Pandemic, Democracy and Power Shifts BA Hamzah

The Covid-19 pandemic, which has taken the lives of more than 100,000 people globally and 80 plus in Malaysia, will be over at some point and when it is, the governments of Southeast Asia are going to need a practical exit strategy.

A workable recovery plan should conceivably include a diplomatic and economic shift away from a critically weakened west towards an Asia, particularly China, Japan, South Korea and other countries, which are expected to emerge from the pandemic earlier and in better shape from a staggering West.

The collateral damage from the pandemic is unprecedented. Apart from deleterious impact on life and the economy, democracy or trappings of it, are threatened. Irresponsible politicians have hijacked the pandemic to consolidate power.

Hungarian Prime Minister Viktor Orban has used the virus to solidify his one man-rule that he calls “a system of national cooperation”. Some countries even expel or threaten foreign journalists from reporting on the pandemic. Without the right to dissent and hold free elections, for example, democracy is hollow.

The United States is already delaying primary elections, setting a worrying trend. Malaysia and other Southeast Asian nations should prepare for the permanent shifting of economic power from the US and the European Union nations to Asia. Policymakers should start looking north.

China has begun to emerge earlier from the disaster at the time the West is just going. UBS, for instance, sees China’s gross domestic product (GDP) growth rebounding on policy easing, higher fiscal deficits and stronger infrastructure investment in the face of an expected recession for Japan, Germany and the US as well as global supply chain disruptions, rising unemployment and income losses. Despite some setback, GDP growth in China is expected to remain positive.

Even before Covid-19, the Malaysian economy was already sluggish following a decline in the export sector. The gross exports of goods and services contributed to about 73 per cent of Malaysia’s GDP in 2015. Prices for palm oil, oil and gas as well as its electronics — the mainstay of Malaysian economy — have taken a direct hit. The current political uncertainty will further dampen the overall confidence outlook in the country.

Hence, the first consideration for the exit strategy is to strengthen democracy in the country. Ensuring the rule of law, the cornerstone of all democratic societies, always makes good sense. Respect for fundamental human rights, like free elections and an independent judiciary, are non-negotiable values in any democracy.

The second exit strategy is boosting the domestic economy. In the absence of foreign investment, the challenge is how to expand private consumption. While public expenditure on infrastructure projects, for example, may spur growth, it will further widen the fiscal deficit, predicted at 3.2 per cent of GDP in 2020 budget by the previous government. Maintaining fiscal discipline in a dire economic situation is key to recovery. The challenge is finding the right balance between saving life and saving the economy.

The third exit strategy is to develop new strategies to enforce social stability in a multiracial society, where income inequality is widening since 2008, according a 2018 study by Khazanah Research Institute. According to the United Nations Development Programme, the top 40 richest Malaysians owned 22.4 per cent of GDP in 2012, almost 7 per cent higher than in 2006.

Leakages from the economy are exceptionally large, most notably through corruption, which cost the taxpayers US$4.6 billion and mismanagement and fund repatriation from more than six million foreign workers. The dumping of shares on the stock market estimated at RM9 billion last year will further undermine the business confidence.

Finally, Malaysia needs to revamp and fix the education system. Had Malaysia retained English as the medium of instruction in schools and put more emphasis on the teaching of science, mathematics, engineering and technology as in Singapore, the nation would have been on a different trajectory. It is never too late to start afresh!

BA Hamzah is a keen student of geopolitics.

This article was published in The New Straits Times dated 16 April 2020. Republished with permission.