COVID-19 CLIENTEL CAPITALISM COLLUSION WITH MONOPOLY-CAPITALISM

PROLOGUE

The clientel [place] had aligned with monopoly-capital [positions] in promoting rentier capitalism to sustain their hold on [power]. They adopt this clientelism as solicitations for votes at the grassroots level, allowing ruling elites [place] the party patronage [position] and political [power].

1] INTRODUCTION

The root of COVID-19 pandemic is a crisis of globalization, a crisis of neo-colonialism, a crisis of ethnocratic capitalism, a crisis of the socio-economic management of our healthcare.

A) CRISIS OF GLOBALIZATION

According to the World Trade Organization, the economic fallout from the COVID-19 pandemic would lead to a drop in annual world trade in 2020 by 13 percent in the more optimistic scenario, and by 32 percent in the more pessimistic scenario. In the latter case, the collapse of world trade would equal in one year what happened in the Great Depression of the 1930s over a three-year period, (World Trade Organisation, Trade set to Plunge as Covid-19 Pandemic Upends Global Economy, WTO, April 8, 2020).

A paper in the New Political Economy (henceforth referred as NPE 2021) published online: 30 Mar 2021 – by Jason Hickel, Dylan Sullivan and Huzaifa Zoomkawala contended that wealth drain from the Global South remains a significant feature of the world economy in the post-colonial era; rich countries continue to rely on imperial forms of appropriation to sustain their high levels of income and consumption.

The researcher-authors discover that the Global North had appropriated from the Global South commodities worth US$2.2 trillion in Northern prices that are enough to end extreme poverty 15 times over. Over the 1960–2018 period studied, the value drain from the Global South totalled US$62 trillion (at constant 2011 US dollars), or US$152 trillion when accounting for the Global South countries’ lost growth. Indeed, it is found that the appropriation through unequal exchange represents up to 7% of Global North’s GDP and 9% of Global South GDP.

B) CRISIS OF NEO-COLONIALISM

That post-independence under continuance of neo-colonialism and the neoliberalism “economic development” approach ensue growth did not trickle down to everyone, and that only the well-connected capital cronies who, through rentier capitalism and clientele corruption, had enjoyed the immense wealth of development. There had been a marked rise in absolute inequality in Malaysia through the years:

Source: Martin Ravallion 15 April 2019

C) CRISIS OF ETHNOCAPITALISM

The past forty years, however, our healthcare policies have reduced health services as part of financialization capitalism, see John Bellamy Foster, “The Financialization of Capitalism,” Monthly Review 58, no. 11 (April 2007). An outcome of this excessive splurging of money is that a small class faction controls increasingly large portions of social wealth, best described as “plutonomies”, see “Revisiting Plutonomy: The Rich Get Richer,” Citigroup Research, March 5, 2006.

The objectives of dominant monopoly-capitalism are still the same: controlling market expansion (TNCs), destruction of natural resources (Big Farms), and peripheral labour reserves exploitation (Global Value Chains), by colluding with local compradore capital in allegiance to this Global North malfeasance, (Samir Amin, Imperialism and Globalization, Monthly Review June 2001 and The New Imperialist Structure, Monthly Review July 2019), while rakyat2 are burdened with economic stagnation where those urban unemployed or have lower working hours with lower pay are having greater challenges in accessing healthcare.

D) CRISIS OF HEALTHCARE

In 1983, premier Mahathir introduced policies allowing the private sector to encroach upon the public healthcare and public education sectors. The encouragement to privatization leads to an unrestrained privatization in healthcare, including medical and pharmaceutical supplies, that cause healthcare costs rising considerably. This lead to a widening in social inequalities not only in healthcare service provision but impact upon widening gaps between different classes on their  working and living conditions.

2] THE CLIENTEL CAPITALISM CONTINUES

Malaysia has spent RM3.5 billion to procure Covid-19 vaccines for 120% of the population in Malaysia or 38.5 million people, said Covid-19 Immunisation Task Force (CITF); that the overall budget for Malaysia’s National Covid-19 Immunisation Programme was RM5 billion, as it included the cost of implementing the programme itself, with RM3.5 billion spent on vaccine procurement.

The country received the second batch of COVID-19 vaccines, shipped via the COVAX Facility, or COVID-19 Vaccine Allocation Plan, a partnership between the World Health Organization (WHO), the Coalition for Epidemic Preparedness Innovations (CEPI), Gavi, and the United Nations Children’s Fund (UNICEF), ensuring an important step in the fight against the COVID-19 pandemic.

The 559,200 doses of AstraZeneca vaccines had arrived following the April 21^st 2021 COVAX shipment of 268,800 doses to Kuala Lumpur, Malaysia. In total, Malaysia has received 828,000 doses of the expected 1,387,200 doses of AstraZeneca vaccine provided by the COVAX Facility.

The national vaccination rate had reached 100,000 doses a day since May 27 and the target now is to achieve 200,000 doses by the end of July 2021; and the vaccination rate to hit 300,000 a day by August 2021, (New Straits Times, 8th. June 2021).

The ruling regime vaccine coordinating minister Khairy Jamaluddin denies deliberately delaying administration of Covid-19 vaccines and dismissed accusations that the federal government had not been helpful in allowing state governments from buying their own vaccines after opposition members had claimed that the federal government had stonewalled attempts by Selangor and Sarawak state governments as well as private entities from getting their own government-approved vaccine supplies, (channelasianews, 20th. April 2021).

However, the state governments or private hospitals intending to acquire Sinopharm and Moderna products need to register these purchases with the Health Ministry’s National Pharmaceutical Regulatory Agency (NPRA), adding another layer of clientele capitalism control.

Further, if these parties wish to purchase vaccines that are used in the NIP such as Sinovac and Pfizer-BioNTech vaccines, then they will have to wait for the suppliers to fulfil the federal government’s orders first. 

The vaccines currently used in Malaysia’s NIP are Pfizer-BioNTech, Sinovac and AstraZeneca. Other vaccines that have been approved by WHO include Moderna and Sinopharm. 

3] THE MONOPOLY-CAPITALISM PROCESS

In a crisis under an Ecological-Epidemiological-Economic environment, the control and distribution of vaccines has entangled oligarchy associates with Big Pharma capital linking to Global North monopoly capital and its financialisation capitalism domain.

That an unfavourable arrangement whereby Pharmaniaga – the premier privatised pharmaceutical company – would source for required medicines and sell them to the Health Ministry at a pre-determined price  with an additional mark-up and commission rate to cover the costs of distribution, inventory holding and procurement is not only a disturbing trend, but a reality in clientel capitalism where rent-seeking is a norm insofar capitalism breeds unlovely opulence among the few, and immiseration of the many.

As early as January 12, 2021, Pharmaniaga had partnered China’s Sinovac Life Sciences Co Ltd for the supply of the 14 million doses of Covid-19 vaccine, enough to cover 22% population in Malaysia. The country has received Sinovac’s first 200-litre Covid-19 vaccines on 27th. February,  2021, equalling to 300,000 doses.

Pharmaniaga’s wholly-owned subsidiary Pharmaniaga LifeScience Sdn. Bhd. (PLS) had also entered into a term sheet agreement with the Ministry of Health (MoH) for the purchase and distribution of the vaccine developed by Sinovac Life Sciences Co Ltd (Sinovac LS), a subsidiary of Sinovac Bi-otech Ltd., (theedge, 27/01/2021). The agreement will enable PLS to supply doses of finished Covid-19 CoronaVac, SARS-CoV-2 Vaccine (Vero Cell), Inactivated (developed by Sinovac LS), and filled and finished by PLS to be delivered to hospitals, clinics and any other facilities nationwide as instructed by MoH.  

In the rollout of vaccination, the spectre of ethnocratic administration and rentier capitalism should not be eclipsed from public knowledge especially when bumiputera ethnocapital agents act as intermediaries between government hospitals on one hand, and foreign and Malaysian non-bumiputera pharmaceutical companies on the other, who bid for public procurement of drugs and other medical supplies. In fact, this class of ethnocapital tendering agents shall continue to provide additional services like warehousing and distribution, while other bumiputera shall continue to assume purely as intermediary middlemen. These ethnocapital tender agents charge a fee of between 2 per cent and 3 per cent for their services.

Further, unlike typical logistics companies that charge shipping based on product weight and distance of the destination, Pharmaniaga charges MoH a percentage of the value of products purchased to cover logistics and  distribution expenses, even though the MoH owned the IT system developed by Pharmaniaga to manage drug procurement.

4] ] THE CLIENTEL COLLABORATION WITH MONOPOLY-CAPITALISM COLLUSION

i) Covid-19 vaccines are significant intervention in managing the pandemic, but should be based on an equitable distribution (Jomo, February 2021) and Big Pharma should not refuse to join the voluntary knowledge sharing and patent pooling COVID-19 Technology Access Pool (C-TAP) initiative under WHO auspices, (Chowdhury and Jomo, March 2021) because patents on vaccines were developed with public funding to the fight against COVID (Rob Wallace, The Political Economy of Pandemic).

Though the production of vaccines, like medicines, is an expensive process, and that the development of the scientific knowledge and production typically take time, whilst poorer countries need large volumes, the prices have to be affordable to them and easily available for everyone on mother earth.

Though governments, private companies, non-governmental organisations and COVAX, the vaccines pillar of the ACT-Accelerator partnership launched by the World Health Organization (WHO), Coalition for Epidemic Preparedness Innovations (CEPI) and Gavi, the Vaccine Alliance have funded the development of the Covid-19 vaccines, it is the monopoly-capital that benefits.

