This document sets out the first phase of response by the UN development system in Malaysia, comprising 19 resident and non-resident agencies, funds and programmes. It outlines both ongoing as well as planned responses, including those that require donor funding to take forward in an effective manner. The scope of the support to the country and its people, spans the priority pillars of the public health response, humanitarian needs of vulnerable groups and the early socio-economic response. Against the backdrop of an upper middle-income country with a strong public healthcare system and economic fundamentals, this plan focusses on further enhancing the public health and humanitarian response in a spirit of partnership with Government, civil society and other actors - to reach, in particular, those who are most vulnerable, who are inadvertently left out of the normal coverage of aid efforts.
1.0 Situation Overview
1.1 Socioeconomic Impact of COVID-19
Despite being an upper middle-income country with strong economic fundamentals, COVID-19 and the measures taken to curb the spread of the disease have dealt a devastating blow to many who live on the brink of poverty. These include those in the informal sector, who were already part of the bottom 40 per cent (B40) in the country who earn less than RM2,848 (USD10662), the homeless as well as groups of vulnerable populations such as the undocumented, the migrant workers, refugees, stateless, asylum seekers and others who have little or no access to basic services or social protection. And within these very vulnerable groups, are those who suffer much more than others due to an intersectionality of various issues that are experienced to an even higher degree by women and girls, persons and children with disabilities, the aged, migrants, and health workers (disproportionately represented by women) and those living in informal settlements or working in the informal sector. The UN in Malaysia can leverage its comparative advantage and global expertise to work with Government and civil society partners to develop innovative solutions to address the complexity of issues that have been deepened with the onset of the pandemic.
Whilst, Malaysia has had strong development planning and implementation capacities, incorporating key principles of the 2030 Agenda for Sustainable Development and the Sustainable Development Goals (SDGs), the trajectory on which Malaysia was on, may now be seriously derailed. Prior to the outbreak, the Government expected the gross domestic product (GDP) to grow by 4 to 4.5 percent in 2020, but the projection has since been revised downwards. The Ministry of Finance and the central bank (Bank Negara Malaysia) expect the economy to fall into recession this year, with GDP expected to contract by at least 2 per cent, although independent economists such as Nomura Research, expect the economy to contract by about 6 per cent this year. This will seriously affect Malaysia’s ability of achieving high-income status by 2024.
The impact to business is dire, and many firms are struggling to stay afloat. A survey done by the SME Association in March 2020, highlighted that nearly 82 per cent of SMEs foresee losses for the financial year 2020, with nearly 7 in 10 of the SMEs with only just enough cashflow for them to pull through until April 202014. Another survey done by the Federation of Malaysia Manufacturers (FMM) in April 2020, reported that nearly two in three (63%) manufacturers will need to undertake drastic cost-cutting measures such as retrenchment, unpaid leave and freeze in hiring in order to stay in business; and about one in two (47%) stated that the cost-cutting measures will be implemented within three to six months15. Strikingly, more than three-quarters (78.7%) of surveyed firms said they might have to lay off up to 30% of their workforce16. Latest statistics from the Department of Statistics Malaysia (DOSM) show that 68 per cent of firms reported zero income during the Movement Control Order (MCO), which came into force on 18 March 2020, and had to use internal funds to stay afloat17. SMEs employ 70 per cent of the 10-million-strong workforce in Malaysia – a closure of 20 per cent of SMEs could potentially see up to 1.2 million people being jobless and increase the unemployment rate to 10%. Poverty rates will increase, as not only do workers have little or no personal savings, but about four in ten or 40 per cent are not covered by employment-based social protection.
Large numbers of the vulnerable population e.g. migrant workers (both documented and undocumented), many of whom make up the much-needed labour force of the country i.e. 30 per cent18 in both the formal and informal sectors – are in a highly precarious situation. UN agencies working with partners on the ground, report a high level of human suffering amongst the refugee and undocumented populations. The loss of jobs and income sources and the resulting deprivations including food, water and shelter – can evolve into a major humanitarian and socioeconomic issue in the country, if mitigating measures are not taken in time. It could also have spill-over effects to the region, given that a vast majority of their families living outside the country are dependent on the remittances from Malaysia.
Malaysians, who live on the fringes of development either in highly congested urban areas with high costs of living or those who are geographically isolated, including the B40 and indigenous peoples of the Peninsula, Sabah and Sarawak – face a multiplicity of issues that threaten to push them into deeper states of poverty. Those who are institutionalised e.g. the aged, those with disabilities and those incarcerated in prisons, in detention centres face a much higher health risk as a result of COVID-19. Health strategies that go beyond medical dimensions of the pandemic and include the human rights and gender-specific aspects of the health response would be more sustainable in the longer term.