Surviving the Storm

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00:00 Around the world,

00:01 the COVID-19 crisis poses a grave threat to everyday life.

00:07 And Malaysia is not alone in this battle.

00:10 The crisis has caused the deepest economic recession

00:14 in half a century,

00:15 as Malaysia's economy is projected

00:18 to contract by 3.1% in 2020,

00:22 compared to growth of 4.3%

00:25 in 2019.

00:27 Already,

00:28 we are seeing the impacts with many people

00:31 suffering job losses and reduced incomes.

00:35 Street vendors,

00:36 micro entrepreneurs,

00:38 local artists,

00:39 and many other informal workers have lost their livelihoods.

00:44 With incomes taking a big hit,

00:47 households in the bottom 40%

00:50 will be the least able to cope.

00:53 So far,

00:54 the crisis has triggered an economic policy response on a large scale,

00:59 with Malaysia committing 19% of its GDP.

01:04 Most low income Malaysians are receiving benefits through social assistance.

01:10 This means

01:11 that someone like Ahok,

01:13 an informal worker in the bottom 40%,

01:16 will already be receiving cash transfers for essential purchases.

01:21 However,

01:22 social assistance spending in Malaysia is still low

01:26 compared to other upper middle income countries.

01:29 And while social assistance programs have the

01:32 capacity to reduce the level of poverty,

01:35 outcomes in Malaysia

01:37 have been modest

01:38 in comparison to other upper middle income and high-income countries.

01:44 So,

01:45 as we weather the storm of the COVID-19 crisis,

01:50 Malaysia has a chance to come back stronger

01:53 in the new normal with improved support

01:56 to the vulnerable.

01:57 To do so,

01:58 policies must achieve three objectives

02:02 protect the incomes of the vulnerable from shocks,

02:06 promote equality of opportunity for everyone,

02:09 and

02:10 invest in the human capital of the poor.

02:13 The first step

02:14 is to ensure social protection reaches as many of those in need

02:20 as effectively as possible

02:22 during the COVID-19 crisis and beyond.

02:26 This can benefit someone in the country's bottom 40%,

02:29 like Katima,

02:31 as strengthened cash transfers provide short-term relief

02:35 in the face of financial strain.

02:38 There is also a need

02:40 to address social protection for the elderly

02:44 and increasing demand for non-cash support services.

02:48 As such,

02:49 a broadly targeted social pension,

02:52 coupled with better coverage of old age income protection

02:56 in the form of the Employees Provident Fund,

02:59 EPF

03:00 is important

03:01 for Mutu

03:02 and Lakshmi,

03:03 a retired couple in their 70s.

03:07 Non-cash support services for the elderly,

03:10 such as health

03:11 and aged care services,

03:13 will require public resources,

03:16 regulation,

03:17 and cooperation from the public

03:19 and private sector.

03:22 These measures help promote the resilience of the elderly

03:26 against the impact of sudden shocks,

03:29 and

03:30 surviving the storm will also require finding

03:34 ways to finance Malaysia's social protection needs.

03:39 Malaysia can improve its personal income tax framework

03:43 and expand taxes on non-earned income.

03:46 This will be important to raise more revenue in under-collected areas,

03:52 create new sources of public revenue,

03:54 and improve the distribution of income.

03:58 As Malaysians focus on surviving the storm,

04:02 there is an opportunity for the country

04:04 to emerge stronger from the crisis,

04:07 with a modernized social protection framework

04:11 that builds resilience

04:13 and offers protection

04:14 for those who need it most.

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transcript

Around the world, the COVID-19 crisis poses a grave threat to everyday life. And Malaysia is not alone in this battle. The crisis has caused the deepest economic recession in half a century, as Malaysia's economy is projected to contract by 3.1% in 2020, compared to growth of 4.3% in 2019. Already, we are seeing the impacts with many people suffering job losses and reduced incomes. Street vendors, micro entrepreneurs, local artists, and many other informal workers have lost their livelihoods. With incomes taking a big hit, households in the bottom 40% will be the least able to cope. So far, the crisis has triggered an economic policy response on a large scale, with Malaysia committing 19% of its GDP. Most low income Malaysians are receiving benefits through social assistance. This means that someone like Ahok, an informal worker in the bottom 40%, will already be receiving cash transfers for essential purchases. However, social assistance spending in Malaysia is still low compared to other upper middle income countries. And while social assistance programs have the capacity to reduce the level of poverty, outcomes in Malaysia have been modest in comparison to other upper middle income and high-income countries. So, as we weather the storm of the COVID-19 crisis, Malaysia has a chance to come back stronger in the new normal with improved support to the vulnerable. To do so, policies must achieve three objectives protect the incomes of the vulnerable from shocks, promote equality of opportunity for everyone, and invest in the human capital of the poor. The first step is to ensure social protection reaches as many of those in need as effectively as possible during the COVID-19 crisis and beyond. This can benefit someone in the country's bottom 40%, like Katima, as strengthened cash transfers provide short-term relief in the face of financial strain. There is also a need to address social protection for the elderly and increasing demand for non-cash support services. As such, a broadly targeted social pension, coupled with better coverage of old age income protection in the form of the Employees Provident Fund, EPF is important for Mutu and Lakshmi, a retired couple in their 70s. Non-cash support services for the elderly, such as health and aged care services, will require public resources, regulation, and cooperation from the public and private sector. These measures help promote the resilience of the elderly against the impact of sudden shocks, and surviving the storm will also require finding ways to finance Malaysia's social protection needs. Malaysia can improve its personal income tax framework and expand taxes on non-earned income. This will be important to raise more revenue in under-collected areas, create new sources of public revenue, and improve the distribution of income. As Malaysians focus on surviving the storm, there is an opportunity for the country to emerge stronger from the crisis, with a modernized social protection framework that builds resilience and offers protection for those who need it most.

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worldbank/WB MEM June 2020 Surviving the Storm Animation

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WB MEM June 2020 Surviving the Storm Animation

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WB MEM June 2020 Surviving the Storm Animation

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