There are different prices for different vaccines in different countries as dictated by the Big Pharma

Indeed, pharmaceutical companies are charging different prices for different Covid-19 vaccines.

The Belgian budget state secretary’s tweet about the price list of the Covid-19 vaccines that her country intended to purchase from the European Union (EU) drew the ire of pharmaceutical companies. The tweet was deleted, but not before screenshots taken have put it in the public domain :

Oxford/AstraZeneca: €1.78 (£1.61)
Johnson & Johnson: $8.50 (£6.30)
Sanofi/GSK: €7.56
Pfizer/BioNTech: €12
CureVac: €10
Moderna: US$18

The prices for the various Covid-19 vaccines even differ between those available in the United States (US) and European Union (EU) countries as summarised in The Washington Post of 18th. December 2020 :

Another extract from the British Broadcasting Corporation (BBC) is shown in the graph below :

ii) Many of those in the Global North signed agreements with Covid-19 vaccine manufacturers, and some made contributions to research and development and even made pre-payments like what Malaysia did, (The Star, 19th. November 2020). The unequal exchange since colonial conquest and imperial intrusion still is existing and persisting when doing business with the Big Pharma, even embroiling with a few unanswered questions of the royalty (Sarawak Report, June 2021) in intermediary exchange between nations, (Asia Sentinel, 9th. June 2021; Sarawak Report 11 June 2021); read also Ahmad Fauzi Abdul Hamid and Muhamad Takiyuddin Ismail The Monarchy in Malaysia: Struggling for Legitimacy, (kyotoreview issue 13).

Even WHO has to articulate “Vaccine pricing is becoming increasingly complex and multidimensional at a global level and in certain country contexts. Contracts now include elements such as assured volumes, upfront payment, multiyear contracts, bundling of products, discounts and rebates, etc. These conditions make it more difficult to identify the actual price of a vaccine and to disaggregate all price components.”

iii) Malaysia’s Vaccine Requirement

The currently available Covid-19 vaccines require two doses to be administered. As such, Malaysia, with a population of 32 million, would require 64 million doses.

The Prime Minister has announced that the Covid-19 vaccine will be given free to all Malaysians. On 27 November 2020, the government announced that it will purchase 12.8 million doses of the Pfizer vaccine to vaccinate 6.4 million people. One million doses of the vaccine will be delivered in the first quarter, 1.7 million in the second, 5.8 million in the third and 4.3 million in the fourth quarter of 2021.

On 21 December 2020, the government signed an agreement with AstraZeneca to purchase 6.4 million doses of its vaccine to vaccinate 3.2 million people. The agreements announced to date would be sufficient to vaccinate 12.8 million Malaysians covering 40% of the population.

On 23 December 2020, the Minister of Science, Technology and Innovation announced that the government is also negotiating to buy 14 million and 3.5 million doses of the Sinovac and CanSino vaccines from China, respectively, and 6.4 million doses of the Sputnik V vaccine from Russia to cover another 11.95 Malaysians. With these additional purchases, up to 26.5 million people, that is, 82.8% of the population.

The government has also signed an Optional Purchase agreement with COVAX to provide vaccines for 10% of the population equivalent to 6.4 million doses for 3.2 million people. The ceiling price per dose has been set at US$10.55.

Based on the prices for the EU and the US, the Pfizer vaccine would cost the government between US$188.93 million to US$249.60 million, and the AstraZeneca vaccine between US$14.02 million and US$25.60 million. Based on the ceiling price, the COVAX vaccine would cost a maximum of US$67.52 million. The cost then to vaccinate 40% of the population would be between US$270.47 and US$342.72 million.

The published price per dose of the Sinovac vaccine ranges from US$13.60 to US$29.75 and the Sputnik V US$10. Indonesia will be getting the Sinovac vaccine at US$13.60. The price per dose of the Sinovac, CanSino and Sputnik V vaccines for Malaysia were not disclosed.

Further, reports of phase 3 trials of these vaccines are yet to appear in the scientific literature.

iv) Malaysia Vaccine Expenditure

The Finance Minister had informed Parliament that MYR3 billion (about US$750 million) has been allocated for Covid-19 vaccine procurement (Hansard 20201217). The government has stated that the targeted coverage of the population is 70%.

The Minister of Science, Technology and Innovation later tweeted that the vaccine expenditure on 22 December 2020 for 26.5 million Malaysians was ONLY US$504.4 million which was still US$250 million less than what was pronounced by the ruling bursary holder; another one billion ringgit blown with the monsoon rain.

VACCINE ORDERS and DELIVERIES as by 11th. June 2021

Not stated was that in mid-November 2020, the country had paid upfront RM$94mil for vaccine under the Covax plan (The Star, 19th. November 2020).

The reason given for not disclosing the actual purchase price of all the vaccines ordered or acquired is that the Government of Malaysia has signed non-disclosure agreements (NDA) with the manufacturers and suppliers, presumbly including Pharmaniaga.

It is difficult to accept such simplistic rationality or justification as large sums of public monies are involved. When NDAs are signed that limits disclosure of information, about any procurement, it just raises suspicions of impropriety, and the certainty of an imminent collusion, if not close collaboration of clientele capitalism with Global North monopoly-capital is completed.

Agreements on vaccine procurement and pricing should be subject to external oversight of the Executive. This should be executed expeditiously by the Parliamentary Select Committee on Health, Science and Innovation as well as its Public Accounts Committee, and not presented as a fait accompli; see Sarawak Report 10th. June 2021, on chaotic rollouts.

v) The fifth aspect is the Global North monopoly-capital domination in the supply and distribution of not only pharmaceutical products – and services – but other manufactured products throughout the global value chain where undue processes and procedures have caused intermediary commissions and offset costs to be incurred, (John Smith, The GDP Illusion, Monthly Review July 2012). The commodity value chain perpetuates the continuous unequal exchanges between monopoly-capital in Global North and the disadvantaged nations of the Global South, (see Intan Suwandi, Value Chains: The New Economic Imperialism, Monthly Review Press, 2019; John Smith, Imperialism in the Twenty-First Century: Globalization Super-Exploitation, and Capitalism’s Final Crisis, Monthly Review Press, January 2016).

5] CONCLUSION

The clientel capitalism is affecting our national healthcare services, and those profound issues regarding equity in healthcare provisions :

a) That the Big Pharma global pharmaceutical industry and the main corporate actors not only infrequently targetted country markets with unessential pharmaceutical products that they can sell for hundreds of thousands of dollars per year per patient linking to sales of the primary medicines is, indeed, a marketing strategy reality. A core concern is that the pharmaceutical companies have viewed the coronavirus pandemic as a once-in-a-lifetime business opportunity.

b) In the shadow of negative experience with monopoly capitalism during the HIV/AIDS pandemic when so many were ‘left to die’ (Nkegasong et al. 2020), Robinson and Gilbert 2018 have called for boethicists to engage with structural analysis to understand
how macro-economic structures intersect with medical research and practice by offering several illustrations of how twenty-first century capitalism intersects with COVID-19 to identify pathologies and opportunities for change going forward, (M.K. Robinson and J.M. Gilbert,  Designing an Economic Bioethics,  Harvard Law Policy, Oct.10, 2018).

In a paper entitled COVID-19 Impact and Mitigation Policies: A Didactic
Epidemiological-Macroeconomic Model Approach prepared by John P. Ansah, Natan Epstein, and Valeriu Nalban for the International Monetary Fund, November 2020, a workhorse framework is presented that combines a rich epidemiological model with an economic
block to shed light on the tradeoffs between saving lives and preserving economic outcomes under
various mitigation policies and scenarios calibrated for emerging market using Malaysia data as case country scenario with the reported epidemiological data gathered between late-January to early-July 2020 (source: Malaysia Ministry of Health).

Though the report came out with tractability, and the straightforward adaptation
to particular country-cases, implementation of relevant policies and scenarios (including endogenous lockdown stringency, second infection wave and temporary immunity considerations), and other tradeoff assessments, the compendium came out too late for mitigation implementation for the Sabah state elections in September 2020 that had by then introduced cross-border infection spreads into Sarawak and peninsula Malaysia.

The Sabah state election had resulted in an estimated 2,979 Covid-19 cases in the first few weeks after polling day, according to a new analysis reported.

This amounts to 70 percent of cases reported in the state from Sept 26 (polling day) until Oct 12 when the government began imposing the conditional movement control order in Sabah and several other states to curb the outbreak Prime Minister Muhyiddin Yassin admitted much later as such was the cause of the latest wave of Covid-19 infections across the nation, (malaysiakini 27th. May 2021).

The key element in the blueprint of action to mitigate this Covid-19 national emergency must surely be a well-executed Find, Test, Trace, Isolate and Support (FTTIS) system recommended by the World Health Organisation (WHO), which has fallen terribly short in its national implementation, (codeblue, 14th. January 2021).

