What’s behind May 4 and what will it bring?

The Malaysian government reopens “almost all” sectors of the economy today. It’s probably the first country in the world to do this. Other, and bigger, economies are still grappling with the issue. What’s the difference?

Caution versus desperation. Plus other motives.

It’s one thing to attempt to reboot a relatively small economy that’s heading deeper into recession. But it’s not another thing to relax the movement control order (MCO) so the economy can regrow. Because the two aren’t mutually exclusive.

The really pressing question here is whether restarting the economy is being done at the cost of human life. In other words, is regenerating national income and business profitability being prioritised above the public health and safety?

The cabinet is behaving as if it has eradicated the killer coronavirus. The facts point the other way. Until last Saturday Covid-19 infections were still being recorded in double-digits, in the sixties.

On Sunday it jumped to triple-digits, with 122 new cases. Fifty-two of these were imported transmissions, 70 local. Mortality rate is at 1.66 percent at 105 deaths. The Muhyiddin Yassin regime is treating these statistics as if it has won the Covid-19 battle.

The war is yet to be won. Every scientist is saying loudly that eliminating the illness is far too ambitious. The best hope is to contain its spread. These experts are also saying that even if a vaccine is found it won’t eradicate Covid-19.

Take the flu. There are vaccines but the dreaded flu returns every year to varying degrees and claims a few lives. Tuberculosis still claims around 2,000 lives in Malaysia every year. That’s six deaths every day. There’s dengue, too. And in parts of the world malaria is coming back.

This is not time to take the foot off MCO despite pressing the case on the people to practice social distancing. Since the MCO was established, there have been quite a few people, including ministers and their families, and ordinary people, who flouted the order.

This, after all, is Malaysia where laws are designed to be tested and broken even by people who of lesser means in wanton disrespect of authority. Then again it’s hard to call it authority when the keepers of laws corrupt it at will. So, good luck to Dr Noor Hisham Abdullah (photo) if he thinks compliance can be had as easily as his spouting relaxing the MCO which, curiously, was extended only two weeks ago.

If the Muhyiddin regime is suggesting Covid has been substantively licked in the space of the last two weeks, it’d better prove true. But the failure of widespread testing remains fraught and real and makes a mockery of the government’s claims.

Which reinforces the view that relaxing the MCO is being done for the sole purpose of restarting the economy at the expense of public health. Seems to me Muhyiddin is desperate to deter challenges to his personal and his “backdoor” regime’s legitimacy.

He’s resorting to currying favour with the people who, understandably, have been cooped up for ten weeks. If MCO relaxation works, and the economy comes back a little, he’ll use it at parliament’s July sitting to thumb the noses of the deeply-fractured Pakatan Harapan.

Bringing back the economy, even if only green shoots, will buy Muhyiddin political-survival time and boost his popularity. Maybe then he’ll call a snap poll to also put Umno and PAS in their place. It’s doubtful. He hasn’t got the numbers and his Perikatan Nasional regime is shambolic.

The hint of rebooting the economy came when he announced reopening the economy last week. He threw some numbers around, among them the claim on preventing economic losses of close to RM100 billion. For a US$380 billion economy (compared the US’ US$20 trillion economy) or 6.12 percent of GDP, that’s a heck of a lot for a small export-dependent economy.

It means recession. It means negative growth perhaps for the next few quarters. It means a giant hike in unemployment that could easily become an immense structural problem. Which means additional budgetary spending to keep people fed, to stop crime from spiking, and a host of additional social problems like greater poverty, malnutrition and mental health.

With government debt inching towards RM1 trillion and a budget deficit that can’t hold the line at 3-3.5 percent, of GDP, the economy has to grow to recover revenue for far bigger budget expenditures to come. But loose monetary and fiscal policies in the time of Covid don’t guarantee success. Standing in its way also is a global recession, compounded by collapsing commodity prices including oil.

How deep the recession, nobody knows. The respected Institute of International Finance projects minus 2.6 percent world economic growth. Multiplier applied, it means small export-dependent domestic economies will plunge even harder and for longer. Longer also because Covid-19 will still be around. Which means more than continued social distancing; other harder restrictions may be necessary backed by a special law – as long as it doesn’t amount to emergency rule, as in the Philippines.

Understandably, Muhyiddin has been under pressure from the restless public to relax the MCO. Though there appear no signs if this is being done in judiciously thought-out stages. Because otherwise, it would follow that economic reopening would be in conducted in carefully planned stages too. But it seems like a crazy all-at-once desperation. Which might prove to be the case in the short-run.

Muhyiddin has been under intense pressure from small and medium businesses. But it’s big business that has piled on the pressure, particularly the influential Federation of Malaysian Manufacturers. Go to the lobby group’s website; read its press releases between the lines.

For the sake of Malaysians, one hopes Muhyiddin has drawn up effective plans to govern the reopening of the economy. Economic reopening mustn’t be left entirely in the hands of business.

Business’ agenda is to minimise cost even more and maximise profits in the current conditions. It’ll be uphill, to say the least, to pluck reasonable profit. I expect 30-40 percent of firms to declare bankruptcy in the next couple of quarters. And with the reduction of competition, Muhyiddin must watch the business for exploitative price-gouging and further squeezes on workers’ rights and conditions.

Meanwhile, the public must keep the regime honest and not let it sell down public health and safety of Malaysians just because it’s reopening the economy. Treating so inhumanely foreign workers is abhorrent and disgusting. These people were “bought” and smuggled in by criminal syndicates abroad in conjunction with criminal syndicates in Malaysia connected with and protected by the regime. They have catered to unscrupulous Malaysian businesses demanding for cheap foreign labour over locals

This also doesn’t mean an illiberal regime will end domestic human rights abuses and abuse of state power. Economic troubles lead to social disorder. To let the Muhyiddin regime do the bidding of big business will only extend the disaster of the last 62 years of authoritarian capitalism where precious scarce resources and wealth have been looted by the corrupt ruling and political classes.

The challenge for Muhyiddin is to show he has a spine and reverse such expectations. I, for one, won’t be holding my breath.

---

MANJIT BHATIA reads economics and international politics in New Hampshire in the US.  - Mkini