MONDAY, 12 July 2021: The Center for Market Education (CME) published a new policy paper titled Fighting COVID-19 in Malaysia: Mass Testing and Other Reasonable Proposals, co-authored by Dr Carmelo Ferlito (CEO, Center for Market Education, Malaysia), Dr Salvatore Chirumbolo (Clinic Biochemical Scientist, Department of Neurosciences, Biomedicine and Movement Sciences, University of Verona, Italy), Dr Consilz Tan (Senior Lecturer in Economics, School of Economics and Management, Xiamen University (XMUM), Malaysia), Dr Veerinderjeet Singh (President of the Malaysian Institute of Accountants & the Malaysian Institute of Certified Public Accountants, Malaysia), Jochen Fries (Entrepreneur, Malaysia), Steven Sieff (Greenbandredband, United Kingdom), Carmine Iavazzo (Entrepreneur, Malaysia), Yow Chuan Lee (Entrepreneur, Malaysia) and Sergio Maria Calzolari (Business Advisor, ASEAN).

“The present paper is the coordinated effort of scholars and people from the civil society to offer a contribution to find a solution to fight COVID-19 without destroying the social and economic structure of the country”, declared Dr Ferlito. “We believe that we offered a fresh analysis grounded in a sounder trade-off analysis and on the principle of individual responsibility. Contrary to what we have seen so far, this is indeed a plan”.

The paper is an attempt to analyze the dynamic of COVID-19 in Malaysia and to provide a comprehensive, implementable policy plan to reverse the emergency, while allowing the economy to get back on a growth path. Such a plan is based on the superior outcomes produced by decentralized decision processes, and is thus centered on mass, frequent and affordable testing and on targeted protection, in the light of a balanced trade-off analysis.

From the medical perspective, the paper stressed that recent research showed that COVID-19 seems to be confirmed as a cardiovascular disease, while it has a syndemic character, such that the presence of other non-communicable diseases increase the chance of developing serious symptoms. As of 17 June, Malaysia had recorded 673,026 COVID-19
infections and 4,142 deaths linked to COVID-19 (2% of the population has tested positive and 0.61% of the positive cases – or 0.012% of the population – have lost their lives from complications due to the virus). Survival rate is 99.39% (98% worldwide). The average age of death was 65.8 and the median age of death was 67. Furthermore 71.18% of deaths were recorded among individuals aged 60 and above. Almost 86% of the COVID-19 deaths
happened in the presence of at least one comorbidity and the most common recorded illnesses were high blood pressure and diabetes.

From the economic perspective, the paper argues that the policy response so far has been based on the assumption of super-knowledge possessed by the State and this has produced poor policy results (and absurd SOPs), mainly based on blind faith in lockdowns. The main focus has been to minimize infections, when scientific literature supports the idea that we
should increase infections, but in a targeted way, in order to accelerate the transformation of the pandemic into an endemic phenomenon. A constantly low R0 will prolong the pandemic up to 20 years.

A balanced trade-off analysis has been missing, instead. Affecting mostly the poor, generalized movement restrictions have considerably increased unemployment, underemployment and poverty: currently the number of those struggling to make ends meet is more than 700 times higher than the number of people who succumbed to COVID-19.

The estimated cost of treating people infected with the virus so far is RM 8 billion, against an annual lockdown cost of RM 170 billion (12-13% of GDP). Therefore, a more balanced trade-off analysis would have suggested investing (and saving) resources into treatments, equipment and temporary hospitals: the cost would have been a fraction of those generated by lockdowns (which furthermore generated no actual medical benefit).

Expansionary fiscal and monetary policies, made necessary by movement restrictions, and supply-side shocks are triggering inflationary processes which may become out of control after the COVID-19 emergency is over, laying the foundation for a deeper economic crisis. This course needs to be reversed now, together with restoring the rule of law to increase confidence domestically and internationally.

Therefore, the Center for Market Education offers the following policy proposals:

  • Lockdowns do not work and can make the situation even worse by prolonging the pandemic duration and compromising the physical and mental health of a much higher number of individuals. Lockdowns should be immediately abandoned, together with other questionable measures, such as the distinction between essential and non-essential services.
  • Because of variants, limited time efficacy and supply-side constraints, vaccination cannot be the sole practical response.
  • The first change should be to move from generalized restrictions to focused protection by protecting vulnerable categories (the elderly and sick) and allowing targeted infections for faster immunity development.
  • Pharmaceutical and medical research should be enhanced for long-term treatment. At the same time, healthy behaviours to strengthen the immune system (physical activity, supplement consumption, meditation…) should be incentivized.
  • The gold standard for returning to normal personal and economic lives while allowing the virus to circulate in the community and develop herd immunity is mass, frequent and affordable testing. This means allowing firms and schools to test individuals on a weekly basis, making possible early detection and avoidance of asymptomatic spread. For this to happen, rapid test kits need to be liberalized. While the cost of tests can be borne by businesses, the amounts should be made tax deductible.
  • Increasing testing and tracing will require investments in additional hospitals and medical equipment, as well as entrepreneurial innovation based on the cooperation between private and public healthcare.
  • Competing groups of experts should be allowed to dialogue with institutions and to give the public open advice, on the basis of which individuals can make informed decisions.

Together with policy recommendations, CME offers also a way to finance the proposed plan:

  • Special Purpose Tax of 5% on profits above a certain threshold. This should be clearly temporary and based on the promise of no further lockdowns. Furthermore, the collected revenue should be linked to anti-COVID investments in the medical field. 
  • Reintroduction of a targeted and multi-layer GST, to be collected at the state rather than the federal level; the excess collection over the previous SST should be invested to medically fight COVID-19.
  • Percentage Tax Designation Institutions: businesses and individuals should be given the occasion to allocate a percentage of their taxes (max 2%) to investments to fight COVID-19.

“We hope to find ears ready to listen, as the country is close to collapsing. We are here with our little contribution in the fight for the common good. We hope that a new leadership may emerge in the country to propose a fresh approach against the current emergency”, Dr Ferlito concluded.

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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.