Set up ‘strategic production zones’ as rapid response to Covid-19 crisis

The formation of a special Cabinet committee to develop strategic measures to safeguard the economy amid the Covid-19 outbreak shows the Malaysian government is serious about creating a balance between continued safety of the general population and the survival of the economy.

In the global context, as many countries struggle to deal with the medical response to Covid-19, this step represents a rapid response to the crisis. The clearly stated objective of this new committee is to balance the medical risks and rewards of increased production during the current situation.

This rapid response is testimony to Malaysia’s 12th place ranking in the World Bank’s Doing Business 2020 report.

From the perspective of crisis management, all scenarios need to be taken into consideration. This includes the scenario that a prolonged crisis becomes the new reality that people and companies have to face up to.

With this possible reality, innovation, coupled with a radical departure from contemporary thinking, is required.

A proposed solution could be the designation of “strategic production zones” in various locations around the country.

These industrial zones should be confirmed to be “green zones” free of Covid-19 and have a managed flow of human capital.

A quick checklist of key components for these zones would include the following — close proximity to a port or airport, temporary onsite accommodation or centralised accommodation, medical screening facilities, additional onsite medical support and central kitchens to ensure availability of food.

In addition, we can apply the concept of “fly-in fly-out” (Fifo), which is used in the mining and energy sectors to allow workers to be on site for a period of time and then be flown out to be replaced by other workers. This would allow the expansion of production beyond the current highly critical food and medical supplies.

Can this concept of “strategic production zones” be applied to the current situation, considering the country’s current capabilities?

The police and armed forces have successfully cordoned off various “red zones” (with a high number of Covid-19 cases) and the different agencies have ensured that those in these affected areas receive food and medical attention.

At the same time, several risks have become accepted norms. This includes the movement of cargo overland and by air; reduction in the registered workforce in critical industries; continued operation of the banking sector; and the controlled movement of the population to purchase food.

These combined factors leave space for the discussion between stakeholders for expanded production during this time.

While many small and medium enterprises (SMEs) have their heads on the cutting block, some of the larger corporations will not be far behind if supply chains and the related ecosystems grind to a halt.

Supply chains are complex and this crisis has been a strict taskmaster in the lessons of interrelatedness of local and international supply chains.

While we attempt to flatten the Covid-19 infection curve, we can’t ignore the steep learning curve has not changed.

Corporations that are chomping at the bit to return to partial or full production need to remember that on any level, a sustainable business model requires customers to remain alive to continue to buy goods and services well into the future.

On the flipside of that same coin, at this time, it’s important to remember that public health is a luxury that is only made possible by a functioning economy.

Innovation and resilience from all stakeholders will be required to shape a positive and sustainable future.

If workers and corporations alike are concerned about their shared financial realities, they will have to continue to adapt to the changing conditions during times of crisis to ensure production.

Nordin Abdullah is founding chairman of the Malaysia Global Business Forum. - FMT