The Bank Negara Malaysia Hotspot Identification Dynamic Engagement
(HIDE) model – introduced
in early May 2021, with the objective of trying to identify hidden or potential
hotspots, and taking preventive measures to
stop infections from spreading – somehow fumbled and neglected, (REFSA Projek Muhibah, June 2021).

c) IF the November 2020 IMF Didactic Model Report was consulted much earlier – when and where Malaysia is the applied country case-study – there would likely be no or minimal surge in the May 2021 national-wide cases of outbreaks linked to prayer gatherings and pre-Ramadan night markets and uncontrolled supermall shoppings, (New York Times, 27th May 2021). With ruling kleptocrates loosing a distinctive direction except to be on the trail of Covid vaccine shopping spree (Sarawak Report, 3rd. January 2021), where and whence clientel capitalism continues looting once again after more than six decades under Kleptocracy Governance and the country having indebted to more than RM$1.2+Trillion but, yet not completely clueless to confuse and crush the rakyat2.

Just Where Have Malaysia’s Billion Dollar Vaccine Payments Ended Up? Sarawak Report

EPILOGUE

Backdoor coup-mongers have a limited window of opportunity and fragility holding on power, except it’s time for clientel capital to pile up the private bank accounts now.

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more Malaysia manuscripts

Related topics in STORM:

1. Financialization of Healthcare – Capital and Health Equities
2. Big Pharma
3. Vaccine Distribution
4. Underdeveloping Sabah Healthcare
5. Sickness in Sarawak Healthcare
6. Healthcare for All

BIG PHARMA WIDE CLIENTELISM DEEP FINANCIALIZATION IN HEALTHCARE CAPITALISM

PROLOGUE

The international vaccine distribution effort is hindered by the global power and wealth imbalance

1] INTRODUCTION

The spikes of COVID19 add an epidemiological dimension to the political economy of nation that opens a prised can of capitalism worms to display the vagaries of clientiel-rentier capitalism in a financialization capitalised healthcare provider.

The emergence of a new class of compradore capitalist under present politico-economic situations requires a new narrative on the role of clientele capitalism inserting into the monopoly-capital supply chain. Under a post-independence environment with ardent economic nationalism craving, to cultivate support from their respective political bases, ruling elites are often in alignment with economic oligarchs by accepting rentier capitalism to sustain their hold on power. They adopt this clientelism as solicitations for votes at the grassroots level, allowing ruling elites the party patronage and political power to “effectively partisanizing them and ensuring ground-level officials with whom most voters interacted with ……are political party loyalists” (Weiss, 2020).

This is part and parcel of a rent-seeking class spritzered with the particular burden of privilege under a clientele capitalism downpour. Under this category of clientelism, goverment-link companies (GLCs) are connected through old-boy networks on a musical chairmanship to retrieve generated accumulation of surplus wealth to distribute among their oligarch collectives.

To complement this circus of capitalism is to connect to the circuitry in capital with globalisation of monopoly-capital commodity chains – controlled by transnational corporations (TNCs) in connecting production zones in the Global South, but with the apex of world consumption, finance, and accumulation primarily in the Global North – in the rise of generalized monopoly-finance capital, defined as a late imperialism episode, (John Bellamy Foster,  Late Imperialism, Monthly Review, 71 No 3, July-August 2019). Under a crisis at present Ecological-Epidemiological-Economic environment, the control and distribution of vaccines shall entangle oligarchy associates with Big Pharma capital linking to Global North monopoly capital and its financialisation capitalism domain.

2] RENTIER CAPITALISM IN HEALTHCARE

Pharmaniaga is given sole distribution rights on the Pfizer’s vaccine in Malaysia (Boustead Holdings owns 55.93% of Pharmaniaga, while Lembaga Tabung Angkatam (LTAT) owns 11.12%, as at May 29, 2020, and through a reverse ownership, the major owner of Boustead Holdings is LTAT).

Ruling regimes through the years have been acting not unlike a tripartite healthcare agent: as a public healthcare provider and regulatory agency, as financial capitalisation with it’s own private hospitals in Sime Darby, Pantai, Khazanah, KPJ Healthcare Berhad, and as rentier capitalism with a disposition to the private pharmaceutical companies.

Pharmaniaga is such an intermediary Big Pharma GLC.

The role of Pharmaniaga in the public healthcare system is essentially acting as a middleman. It is rare for countries to rely on a single concessionaire company to supply biopharmaceutical products, and for such a long period of time, too. More than an ownership, Pharmaniaga is the sole concession holder to purchase, store, supply and distribute both branded and generic approved drugs and medical products to 148 government hospitals and 2,871 clinics and district health offices nationwide.

Of the RM27 billion allocated for public healthcare in 2018, at least RM2.5 billion was for medical supplies and RM1.6 billion for consumable and medical support items. Indeed, with 100% market share of the government concession, more than RM1 billion goes to Pharmaniaga annually whence the GLC had a 10-year concession agreement with the Ministry of Health (MoH).

It is through this unfavourable arrangement  whereby Pharmaniaga would source for required medicines and sell them to the health ministry at a pre-determined price with an additional mark-up and commission rate to cover the costs of distribution, inventory holding and procurement.

It is prudent to ask appropriately and timely now whether the ministry deals directly with pharmaceutical companies rather than depend on a middleman to save millions of ringgit. It is also timely rakyat2 are able to have accessible and affordable equity healthcare, and that there should be competition in the drug procurement process, not dependance on a monopolistic company that has oligarchic links with political rulers.

In June 2018, with a changed political environment, a new government had decided to replace Pharmaniaga’s concession for public drug procurement with an open tender system after what the then Finance Minister Lim Guan Eng deemed it a “monopoly” that cost the government over RM1 billion annually.

More than a decade ago, in 2010, Pharmaniaga Manufacturing Bhd (PMB), a wholly owned unit of Pharmaniaga Bhd, has had its manufacturing licence revoked following a routine audit by the pharmaceutical services division of the health ministry. Pharmaniaga had stated that it is a diversified healthcare group with business in logistics, distribution and medical equipping; according to its FY09 financial results, manufacturing contributed about 10.8% to its then full-year turnover of RM1.3 billion. The bulk of their income comes from running government hospitals and clinics. So the revoking of their manufacturing licence would not have a big impact on their numbers, an analyst had told The Edge financial daily. The analyst said Pharmaniaga, being a government-linked company (GLC), should be able to get its act together promptly. However, the analyst noted that this development shows a lack of competency, especially for a GLC. “There is still obviously a lot to be done for KPIs,” the analyst concluded.

The Edge reported then that Pharmaniaga major shareholder, UEM Group Bhd, is in negotiations with several parties to dispose of its entire 86.81% equity stake in Pharmaniaga which could fetch a whopping RM414 million for UEM’s stake. However, given the turn of events, the sale of any stake may yet materialise but at a huge discount, the analyst said. UEM had once held about 30% of Pharmaniaga before purchasing an additional 16% stake for RM90 million and another 40.81% stake at RM5.50 per share.

It was reported that among parties that would be interested to purchase UEM’s stake in Pharmaniaga were Tan Sri Rozali Ismail, executive chairman of Puncak Niaga Holdings Bhd, and Equiti Nasional Bhd (Equinas). In February, 2021, Ekuinas made its maiden investment into the pharmaceutical industry with the acquisition of a controlling stake in Medispec (M) Sdn Bhd, based on an enterprise value of RM88.5mil.

UEM is a crony company of successive ruling regimes which had their unlimited euphoria in forsaken corruptive indulgents before and during the Asian Financial Crisis (AFC1997), and an unpleasant union busting episode in 2020.

But then the super bull-run for Malaysia came in 1993 when the index moved from a low of 645 points to a high of 1332. Everyone was a winner then and I remember the words of my remisier friend, “money is like free!”. From thereon I was hooked. The adrenalin rush, the excitement of coming to the office every morning and feeling smug given that all your BUY recommendations are winners.

Its was am amazing ride right  to the BIG crash in 1997. Along the way I became the infrastructure analyst and was right at the epicenter of the major infrastructure projects from the North South Expressway, the Second Link, LRT and all the highways and byways and the KLCC twin towers, Gelang Patah – now known as Iskandar Malaysia and Putrajaya.

Naturally I was the analyst for the infamous UMNO related UEM/Renong group.  I still remember accompanying clients on helicopters to have an overview of  the construction works and the countless roadshows globally. I even travelled on the Concorde from London to New York for an IPO. Those were the go-go days. …. Of course I was not with [company] then!

UEM/Renong was also the tipping point for both the Malaysia market and me as an analyst for the w9ron reasons.  It was the TWO stocks to own in Malaysia as there were the prime beneficiaries of the government’s infrastructure spending and took the market to dizzy heights. The music stopped 17th November 1997 when UEM bought a 33% stake in its parent Renong @ RM3.24 a piece when the market price was RM1.90 for USD685.8m. This was  just when the Asian Financial crisis was unravelling!  The market lost 20% in value in three days. Talk about governance. 

Of course, the Malaysian market had gone through those pulsating periods many a time since. 

Even through the years of control and in the domination of the pharmaceutical market, whatever the new “changeover “, Pharmaniaga would still be the only tender agent in the country with exclusive concession to supply 700 items in the Approved Product Purchase List (APPL) comprising medicines and other medical items, determined by MoH, to government hospitals, institutions, and clinics. This comprises over a third of the government’s drug supply.

The 700 drugs that Pharmaniaga procures for MoH, according to the then Pakatan Harapan government health minister Dzulkefly, are essential medicines. The health minister had even said that the direct procurement of certain medicines by some government hospitals from pharmaceutical manufacturers without a Bumiputera tender agent, such as cancer or palliative drugs, would remain.

MoH will slowly take over Pharmaniaga’s functions and buy medicines directly from other pharmaceutical companies.

