Full Movement Control Order (FMCO): Is It Necessary?

 

The Government, after much dithering, has implemented FMCO for two weeks, starting from June 1, 2021. Fairly like MCO 1.0, which was from March 18 to May 4, 2020, FMCO will have a severe impact on the economy.

According to the Health Ministry, there are 233 clusters still active with 16,785 cases. The clusters are mainly from factories – 46% of the total. Even after MCO 3.0, factory work clusters remain high (53% of total work clusters).

Our choice is life or livelihood? Is it that simple?

Before FMCO, economists were suggesting GDP growth for 2021 to be between 4.5% to 5.5%. This was below BNM or IMF estimates of 6-7.5%. Many have said the loss per day is RM2.4 billion with MCO. It may be half of that (RM1.2 billion) but that too is significant. Assuming a 6-week lockdown period, the economic loss is about RM50 billion or 3.6% of nominal GDP.

In May alone, 1,290 people lost their lives. Of this, 74% were those aged 60 or older. As of 1st June 2021, only 8% of Malaysia’s adult population has received at least one dose. Chasing single-digit daily infection rate is illusory now and may take another 12 months for us to achieve herd immunity. Then there are 62,000 no-shows at vaccine centres because of the lack of transport. The bulk are from the Malay heartland – Pahang, Kelantan, Terengganu. Where are political parties to help? When there is an election, there are workers available to transport voters! But not for vaccination?

Then do we have room for more stabilization programmes?

Direct fiscal injection was RM77.6 billion. Another RM10 billion need to be included (from KWAN and Pemerkasa+) which will raise budget deficit to 6.3%. Based on above table, our debt to GDP is well below Singapore and Hong Kong. So, there is still room to assist SMEs and others.

Remember the virus does not discriminate – it kills the poor, the rich, the religious or non-religious. We need to have a comprehensive, targeted strategy to contain this dreadful disease. Flip flop policies don’t help but add to the confusion.

What do I mean? If the bulk of the clusters are factories, then that’s where FMCO is applicable, vaccination prioritized, and close monitoring required. If religious bodies are responsible, then we need to stop religious gatherings and do services by Zoom or YouTube.

So, is it necessary (FMCO)? Not a blanket FMCO but a well selected, monitored FMCO. Then we need a targeted vaccination programme and more funds to SMEs to survive. WFH is fine for some but output without physical presence can be challenging for others.

 

Reference:

Pankaj C. Kumar, Insight - Lockdown is painful but necessary, 2 June 2021, Starbiz