This article first appeared in The Edge Malaysia Weekly on June 21, 2021 - June 27, 2021

PUTRAJAYA’s National Recovery Plan has shed light on how quickly and under what conditions the movement restrictions can and will be lifted in Malaysia. Yet, the challenges posed by the ferocity of new Covid-19 variants as well as the possibility of delivery delays of procured vaccines mean the country’s exit strategy — currently centred on vaccinations — needs to be enhanced to give the people, businesses and investors a higher level of assurance that recovery is within reach.

“It is very good that there is a transparent plan and milestones. I would have liked, however, to see more investment in more robust track, trace and isolate capabilities in case there is a problem with vaccine supplies and there are variants that render the vaccine less effective,” Datuk Seri Nazir Razak, founding partner and chairman of Ikhlas Capital, tells The Edge.

The former chairman of CIMB Group Holdings Bhd, who has been chairman of Bank Pembangunan Malaysia Bhd since April 22, had flagged the significance of the plan at a June 14 webinar on the role of government-linked companies (GLCs) in battling the Covid-19 crisis.

On June 15, Prime Minister Tan Sri Muhyiddin Yassin announced via national broadcast a four-phase National Recovery Plan centred on how quickly at least 60% of the population will be vaccinated. As at June 16, more than 3.63 million people, or 11.1% of the population, had received at least one dose of vaccine and 1.48 million, or 4.51% of the population, had completed two doses.

While new daily Covid-19 cases as well as the capacity of ICU wards across the country and the public health system are listed alongside vaccination rates as the three key indicators and thresholds that would determine when the restrictions to bring the pandemic under control would be lifted, the biggest “carrot and stick” in the plan that is applicable to everyone are interstate travel, domestic tourism and social activities, which are allowed only under Phase 4, when 60% of the population has been vaccinated.

According to the plan, Phase 4, in which most restrictions are lifted and all economic sectors allowed to open, is expected to happen in November and December. Malaysia,— which wants to inoculate at least 26 million people, or 80% of the population, by year-end — is expected to move into Phase 2 of the recovery plan when 10% of the population has been vaccinated (in July and August) and Phase 3 when 40% of the population has been vaccinated (in September and October). Only sectors on the positive list will be allowed to open under Phase 2 and parliament is expected to reconvene during Phase 3, where only activities on the negative list (where social distancing is impossible) will be prohibited (see table).

Not everyone is happy about the timeline presented, noting the strain of prolonging restrictions beyond end-June on businesses and the economy. The EU-Malaysia Chamber of Commerce and Industry (Eurocham Malaysia), for instance, suggests that the government “adjust” its milestones for reopening in relation to the percentage of population inoculated with one dose rather than those who have been fully vaccinated. “We also propose to shift the goalpost to vaccinate 20% of the adult population with at least one shot by end-June and start reopening some sectors with a low-risk profile,” it said in a June 15 statement.

In any case, back-of-the-envelope calculations based on the latest vaccine delivery timeline show it is possible to reach 60% population coverage with two doses as early as end-October if the number of doses administered daily is quickly ramped up to at least 300,000, from 204,839 as at June 16. The 60% coverage is also possible by year-end even at 200,000 doses a day. More on this later.

If nothing else, experience abroad on reopening shows the need for governments to plan for contingencies — even where inoculations are high and there is proof of reduced instances of deaths and severe infections when more than 30% of the population is vaccinated like in the US, the UK and Singapore.

While New York was able to lift all state-mandated Covid-19 restrictions on June 15 after more than 70% of the state’s adults had been inoculated, the UK on June 14 postponed lifting restrictions by four weeks from June 21 — the day its tabloids had called “Freedom Day” when all Covid-19 restrictions were to have been lifted — after a spike in new cases. More than 90% of these cases were caused by the Delta (Indian B.1.617.2) variant believed to spread more easily than the Alpha (UK B.1.1.7) variant, The Guardian reported on June 11. In the US, federal health officials are pushing for the remaining populace to be vaccinated, as the Delta variant is significantly more transmissible, comprising more than 10% of new daily cases as at June 17, up from 6% the week before.