(The Health Minister Dzulkefly Ahmad was speaking at the launch of the National Palliative Care Policy and Strategic Plan 2019-2030 at Hospital Selayang on November 6, 2019; three months later, he ceased to be the Health Minister when there was a change of government).

The Harapan government had decided to extend Pharmaniaga Berhad’s concession with the Ministry of Health (MoH) to procure certain essential medicines for until December 2021. The interim extension of Pharmaniaga’s 10-year concession ending in November 30, 2021 is to allow MoH to take over the Bumiputera tender agent’s functions so that the government can purchase medicines directly from pharmaceutical manufacturers without going through a middleman. On top of these concessions, the government-linked company (GLC) will also get another five-year contract to store and distribute MoH’s medical supplies.

The Sheraton Move in February 2020 changed the political dynamics when an unelected government took the backdoor way to emerge as the new ruling regime.

Pharmaniaga’s management, inadvertently, underwent a change following Datuk Farshila Emran’s departure as MD in March 2020. Subsequently, the firm named former Felcra Bhd CEO Datuk Zulkarnain Md Eusope as MD on Sept 1, 2020. For the third quarter ended Sept 30, 2020, Pharmaniaga’s net profit rose to RM1.44 million on better demand for protective equipment during a pandemic. However, revenue fell to RM624.8 million against RM716.85 million.

The Malaysian Reserve learned that its current chairman Datuk Dr Hafsah Hashim was recently asked to vacate her post before her contract is due. She is one of the few appointees under the previous Pakatan Harapan administration that remain in position after the government changed in February 2020.

Datuk Seri Mohamed Shazalli Ramly has been appointed the non-independent non-executive chairman of Pharmaniaga Bhd as on 1st March 2021. In December, 2021, he was appointed the managing director (MD) of Boustead Holdings Bhd. Prior to this post in Pharmaniaga, he was MD and chief executive officer of Telekom Malaysia Bhd (TM) since April 2017. TM is the exclusive shining digital knight intermediary controlling the “last-mile” internet hub in the country over which all broadband telecommunication companies have to connect to TM before entering onto the world wide web of the monopoly-capital Global North infrastructural platforms.

Boustead’s executive director of group business development Izaddeen Daud has also joined the board of Pharmaniaga as a non-independent and non-executive director. He also sits on the board of listed companies that include Boustead Heavy Industries Corp Bhd, Boustead Properties Bhd, UAC Bhd, and Olympia Industries Bhd, the latter entity, according to Bloomberg’s, through its subsidiaries, the Company develops, invests and manages property, organizes and manages public lotteries, and provides stock broking services besides operations in construction of storage tanks, money lending services, recreation club, and land reclamation. Tengku Y A M Tunku Naquiyuddin Ibni Ja’afar is a board member; the eldest son of the Grand Ruler of Negeri Sembilan state, who was once the King of Malaysia.

Leadership changes are normal, but having a corporate upheaval in the midst of a pandemic, and in a current Covid19 ongoing vaccination programme, raises concern that it will affect the rollout as well as compromising the integrity of corporate governance.

Anyway, by January 12, 2021, Pharmaniaga had partnered China’s Sinovac Life Sciences Co Ltd for the supply of the 14 million doses of Covid-19 vaccine, enough to cover 22% population in Malaysia. The country has received Sinovac’s first 200-litre Covid-19 vaccines on 27th. February,  2021, equalling to 300,000 doses.

Pharmaniaga’s wholly-owned subsidiary Pharmaniaga LifeScience Sdn. Bhd. (PLS) had entered into a term sheet agreement with the Ministry of Health (MoH) for the purchase and distribution of the vaccine developed by Sinovac Life Sciences Co Ltd (Sinovac LS), a subsidiary of Sinovac Bi-otech Ltd., (theedge, 27/01/2021). The agreement will enable PLS to supply doses of finished Covid-19 CoronaVac, SARS-CoV-2 Vaccine (Vero Cell), Inactivated (developed by Sinovac LS), and filled and finished by PLS to be delivered to hospitals, clinics and any other facilities nationwide as instructed by MoH.  

Duopharma, a different pharmaceutical firm, on the other hand, will be supplying 6.4 million doses of the Russian-developed “Sputnik V” Covid-19 vaccine.

There are other vaccine distributors such as Yong Tai Bhd, Bintai Kinden Corp Bhd and INIX Technologies Holdings Bhd.

Yong Tai had said that it had inked agreement with Shenzhen Kangtai Biological Products Co Ltd for the development and exclusive commercialisation of the latter’s inactivated Covid-19 vaccine in Malaysia. Under the deal, Yong Tai will supply 100 million doses of the vaccine over a five-year period.

Also, Bioalpha Holdings Bhd is the latest to jump on the bandwagon when it entered into a two-year procurement and distribution agreement with Shanghai Bukun Trading Co Ltd for the procurement and distribution of vaccines in Malaysia, including the Covid-19 vaccine developed by Sinovac Biotech.

Bintai Kinden, a mechanical and electrical engineering services company, has also said it is partnering US-based Generex Biotechnology Corp and its subsidiary NuGenerex Immuno-Oncology Inc to distribute and sell their Covid-19 vaccine in Southeast Asia.

Any supply of Covid-19 vaccine will be subject to the approval of NPRA, the National Pharmaceutical Regulatory Agency (NPRA), under the Ministry of Health’s Drug Control Authority. Special Vaccine Supply Access Guarantee Committee co-chairperson Khairy Jamaluddin had assured that Malaysia will not go through with its Covid-19 vaccine procurement deals if the vaccine in question does not meet standards. Further, he reiterated that the agreements are subject to approval by the National Pharmaceutical Regulatory Agency, which would assess the vaccine candidates for its safety and efficacy.

Thus, overall, Malaysia had reached an agreement to get a total of 66.7 million doses of vaccines from Pfizer-BioNTech, AstraZeneca, Sinovac, CanSinoBIO and Sputnik V, aiming to create 70% immunity in the country.

With the start of mass vaccinations, 126,000 people are planned to be vaccinated daily at 600 vaccination centers in the country. As part of its national COVID-19 immunization program, Malaysia kicked off vaccinations on Feb. 24, 2021 and it is prioritising with the vaccination of health care workers and security forces.

In the excitement over the rollout of vaccination, the whole spectre of ethnocratic administration and rentier capitalism eclipsed from public discussion when bumiputera agents act as intermediaries between government hospitals on one hand, and foreign and Malaysian non-bumiputera pharmaceutical companies on the other, who bid for public procurement of drugs and other medical supplies. In fact, bumiputera tender agents shall continue to provide additional services like warehousing and distribution, while others are purely middlemen. Bumiputera tender agents charge a fee of between 2 per cent and 3 per cent for their services.

Further, unlike typical logistics companies that charge shipping based on product weight and distance of the destination, Pharmaniaga charges MoH a percentage of the value of products purchased to cover logistics and distribution expenses, even though the MoH owned the IT system developed by Pharmaniaga to manage drug procurement.

With the complexity of pharmaceutical product acquisition and continuance of a lack of competition, the nation is stunted with a lack in the development of a truly equitable public healthcare system and limiting patient access to simple clinical facilities, and importantly, life-saving drugs, especially to communities who are in the mountainous interiors.

Malaysian Pharmaceutical Society (MPS) president Amrahi Buang voiced opinions saying the government should review the roles played by all GLCs in the healthcare system, including Pharmaniaga.

Opposition DAP MP Tony Pua had once in the past said the prices of medicines in Malaysian hospitals were up to 148% higher than in Australia, as previous ruling regimes “forced” hospitals to purchase them through Pharmaniaga.

Australia, with its Pharmaceutical Benefits Scheme that covers the entire population, negotiates prices at a national level. If drugs are not listed on its formulary, sales suffer significantly. Therefore, Australia is able to achieve prices for brand-name drugs that are about 9 to 10 percent lower than Canada’s, (Productivity Commission, 2003, Evaluation of the Pharmaceutical Industry Investment Program, Research Report  (Canberra: AusInfo, 2003). New Zealand is even more aggressive and uses competitive bidding for generic drugs and reference-based pricing for brand-name drugs. Reference-based pricing groups all drugs that are therapeutically equivalent for a particular problem, and the government then pays only for the lowest-priced drug in the group. Using these two approaches and a few others, instead of spending an expected NZ$2.34 billion in 2012, based on the rate of rise in drug spending in 2000, New Zealand paid out only $777 million, see Pharmaceutical Management Agency, Annual Review 2012 (Wellington: PHARMAC, 2013), http://pharmac.govt.nz, as referenced from the Monthly Review March 2018’s article on The pharmaceutical industry in contemporary capitalism.

Meanwhile,

Pharmaniaga LifeScience Bhd has been selected to complete the fill-and-finish process of the Sinovac vaccine, but NPRA is still evaluating Pharmaniaga’s fill-and-finish facility and has yet to give the company approval to undergo the process.

3] FINANCIALIZATION CAPITALISM OF BIG PHARMA

There are two physician organizations, one in the United States (Physicians for a National Health Program) and one in Canada (Canadian Doctors for Medicare), that have developed a comprehensive strategy to restrict the power of the pharmaceutical industry and to improve access to medications, (Monthly Review, ibid.)

There is no such an entity, nor a civil pressure group, with the exception of the think tank Galen Centre for Health and Social Policy, to emasculate Pharmaniaga dominative power and to ameliorate broad community-based access to affordable medicines.

