SENIOR MINISTER DATUK Sri Ismail Sabri Yaakob who helms the Security and Defence portfolio announced that the government will impose an entry ban on citizens from countries recording more than 150,000 Covid-19 cases, starting September 7.
The restricted countries are the US, Brazil, France, the UK, Spain, Italy, Saudi Arabia, Russia, Bangladesh, India, Indonesia and the Philippines; and involves six categories of pass holders, namely those with permanent resident status, Malaysia My Second Home Programme participants, expatriates including professional visit pass holders and resident pass holders, spouses of Malaysian citizens and their children, as well as students from the abovementioned countries wanting to return to the country.
The government needs to justify, clarify and communicate with the public why the magic number “150,000” was chosen. On what scientific grounds do 150,000 Covid-19 cases in a country makes it “high-risk”? Are there no other factors that should be considered in identifying high-risk nations?
Firstly, 150,000 is equivalent to 0.01%1 of India’s population and 0.43%1 of Saudi Arabia’s, respectively. So, putting all other parameters aside, is the probability of getting a Covid-19 imported case from India and Saudi Arabia the same or at least close to each other?
Secondly, population density and transportation connectivity are among the well-known factors in aggravating the spread of Coronavirus. It is unbelievable for a country to decide on an entry ban by purely referring to the number of recorded Covid-19 cases alone.
Thirdly, and building on the above argument, the list of restricted countries cannot help but grow longer as their Covid-19 case numbers can only lead to an uptrend line or in the best case scenario, stagnate due to zero new cases.
Being an open economy and export-oriented country, is it therefore wise for us to isolate ourselves from the rest of the world?
The federal government has kept silent on the timeline of this blanket entry ban, which may well impact companies’ business plans, families’ reunions, overseas students’ study plans and many more. The public is now in the dark on how to plan for their businesses and lives. In any situation, a government decision must enable the public adequate time to strategise and react in advance.
Covid-19 Does Not Discriminate
Regardless of nationality, the proper SOP and Covid-19 test procedures should apply to all entering into the country. I am not advocating the government to fully open up the borders, but business travellers, spouses and children of Malaysian citizens and overseas students who are already enrolled in their courses should not be barred from entering Malaysia.
The health of a nation is about the people having a balance of physical and mental wellness, financial stability and family life.
What does “Embracing the New Normal” Mean?
Embracing the new normal is not only restricted to practising social distancing and wearing face masks. It is about accommodating Covid-19 in our lives and the economy, after complying with the SOPs. Our country cannot afford to implement non-science based policies that will severely disrupt both these areas.
Impact on the Economy and Employment Opportunities, with Unquantifiable Collateral Damages
According to The World Bank, Malaysia is one of the most globally open economies with a trade to GDP ratio averaging over 130% since 2010. Openness to trade and investment has been instrumental in employment creation and income growth, with about 40% of jobs in Malaysia linked to export activities.2
The US and India (now subject to the entry ban restriction) are among Malaysia’s top 10 export markets. In 2019 Malaysia exported RM133bil of goods to these two countries,3 and the US has consistently been a key FDI contributor to Malaysia over the past decades.
In addition, the total ban will also negate the PENJANA incentive announced by Prime Minister Tan Sri Muhyiddin Yassin on June 5 to attract FDI (10 years / 15 years tax free for RM300-500mil / RM500mil above investments in relocating manufacturing operations into Malaysia). It is impossible for corporates to commit hundreds of millions into a country without being able to perform due diligence at the site.
Penang is a case in point. The state attracted RM15.0bil and RM6.8bil of FDI in 2019 and Q1 of 2020 respectively, and these investments are estimated to have created about 20,000 new job opportunities in the country. Approximately 70% of these FDI project values are from US and UK-headquartered companies. Now, with the imposition of travel restrictions on their corporate executives, project implementations are delayed or at risk of being abandoned; dampening potential new job opportunities and benefits to our local economy.
Manufacturing output, especially from the electrical and electronics industry, contributed 93% of Malaysia’s trade surplus and 38% of total exports in 2019. We need to take cognisance that our investors, both local and foreign, have high technical production lines which require foreign expertise to install equipment, transfer technical know-how and to train the local Malaysian team. This sudden ban halts all possible progress forward, production ramps, new business qualifications; and new product transfers into the Malaysian sites are deferred.
With the multiple changes in policies, unclear criteria and long application processes, it has become literally impossible for investors to plan their businesses in the current environment. This ban will further damage Malaysia’s pro-business image internationally, making it even more difficult to compete for FDIs in the future.
The Bottom Line
Covid-19 caught us unprepared at the beginning of the year. Six months into the pandemic, we have gained valuable lessons in containing the spread in Malaysia with scientifically based SOPs. Do not concede these hard-fought gains thus far with this blanket ban!
1Calculated based on the population figures from https://www.worldometers.info/world-population/population-by-country/
Dato’ Seri Lee Kah Choon is Adjunct Senior Fellow at Penang Institute and Special Investment Advisor to the Chief Minister of Penang. He is currently Chairman of Malaysia Debt Ventures, Malaysia’s leading technology financier under the Ministry of Finance, and a board member of various private companies and state government-linked corporations.