FINE-TUNED
This is not an argument that the RMCO settings have been perfected and should remain indefinitely, though confidence would benefit from clearer guidance on measures that must stay in the foreseeable future.
An important feature of Malaysia’s reopening has been its deliberative dynamism; adjusting carefully as circumstances change and after standard operating procedures have been developed.
Activities such as live entertainment, clubs and crowds at sporting events remain banned, whereas partial re-openings have been achieved overseas under strict regulations.
These arguably involve lesser risk than unrestricted interstate travel – which has played a prominent role in super-spreader events both in Malaysia and globally.
Even then, single-destination interstate travel for essential reasons can be managed at low-risk.
Measures prioritising safety (quarantine and testing), duration (long-term purposes) and criticality (work/medical/family) instead of travel bans based on specific borders can help carefully open the travel envelope.
Looking ahead, critics have rightly asked whether support will be extended alongside the RMCO, particularly for sectors that remain closed or face bleak prospects for as long as the pandemic persists.
Just as the RMCO provides the legal foundations supporting the health response, the stimulus measures and forthcoming budget underpin the economic.
Without detailed information on the implementation of stimulus measures, it is hard to determine how much of the June/July recovery was dependant on government support.
As Malaysians mark “Rumah Merdeka” – the pandemic friendly version of Independence Day – their collective sacrifices and achievements to date deserve quiet celebration and greater recognition.
But as the resilient, humble people and their underestimated political and bureaucratic leadership recognise, the battle is far from won.
Stewart Nixon is a research scholar at the Crawford School of Public Policy, The Australian National University and a research visitor at the University of Malaya.