It comes at a time while Malaysia merely spends 4.4 percent of its GDP on healthcare of which 52.4 percent of the expenses is funded by the government compared to Japan’s 8 % and 80 %, respectively. The total expenditure for both public and private healthcare is at RM50.3 billion; where Operational costs itself takes up 93 percent of the expenditure and only 7 percent is allocated for Development purposes.

The lackluster healthcare provision is compounded when in 1983, then-prime minister Dr Mahathir Mohamad introduced privatisation policies that encourages the private sector to intrude wide sphere by taking away the state’s responsibilities in both healthcare and education; healthcare has shown ever increasing costs since then. The privatisation lead to government-linked companies (GLC) like Sime Darby, Pantai, Khazanah, KPJ and others that account for more than 40 percent of private hospital beds.

Even private hospitals that were formerly run by non-profit organisations or religious organisations are now increasingly run as profit-oriented private hospitals. The underlying argument is that the rich can afford private hospitals and this would reduce the traffic at government facilities where public hospitals should be providing better services for the poorer patients.

Of course, this approach only cause a majority of Malaysian rakyat2, and migrant workers, go to public healthcare facilities where seventy-five percent of Malaysian seek in-patient treatment and 90 percent of Malaysians seek out-patient treatment at public facilities which are already underfunded. The resultant picture is not that healthy as the GDP percentage spent on healthcare ranks Malaysia at number 156 in the world.

To compound the predicaments of national healthcare provision, in 1993 the pharmaceutical services under the Health Ministry were privatised where a crony company Renong was awarded an exclusive long-term contract to supply medicines and supplies, and other support services follows by financialization capitalising activities such as laundry and linen, clinical waste management, cleaning, facility engineering and maintenance. Within a year, the cost of these latter services in the public health sector shot up.from RN$140 million to RM$450 million.

Further, as a result of these processes of privatisation, highly qualified and experienced doctors flocked to the private sector. In fact, within a short span of twenty years, the private sector held two-thirds of the total number of medical, surgical consultants, and specialists. Consequently, the waiting time and quality of service in government hospitals deteriorated significantly.

The second emergence consequent of financialization capitalising on medical services is that to distribute the burden of healthcare to the private sector, the financial model needs to be established to bear the cost lies with the insurance industry. It is estimated that the cost to insure every Malaysian at a minimum premium to cover hospitalisation costs would be at RM$30 billion per year. The insatiable urge in capitalism in profit-takings means the number of insurance policy holders has increased and more capitals are attracted in developing private hospitals, (malaysiakini, 2016).

With the equilibrium of such supply versus demand, the cost of healthcare should, one can argue, be reduced. However, it is not the case; indeed, the past years had seen a sharp spike in the cost of healthcare services.

With insurances bearing medical costs, the financialization of capital only attract unnecessary clinical investigations and over-treatments being performed at private hospitals inducing profit-gorging by these enterprising ventures.

That the cost of healthcare is increasing unnecessarily is due to the existence of this industry’s middle-men, termed as the Third Party Administrators (TPA) or sometimes called the Managed Care Organisations (MCO) where they provide interface administration between medical providers, corporations, and the insurance companies. They assist in processing claims, corporate and retail policies and also financial facilities. Their major revenue is in the form of fees or commissions on premium, which though standardised by the Insurance Regulatory Development Authority (IRDA), there is the extra premium charged by insurance companies for TPA services.

Even with privatization, the medical labour is still unheathily expropriated by capital. The financialization of capitalism has exploited the medical professional in so far that the money that goes to the salaries of doctors is a small proportion of the medical services’ throughput. The healthcare’s EBITDA/Revenue percentage is approximately at 35 percent while Wages/Revenue is at 20 percent. If we take Australia as a developed nation as a benchmark, the respective figures are approximately 12 percent EBITDA/Revenue and 45 percent Wages/Revenue.

The third central aspect in the financialization capitalism in the healthcare provision is the Global North monopoly-capital domination in the supply and distribution of pharmaceutical products – and services – throughout the commodity supply chain where undue processes and procedures as illustrated in the rollout of Pfizer Covid19 vaccine have caused intermediary commissions and offset costs to be incurred.

This is where, in the pharmaceutical industry, that prescription drug manufacturers have tremendous influence over prescription medicine pricing. Typically, they gather projected demand and future competitive market costs data to come out with the wholesale acquisition cost (WAC) where this is the “list price” of a brand medicine before any discounts, rebates or other price reductions are applied. This becomes the baseline price at which wholesale distributors purchase prescription medicinal products. The manufacturers often can choose to issue discounts and rebates based on such other factors like market share, volume and even prompt payment. These wholesale distributors are paid a distribution service fee for their services, like to Pharmaniaga. Not infrequently, basing on a percentage of WAC, the distribution service fee is paid in exchange for services including financial management, distribution service, inventory management and data processing where, in the Pharmaniaga case, the latter ownership, in fact, belongs to MoH.

The above-stated factors are some of the ramifications affecting our national healthcare services, and the associated issues regarding equity in healthcare provisions :

a) That the global pharmaceutical industry and the main corporate actors not infrequently target small therapeutic markets with drugs that they can sell for hundreds of thousands of dollars per year per patient than to promote unprofitable medicines. Indeed, pharmaceutical companies view the coronavirus pandemic as a once-in-a-lifetime business opportunity.

b) That there is the issue of fixed-dose combination (FDC) products, that is, products that contain two or more active ingredients where researchers recently found often corporations do take advantage of lax regulatory standards to sell “many millions of dose of FDCs that included drugs restricted, banned, or never approved in other countries owing to their association with serious adverse events including fatality.” (Patricia McGettigan, Peter Roderick, Rushikesh Mahajan, Abhay Kadam, and Allyson M. Pollock, “Use of Fixed Dose Combination (FDC) Drugs in India: Central Regulatory Approval and Sales of FDCs Containing Non-Steroidal Anti-Inflammatory Drugs (NSAIDs), Metformin, or Psychotropic Drugs,” PLoS Medicine 12 (2015): e1001826 as referred in the March 2018 Monthly Review op.cit.

c) That drug regulation in the United States and the European Union has been corrupted through the influence of the pharmaceutical industry. Courtney Davis and John Abraham, who teach pharmaceutical policy at King’s College London, observe that “the last 30 years have seen a raft of deregulatory reforms, ostensibly to promote pharmaceutical innovation deemed to be simultaneously in the commercial interests getting drug company representatives appointed to task forces that help form overall government policy. The ultimate result is that the state actively supports the broad regulatory goals of industry” as cited in Monthly Review, ibid.

So much so that though U.S. and Germany — along with Canada and the rest of the European Union — have contracted for enough doses of various Covid-19 vaccines to inoculate their populations several times over, countries that hosted vaccine trials — like Argentina, South Africa, Brazil, and Turkey — will not receive adequate supplies. In fact, it is not disputed that the world is facing a Covid19 vaccine apartheid, as expressed by Yanis Iqbal and Jomo Kwame Sundaram.

d) That with limited patent life, the longer drugs are on the market the greater the return to the corporations marketing them. The Prescription Drug User Fee Act (PDUFA) was a law passed by the United States Congress in 1992 which allowed the Food and Drug Administration to collect fees from drug manufacturers to fund the new drug approval process, by getting drugs to the market faster, meant more profits for the corporations.

e) That Intellectual property rights (IPRs) are the key factor in driving revenue and profits for pharmaceutical corporations.

In 1994, it was the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), which required uniform patent standards for all WTO member countries, meaning product patents for pharmaceuticals of twenty years and limiting the use of compulsory licensing as a tool for accelerating the appearance of generic products.

Pfizer and its then CEO Edmund Pratt played a key role in convincing the U.S. to adopt a more pro-enterprise posture. Links to cases where Pfizer bribed Nigerian families and doctors, overcharging the UK National Health Service, illegal marketing, misleading drug studies and other unethical cases in international arena can be found HERE besides profit-taking HERE

In the 1980s, it was found that the most common reason for terminating trials in the late stages of research, including treatments for cancer, cardiovascular disease, and neonatal sepsis, was financial consideration (43 percent), compared to efficacy (31 percent) and safety (21 percent). Though, if adequate funding is available as in January 2020, Regeneron could struck an agreement with a division of Department of Health and Human Services known as the Biomedical Advanced Research and Development Authority, or BARDA, to receive up to US$81 million for work on antibodies that would prevent Covid-19 from infecting cells by attaching to the spikes on its surface.

It is also eloquently argued by Jomo and Anis Chowdhury that the refusal to temporarily suspend several World Trade Organization (WTO) intellectual property (IP) provisions to enable much faster and broader progress in addressing the COVID-19 pandemic should be grounds for International Criminal Court prosecution for genocide; making life-saving vaccines, medicines and equipment available, freely or affordably, has been crucial for containing the spread of many infectious diseases such as tuberculosis, HIV-AIDS, polio and smallpox.

On the other hand, the Mario Negri Institute in Italy, in existence since the early 1960s, offers an alternative way for doing pharmacological research. It is willing to accept money from pharmaceutical corporations for research, but it insists on maintaining its independence by designing the trials, conducting them, collecting and analyzing the data, and writing up the results without any interference from the funding source. In addition, the Institute declines to take out any patents or to demand any other form of IPRs and makes all data freely available. Finally, it rejects any funding when its scientists conclude that the results will not further the interest of public health, (Donald W. Light and Antonio F. Maturo, Good Pharma: The Public-Health Model of the Mario Negri Institute (New York: Palgrave Macmillan, 2015).

