APEC economies' steady strides towards economic recovery


By Azanis Shahila Aman - June 29, 2020 @ 10:00am

KUALA LUMPUR: It is not an overstatement that the members of Asia-Pacific Economic Cooperation (APEC) have fared well in managing the social and economic fallout from Covid-19.

The region's response to the crisis, whether individually or collectively, has been pointed and result-oriented.

The adverse impact of Covid-19 has been reflected in weaker economic growth and large stimulus spending globally, since the pandemic was first detected in China at the end of 2019.

Malaysia and its counterparts in APEC have not been spared from the worst public health crisis in a century.

The pandemic has undermined domestic economic activities as well as export earnings from commodities, manufacturing and intermediate goods, and tourism receipts as well as slowed down the progress of foreign and domestic investment projects.

But fortunately the economies have responded proactively and responsively to balance their country's economic sustainability and ensure the health and safety of the people.

'Strong and robust' measures

In the case of Malaysia, the Movement Control Order (MCO) was introduced on March 18 to confine the spread of coronavirus. The MCO meant that each and every Malaysian has to "stay at home" and "stay put wherever they are". The MCO has since been relaxed via the conditional MCO on 4 May and on 10 June, it will be further relaxed through the Recovery MCO (RMCO).

Many businesses, including small and medium enterprises (SMEs), were not allowed to operate during the early MCO phase. Only critical economic sectors were allowed to operate since March 18, subject to conditions set by the Health Ministry. Although the MCO may have markedly reduced domestic economic activities, it has proven effective in flattening the Covid-19 curve.

Malaysia's response to the global health crisis and economic shock has been comprehensive and timely. Experts have recognised that Malaysia was among a handful of governments in Asia Pacific which were extremely proactive to quickly put in place robust testing regiments, pursue contact tracing and impose strict quarantines at the short-term expense of their economies.

The World Health Organisation has reportedly described Malaysia's Covid-19 response as strong and robust.

WHO head of mission and representative to Malaysia, Brunei and Singapore, Dr Jacqueline Lo Ying-Ru reportedly said Malaysia had adopted a "whole of government" approach to managing the pandemic.

She added that the multiple phases of the movement control order had brought about a reduction in the number of cases, "though much still needs to be done to sustain efforts and to adapt to the evolving situation".

The Diplomat magazine has praised Malaysia, saying its government had largely allowed its competent civil service and medical professionals to do their jobs.

"Malaysia is one of the first in the region to flatten the curve," the magazine reported.

East Asia Forum, in a recent article, noted that Malaysia's response deserves greater recognition as a meaningful example for countries that have porous borders, significant mobile and vulnerable populations, larger households in denser living conditions and less than ideal political situations.

"And at a time where the world needs to unite against a common threat, Malaysia is working closely with China, South Korea, the UAE and its Asean neighbours to reinforce supply chains delivering essential goods and services," it said.

Since the MCO implementation, the increase of Malaysia's new Covid-19 cases had flattened and even on the trend of decline, according to local and foreign health experts.

As of May 31, Malaysia recorded a total of 7,762 confirmed Covid-19 cases, among which 6,235 or more than 80 per cent have been cured and discharged with the death toll standing at 115.

Malaysia also has one of the lowest Covid-19 fatality rates in the world at about 1.6 per cent.

Vietnam is another success story in the region, with no deaths and only 328 infections, 279 of which have recovered. The country has kept its infections to a minimum due to stringent measures taken, such as rapid testing and aggressive contact tracing as well as prompt and early intervention measures, as soon as the virus was reported out of China.

Another APEC economy which has seen success is New Zealand, which has recorded no local community transmission since the country initiated strict lockdown measures.

Economic measures for challenging times

Economically, the Malaysian government announced a RM250 billion PRIHATIN stimulus package on March 27 to help Malaysians and businesses cope during the challenging period.

Prime Minister Tan Sri Muhyiddin Yassin also announced an extra RM10 billion relief package for the SMEs a few days later.