At the time of writing, the World Health Organization (WHO) had listed four “variants of concern” — (a) UK B.1.1.7, or Alpha variant; (b) South African B.1.351, or Beta variant; (c) Brazilian P.1, or Gamma variant; and (d) Indian B.1.617.2, or Delta variant — and seven “variants of interest”: Epsilon (US/B.1.427 and B.1.429) and Iota (US/B.1526); Zeta (Brazil/P.2); Theta (the Philippines/P.3); Kappa (India/B.1.617.1); and Lambda (Peru/C.37).

According to Health Director-General Tan Sri Dr Noor Hisham Abdullah, Malaysia had 161 cases involving variants: 145 variants of concern (including Beta and Delta) and 16 variants of interest as at June 9. The Delta variant, for instance, caused cases to rise in Labuan in recent weeks.

Evidence from countries such as the UK and Singapore, where at least a third of the population has been vaccinated, shows the need to vastly boost testing and contact tracing capabilities to quickly isolate potential spreaders and effectively treat them to allow normal life to carry on and for borders to reopen.

When speaking of easing restrictions back to Phase 3 (Heightened Alert) from June 14, Singapore’s Prime Minister Lee Hsien Loong said on May 31 that the city state “must test faster, more liberally and extensively” even as more types of tests become available, including antigen rapid tests (ART) — which are cheaper and easier to administer than polymerase chain reaction (PCR) tests — as well as saliva tests, breathalysers, wastewater surveillance and even sniffer dogs.

In fact, capabilities to test, trace, isolate and treat the people infected with the virus is just as crucial as vaccination, which reduces the risk of severe infections but does not completely eliminate the risk of one contracting the virus, which may not go away for some time.

Science, Technology and Innovation Minister Khairy Jamaluddin, who heads the National Covid-19 Immunisation Programme, has stressed the importance of vaccination but admits it is only “one tool in an arsenal of measures” and that there is a need for the country to test faster and cheaper as well as invest in its own vaccine originating and manufacturing capability, which Malaysia currently lacks.

Lembaga Tabung Angkatan Tentera (LTAT)/Boustead Holdings Bhd-controlled Pharmaniaga Bhd, which currently carries out in Malaysia only the “fill-and-finish” process of the bulk “ready-to-fill” Covid-19 vaccine imported from China’s Sinovac Life Sciences Co Ltd, told the stock exchange in January that the collaboration aids its longer-term plans to strengthen its vaccine business.

Malaysia has a collaboration with a university in Thailand for vaccine production, Khairy says without elaborating.

Speaking at an online forum organised by The Oxford and Cambridge Society Malaysia entitled “The Path to Herd Immunity”, which began at 8pm on June 16, Khairy said he expected Covid-19 to be “endemic” and would be cautious about removing non-pharmaceutical interventions such as the wearing of masks and physical distancing too early.

“What the world [and] Malaysia would look like in 2022 is a mixture of people who have been fully vaccinated [and those who have not]. Rapid test kits need to be introduced as part of our lives — taking your temperature, doing a quick saliva test. We’re talking to Singapore to see how we can work together [on having] breathalyser tests or whatever that allows us to test faster,” he said, likely referring to the breathalyser tests developed by the National University of Singapore’s (NUS) spin-off start-up Breathonix, which has results within one minute and has reportedly been installed at the Causeway and Changi Airport.

While, like some experts in the US, Khairy is abandoning the term “herd immunity” on the possibility of new variants making Covid-19 endemic, the need to get at least 80% of the population vaccinated remains crucial for the country to better manage and bring under control the threat to lives and livelihoods. “It is very, very important for us to bring down the rate of hospitalisation and deaths — that we know vaccines do for sure,” he said at the online forum.

“We feel that when 40% of our population has been given two doses, we can start moving into a recovery phase. When 60% of our population has been fully vaccinated, then we can start allowing interstate travel. Right now, if we allowed interstate travel, it might contribute to another outbreak and it would be unfair to people who have not been vaccinated. But once we hit 60% of the population, that’s when public health experts can start advising us [on] lifting freedom for certain sectors.

“Different countries have different real-life outcomes as far as the vaccination is concerned. But, for most countries, we see them loosening when they reach 50% to 60%. However, the big caveat here, again, is variants.”

He cited the delay in reopening in the UK, where about 42 million people, or 80% of the adult population, have had at least a first dose of vaccine and over 30 million have had two doses.