To endorse and adopt to an equity healthcare provision, the country may care to look at the Cuban community model, the Indonesian reformists organisation Muhammadiyah’s venture in running non-profit medical clinics and hospitals or the Karnataka model – a state in the south western region of India – which is leading the way for affordable healthcare when it introduced the Yeshasvini Health Scheme, a scheme for the rural masses to access quality healthcare at only RM$0.30 (5 Rupees) per month with free outpatient consultations and 1,700 different types of operations entirely free of cost.

However, as we have seen, the pharmaceutical companies in our country are not only dominated by ethnocratic-oligarchy entities serving political kleptocrates, but as the only Big Pharma in the country, Pharmaniaga is perceived as to colluding with Global North monopoly-capital and deepening the financialization capitalism in commodity sourcing supply chains.

EPILOGUE

The more desperate patients become, the higher the price they are willing to pay.

CLIENTELE CAPITALISM CATASTROPHE COLLIDING INTO A COVID19 CRISIS

1] INTRODUCTION

With a moribund economy: high underemployment and increasing national debt, the control of Covid19 is catastrophically mismanaged in terms of control of coronavirus spread, fast acquisitions of supplies, vaccine supply chain uncertainties and, whether the cure to a sick nation – epidemiologically and economically – can be found.

2] CAPITALISM CATASTROPHE

A) Malaysia’s economic slump deepened in the fourth quarter 2020 due to sustained restrictions on movement and business to curb the spread of the coronavirus. A Reuters poll on the median estimate of 12 economists pointed to the economy shrinking 3.1% in the October-December quarter from a year ago, following on from the 2.7% contraction in the third quarter.

Economic recovery was likely to have “virtually stalled” in the final quarter of last year as sustained movement restrictions to clamp down on the spread of Covid-19 hit consumption, even as exports improved, Capital Economics said in a research note.

“The bad news is that worse is still to come,” said Gareth Leather, senior Asia economist for Capital Economics; the economy is expected to contract by 4% in current quarter (1Q2021) from year-ago levels.

The 2020 Industrial Production Index declines 4.2%, the first drop since 2009, (theedge, ceo morning brief, 9/02/2021); but then, Ministers aren’t working, and the Government isn’t functioning as the pandemic isn’t academic as Covid19 splurges and spikes.

B) With a declining industrial production, the national jobless rate forecast by MIDF Research has revised to 4.5% from 4.3% in 2020. Overall, challenges remain for the labour market as businesses may hold back hiring on concerns over weaker domestic demand and sales outlook. In a note, UOB Global Economics and Marco Research said the near-term outlook of the labour market is expected to be dim as the third wave of the Covid-19 pandemic enters in January 2021.

C) According to the United Nations Conference on Trade and Development (UNCTAD), the foreign direct investment (FDI) inflows to Southeast Asia fell by 31% to US$107 billion in 2020 with FDI inflows to Malaysia fell by 68% compared to Singapore (-37%), Indonesia (-24%) and Thailand (-50%).

According to the World Trade Organization, the economic fallout from the COVID-19 pandemic would lead to a drop in annual world trade in 2020 by 13 percent in the more optimistic scenario, and by 32 percent in the more pessimistic scenario. In the latter case, the collapse of world trade would equal in one year what happened in the Great Depression of the 1930s over a three-year period, (Workd Trade Organisation, Trade set to Plunge as Covid-19 Pandemic Upends Global Economy, WTO, April 8, 2020).

By mid–April 2020, 81 percent of global manufacturing firms were experiencing supply shortages, evident in a 44 percent increase in force majeure declarations by March from the beginning of the year before the emergence of the novel coronavirus, and a 38 percent increase in production shutdowns. The result is not only material shortfalls but a crisis in cash flow and hence a huge “spike in financial risks”, (Future of Sourcing, COVID19: Where is Your Supply Chain Disruption, April 3, 2020, as referenced in John Bellamy Foster and Intan Suwandi, COVID19 and Catastrophe Capitalism, Monthly Review, June 1, 2020).

D) With the announcement from the World Health Organisation that the Covid-19 virus most likely infected humans from an intermediate animal host, similar to the Nipah virus in Malaysia (from bats to pig farms in Tebong Nipah, Perak, 1998/1999), further studies looking at whether the virus could have made the jump to humans from frozen animal products was needed, said Dr Embarek, in an indication of the direction of future investigations probing the origins of Covid-19.

The covid19 is an ecological crisis is largely a product of wealthy people, countries, and monopoly-capital corporations exploiting the planet’s resources for their economic gain when the resulting surplus in global exchange markets increases energy extraction, (Paul Griffin, The Carbon Database Report (London: CDP, 2017).  Capitalism depends on ecological degradation because it needs to rapidly extract vast quantities of natural resources, manufacture the corresponding products, and then commodify the finished products, (John Bellamy Foster, Marx’s Ecology (New York: Monthly Review Press, 2000).

Whenever economies absorb energy from the natural world and then convert a portion of that energy consumption to power their cycles of production, distribution, and consumption, there is a metabolic rift. Capitalism, with its ever-expanding production to realize profits on an ever-growing market has created innumerable rifts between natural and social “metabolic” processes. The metabolic rift forms part of disruption of human microbial ecosystems, with consequences for human health, (Michael Friedman, Metabolic Rift and the Human Microbiome; and John Bellamy Foster and Brett Clark, The Robbery of Nature: Capitalism and the Metabolic Rift, Monthly Review Press, 2020).

The chapter on “Machinery and Large-Scale Industry” in the first volume of Karl Marx’s Capital closes with this statement: “All progress in capitalist agriculture is a progress in the art, not only of robbing the worker, but of robbing the soil…. Capitalist production, therefore, only develops the techniques and the degree of combination of the social process of production by simultaneously undermining the original sources of all wealth—the soil and the worker.” “Robbing the worker” referred to the theory of exploitation, which entailed the expropriation of the worker’s surplus labor by the capitalist. But what did Marx mean by “robbing the soil”? Here robbery was connected to his theory of the metabolic rift arising from the expropriation of the earth. As he stated earlier in the same paragraph, “capitalist production…disturbs the metabolic interaction between man and the earth, i.e. it prevents the return to the soil of its constituent elements consumed by man in the form of food and clothing; hence it hinders the operation of the eternal natural condition for the lasting fertility of the soil.”,(Karl Marx, Capital, vol. 1 (London: Penguin, 1976), 637–38; and to go through this BIBLIOGRAPHY ).

An ecological system needs to prioritize the stability of the energy flows that sustain these productive economic cycles.

In the last two centuries of capitalist development, as a result of energy flows that sustain these productive, yet extractive and exploitative economic cycles, these energy losses have, however, immensely reorganized our planet’s entire ecosphere, to the point where intensifying ecological disturbances have become a major threat to the stability of the energy flows that power our economic systems.

Present global economy is experiencing the worst cataclysm since eight decades ago because chaotic feedback loops between nature and society have severely destabilized the cycles of economic activity. As the Big Farm agribusiness expands into pristine habitats and luxuriant forested hinterlands, it increases substantially the odds of viral transmission from wild animals to human beings. As we pump more greenhouse gases into the atmosphere, mother earth keeps getting warmer and nearly all living organisms are feeling the impact. Indeed, energy-intensive modes of capitalism have been uniquely harmful: it eliminates the nutrients and eradicate the bio-botanic ecosystem that earth needs to sustain as a living world.

W H McNeill wrote in his classic Plagues and Peoples (1976) where the relationship between humans and their microparasites – viruses and bacteria – is not stable. The neoliberal era has seen capitalism commercialising agriculture on a worldwide scale and invading the surviving wild spaces. Now we begin to see the catastrophic resultant outcomes: a cataclysm of Ecological-Epidemiological-Economic dimension.

This unpleasantness of capitalism itself has a tendency to centralize economic planning in the hands of a few political oligarchs and their crony corporations which then control the distribution of resources for other selected individuals and preferenced corporations. These resources are not equally distributed among the rakyat2. Capitalism has the inevitable tendency to consolidate and centralizel the capital to suffocate rakyat2  wellbeing.

For instance, in 2020, the U.S. federal government pumped into the economy with trillions of dollars in a desperate bid to save private capital from a systemic breakdown. Meanwhile, capitalists did not hesitate to fire millions of workers as a way of salvaging their profits while eagerly accepting the trillions of dollars the government injected into corporate balance sheets. This is the second time in the last two decades that USA capitalists have relied on massive interventions from their governments in order to avoid total collapse.

Similarly, more funding is directed to corporate capital in Malaysia than to the ordinary rakyat2.

Two think-tanks have suggested that a significant stimulus package amounting to nearly 10 per cent of GDP – RM$100B –  is needed to keep the Covid-19-hit economy from tanking.
Research For Social Advancement (Refsa) and the Malaysian Institute of Economic Research (MIER) agreed that the stimulus must be at least over RM90 billion. The government has since unveiled a total  +RM$300B worth of stimulus packages by end of 2020.

Among measures announced was the unlocking of RM40 billion of private retirement funds for all contributors below the age of 55. Detractors quickly denounced the measure, questioning why workers are forced to tap into their pensions when the government should have pumped direct ringgit into their pockets instead.

