CME: A TOTAL ECONOMIC SHUTDOWN WOULD RUIN THE COUNTRY
Sunday, 24 January 2021: The Center for Market Education (CME) has understood via the media that Putrajaya is set to announce a total economic shutdown after February 4, should the number of Covid-19 cases in the nation continue to not show any improvement, according to what the EU-Malaysia Chamber of Commerce and Industry (Eurocham Malaysia) seems to have said in a letter issued to its members.
According to CME, however, a strengthening of the so-called containment measures would bring Malaysia to the verge of economic collapse. First and foremost, as mentioned in other occasions, it is now more and more clear – scientifically speaking – that lockdowns are not an effective measure for containing the virus. Better data analysis and communication, to allow people to take informed risk assessments and to orient their behaviour, is a much more effective way to fight Covid-19. But such data analysis strategy is yet to be seen in Malaysia.
“From the economic perspective, instead” – explained Dr Carmelo Ferlito, CEO of CME – “a decision to completely shut down the economy, including manufacturing, can only be driven by a poor understanding of how the economy work. The economy, in fact, cannot be divided into independent sectors; on the contrary, it is an intricate web of connections, in particular human interactions”.
With an example, Dr Ferlito explained that if you allow chicken farms to operate but you shut down manufacturing and transports, then you don’t allow chicken to be slaughtered, packed and carried to the supermarket. In a nutshell, you allow a product to be produced but you do not allow people to consume it. Similarly, if you do not allow the service people to repair the broken machines in chicken farms, you get a similar result. “Only a deep misunderstanding of what the economy is can lead to imagine that the economic sectors can be somehow divided into non-communicating groups”, Dr Ferlito added.
This adds to another factitious division, the one between essential and non-essential sectors. As declared in another statement, CME reminds the government that each work is essential to the worker to bring food to his or her table.
“We need to learn to live and the virus – Dr Ferlito added – and the real problem is not to avoid infections in the first place but to focus on prevention and treatments that can reduce, minimize and eventually nullify mortality (already at a very low level in Malaysia)”.
The hiccup lockdown strategy that seems to become the new norm in Malaysia policy is creating nervousness in the investor community; while countries like Indonesia and Vietnam are gaining from FDIs leaving China and are implementing favourable investment policies, Malaysia seems to be on the way to discourage both domestic and international investment. Recently 16 companies from China, Japan and Korea moved to Indonesia and not to Malaysia. This is something that we should keep into account.
The situation is aggravated by a confusing political scenario.
“For the Center for Market Education – stressed Ferlito – it is time for a change in pace in the fight against Covid-19”. CME indicates the following steps:
- Abandon any idea of total lockdown, which is not proved to be useful from a scientific perspective, and can only bring Malaysia to a devastating level of poverty, with the number of people dying of poverty much higher than the one dying of Covid-19.
- The current MCO 2.0 does not need to be strengthen in order to increase unemployment and poverty and to flatten the GDP curve, it is already working very well.
- Focus on collecting more disaggregate data for Covid-19 cases and Covid-19 deaths:
- Age groups.
- Public these data for a better individual risk assessment so that individual choices with respect to movements and exposure can be more soundly grounded.
- Enforce control over respect of SOPs.
- Enhance research for better prevention and cure of the virus, for a long term fighting strategy.
About CME: The Center for Market Education (CME) is a boutique think-tank based in Kuala Lumpur, Malaysia. As an academic and educational institution, CME aims to promote a more pluralistic and multidisciplinary approach to economics and to spread the knowledge of a sounder economics, grounded in the understanding of market forces. In order to do so, CME is not only involved in academic initiatives, but it organizes seminars, webinars and tailor-made economics classes for students, journalists, businesspeople and professionals who wish to better understand the relevance of economics for their daily lives and activities. Economics matters and needs to be presented in a fashion in which the link with reality is clearly visible. In this sense, we look not only at theoretical economics but also at policy making, with an emphasis on the unintended consequences generated by political actions.