EMIR Research thanked and wholeheartedly welcomed the government’s May 28 call for a full motion control order compliant with MCO 1.0 from June 1st to June 14th.
This is an unpopular but necessary measure to break the chain of infection and allow our overwhelmed medical system to recover.
We at EMIR Research are also grateful to see that the government’s recently announced Pemerkasa Plus aid package complies with EMIR Research’s proposals for a holistic “survive-to-restart” package aimed at realizing the full impact of the MCO on the rakyat and rapid vaccination.
It is particularly gratifying that the support of SMEs, the cornerstone of the country’s economy, was the focus of the Pemerkasa Plus package.
EMIR Research previously proposed at least three high-priority measures to support the small and medium-sized enterprises (SMEs) affected by the current full MCO – a moratorium on credit management for three months, rental protection for at least two months, and wage subsidies for three months .
The grant of a three-month loan moratorium or a 50% reduction in loan repayments over six months has been granted to those in real need such as those in the B40 group who lost their jobs and non-operational SMEs throughout the MKO.
This is a welcome response from authorities and financial institutions.
However, the M40 group and even the SMEs that are allowed to operate during the full MCO are likely to be affected (albeit to a lesser extent), so that at least discounted loan repayment, if not a moratorium, should be considered for this group Granted, the government can be limited in its ability to provide more direct monetary aid.
It is not without reason that EMIR Research has made this measure a top priority in its policy recommendations. In mid-2020, according to MCO 1.0, EMIR Research carried out a qualitative study to fathom the mood and concerns of rakyat.
With incomes shrinking dramatically during MCO 1.0 (due to reduced walk-ins, dine-ins, etc.), fixed financial responsibilities posed a serious problem for many discussants on an individual and business level.
Many reported that managing their heavily leveraged positions became an insurmountable hurdle during MCO 1.0.
At this point, the participants unanimously thanked the current government for their quick action in the situation and for imposing the moratorium.
The discussants also pleaded unanimously for an extension of the moratorium, which was also approved by the government last year.
It is also a welcome move by the government to help SMEs in the form of loans, grants and relief for the recovery of relief supplies, apart from a loan moratorium.
For example, providing RM 1.5 billion in microloans to finance working capital at interest rates as low as 3% would be invaluable to SMEs as the cost of short-term finance is a huge burden for any business, and especially for SMEs.
In order to further reduce the burden, hotel operators, shopping centers, airlines and other SMEs could also benefit greatly from discounts on their electricity bills.
If anything, these small businesses may need it more.
Again, however, it is understood that the government seeks to optimally resolve a number of problems within the given financial constraints.
Another policy recommendation from EMIR Research was to introduce some kind of tenant protection system for at least two months.
This suggestion was also based on the rakyat’s heartbeat. In the aforementioned qualitative study, the participants, especially entrepreneurs, emphasized their difficulties in dealing with debts and other fixed costs such as rents.
However, as EMIR Research also noted in its policy recommendations, it is important to ensure that such rental protection systems do not also bring landlords and property owners to the point of survival.
Presumably in the absence of data permitting such targeted subsidies, a government solution to grant special tax reductions to property owners who still grant at least 30% rental discount for six months by December 31st seems very appropriate.
In addition, Mara entrepreneurs affected by the economic shutdown would receive a 30% discount on business premises rentals from May to July 2021.
The third thrust proposed by EMIR Research to mitigate the impact of the full MCO on SMEs and through economic links on the general public was three-month wage subsidies limited only to those in the private sector.
In accordance with this proposal, Pemerkasa Plus grants a one-month extension of the wage subsidy program for affected industries.
The idea that there would be a cap of 500 employees per application suggests that again this will mainly benefit SMEs and potentially save many jobs, which is an excellent move.
Aside from the above, EMIR Research’s proposal for direct money transfers to the weak and day laborers was not ignored and thoughtfully included taxi, bus and e-hailing drivers.
The Pemerkasa Plus package includes other equivalent solutions to achieve the same effect, such as: B. Tax exemption, discounts on utility bills, postponement of contractual penalties and fines, breach of contract protection and others.
All of this will go down very well with SMEs and rakyat in general, and will help minimize the negative effects of the upgraded MCO, and apart from the small considerations above, Pemerkasa Plus is generally considerate.
The announcement that ministers and deputy ministers will not take their salaries for three months is also a strong gesture that they are “in” with the people.
The allocation of RM 1 billion from the direct injection of RM 5 billion shows that the focus is on increasing public health capacity, which is a much-needed measure to ease the pressure on the health sector.
More than half of the RM1bil is spent on related Covid-19 surgeries, the procurement of drugs and reagents, and the appointment of contract agents.
It is hoped that these will be the latest test kits needed for detecting the latest variants and for sourcing current and potentially upcoming drugs.
Frontliners need sufficiently high-quality personal protective equipment and workplace equipment for greater safety and comfort.
The Ministry of Health should check that current equipment (personal equipment, workplace ventilation, etc.) is sufficient to protect against airborne transmission of Covid-19.
The renewal and reinstatement program is a welcome gesture both as a reward for their service and as an incentive to increase work ethic. However, considerations about permanent positions and other forms of career positioning must be continuous.
Measures to speed up the vaccination process such as designating a total of 1,000 general practitioner practices and private hospitals as vaccination centers, introducing drive-through vaccinations and using government vehicles to provide vaccines to the elderly and people far away from vaccination centers are all excellent decentralization strategies and a sign of this that the responsible ministries listen to public and professional suggestions.
However, these stimulus measures would be a waste if the lockdown does not achieve its intended purpose. In this regard, EMIR Research remains in its position that phase one of the full MCO must mimic the success of MCO 1.0 in the sense that there must be a “total lockdown” – the success of which enables the transition to phase two where economic sectors can to be gradually opened up again.
The success of Phase 1 depends on a complete lockdown or strict monitoring and enforcement of SOPs, especially for the eligible or essential sectors (some of which were known in the past as cluster contributors).
Past experience gives cause for concern over reliance on SOP compliance by the public sector and business. Because MCO 1.0 lasted eight weeks, phase 1 of the full MCO can take longer than 14 days.
The empty streets during the early stages of MCO 1.0 seem a terrifying contrast to the heavy traffic, or at least normal traffic, reported on June 1st.
This could simply be the effect of increasing barriers, or it could be an (albeit crude) indicator that economic activity is at levels above ideal.
The reported crash of the Ministry of Domestic Trade and Consumer Affairs website the day before the MCO is complete indicates a high level of business interest.
A successful total lockdown that would give health facilities the much-needed respite must be paired with the projected increase in vaccination pace and would depend on the successful adjustment and enforcement of current SOPs for the workplace, vaccination centers, individuals, public places and the public, and transportation other places.
> Dr. Margarita Peredaryenko and Ameen Kamal are part of the research team at EMIR Research, an independent think tank that focuses on strategic policy recommendations based on in-depth research.
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