E) The fifth point is that concurrent with present concern is the severely difficult to service impaired loans creeping to a 9-year high; what’s not stated is bumi investments: corporates and those in GLCs where the private individuals cheated are bumi. Unfortunately, what Costas Lapavitsas,  Financialised Capitalism: Crisis and Financial Expropriation,  Historical Materialism 17 (2009), School of Oriental and African Studies, London) had stated is truism: when financialization capitalism reared its ugly head, householders debt in Malaysia increased tremendously; hard hit are those investing in PNB unit trusts. Indeed, household debt – at nearly 83 per cent to gross domestic product – is among the highest in Asia.

The other seriousness is that general government debt jumps to 76.0% of GDP in 2020 from 65.2% of GDP in 2019. The debt figures used by Fitch Rating Inc. include officially reported “committed government guarantees” on loans, which are serviced by the government budget, and 1MDB’s net debt, equivalent in September 2020 to 12.6% and 1.3% of GDP, respectively. On this account, the debt burden is significantly higher than the medians of 59.2% and 52.7% for other firms in the ‘A’ and ‘BBB’ rating categories, respectively, have since degraded to BBB by Fitch last year. Malaysia debt is close to 400% of revenue, around three times peer median.

FEDERAL government debt and liabilities rose to RM1.2569 trillion, or 87.3% of GDP, as at end-September 2020 – up 7.5% in the first nine months of the year compared with RM1.1692 trillion as at end-2019.  Indeed, country’s revenue is not rising as fast as the increase in operating expenditure that is more than 95% of revenue since 2008. We are just not investing for the NexGen!

The debt service charges made up 14% (RM32.9 billion) of federal government revenue in 2019 and is estimated to take up 15.4% or RM34.95 billion of the government’s income by 2020. The amount is expected to rise even further to RM39 billion, or 16.5% of the government’s revenue for 2021, according to data in the Fiscal Outlook 2021 Report, (RAM and theedgemarkets). Already, the debt service charges are more than the fund allocated to economic development expenditure in 2021, a policy-scenario played out for the third straight year! The RM39 billion — which works out to RM3.25 billion a month — is enough to give RM1,192 cash to each Malaysian of the 32.7 million population and is more than five times the RM7 billion allocation for the Bantuan Prihatin Nasional 2.0 cash aid announced on Sept 23 2020 for the vulnerable groups in society. Even then, household incomes are projected to fall by 12 per cent, which is estimated amounted to RM$95 billion; and job losses are estimated to be of 2.4 million positions, 67% of which is unskilled labour, the MIER had stated in 2020.

Global growth has been increasingly driven by the development of financial bubbles that stimulated consumption and investment. States always helped to engineer these bubbles, but since the crash of 2007-8, growth has come to depend on the injection into the financial system of new money by central banks that boosted asset markets, pushing up the price of real estate, stocks and shares, and bonds, and made the rich even richer. 

3] COVID19 CRISIS  UNDER CLIENTELE CAPITALISM

Malaysia is expected to receive the Pfizer vaccine by the end of February 2021.

Procuring through Covax facilities, Pfizer and AstraZeneca, the government expects to secure supply vaccine for 40 per cent of population coverage.

COVAX has been co-led with GAVI, the Vaccine Alliance, and the Coalition for Epidemic Preparedness Innovations. To induce private efforts to develop and distribute vaccines, the World Health Organisation (WHO) initiated COVAX to ensure more equitable access to Covid-19 vaccines. However, vaccine capital expect to sell their vaccines very profitably by making advance sales to many rich-country governments, rather than, or even while committing to COVAX, and consequently, instead of protecting and promoting the interests of the poor, the public interest and the common good, the COVAX has served to set floor prices. Between the Big Pharma that routinely blocks pro-health initiatives aimed at promoting the use of TRIPs’ fexibilities (Trade-Related Intellectual Property Rights) such as compulsory licensing and parallel importation, that would make essential medicines afordable and accessible in vaccine procurement and the mass inoculation (K.S. Jomo) lies the spectre of clientelism capitalism injecting into the supply chain intermediary as amplified by Weiss.

This clientelism is solidifief at the grassroots level, allowing ruling elites in the UMNO, and now Bersatu, political parties a system with party patronage, “effectively partisanizing them and ensuring ground-level officials with whom most voters interacted were Alliance (BN) loyalists” (Weiss, op. cit., p74).

It is widely acknowledged, primarily those members in the political party Bersatu who are earnestly and directly in competition with UMNO for the Malay votes, this practice – and voter mentality of the role of political parties and governance could not easily be changed; it is part of the rent-seeking ethos surrounding the particular burden of privilege class in the community under clientelism capitalism.

MIDF Research restated that the government is also in the process of final negotiations with Sinovac, CanSino and Gamaleya to get a guarantee of increased vaccine supply exceeding 80 per cent of the total population of the country or 26.5 million.

“With this, it is hoped that Malaysia can achieve herd immunity against the vaccine. We maintain our expectation that the vaccine will be widely available by the second half of 2021,” MIDF Research re-articulated.

The government has allocated over RM3 billion under Budget 2021 for the purchases of Covid-19 vaccines to immunise an estimated 70 per cent of the population here in Malaysia.

Nationally, the seriousness of the pandemic situation is that the Covid-19 outbreak is deteriorating out of control. In Selangor – the state is an economic hub – has many migrant workers, including the largest cluster reported in Malaysia, the Teratai cluster, which originated from the Top Glove Corp’s migrant workers’ dormitories in Meru, Klang. (This entity had labour recruit and employment issues with UK and Australia authorities, see STORM, The Top Gloves and the Bottom Doves – Capital and Labour during Covid19, but had the best-ever quarterly net profit at RM1.29 billion in the fourth quarter ended Aug 31, 2020 (4QFY20), which is almost 18 times the RM74.17 million posted last year, (theedgemarkets.com,  September 17th. 2020).

Many migrant workers in these plants live
in communal housing; crowded working conditions, large plants and cramped housing, and lack of paid sick leave all exacerbate the spread of coronavirus in these environments.

By January 5, 2021, the Teratai cluster recorded that for every 100 people who undergo Covid-19 screening, more than 67 people are being infected with the coronavirus in this cluster.

The continuing production shows that global monopoly-capital demand, and the linking value chains, only deepen the exploitation of labour by capitalism whereby the transnational corporations (TNCs as intermediaries to say respective US hospitals, old folks homes’ and the Federal Emergency Management Agency – FEMA) collude with local corporate capital to use global labour arbitrage to create “global labour value chains” to protect their profit margins, so that supposedly decentralised global production is associated with the growing concentration of profits and economic power in the Global North.

At Top Glove where 16,000 pieces of  single-glove @ price value of RM$1 each are produced by one worker per day with a paid salary of RM$80/day including overtime, a single worker is basically generating RM$200 value worth out of his ringgit/dollar effort.

The central aspect is that the surplus value – the added value created by workers in excess of their own labour-cost – is being appropriated by the manufacturing producers (Marx, Capital, chapter 8); the percentage of surplus value gained by Top Glove is exactly similar to labour’s added value but expropriated by such TNCs like Apple, Nike, Swedish retailer Hennes & Mauritz and Spice Girl’s T-shirt under Global North monopoly-capital system, (MR Online 2021).

Contrast this to the approach adopted in socialist-led Venezuela with the least number of deaths per capita from COVID-19, and where collectively organized social distancing and social provisioning is combined with expanded personalized screening to determine who is most vulnerable, widespread testing, and expansion of hospitals and health care, developing on the Chinese and Cuban community healthcare models.

The inability of the unelected PN regime to manage the third wave of Covid-19 cases has resulted in the second movement control order (MCO) in January 2021. The crisis in political mismanagement is compounded by lack of confidence even on monopoly-capital from the Global North where new data has emerged that shows a significant decline in foreign investor confidence in Malaysia.

This Covid19 crisis is compounded with the close association of privatised capital with public health authority. Pharmaniaga is given sole distribution rights on the Pfizer’s vaccine in Malaysia (Boustead Holdings owns 55.93% of Pharmaniaga, while Lembaga Tabung Angkatam (LTAT) owns 11.12%, and through a reverse ownership, the major owner of Boustead Holdings is LTAT, and the latter is the pension fund for serving members of the Malaysian Armed Forces, a statutory body – basically a government linked company GLC – overseered by the Ministry of Defence.

Pharmaniaga also recently announced that its wholly-owned subsidiary Pharmaniaga LifeScience Sdn. Bhd. (PLS) had entered into a term sheet agreement with the Ministry of Health (MoH) for the purchase and distribution of 12 million doses of vaccine developed by Sinovac Life Sciences Co Ltd (Sinovac LS), a subsidiary of Sinovac Bi-otech Ltd., (theedge, 27/01/2021), thus cornering the national marketspace. The agreement will enable PLS to supply 12 million doses of finished Covid-19 CoronaVac, SARS-CoV-2 Vaccine (Vero Cell), Inactivated (developed by Sinovac LS), and filled and finished by PLS to be delivered to hospitals, clinics and any other facilities nationwide as instructed by MoH.  

[Duopharma – with 50% of its transactions with the Government  – will be supplying 6.4 million doses of the Russian-developed “Sputnik V” Covid-19 vaccine. There are other vaccine distributors such as Yong Tai Bhd, Bintai Kinden Corp Bhd and INIX Technologies Holdings Bhd., and other smaller entities are related HERE].

The logistics in deliverance has to be enquired as whether the air freight capacity is in place, whether the cold chain requirements can be easily be met by existing dry ice production for the Pfizer’s vaccines that need such equipment and related distribution process.

