Count logistics as essential service, says economist

IDEAS economist Carmelo Ferlito says logistics needs to be restored as a huge priority during the Covid-19 crisis.

PETALING JAYA: An economist has urged the government to include logistics as an essential service, saying hindrances to the industry will affect food supply.

In making the call, Carmelo Ferlito of the Institute for Democracy and Economic Affairs (IDEAS) used the supply of chickens as an example.

He told a webinar (online seminar) that chicken farms required various equipment such as air-conditioners, ventilators and various motors for production, noting that some of these are obtained from abroad.

Even chicken feed is imported, he said.

“In fact, 65% of the cost of production of chicken comes from the feed, and Malaysia doesn’t produce feed for chickens. Almost 100% is from India and the United States.

“You need to allow these things to come in. So logistics needs to be restored as a huge priority.

“If chicken is essential, you should judge as essential whatever is necessary to produce chicken.”

IDEAS senior fellow Jayant Menon said in the same webinar that breaking any part of a supply chain could lead to its total collapse.

“Crises like the current pandemic highlights the fragility of the system very vividly,” he said.

Menon also said the Covid-19 crisis had affected labour supply because of the government’s movement control order.

Carmelo said the best way to ensure the consistency of domestic food supply was to keep economic activity going as much as the current situation would allow.

He said mass Covid-19 screenings would help since it would identify workers cleared of the virus.

“We need to be aware of the integration of the supply chain,” he said. “I know that some supermarkets are struggling with plastic bags and food producers with plastic containers.

“It is important to keep all the steps connected, but in a medically secure environment.”

If mass screenings were done, he said, workers would be working in safe environments. The government could then ensure the gradual resumption of economic activity and stop spending money on subsidies, he added.