Covid-19: Some forward planning thoughts
Published on: Sunday, April 19, 2020
By: Datuk John Lo
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The global situation.
Under the best circumstance, things can be uncertain, except that there is a good level of confidence going forward. Best description of the present global situation is nothing is certain. Flux rules the day. Most countries are grappling with adverse economic conditions, very much aggravated by wide spread of Covid-19. Health and economic glooms are everywhere and in every country. No country, including USA, has been able to control Covid-19 convincingly yet except China. None of the G7, which are the most advance countries can say that the curve is flattening. No country can signify the first sign of overcoming Covid-19. USA and Europe [UK, France, Italy, Spain] are fighting Covid-19 with everything they have got. Australia, Japan, South Korea and many advance countries have similar challenges. These advance countries with sufficient resources and better health care will defeat Covid-19 eventually. The question is when.
Much more worrying are the less developed, potential huge epic-centre countries which have poor or non-existent health care, minimal resources and great number of people living in slum. These countries are spread over the world like Indonesia, Philippines, in Africa, Latin American and many parts of Asia.
On the economic front, we know that the world economy has shrunk, will sink further before recovery. Reality is that the cake has become much smaller. Many countries, struggling, will resort to inward looking policies, many politicians like Trump and Japan’s Abe have started stirring up nationalistic fever for political survival. If global economy worsens, co-operation among countries will be reduced. World trade will diminish. Protective walls will be put up.
The only comfort now is that all the major economies have introduced financial stimulus packages to keep their economies from going under and to sustain employment. Without exception, they will incur deficit budgets, will suffer financial complications.
In contrast to China’s strict lockdown, most western countries are contemplating business reopening while still having the pandemic. If Covid-19 can still be controlled, well and good. If not, there will be a major health and economic problem which may well lead to the worst depression for the whole world.
The world economy will undergo a drastic restructure. Many industries like tourism, will experience some very fundamental change, same with aviation industry. Another development is relocation of industries. Japan and USA will pay or subsidise their companies in China to relocate back to their respective countries or to other countries in Asia. Vietnam is now the favourite to benefit.
Such is the power of Covid-19, within 3 short months, it has changed the behaviour of 7 billion people. It has reshaped relationships between countries and for sure, the world will become multi-polar instead of just 1 super power.
IMF has predicted world economy will contract by 3pc in 2020. Weaker economies will suffer much worse.
http://www.xinhuanet.com/english/2020-04/14/c 138976128.htm
The Malaysian situation.
The Malaysian prosperity is highly dependent on trade and commodities. Trade will go down, it is a question of how severe. Hold tight for negative growth rate. Except for rubber gloves, nothing much is happening. Manufacturing is suffering. SME is and will go through a bad bashing. SME, total number about a million, provide about 90pc of employment, are substantial players in supply chain for few large companies and large portion of exports. Most of these SME are not financially strong to withstand the current economic depression.
GLCs which form the largest block in KLSE are not particularly strong to alleviate the economy or assist the government. Hopefully they don’t cry to the government for assistance too. Bad timing for federal government to replace heads and directors of GLCs who are professionals in their own rights. Replacing them with politicians is a very bad move.
Most worrying is the inexperience of many federal ministers. Some of them are down right ignorant. At this critical period, we cannot afford the luxury of ministers keeping on their boo-boo antics.
Malaysia, like all countries, has rolled out 3 stimulus packages [1 from PH, 2 from PN – 2nd one in support of SME]. The respective ministers in charge of various components of these packages should do their homework well so that there will be 100pc effects.
Congratulations are in order to our medical front liners, from the Director General of Minister of Health, doctors, nurses and the men of the armed services manning road block under the hot sun. With a great sense of pride, the Malaysian Covid-19 situation is very much better than many advance countries like Italy, Spain, France and USA. Malaysia is one of the best in the world.
Typical Malaysian style – every businessman, every sector is wanting the biggest possible slice of the stimulus packages. Without exception, all say they are very important to the economy or keep jobs. They will fold up without immediate government aid. All of them wants free rides. None, absolutely none, have offered to – [a] assist the country to overcome our current dilemma by digging into their pockets. This is very true of big companies which have made billions in the past. [b] offer to repay back the assistance that they will receive from the stimulus packages. They will conveniently forget when they start to make money again. They won’t remember that these are tax payers’ money.
Sabah’s forward plan for post Covid-19
In better times, Sabah’s economy has been coasting along, more like muddling through, at a low level, Sabah government financially not that strong, narrow revenue sources, limited economic options and employment. We are in urgent need of economic diversification and restructure. At the same time, the world as we knew it 3 months ago no longer exists. A whole new world is already here. At the speed the global situation is evolving, no expert’s opinion can be relied on 100pc. None has gone through such an experience. At best, any analysis is guess-work.
Notwithstanding that, plan ahead is the best chance to survive and progress in the post Covid-19 new normal. Without a plan or with a bad plan, Sabah’s economy will more than likely to spiral down from our present already weak position.
The global and Malaysian situations are very complex, unusual and uncertain. The best option for those tasked with planning for post Covid-19 is to compile a few models, discuss them with government leaders so that they can choose the best model they deem is good for Sabah’s future. Hopefully these models will contain some/or all of the followings –
[a] The economic objectives and targets of State political leaders because they are our elected representatives and are answerable to us in the next election.
[b] up Sabah’s economy in the value chain, especially in oil/gas and agriculture.
[c] Assimilate high tech [especially 5G] into all Sabah’s economic spheres. This is a must. In this respect, Sabah is fortunate to have Datuk Safar Untong as KSN as he is very knowledge in this regard.
[d] Diversification of Sabah Government’s revenue.
[e] Seek new economic activities.
[f] New employment and investment opportunities.
[g] enhancement of income for small farmers and coastal fishermen who form most of Sabah’s less fortunate population.
[h] New game plan for tourism.
[i] down grade the importance of oil palm for it has taken the biggest slice of Sabah’s land but is giving Sabah poor return. Diversify into other high value crops which Sabah small/medium farmers can benefit.
[j] Sabahans have one of the lowest productivity rates in the country. This should be improved.
Big mistake for Sabahans/political leaders to take things for granted and think of the pre Covid-19 ways of doing things will be ok. I must stress that it will not be ok.
In the final analysis, Sabah’s future in post Covid-19 is in the hands of Sabahans. In the new normal post Covid-19, Sabah political leaders should ensure that Sabah’s economic assets can be retained in Sabahans’ hand as much as possible.
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