Khairy concurred with moderators that Malaysia would “have to start investing in treatments as well”, adding that the country was in discussions with Pfizer Inc, which is reportedly testing pills to “cure” Covid-19 in the US with adult volunteers. On June 16, Pfizer said its study on oral rheumatoid arthritis drug Xeljanz — which also treats autoimmune disease ulcerative colitis but has not been approved in any country for treatment of Covid-19 — found reduced deaths or cases of respiratory failure in hospitalised Covid-19 patients with pneumonia in Brazil.

Last Thursday (June 17), the Biden administration announced a US$3.2 billion (RM12.2 billion) plan to develop and manufacture drugs to treat patients with Covid-19 and future viruses, dubbed the “Antiviral Program for Pandemics”, with the goal to have some antivirals authorised and made available to the public within a year.

Malaysia is also studying the possibility of mixing vaccines, said Khairy, citing a preliminary study from Germany (Saarland University) that had been presented to the committee showing evidence of stronger immune response among people who had received a combination of AstraZeneca and Pfizer-BioNTech vaccines. If this is done, the number of people completing two doses can be achieved faster, given that the 12-week interval period for the second shot of AstraZeneca is longer than the three weeks required for Pfizer and Sinovac. Mixing vaccines may well need to be considered if there are supply constraints, Khairy said during the forum.

Malaysia needs to get at least another 11.4 million people to register for vaccination, with 14.64 million, or 62.5% of the adult population and 44.7% of the total population, already registered as at June 16. Walk-in vaccinations will also be allowed after everyone who has registered for the vaccine via MySejahtera are given appointments “by end-August or early September” when supply of vaccines is not as tight, said Khairy.

According to details shared at the online forum, Malaysia expects to receive 44.8 million doses of vaccines this year, of which 5.68 million doses have been received (Pfizer, 3,196,440; Sinovac, 1,656,840; and AstraZeneca, 828,000). The 5.11 million doses that had been administered as at June 16 indicate a 90% utilisation rate.

By end-July, there should be at least another 1.8 million doses from Pfizer and 10.34 million from Sinovac — to bring the total number of doses received so far to 17.8 million, enough to inoculate at least 27.2% of the population with two doses each, back-of-the-envelope calculations show. This excludes the 4.07 million doses from AstraZeneca that are supposed to arrive “from July”. Another 25.68 million doses of the Pfizer vaccine are supposed to arrive in batches in the third quarter and 14.14 million doses in the fourth quarter — enough to inoculate another 60% of the population.

The 25.68 million doses that are supposed to arrive in the third quarter or by end-September alone should be enough to cover another 39.2% of the population with two doses. In short, there should be enough vaccines to cover 27.2% of the population with two doses each by end-July, 66.4% of the population by end-September and 94.2% by end-December, barring any supply delays.

To reach 40% population coverage, 26.2 million doses need to be administered — the additional 21 million doses are possible within 105 days, assuming 200,000 doses a day, and 70 days at 300,000 doses a day. To reach 60% population coverage, 39.3 million doses (or an additional 34.2 million doses from the current 5.1 million) have to be administered — possible by end-October or within 114 days (just under four months) at 300,000 doses a day.

Even at current levels of about 200,000 doses a day, the amount required to reach 60% coverage should be attainable within six months, back-of-the-envelope calculations show.

Economists would not be surprised if Malaysia lowers its 2021 GDP forecasts when it releases its second-quarter GDP reading on Aug 13, given that Finance Minister Tengku Datuk Seri Zafrul Aziz had said Malaysia’s 2021 GDP forecast could be lowered from the current range of 6% to 7.5%, owing to the impact from MCO 3.0 in June. MCO 3.0 costs the economy RM1 billion a day, the prime minister said on June 15 — lower than the RM2.4 billion a day for the first MCO but three times the RM300 million a day under MCO 2.0 earlier this year.

“The government has so far kept mum on any revision to its earlier 2021 GDP forecast of 6% to 7.5%. However, going by its daily hit estimate, and assuming no further extension of Phase 1, it would mark around two percentage points hit, putting the bottom part of its forecast in line with our 4% forecast,” OCBC Bank economist Wellian Wiranto wrote in a June 16 note.

Given that a RM40 billion Pemerkasa Plus aid package with RM5 billion in direct fiscal spending had been announced on May 31, ahead of MCO 3.0, expectations are not high that additional packages will be announced before Budget 2022 is tabled after parliament reconvenes.