The various issues on Dry ice, Storage Warehouses and Freezer Farms, and the required Carrier capabilities and capacity, Infrastructure deployment covering staff expertise, service levels,  quality support, and Interior Highland Support covering 26,400 villages across the country where 3.1 million of them reside in 46 remote districts in the peninsula, Sabah and Sarawak and the interior dwellers are spread across a vast rural landscape covering 52 per cent of the country’s land mass, are all further elaborated HERE.

The “national stakeholders” through clientele capitalism would likely demand “consultancy fees” and since the 1965s’ Bumiputera Congress initiatives and the Guthrie Dawn Raid had prompted a wave of economic nationalism that had fused local corporate capital with the imperial monopoly-capital in the Global North, (Khoo Siew Mun, DOCUMENTING PAPERS ON BUMIPUTRA PARTICIPATION IN THE MALAYSIAN ECONOMY, Journals Library Review, Volume 36 Issue 2); also, https://www.nas.gov.sg/archivesonline/audiovisual_records/record-details/4d229695-1164-11e3-83d5-0050568939ad;

The first batch of Covid-19 vaccines – from Pfizer and BioNtech – will arrive in late February, and is enough to cover 12.5 million Malaysians (two doses each) or 39 percent of the population.

Whether the vaccination plan can proceed smoothly will depend on whether Malaysia can finalise deals with other vaccine makers, including UK’s AstraZeneca-Oxford and China’s Sinovac, although both have their challenges.

The availability of the vaccine, syringes, and even personal protective equipment (PPE) must also be synchronized; do we have sufficience availability? Do we have enough of strategic stockpile? How efficient is the bureaucracy in the public sector to re-allocare and re-distribute? Can the private performs similar efficiency process without taking a height in pricing?

It should be noted that already in China, Chinese  and needle companies quadruple prices for their manufactured products amid surging demand. They are sending clear warnings that their capacity is fully accounted for despite production expansions, with some orders waiting till August, (Global Times, 28/01/2021).

Material procurement will be critical to a successful vaccination campaign. Yet experiences in previous pandemics in other countries, including Ebola, SARS, and MERS, had shown that logistics companies have the capabilities and the knowledge in place to address these challenges. The pointed question is whether, despite the seemingly unprecedented scale of the current pandemic, and its sporadic surges, can the nation rises to the occasion again?

In Africa, for instance, indigenous experts
from the African Center for Disease Control are mobilizing to deepen capacity to produce vaccines and manufacture PPE in the shadow of past negative experience with monopoly capitalism during the HIV/AIDS pandemic when so many were ‘left to die’ (Nkegasong et al. 2020). They have already developed testing capacity and have trained thousands of contact tracers.  Robinson and Gilbert 2018 have called for boethicists to engage with structural analysis to understand
how macro-economic structures intersect with medical research and practice by offering several illustrations of how twenty-first century capitalism intersects with COVID-19 to identify pathologies and opportunities for change going forward, (M.K. Robinson and J.M. Gilbert,  Designing an Economic Bioethics, Harvard Law Policy, Oct.10, 2018).

The last point is crucial because what is frequently not articulated well in our national conversations are the +6 million migrant workers and UNHCR refugees need to be vaccinated, too. The daunting task ahead is identification, tracking and tracing of the floating and active migrant workers, especially those illegals and unregistered, concurrently to manage an inoculation campaign for every Malaysian. The coronavirus CATASTROPHE shall be with us because capitalism needs accumulation to sustain as a profit-gorging system rather than seeking towards an ecological state with healthcare equity.

In developed countries, manufacturers have already put in place contingency plans to stock extra materials, and glass manufacturers such as Corning and Schott have begun preparing the necessary supplies of vials and syringes, which must be coordinated with evolving vaccine production to ensure that they are available at the right time and place, but whether we – missing Vision 2020 as the “developed” nation status – can face the challenges ahead, (Jomo K. Sundaram, 2021) besides those issues on inequality in vaccine procurement and distribution as stated above.

4] MONOPOLY-CAPITAL IMPERIALISM IMPERATIVES

A) To the Global North pharmaceutical firms felt
threatened on their profts and reduce shareholder value, the proft imperative of fnancialized capitalism has promoted Big Pharma to invest more in lifestyle diseases such as erectile dysfunction and baldness than in diseases of the Global South. Big Pharma with patent protection would more often than not endeavour to increase prices and reduces access to medicines, diagnostics, vaccines, medical devices and PPE. Besides, through strategic positioning, and marketspace posturing, Global North North pharmaceutical TNCs are erecting barriers to block generic competition, therefore contributing to
rising drug prices. Further, Big Pharma often indulge, and engage, in ‘evergreening’ to extend patent protection terms.

A firm may have a popular drug with an about-to-expire patent, and then ofer a ‘new’ formulation from a tablet to a gel cap.

B) As such, capitalism captures the globalization of finance and the increased economic and political power of the financial sector, and the ramifications are that financial markets, motives, institutions and elites have come to dominate a national economy affecting everything from production, consumption, regulation and health.

On the other hand,  with globalisation, Monopoly Capitalism with ‘intellectual monopoly capitalism’ captures intellectual property (for example, patents, copyrights and trademarks) to avoid competition. This ownership of intellectual property (IP) gives owners the right to others from using the IP, reduce competitive supply to increase prices.

The quest to be competitive in global markets has led to economic concentration, oligopolies and a reduction in competition where economic power shifts from the mainstays of the real economy (like, commodity producers and traders) to the controllers of global value chains who own intangibles such as intellectual property and financial instruments (listen to Susan K. Sell, What COVID‑19 Reveals About Twenty‑First Century Capitalism:  Adversity and Opportunity © Society for International Development, November 2020).

TNC (transnational corporation), irrespective of its particular geopgraphical locations or site-branch or assembly plants, is to control and capitalize on these intangible assets’ in order to maximize shareholder value and generate large rents. The result: firms that are relatively immune to competitive pressure are ‘less compelled to invest’ in the real economy (Durand and Milberg 2018, Intellectual Monopoly in Global Value Chains, The New School for Social Research).

It is to be noted that in 2018 Merck and Pfizer grew large by acquiring blockbuster drugs developed by other companies, and then ‘milking them for revenues over their remaining patent lives’ (William Lazonick, The Curse of Stock Buybacks, The American Prospect, June 25, 2018). Pharmaceutical executives’ compensation is based on the price of company shares, so they have every incentive to boost it. They do this by buying back shares of their own stock on the open market, which became legal in 1982.

For instance, in 2016 John C. Martin, CEO of Gilead Sciences earned $98.4 million, of which 96% was stock-based pay. Overall, in just 3 years, 2017, 2018, and 2019 pharmaceutical firms spent $28.6 billion on stock buybacks and just $10 billion on R&D (according to a testimony of US House Representative Katie Porter).

C) Through the years, TNC has their strategic priority changed from ‘delivering value to customers’ (in the form of marketable products) to delivering value to creditors and shareholders.  What is happening in that whilst in the past firms would re-invest profts in their companies to develop new products and retain skilled personnel, but now most of the profts go to the creditors and institutional investors such as State Street and Black Rock that own majority shares. Look at these firms: the three largest makers of N95 respirator masks are 3M, Honeywell and Kimberly-Clark which have also pursued this financialized approach by tightly held the multiple patents on the masks. Indeed, the critical shortages of personal protective equipment such as N95 masks and ventilators have been partly due to the exclusive rights that IP confers. This has slowed down the production and distribution of this vital PPE. Ventilator production was also hampered when larger firms acquired smaller innovative companies that were producing affordable ventilators in order to quash the potential competition and maintain the larger frms’ higher prices.

D) Monopoly Capitalism motives in  denying equity access to medicines by the application of Intellectual Property.

In the late 1970s and early 1980s, US-based IP owners lobbied for regulatory and legislative reform to expand IP protection. Pharmaceutical, software, publishing and entertainment
producers argued that their industries provided
America with competitive advantages in global markets. They sought the incorporation of IP into the trade regime to ensure that their IP would be remunerated in global markets and that trading partners would respect and enforce their ‘rights’.

By 1994 IP owners had succeed in globalizing
their preferences through the Agreement on Trade-Related Intellectual Property Rights (TRIPs) in the World Trade Organization (Sell 2003). TRIPs is hard law; it is binding and enforceable. It mandates 20 years of patent protection for pharmaceutical oligarchs, (Pagano, Ugo. 2014. The Crisis of Intellectual Monopoly Capitalism, Cambridge   Journal of Economics 38: 1409–1431).

5] CONCLUSION

We shall end this short exploration on capitalism catastrophe and the occurring Covid19 crisis by pointing out that at this moment of time it is not like bailing out MAS or Perwaja, but to demand whether the public sector can mobilize vast resources, including critical human resources, to provide more social safety nets. This crisis has opened up, and resuscitated the serious conversations about a Universal Basic Income (UBI) to create conditions of economic certainty, too.

There is the call for a radical overhaul of the socio-economic system to develop a political economy of social justice to counter the systemic logic of domination by contemporary modality of capitalism. To begin to build such a system of social justice, we may even need to ask whether it is worth seeking to transform contemporary capitalism that had generated and sustained injustice and inequality through bad political actors, bad enthnocratically-administrative state, bad local corporate capital colluding with bad foreign monopoly-capital.

Rakyat2 – the construction and consolidation of a strong left movement, with revolutionary socialists at its core, is the most urgent of tasks in our hands, sekerang.

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