Identify industries with growth potential to spur recovery
The economic consideration at that point could have swayed the authorities to delay for a while, in view of its implications on small businesses and the self-employed. - NSTP file pic
OTHER than the earlier Emergencies and previous few economic crises, Malaysia has never been confronted by a calamity of this current proportion. The previous economic crises were never accompanied with public health challenges of the present scale.
Currently, the leadership is also challenged with political bickering, which unnecessarily creates social apprehension impacting the immunisation drive efforts. The decision to impose the Emergency, unpopular as it may be, is quite right so as to control the pandemic.
The government is spot on in putting the policy to address the pandemic as the No. 1 public concern. It would appear that the lockdown initiative could have been more effective if it was enforced when new cases were about 4,000 to 5,000 daily.
The economic consideration at that point could have swayed the authorities to delay for a while, in view of its implications on small businesses and the self-employed.
Having reached the current proportion, the slowing down of daily cases may take time to taper off unless the efforts are supported by strong vaccination measures so as to expedite herd immunity and strict adherence to standard operating procedures (SOP), such as physical distancing and movement restrictions.
In as much as there is the absolute need to address the spread of Covid-19, the economy must be allowed to function to create jobs and facilitate income circulation, especially with the billions of ringgit pumped directly by the government, or through Bank Negara Malaysia measures like loan moratorium at reduced interest rates, to support business and jobs and to protect vulnerable groups.
This is the critical balance which the authorities have to manage between the need for a complete lockdown and allowing people to do their daily chores, such as going to supermarkets, pharmacies and clinics, as well as banks. People should refrain from moving around for less necessary purposes.
To be sure, the national productivity could have been much affected by the pandemic through a drop in employment and capacity utilisation of our machineries and factories.
This is reflected by the marked decline in total output by more than five per cent last year. Any semblance of increase in output this year may be largely statistical in nature, i.e from a smaller output base of last year.
More than the need to observe SOP, people should try to maintain productivity by working from home (WFH), a frequently used jargon now and may be an acceptable trend of the future to reduce cost and economise labour, particularly for women.
Indeed, time and space may and can be created through greater use of information technology and other digital measures.
In efforts to reset the economy, the planners must identify industries which have the potential to grow immediately with regard to the changed environment, especially in the supply chain network in the domestic and global context.
In the domestic context, many retail shops have closed down while in the international context, the shipping industry that is responsible for over 80 per cent of world trade has been affected (easily a 30 per cent drop) by the pandemic, and industries are adjusting to these changes.
Surely our industries are also affected. In the past economic and financial crises, the recovery had taken a "V" or "W" shaped recovery, the latter referring to a double dip decline. This recovery may, however, take a different shape now.
Some say it may take a "K" shape — after a negative growth, two set of industries may emerge. The first set will become important and expand, while another set will decline and become a small component of the gross domestic product.
What are these industries? Those involved in the planning and statistical analyses of the economy may have to burrow themselves in our Input-Output economics to identify these industries to form the new structural base of our immediate growth potential.
Not the least, too, is the support from business and industries that have the first "gut feeling" of the economic impulses responding to fiscal and monetary stimulus of the country, and the emerging opportunities in the global horizon which can be further nurtured into full industrial potential of the country.
In this regard, strong cooperation and coordination between the public and private sector appears to have never been more important.
This original article was published at https://www.nst.com.my/opinion/columnists/2021/06/697078/identify-industries-growth-potential-spur-recovery
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