In the January 2021 edition of the International Monetary Fund’s World Economic Outlook, countries around the world are expected to see significant bouncebacks in terms of economic growth. For Malaysia, the IMF estimates 7% GDP growth, in line with the official government forecast of 6.5% to 7.5% growth. Malaysia is not the only country where the IMF estimates robust 2021 growth. China, whose GDP growth had clocked in at between 6% and 7% from 2015 to 2019, is expected to grow at 8.1%.
Some of it is, naturally, due to low-base effects. If 2020 GDP is far lower than expected because of fallouts from the Covid-19 crisis, then any bounceback towards pre-Covid-19 levels should arithmetically record higher growth rates. But the big story in terms of growth resumption in 2021 is vaccination.
As more and more people in countries get vaccinated, economies will gradually recover and some form of pre-Covid-19 normalcy — if such a thing is even possible — will ensue. Indeed, growth in developed markets is likely to recover more quickly, given earlier access to vaccines, while growth in emerging markets such as Malaysia is expected to recover in the second half of 2021, albeit at different speeds in different countries.
On this note, a lot of discussion has centred around the various vaccine strategies of each country. There are three broad aspects to a given vaccine strategy. The first is the procurement of vaccine “portfolios”, which are essentially the various combinations and quantities of vaccine types that governments have managed to procure from vaccine producers globally.
Once you have your vaccines, the second aspect is vaccine sequencing. This means deciding which segments of the population will get the vaccine first. Like most countries, Malaysia is prioritising its frontline workers and vulnerable population. As the Minister of Science, Technology and Innovation Khairy Jamaluddin has said, “If you are a healthy adult under 60 and not a frontline worker, it is safe to assume that your turn will come by 3Q (of 2021) or later.” As such, frontline workers, senior citizens and people with chronic illnesses will be prioritised.
Once you have your vaccines, and you know how you want to sequence your vaccination programme, then comes time for the third aspect, which is vaccine distribution.
In my view, this is the most difficult part of any vaccine strategy. Indeed, any macroeconomic outcomes — particularly on economic recovery — will ultimately depend on how good a given country is in organising itself in its vaccine distribution. This is the acid test for the state machinery of countries; how well it does in that test will be reflected in the country’s speed of recovery.
For much of public policy, implementation is the most difficult part. It is far easier to come up with a technically correct or fundamentally sound policy idea than it is to implement it in a messy, complex world. Vaccine distribution is no different. Yet, implementation is often the aspect of public policy that receives the most hand-waving.
For instance, consider the debate on the targeting of welfare support. Ideally, we would like, for example, cash transfers to go only to those who need it. But even if we could identify those who need it — say, by taking some income threshold — how do we ensure that only those who meet that threshold get it, and those who do not meet that threshold do not receive those cash transfers? Furthermore, how do we ensure that we do not miss out those who meet that income threshold but for some reason are not captured in our system?
These are hard problems that any state machinery faces in implementation. And even when data on registered individuals exists, the challenge may not necessarily get easier. Coming back to vaccine distribution, much of Malaysia’s hopes in economic recovery via vaccination will therefore lie in how well the government machinery — at federal, state and local levels — can inject vaccines into arms.
The same is true of other countries. Recovery via vaccination is not a given even if there are sufficient vaccines in the vaccine portfolio. Where the rubber meets the road lies in implementation.
One alternative that is generally quite popular is to have the vaccine distribution plan being undertaken by the private sector, which is usually seen as more efficient than government machinery. There, we should be cautious as well. A well-run private operation does not necessarily translate into a well-run public operation.
Take, for instance, a recent mishap in the city of Philadelphia, which outsourced part of its vaccine distribution to a non-profit called Philly Fighting Covid. Its leader, Andrei Doroshin, who has no background in healthcare, promised the Philadelphia city council that it would efficiently vaccinate the city population, as his company did not think like a traditional medical institution.
Doroshin said, “We’re engineers, we’re scientists, we’re cybersecurity nerds. We think a little differently than people in healthcare do … We took the entire model and just threw it out the window. We said to hell with all of that. We’re going to completely build on a new model that is based on a factory.” He added, “I think the old best practices in healthcare … can mostly go out the window.”
First, there is nothing wrong with non-healthcare professionals attempting to disrupt healthcare. Often, an outsider’s perspective can be useful. But, some humility is also called for. An equal dosage of scepticism and openness should be applied to anyone who says, “We think a little differently … we took the entire model and just threw it out the window.”
Second, I am no fan of the argument, “because this is the way it’s always been done”. I don’t think best practices should always be uncritically followed. However, to disrupt them, they should be understood. Those best practices are typically the result of years of cultural evolution; understanding and respecting why they arose in the first place is important. As it turned out, Philly Fighting Covid had failed in its promise to the city council for a variety of reasons, and the city decided to dissolve the partnership.
The ultimate test of our efficiency in delivery is still to come. In fact, for social scientists who try to study state capacity around the world, this is a glorious opportunity to assess how effective governments actually are in implementing strategies. This is no small challenge for Malaysia. The implementation of vaccine distribution will make or break our vaccination strategy and will have important consequences for our more macroeconomic outcomes such as GDP growth and employment rates.
That said, we should not put all our eggs in one basket. Vaccination should not be our silver bullet to overcoming this pandemic. Indeed, as Khairy has stressed, “the vaccine is not a panacea and until the country can achieve herd immunity, habits such as wearing face masks, maintaining physical distancing and good personal hygiene must continue”.
And even then, while vaccines have been proven to be effective against the onset of the disease, they have not yet been proven to prevent transmission of the disease. We must continue to stay vigilant and not put all our hopes in a vaccination strategy, one whose effectiveness, like in all countries in the world, ultimately lies in an area as precarious as strategy implementation.
Nicholas Khaw is an economist with the Khazanah Research division