“Based on our channel checks, there are no plans to announce further stimulus measures for now. The coming Budget 2022 proposal and the 12th Malaysia Plan (2021-2025) are expected to be tabled once parliament sessions resume in September/October to further strengthen the national recovery over the medium term,” UOB Bank Malaysia senior economist Julia Goh wrote in a June 16 note. She also has a GDP forecast of 4% for 2021.

There should be room to hasten the transition to recovery, if vaccination rates can be attained faster than expected or if the number of new infections falls significantly earlier and no longer severely strains public health facilities and frontliners.

More needs to be done to get buy-in from investors, judging by the response from Eurocham Malaysia, which “cautiously welcomes” the National Recovery Plan but expresses concerns about the timeline and suggests the easing of thresholds to allow the reopening of low-risk sectors to happen earlier. The chamber also flagged “a growing trend among international investors in delaying foreign direct investment (FDI) decisions to a later time due to the ongoing and repeated decision to lockdown” and “a decline in Malaysia’s reputation as a reliable partner in the international supply chain with companies unable to fulfil orders or shift production temporarily to other factory sites outside Malaysia”.

“I strongly believe that a pragmatic exit strategy for the Full Movement Control Order is [imperative to helping] with the country’s economic recovery. The National Recovery Plan offers more certainty for investors and local businesses but it also falls short of expectations. We are concerned that the timeline and milestones given are too conservative,” Eurocham Malaysia chairman Oliver Roche said in a statement.

“To maintain investor confidence and the survival of local and foreign businesses alike, it is essential to provide clear communication, consistent rules, SOPs and guidelines.”

While expressing confidence that Malaysia can recover swiftly with a well-thought-out strategy, Eurocham deputy chairman Luciano Pezzotta says the chamber “anticipates that a comprehensive financial support programme for both Malaysian and foreign businesses will still be necessary for the remainder of 2021 and gradually reduced in 2022”. To expedite FDI, he asks that Malaysia, like the EU, implement and recognise a vaccine passport for business travellers and expatriates who have been fully vaccinated.

Malaysian Employers Federation president Datuk Syed Hussain Syed Husman notes the delayed investment commitments by potential investors as well as disruptions to supply chains, and reckons that extending the lockdown by 12 weeks “would drastically impact most businesses across all industrial sectors and lead to increased unemployment, retrenchments, loan defaults and bankruptcy”.

“Apart from providing financial support to bear the high cost of the lockdown, there is also a need for the government to provide employers with better clarity on the details of the National Recovery Plan, especially for companies in non-essential sectors,” he said in a June 17 statement, asking that details be provided for each stage of the plan and ironed out in consultation with stakeholders, including micro enterprises. “Only by having such granularity can we examine the issues and make specific, targeted adjustments to improve the results.”

At the online forum, Khairy — who says he spends two hours every night going through emails seeking help on problems encountered in relation to vaccination registrations — welcomed the help of volunteers in clearing backlogs at overwhelmed help desks, apart from assisting in ushering people as more vaccination centres open.

Former deputy minister of international trade and industry Ong Kian Ming is also being part of the solution to Covid-19 by offering “pro bono” business and consulting advice to businesses affected by the pandemic and that need new revenue streams to survive. In a June 16 statement listing 10 questions and suggestions for the National Recovery Plan, Ong — member of parliament for Bangi and a former consultant with Boston Consulting Group — suggests that the Prime Minister’s Office set up a “National Recovery Plan Ideas Bank”, basically a depository of ideas for helping reopen the economy responsibly and safely. He also asked whether the Ministry of Finance had solutions to raise revenue and improve cash flow, and suggested that the government look at securitising the portion of loans at the National Higher Education Loan Corporation (PTPTN) that have reliable and predictable repayments, among other things.

Malaysians could well benefit if it has a good system to harness ideas from its population of 32.75 million. After all, the path to the liberty that New York enjoys today may well have been helped, in part, by one Huge Ma, a 31-year-old software engineer at Airbnb. Instead of complaining about problems he encountered while trying to obtain a vaccine appointment for his mother, Ma developed TurboVax as a free website to enable people to spot the availability of appointments in three main city and state vaccine systems.

Everyone can be part of the solution to Covid-19 by getting vaccinated and adhering to the SOPs. #Ifyouarenotpartofthesolutionyouarepartoftheproblem

See also Covid-19 Cases + Vaccination Tracker on Page 13

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