The PRIHATIN economic stimulus, in collaboration with Bank Negara Malaysia, should mitigate the decline in economic growth in 2020 by 2.8 percentage points, according to government estimates.

Of the RM250 billion, almost RM128 billion were allocated to protecting the welfare of the people and RM100 billion to support businesses including SMEs and RM2 billion to strengthen the country's economy.

Non-fiscal measures include deferment of all bank loans and financing repayments for six months, and allowing withdrawals from the Employees Provident Fund.

The stimulus package particularly has helped Malaysians especially the B40 and M40 groups including those who earn daily wage, to put food on the table for their families during these trying times.

As the Covid-19 is gradually contained, the government has moved to allow almost all businesses to operate during the MCO period. At this juncture, all parties including those in the public and private sectors are working closely to Build Back Better.

Senior Minister and Minister of International Trade and Industry Datuk Seri Mohamed Azmin Ali in a statement recently said, "In the engagements undertaken by Ministry of International Trade & Industry, challenges that were highlighted by the trade and industry associations, professional bodies as well as SMEs include cash flow constraints, movement restrictions and supply chain disruption. The Government demonstrated unwavering commitment in addressing these challenges, by introducing the PRIHATIN and PENJANA stimulus packages to hasten economic rebound.

Working towards economic recovery

Other countries in the region, have also announced similar initiatives towards cushioning the economic impact of the pandemic.

Singapore has announced its fourth Covid-19 stimulus package, bringing its total stimulus to $92.5 billion. The main focus of the new package is preserving jobs by further enhancing the jobs support scheme, extended waiver of foreign worker levy, rental grants for SMEs, and measures to create 40,000 new jobs in public and private sectors this year.

China's central and local governments have also rolled out supporting policies to build up the confidence of businesses and ease some of their burdens. A wide range of measures were announced for SMEs at the regional level including deferred tax payments, rent reduction, waiver of administrative fees, subsidies of R&D costs, among others. Banks have also been granted extra funding to spur SME loans.

The Malaysian Government recognises that there remain challenges for businesses to restart their operations during this difficult period. In the engagements with trade and industry associations, professional bodies as well as SMEs, the challenges highlighted include cash flow constraints, movement restrictions and supply chain disruption. On (date), the Malaysian government announced a RM35-billion stimulus package called PENJANA to help the country navigate towards a path of accelerated economic recovery. PENJANA is an enabler to prosper people, boost businesses and energise the economy.

This latest recovery plan together with the easing of the movement restrictions will provide the necessary impetus to further jumpstart and revitalise the economy and ensure that Malaysia remains on the right path to full recovery.

With all the measures in place, and possibly more to come, Malaysia and the other APEC economies are on well on their way towards a slow yet steady social and economic recovery.

New normal and a post-Covid APEC

Meanwhile, as part of the 'new normal' arising from the pandemic, Malaysia chaired the APEC Virtual Extraordinary Senior Officials' Meeting (VESOM) on Covid-19, on May 27. The meeting brought together 21 APEC Economies from eight different time zones, into a single virtual platform.

VESOM focused on operationalising the APEC Ministers Responsible for Trade (MRT) Statement on Covid-19, issued earlier this month. Senior Officials also heard from ABAC, as the Council offered its insights regarding the private sector's role in mitigating the impact of the pandemic and hastening regional economic recovery.

The VESOM deliberated on five proposals, encompassing a possible platform for information exchange on the policy responses by APEC Economies to the Covid-19 crisis; two separate proposals on possible ways to facilitate the flow of essential goods during this time of crisis; creation of a sub-fund for APEC-wide cooperation to combat Covid-19 and navigate the region towards a path of economic recovery; and guidance and directions for the APEC bodies (e.g., the Committees and Working Groups) to continue their future work during this uncertain time.

Come end of June, another VESOM will be organised followed by the first ever virtual Ministers Responsible for Trade (MRT) meeting which will further cement the initiatives undertaken by APEC in hastening economic recovery for the region, in a post-Covid world.