Little did we know that COVID-19 would spread to such a grand scale. More than four million people were infected around the world and 283,878 perished as of May 11, 2020. It all started in Wuhan City, China, in late December 2019.

Disruption to industrial supply chain

Back then, all that the people could think of was about the disruption to the industrial supply chain. The perception was somewhat naïve although it is not totally unfounded as China is the largest economy in the world now. Yes, it is the largest by IMF standards with its GDP on purchasing power parity standing at US$27.3 trillion in 2019, surpassing that of the United States of US$21.4 trillion.

The recent contraction in China’s first quarter GDP was also unheard of with its economic activities having declined by a massive 6.8 per cent. The US economy also recorded a 4.8 per cent contraction in the first three months of 2020. Being an open economy, Malaysia’s GDP print is likely to disappoint us.

Despite that, the governments across the globe have responded accordingly, with measures mostly centered to alleviate the financial burden among the small businesses and households. Central banks, too, have revisited their quantitative easing toolkit to ensure that the financial system is appropriately and sufficiently lubricated. In that regard, the Malaysian government has done its part.

Health crisis a great challenge to all

Indeed, the health crisis presents a great challenge to all. The choices are never easy and decisions have to be made as time is of the essence. The Movement Control Order (MCO) is likely to result in higher unemployment among fellow Malaysians.

True enough. The unemployment rate went up to 3.9 per cent in March this year, the highest since 2009 when the country was plagued with the US subprime mortgage crisis back in 2008 and 2009.

Other jurisdictions also have demonstrated significant jumps in the jobless rate.

The most recent was in the US where the unemployment rate shot up to 14.7 per cent as of April.

This is an all-time high since 2010. The trade-off between health and economy is similar to between a life-or-death situation. One casualty is too many.

A silver lining

Notwithstanding, there is a silver lining in all this.

A survey done by the Department of Statistics Malaysia (DOSM) on working conditions during the MCO showed that Working from Home (WFH) accounted for 42.6 per cent of the total survey respondents.

What was once deemed as the unthinkable has happened. Who would have thought that WFH can be embraced in a matter of days?

This goes to show that businesses are adapting to their environment almost immediately and thanks to the state of technology. Meetings can be done online and important decisions can be reached.

The proliferation of webinars has been rapidly accepted for training and seminars. To a large degree, it has become business as usual for some of us.

This is a very forthcoming trend emerging from the pandemic. It seems that there is a paradigm shift among the employers and employees to ensure productivity can never be compromised while, at the same time, keeping everyone safe from harm is the number one priority.

The benefits of WFH

Imagine, WFH has become the accepted norm going forward. The amount of carbon emission can be significantly reduced as employees do not have to travel to office, at least as frequent as before. The strain on public transport demands can be removed and public sector spending can be rechannelled to other uses.

Workers with young children or those who need to take care of their elderly parents will not feel stressful as they can perform both tasks more conveniently.

Businesses can save their office rental, utilities and office equipment and this will lead to better cost management which could enhance their profit margins and pricing power.

Employees would have more time to do their morning run and this can help improve health. Therefore, expenditure on healthcare, especially on non-communicable diseases (NCDs) such as cardiovascular ailments, diabetes and high blood pressure can be kept at a minimum.

Prerequisites of WFH

However, some prerequisites need to be observed.

Investment in digitalisation will have to be doubled up as companies would need to ensure that their security and confidentiality will not be breached.

There must be a systematic way to gauge the productivity of a worker. Otherwise, the per unit cost produced will be rising and this can defeat the whole purpose of WFH.

Above all is the trust between the supervisors and the employees. Therefore, it is important to have suitable standard operating procedures so that everyone will be on the same page.

With or without COVID-19, the business landscape has been constantly challenging. The rise of the digital economy has been reshaping the way we do business. In particular, consumer tastes are changing as they have more options while competition is unstoppable as barriers to entry have been greatly reduced. That would leave businesses to have limited choices but to continuously review their business strategy.

The COVID-19 pandemic could be seen as a catalyst for businesses, big or small, to relook at their playbook.

Perhaps, COVID-19 is a blessing in disguise.

-- BERNAMA


Dr Mohd Afzanizam Abdul Rashid is the Chief Economist at Bank Islam Malaysia Berhad.