Mitigating the Economic Downside of COVID-19
On 27th March 2020, Institute for Democracy and Economic Affairs (IDEAS) hosted our first ever webinar, titled ‘IDEAS Webinar: Mitigating the Economic Downside of COVID-19’. The webinar discussed the steps that must be taken to deal with the negative impacts that stems from the ongoing pandemic, including the support and protection for individuals and businesses affected. The webinar was moderated by Tricia Yeoh, IDEAS Fellow.
The first speaker, Christopher Choong Weng Wai is Deputy Director of Research at Khazanah Research Institute (KRI). When asked to give his comment on what the government has done so far, Christopher has called for a change of strategy. Instead of stimulating the economy, the path to be taken right now is to protect the productive potential of our economy. One of the central elements of social protection strategy is a massive employment retention programme, which is still a very small scale programme. Christopher also said that we need a larger fiscal stimulus policy compared to what has been announced by the government.
The second speaker, Rachel Gong is a Senior Research Associate at Khazanah Research Institute (KRI). On how digital technology could assist us in the ongoing crisis, Rachel commented that digital surveillance and contact tracing could help but Malaysia currently does not have the system set-up like how China and South Korea are doing. On the other hand, what the government could do is to improve the communication. Being open and more transparent with the updates on cases and areas affected would be helpful. Rachel also suggested that free internet data initiatives by telecommunication companies should be directed more towards those who really need it like daily wage workers and gig-economy workers in order for them to raise income.
The third speaker, Dr. Carmelo Ferlito is the Director of the Center for Market Education (CME) and a Senior Fellow at the Institute for Democracy and Economic Affairs (IDEAS). According to Dr. Carmelo, the disruption in the supply chain caused by the economic difficulties is more risky than the ones caused by the virus. The supply chain is also much more horizontally and vertically integrated than we think, resulting in both essential and non-essential products and services interconnected. Dr. Carmelo suggested the government spending money on massive testing in workplaces instead of giving subsidies, so that people can go to work in order to restart economic activity. He also raised a question on how long SMEs in Malaysia could sustain being not in operation and how long can the government support them.
The fourth speaker, Dr. Jayant Menon is a Visiting Senior Fellow at Institute of Southeast Asian Studies (ISEAS-Yusof Ishak Institute) in Singapore. Dr. Jayant started off by admitting that many had predicted the crisis due to this virus outbreak is going to be worse than the last globa; financial crisis more than a decade ago. Aside from the direct impact on industries like tourism, manufacturing and supply chain, he also warned about the effects of intangibles towards financial markets. Malaysia, as a small open economy heavily dependent on trade, especially with China as the main trade partner, will be badly affected due to engagement in the regional supply chain. Over time, supply side adjustments that will alter trade and investment patterns like relocating out of China and into countries of ASEAN would see Malaysia benefit from it. Dr. Jayant added, Malaysia as an oil exporter would be hit hard as the oil price drops and adds strain to the growing fiscal deficit.
Tricia concluded the webinar by stating that the discussion has highlighted the existing challenges the government is facing in balancing fiscal demand, health demand and to keep businesses, trade and supply chain of food going.
Watch the discussion down below:
The article first published at IDEAS website (www.ideas.org.my)