Finance Minister: No Full Lockdown to Prevent Unemployment

Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz said that no other country in the world has completely shut down their companies during the second and third waves of Covid-19.

 

Malaysia is using the same approach as other countries

Rather, these countries only tightened their standard operating procedures (SOPs) and limiting social activities.

He said Malaysia's also using the same approach in preventing unemployment and a more brutal impact on vulnerable groups. 

In a Facebook post, Tengku Zafrul said that with the complete closure of economic activities like Movement Control Order (MCO) 1.0, the number of unemployed people would reach one million. 

He also said that it would also negatively affect 2.8 mullion informal sector workers who are now in a vulnerable condition. 

"Generally, the first two MCOs have reduced Covid-19 cases significantly, but MCO 2.0 achieved this target without negatively affecting the country's economic growth," he said further.

 

Focus on vulnerable groups

According to Khazanah Research Institute (KRI) research associate Adam Manaf Mohamed Firouz, if total lockdown is the only viable option, the government must equip the vulnerable groups with fiscal aid. 

He stated SMEs, low-income households, self-employed workers, and those unable to work from home would also be heavily affected by the total lockdown. 

"Any aid is urgently needed, including automatic loan moratoriums and cash aid. Cash assistance must be adequate as replacement income, instead of mere supplements," he said.

For more comprehensive cost-efficiency and impact, instead of just mainly targeting those officially in poverty and the B40 group, he said the government should focus on incurred risks such as unemployment and salary reduction.

He said that these measures already exist under the Social Security Organisation, like the employment insurance system and wage subsidies. However, the government needs to widen and extend these aids to include more workers and the self-employed.

Many Malaysians are discussing the feasibility of a total lockdown to curb the spread of Covid-19.

Total lockdown is not a magic bullet

Adam Manaf said that a total lockdown would better curb the spread of Covid-19 cases, but it's hardly a magic bullet. There is an urgent need to increase testing, tracing and isolation efforts of cases.

He added that a two-week complete lockdown might not be enough to reverse the number of active cases, but it would still be a better solution to slow the Covid-19 spread than the status quo.

 

More households are at risk of absolute poverty

Based on KRI's 2019 official statistics, about 800,000 households are at risk of falling to absolute poverty with just a monthly income loss of RM800 per household. 

This data means that a total of 1.2 million households (16.9%) would be in absolute poverty. 

Adam Manaf said that a complete lockdown would mean higher income loss and more widespread poverty. However, in reality, the number of households living in poverty could be much higher as economic troubles have long continued since the publishing of the official poverty statistics in 2019.

"For instance, the Federal Territories Minister Tan Sri Annuar Musa stated in February 2020 that 30,000 households in Kuala Lumpur (KL) live in absolute poverty. This is a 30 times increase from the official 2019 KL poverty number. The government needs to monitor the current incidence of poverty during this pandemic closely," he explained.

 

The poor would be the most affected

Institute for Democracy and Economic Affairs senior fellow and Centre for Market Education CEO Dr Carmelo Ferlito said the poor would be the most affected if the government implements a total lockdown.

"Lockdowns are regressive. The poor are the ones who get their job cut first. Small businesses are the ones that cannot stand 15 months of shutdown.

"Businesses are financially stressed. Furthermore, uncertainty and a total lack of strategy are adding depression. Small businesses will close, others will move," Dr Carmelo said.

"We just need to stop lockdowns and implement a different strategy, centred on temporary beds, research, mass and frequent testing, and home treatments. It is useless, lockdowns don't solve the problem, they delay it," he added.

Source: The Malaysian Reserve

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