12/2020 – It’s time for recovery

I am back in Malaysia, three-quarters through my mandatory 14-day quarantine period.

Having gone through five Covid-19 tests in 22 days of travel, my final test awaits me on Monday. Then (hopefully), I can assume my roaming rights again.

For those who travel to the United Kingdom, Malaysians who arrived after Aug 11 do not need to self isolate as Malaysia is now considered a “safe” country. Countries with low Covid-19 infection rates are rated accordingly but the decision can be reversed when the infection rates go up like they did in France and Spain.

Summer holidays are such a big event in Europe, so you can imagine the chaos created when a country is re-designated as “unsafe”. Holidays are cut short, and there is a mad scramble to go home to beat the deadline before you have to self-isolate at home for 14 days.

Since the UK government volunteered to pay 80% of workers’ salaries for four to five months, British workers have been having the time of their lives, being paid to stay at home and do nothing.

Restaurants have been closed for months and some only started reopening in July and August.

Alex, the owner of Mandarin Kitchen in Bayswater, said he started opening his restaurant at end-July with eight of his 24 workers. Within two weeks, his business was back to 60% of the pre-Covid-19 level and he had to increase staffing.

His two oldest staff refused to come back to work – they probably wanted to extend their paid holidays – and Alex changed their status to “permanent unpaid holiday”.

Meanwhile, Boris Johnson has been pleading for office workers to get back to work as London city looks like a zombie town.

From what I hear, many companies will only start operating in their offices in 2021, after the Christmas and New year holidays. Most employees cite the risk of infections as their biggest fear of returning to work in the office. Working from home is the new norm.

This fear, however, was not evident in tourism: there were 150,000 British tourists in France alone; and a mad crowd gathered in Bournemouth beach as UK enjoyed the hottest week of summer in early August.

For the first time in their working lives, Britons enjoyed such a long paid holiday. Everybody was happy, except of course business owners and entrepreneurs.

Many restaurants and small businesses closed for good. In October, when the salary subsidy ends, the retrenchment letters will come out and massive unemployment is expected, worse than in the last recession of 2007/8.

Back in Malaysia, friends have been texting me over the Merdeka holiday weekend, saying large crowds are back in the malls and restaurants. Confidence to get out of the house is returning, thanks to the stellar efforts of the Health Ministry. This is certainly good news.

China has proven that any country that can control its pandemic problems will be the country that recovers the fastest. It is the only nation in the world that had a positive 3.2% GDP growth in the last quarter to June. Every other country was in negative territory.

With the RMCO extended until the end of the year, the Malaysian government needs to do more to revive the economy and create new jobs.

However, other than lip service to followers, I have not seen any sound strategies for a quick recovery. Trumpish claims of an RM82bil FDI from Turkey? No foreign workers for our manufacturing sector? Setting up another e-commerce platform to fight Lazada and Shopee?

No, not really. What Malaysia needs now is a capable team of ministers who are able to focus on the real needs of the nation rather than how to stay in power. The major issues are staring us right in the eye.

The moratorium on RM70bil worth of loans ends in September. Extending the loan moratorium is basically kicking the can down the road. Not everyone or every company needs their loans extended.

Assuming 20%-30% of the loans require special assistance and help, we are still looking at a RM15bil-RM20bil problem. If the banks can restructure 70% of the problematic loans, then the whole banking system can absorb an NPL hit of RM5bil-RM6bil.

Individuals who have been retrenched should be allowed to pay only the interest on their loans for the next 12 months with the principal being stretched further back. Viable SMEs should be allowed to restructure their loan repayments and given a further loan injection to tide over.

To a certain extent, bankers must give equal emphasis to empathy as much as to the financial evaluation (viability) of their customers.

Besides opening our green lane with Singapore, we should consider opening a green lane with our northern neighbour, Thailand, which is another “safe” country with very low infection rates.

Tourism (without the 14-day quarantine) for those from “safe” countries like China, Thailand, Taiwan and so forth should be allowed as long as they come with a negative Covid-19 test taken three days before arrival.

As a precaution, these tourists can do another test on arrival before being allowed to enter.

Malaysia Airlines and AirAsia will not be around in six months’ time if they are not allowed to fly the international skies soon. American Airlines just announced the retrenchment of tens of thousands of personnel in October after the government’s furlough subsidy ends.

Domestic tourism is picking up but it’s just a fraction of the money from foreigners. Last year alone, Malaysia’s economy was boosted with a total of RM86.14bil from international tourist receipts, not to forget the hundreds of thousands of jobs the industry creates.

Foreign workers and maids have been an important feature of our economy for the last 20 years. They do the work that locals do not want to do. Banning these crucial workers from Malaysia is not the answer to a fast recovery as our manufacturing and plantation sectors are crucial and major contributors to our GDP.

The government should allow these workers to come in, have them tested three days before departure and again at KLIA, followed by a mandatory quarantine before they join their employers. Let the employers pay for all these tests and quarantine.

Without ignoring the standard safety guidelines from the Health Ministry, the opening of these economic activities can be implemented without any serious consequences to a healthy Malaysia. Let all of us take a positive step towards the faster recovery of our economy.

The sooner we do it, the better it would be for all.

Published: https://www.thestar.com.my/business/business-news/2020/09/05/its-time-for-recovery

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