The economy is depressed

The government and I live in different worlds. For the government, it is always party time. The Covid-19 pandemic and the Emergency declaration hasn’t affected the government’s optimism – we shall still grow at 6.5% to 7.5%, it seems. The Ministry of Finance carries a cheeky smile in the face of investor’s confidence. 

In spite of everything, Azmin Ali told the country that the trade surplus is the “highest ever” (ignoring the fact that this also indicates a weak domestic economy). 

Contrast this party spirit to mine; I am a downer. The second movement control order (MCO) was nightmarish to me and my clients’ business because it drastically cut short our recovery time. 

Drying cash flow is typically the first bad sign. Stalling business activities mean fewer transactions and lower cash transfers take place. Suddenly expenses looked high, and you start worrying about the day-to-day. 

But of course, I may be an outcast in the grand scheme of things. In my quest to overcome my loneliness, I searched high and low for data about how small-to-medium businesses are doing. Is everyone else affected the way I am? 

I saw a YouTube video by a Chinese uncle called Elmo – the same name as the friendly Sesame Street character. He went on a neighbourhood survey of the hawker stores and restaurants in Petaling Jaya to understand how MCO 2.0 has affected them. 

In a series of interviews, he asked: a. How much has MCO affected your business? b. How different was the impact of MCO 2.0 compared to the first one? 

The interview answers provided me company. Most businesses were negatively affected by the pandemic. There seems to be a magic number: 30%. Although there were variations where some were slightly higher, and some were lower, it is fair to say that almost a third of their revenue was taken away. 

It is not a coincidence. Small and medium businesses are extremely sensitive to the day-to-day accounting and thus has the numbers at their fingertips. 

If your business suffered 30% in revenue every month, that means you have to consider cutting down staffs’ salaries or removing them altogether. The human cost behind the financial cost is heartbreaking for many owners. 

But what I found startling was not the magic number of 30%; I found the manner disheartening. Almost all business owners in that interview have shown a certain sense of hopelessness and dread towards the pandemic. 

Most of them do not remember the triumphant days of having droves of people visiting their restaurants and when seat was an issue; most of them do not remember the community interaction, playful banter, and the daily drama that filled their days; most do not remember having a surplus in their pocket to take on another day in stride. 

In economics, a depression is a form of a prolonged and sustained downturn. To be called an “economic depression”, there must be at least three or more years of economic decline that is at least 10% or more in GDP. Most economic depression is accompanied by high unemployment and rapid inflation. 

We are, of course, nowhere near an economic depression in classical economics terms. But if our economy is a person, it is depressed emotionally. 

The volatile Covid-19 numbers are unencouraging to our optimism. Just when things look like they were about to turn better, it became worse. MCO 2.0 unleashed more demons to our economic spirit that it paralyzed and traumatized our ability to move forward. 

The dark clouds follow us every day. When we read the news, we realize there is no saviour around the corner. Politics hit a dead end after Sheraton Move, and politicians relish playing by a different set of rules. And for politicians who were not installed on the people’s mandate, they have soon discovered they needn’t care about the people’s grievances any longer. 

Elmo’s interview is a small sample size in a localized area, but they paint us a picture of what is going on. If the experience was universal to all Malaysian businesses, then what the government engaging is called the “politics of illusion”. Instead of conceding to the poor economic conditions, the government told us that things were not only good, but they were better if not the best the country has ever experienced. 

Such intense dissonance to the general public explains why the government’s popularity is declining with little by the month. 

But in the face of all this, I always see the growing resilience of Malaysian businesses that we can independently pick ourselves up when times are tough. We would not expect the government to mitigate our burdens – we will help ourselves. 

From Elmo’s interviews, it was heartening to know that businesses who chose to adapt to the changing times by engaging with social media and other forms of digitalizationcould maintain their revenue as before. A smart business owner could see risk as an opportunity and would not give up so readily. 

If anything at all, this episode taught us that we don’t need to wait for the government to save us – we are our heroes. This shall be the lasting truth we cling to. After all, we don’t have a choice. 

Do you have any stories of Malaysian businesses to share?


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