By Boo Cheng Hau

The coronavirus pandemic is an earth-moving "accidental event" that has twisted the country's political fate. After enforcing the first round of nationwide lockdown last year, the Perikatan Nasional government failed to seize the opportune timing to adopt resolute and scientific measures, including mass screenings and mass procurement of vaccines, among other things. This serves to expose the redundancy and inaction of the country's administrative system.

In the meantime, PN ministers have remained divisive over the criteria and definitions of the MCO. As a result, there have been numerous policy reversals and irregularities.

The government even allowed massive religious gatherings as well as the Sabah state elections last year.

Earlier this year, in order to please the rakyat, it relaxed the controls during the festive season without adopting the timely and resolved measures to impose a full lockdown, triggering a fourth wave of new infections. And now, Malaysia "boasts" the highest per capita infections among Southeast Asian countries. All we can say is that such policy-making is completely devoid of logic and wisdom.

The full nationwide lockdown has come way too late, sending the daily new infection numbers through the ceiling, thus requiring far longer time to get things under control again and dampening further the already severely bruised national economy.

The PN government insisted that the lockdown would adversely affect the livelihoods of Malaysians. It had nevertheless overlooked the fact that the pandemic is like an invisible war. We can never compare the unorthodox economic model during the pandemic to one during peace time.

While such a lockdown will invariably hurt the economy, the earlier we put the pandemic under control, the less the damage it would do to our economy and the more robust the rebound will be.

According to the Malaysia Economic Monitor Report published by the World Bank, private investments in this country shrank 11.9% last year, while FDIs plummeted by a whopping 55%. Due to the government's failure to contain the virus, the country's economic growth forecast this year has been scaled back from the original 6% to only 4.5%.

During the first quarter of this year, unemployment among youngsters aged between 15 and 24 hit a high of 12.1% while that for technical workers was a staggering 13.1%.

As the Malaysian economy still depends very much on the labor-intensive manufacturing sector, skilled workforce unemployment is expected to rise further in the near future mainly because we are unable to speedily transform ourselves towards Industry 4.0 in near future.

According to the World Bank report, Malaysia's industrial productivity and innovativity have not only failed to grow remarkably over the past ten years, but have also fared worse than regional countries such as Thailand, Indonesia, Vietnam and Singapore.

Although our exports of manufactured goods jumped 21.9% during the first quarter of this year, thanks largely to a rebound in demand from developed countries following mass vaccination,  this does not reflect improved local market confidence.

According to the prediction model estimates by the Wharton School of the University of Pennsylvania, the US economic growth and employment at the end of this year will very much depend on the country's success in containing the pandemic, in particular the vaccination rate and the number of inoculated people. From the assessment of the vaccine's efficacy and safety to the development and procurement of vaccines, Malaysia is significantly slower than our neighbors like Indonesia, Vietnam and Singapore.

So far only 20% of the country's population has received at least one dose of the vaccine, and the slow vaccination rate has invariably eroded the confidence of foreign investors, making it impossible for the economy to stage a strong rebound in the immediate future.

In the meantime, institutional reforms have been repeatedly delayed. While herd immunity will help stabilize the country's politics, we will have to restart institutional reforms all over again.

The slow vaccination rate means vastly increased chances for new virus variants to propagate in our midst, slashing the effectiveness of our existing vaccines.

Meanwhile, the pandemic has also exposed a severe lack of R&D dynamism in our academic and business circles. In the face of emerging new variants, our health ministry and academics have failed to invest in the research of the viability of mix-and-match vaccination strategy based on existing research reports and statistics. In its stead, we have wasted time and resources on the study of Ivermectin in inhibiting viral growth on its frail scientific foundation. The pandemic has served to remind our policy-makers that we need to enhance the service standard and R&D capability of the country's healthcare system, an area we need to focus on.

We are an upper middle income country, but the government's allocations for the healthcare system are on par with low-income countries at only 3-4% of the GDP, whereas most middle income countries spend an average 5% of their GDP on healthcare expenditures each year, while the global average is between 9% and 10%.

Malaysia's per capita healthcare allocations in 2018 stood at US$1,193 on purchasing power parity, below the global average of $1,467, or just about a fifth of developed countries' $5,971.

The pandemic has also exposed the fact that the country's healthcare system has been chronically overlooked by the government. We should emulate the developed countries to gradually increase healthcare allocations to about 12% of the country's GDP. We not only need to significantly improve our healthcare service quality, but also the R&D capability of the healthcare sector here. We need more service-, teaching- and research-type hospitals in the country to provide doctors with adequate training and long-term employment, participating in R&D works and investing heavily in medical care while improving on service quality and expanding the scope of national healthcare system.

The government must encourage every economic sector to actively take part in the investment of high-tech R&D in a bid to enhance Malaysian worker's productivity and creativity so that we can become a high-income country soon.

Despite the cruel and merciless pandemic, we must revert to the right track and implement sweeping institutional reforms to further boost our economic competitiveness and the quality of life of Malaysians. We need to more actively involve ourselves in the high-tech sector and shift our focus to innovation and R&D in hope of improving our declining industrial innovativity and labor productivity.

The government must also reform the taxation system, increase tax revenue, especially in progressive tax rate, including company profit tax, personal income tax, property gains tax and windfall tax, among others. In addition, the government should also increase the issuance of government-guaranteed bonds in order to raise development funds not only to provide short-term financial assistance to lower and middle-income groups, SMEs and micro businesses, but more importantly to stimulate economic transformation development programs, and focus on the vocational training and skill development while encouraging companies to venture into high-tech production.

Malaysian companies need to improve their competitiveness, including digitization, automation, Industry 4.0, green agriculture, renewable energy development as well as preservation and re-engineering of our environment.

In view of this, we urgently need to reform our education system, enhance the productivity of our workforce as well as the civic quality of our people to meet the needs of the increasingly demanding job market.

While reducing the unemployment rate, this will also improve the remunerations of blue collar workers, which is the most effective way to eliminate poverty and close the wealth gap.

(Boo Cheng Hau is former assemblyman for Skudai.)