When I was much younger, I learnt an interesting term denoting one class of people: OKB, orang kaya baru, literally, “new rich person”. OKB refers to those who suddenly become wealthy and hence, a newly rich. Perhaps the closest western concept would be, a nouveau riche.
Throughout this Covid-19 crisis, we are observing the emergence of another class of people, OMB, orang miskin baru, “new poor person”. These are people who have suddenly fallen into poverty due to partial or total loss of income during this crisis.
Petty traders, waiters, lorry drivers, plumbers, electrical repairmen, kopitiam and restaurant owners, tuition teachers, sports coaches, micro-entrepreneurs and many daily and weekly wage earners are facing such predicaments, perhaps in different degrees.
Previously, these people did not need nor qualify for government welfare assistance. In fact, they are outside the radar of many charitable bodies helping to distribute aid during the MCO, simply because they are not considered poor, even though they are not rich.
However, at this point, the drastic drop in income, the accumulating debt and the ensuing economic uncertainty are already stressing them.
Some of them have applied for Bantuan Prihatin given by the federal government but have yet to receive any news.
The psychology of aid is also not as straightforward. For those not used to applying for and receiving welfare, deciding to do it for the first time maybe mentality daunting. In the end, some may choose to suffer in silence.
Even then, charity and government welfare are not enough for Cik Kiah and her neighbour, Din the tali pinggang who has been worrying over his RM60,000 worth of unsold jeans and leather belts because the pasar malam where he sets up his pre-Raya stall every year is expected to close until Raya.
To make the matter worse, the bulk of his capital came from borrowing from friends and the local money lender.
The SME loans, micro-credit schemes offered so far are a drop in the ocean.
One SME representative recently reported how out of almost one million SMEs in the country, only 5,000 were approved for the government credit scheme. In other words, help only went to less than 1% of the sector.
A pasar malam petty trader told me that some of his friends are resorting to money lenders because the process is so much simpler compared to government schemes.
At all levels of government, the bureaucracy of aid prevents timely assistance to be distributed to deserving parties.
Perhaps as a self-critique, with me being involved in the Penang Lawan Covid-19 campaign, unlicensed hawkers in Penang will not be able to receive the RM500 cash aid given to more than 14,000 licensed hawkers in the state.
The Malaysian federal government and state governments all of the country have to reassess their aid distribution programmes even as MCO is being extended.
(We are not even going into the even more scandalous politics of aid.)
In short, the Cik Kiah handouts announced by the federal government may be saving grace but to many of these OMB, these aids are either too little, too late or too difficult to apply, that is, if they are eligible at all at the end of the day.
In fact, most OMB does not need charity as much as they need to know for sure, how and when they can resume their self-sustaining economic activities. This is because a lot of the OMB is capable of bouncing back quickly if only the government provides a clear exit plan, fast.
However, the chaotic policy announced so far in regards to which sectors to reopen, when to reopen, and how to reopen is definitely not a clear exit plan.
The OMB was a productive force but the longer they are left in this economic limbo, their productivity may be diminished.
It is estimated that losses the last one month could be as much as a quarter of our GDP if not more.
We have heard how over last weekends, companies including big conglomerates were announcing restructuring, pay cuts and even retrenchment. The longer the government delays in producing a clear economic strategy, the more OMB they will have to deal with, and the more permanent poverty will set in on the newly poor.
Exit strategy – a leaf from Penang’s book
What would an exit strategy look like?
I have written elsewhere on the two criteria for exiting MCO, which was later confirmed by our DG of Health Dato Dr. Noor Hisham Abdullah, i.e. low Covid-19 statistics and high system preparedness.
Perhaps one aspect of system preparedness can be expressed in the requests sent three weeks ago by the Penang state government to the federal government, that is, 1) to increase Covid-19 test, 2) to implement movement control at the state border and 3) to implement a Covid-19 specific EHS (environment, health and safety) protocol for all sectors.
So far, Penang has unfolded its Strategi Next Normal Pulau Pinang which involves adaptation of state institutions, economy and society to deal with the new situation wrought by this crisis.
For example, the Chief Minister has outlined a new SME policy framework with five key missions:
- Expanding the digital economy in Penang with the aim of setting up the first Digital Free Trade Zone in the state.
- Strengthening Penang’s position in the medical equipment manufacturing sector.
- Refocusing E & E manufacturing sector to move from producing consumer products to industrial and strategic products, e.g. defence, telco, Industry 4.0, medical etc.
- Expanding the global shared services sector.
- Repositioning Penang to take advantage of the shift in the global supply chain system due to trade wars and the pandemic. Penang with her vast experience in industrialization can offer a strategic new location for the many companies now seeking to diversify their supply chain across geographies.
In terms of the state government’s role, the Chief Minister of Penang was spot on when he said, even if we have to “sell Komtar”, we have to ensure there is enough resources to equip frontliners to fight the epidemic and help the people to bounce back from this crisis.
But state resources alone are not enough – bear in mind Penang state budget is less than 1% of the federal budget – the federal government must already be rolling out a national economic recovery plan.
This may involve increasing public spending along with strengthening transparency to ensure monies spent are on-target not squandered away, expediting strategic projects such as the National Fiberisation and Connectivity Plan, increasing and improving the digital economy, creation of new jobs by both the private and public sectors etc.
To do all these, and to implement an effective national economic recovery plan, federal and state authorities must talk to each other meaningfully, and resources have to be distributed fairly to ensure local governments can begin to deal with the peculiar situations of their respective state immediately.