Innovation, Think Outside The Box Required To Endure Prolonged Crisis

Innovation, coupled with a radical departure from contemporary thinking, is required with a possible reality of a prolonged crisis becoming the new reality that people and companies must function through.

Malaysia Global  Business Forum founding chairman Nordin Abdullah said innovation and resilience from all stakeholders will be required to shape a positive and sustainable future. 

He said if workers and corporations alike were concerned about their shared financial realities, they would have to continue to adapt to the changing conditions during times of crisis to ensure production flows.

"A proposed solution could be the designation of “Strategic Production Zones” in various locations around the country. Industrial zones that were also “green zones” confirmed COVID-19-free and able to have managed flows of human capital together with production flows," he said in a statement today.

A quick checklist of key components of what these zones would require, include but not limited to the following; close proximity to a port or airport, temporary onsite accommodation or centralised accommodation, medical screening facilities, additional onsite medical support, and central kitchens to ensure availability of food, he added.

In addition, Nordin said applying the concept of Fly-in Fly-out (FIFO), which is used in the mining and energy sectors to allow workers to be on site for a period of time and then flown out while being replaced by other workers.

This method would allow the expansion of production beyond the current highly critical food and medical supplies, he added.

"Can the concept of “Strategic Production Zones” be applied to the current situation considering the country’s current capabilities? 

"The police and armed forces have cordoned off various “red zones” and various agencies have ensured that those in the affected areas receive food and medical attention," he said.

At the same time, several risks have become accepted norms, including the movement of cargo overland and by air, reduced and registered workforce in critical industries, operation of the banking sector, and the controlled movement of the population to purchase food, to name a few.

Nordin said these combined factors leave space for the discussion between stakeholders for expanded production during this time.

He pointed out that while many small and medium enterprises (SMEs) have their heads on the cutting block, some of the larger corporations will not be far behind if supply chains and the related ecosystems grind to a halt.  

"Supply chains are complex and this crisis has been a strict task master in the lessons of interrelatedness of local and international supply chains. While we attempt to flatten the COVID-19 infection curve we can’t ignore the steep learning curve has not changed," he said.

Corporations that are chomping at the bit to return to partial or full production need to remember that at any level, a sustainable business model requires customers to remain alive to continue to buy goods and services well into the future, he said.

"On the flip side of the same coin, at this time it’s important to remember that public health is a luxury that is only made possible by a functioning economy," he said.

SOURCE: BERNAMA

Think When Coronavirus Is Over Australia's Economy Will Snap Back Into Place?

BY: Greg Jericho 

As a general rule, any time you need to use the phrase “since the Great Depression” things are not going well. Right now, of course, things are not going well. They are not just going badly, they are going badly quickly.

Through my lifetime there have been three “worst since the Great Depression” times for the economy – the early 1980s, the early 90s and the global financial crisis. In each case we never really got close to experiencing dramatic declines in production and income that happened during the 30s.


Out of those three cases the worst our GDP per capita ever fell in a year was 2.2%. By contrast, during the Depression, there were three consecutive years where it fell by more than 3.5% and one where it fell by more than 10%.

Most of us have lived in a time of moderation.

Consider that from 1920 to 1946, Australia’s annual GDP per capita either rose or fell by more than 4% 14 times; over the past 50 years it has happened just once.

Right now it would not be a shock if such a fall occurs in the June quarter alone.

In the US things have ground to a halt such that the total number of unemployed has increased by more than 50% in a week.

When such things occur, even comparison with the Great Depression fails.

Here in Australia the numbers are going to be just as bad. The numbers of people this week applying for Newstart this week are unprecedented (though not unanticipated) and Westpac economists now predict our unemployment rate will hit 11% by June.


Were that to happen the unemployment rate would have risen six percentage points in four months. The previous biggest four-month jump was in 1982 when unemployment rose 2.4 percentage points, from 7% to 9.4%.

The Great Depression was as bad as it was because economies around the world went backwards for three to four years. Australia’s GDP per capita in 1931 was 20% below what it was in 1928; in the US it fell 31% from 1929 to 1933.

Were our GDP per capita to fall by 20% that would take us back to 2001 levels – 20 years of growth wiped away.

Fortunately, things are a bit different now from the 30s.

Firstly, the world is not on the gold standard as it was in the 20s and 30s, so central banks have been able to engage in an extremely strong monetary policy response.

And secondly, John Maynard Keynes has already written his General Theory, so we know that fiscal expansion, not austerity, is the best response.

This, of course, is a different economic crisis – people are unemployed because the government has in effect mandated that their workplaces close. And so the hope is that when the crisis is over everything snaps back into place.

But generally it takes longer to recover than it does to fall.

It took two years of the Great Depression to lose 20% of GDP per capita and five years to make it back. During the 90s recession it took three years for the level of employment to fall from 59.6% to 55.5% and more than seven years to get back to the pre-recession level.

And in this instance we need to consider the virus and the response of governments around the world. The global economy is only as strong as the weakest link. And right now the US, led by Donald Trump, is in a pitiful state.

Until it is safe to return to normal business – and crucially until we feel safe – we will not see much recovery. But importantly, until we can say the same about other major nations, we will not see the global economy recover.

It may feel as though Trump’s incompetence does not affect us but it very much does.

All facets of our economy are affected – almost beyond comprehension. But it is all irrelevant until the concerns about our health – and the health of those in our major trading partners – are at an end.

Greg Jericho writes on economics for Guardian Australia
SOURCE: THE GUARDIAN