In today’s interconnected world, incidents that arise thousands of kilometres away can have a massive international impact. To mitigate the economic uncertainty resulting from the COVID-19 pandemic, governments including Malaysia’s have rolled out economic stimulus packages aimed at helping citizens weather the loss of income, and to keep domestic spending flowing. The incentive to find new ways to supplement income and stimulate aggregate demand has never been stronger.

For Malaysians looking for ways to supplement their income or perhaps looking for flexible means to make money as well as defray ownership costs for assets like vehicles and property, the sharing economy offers great promise. In recent years, we have witnessed the growth of e-marketplaces and platforms that facilitate sharing-economy transactions. Now, with up to one million Malaysians expected to lose their jobs post-COVID-19, there is an even greater need to look for new ways or channels for income generation. According to data made available by SOCSO, the number of employment losses between March 1 and 29, 2020, was 4,917, which is three times higher than the number reported for the same period in 2018 and 39 per cent higher compared to the first three months of last year.

Rising ownership costs

Gone are the days when asset ownership was a key symbol of success and financial stability. Today, younger people are facing shrinking income growth, where owning assets can present its own set of burdens. Take home ownership, where cost has fast outstripped income levels. In 2016, the median house price was 4.8 times the median annual household income, compared to 3.9 times in 2012, while the affordability benchmark is just 3.0 times. This has more Malaysians thinking of creative ways to afford their homes.

Meanwhile, Malaysia’s ever-expanding urban sprawl and the inability of public transportation networks to keep up are reflected in the level of private vehicle ownership. Compared to other countries globally, we have among the highest levels of private car ownership (93 per cent) and of multiple cars per home (54 per cent). This means Malaysians are caught between the need to have their own set of wheels and the waste of underutilised cars sitting in parking lots and outside homes across the nation.

In this scenario of rising ownership costs, coupled with a scenario like the 15,257 cases of loss of employment from Jan 1 to March 29 this year - due to economic headwinds caused by the likes of the COVID-19 virus, the sharing economy becomes a lifeline that offers relief from the burden of ownership. With Malaysians still encouraged to stay at home in the new normal, the gig economy supported by part-time delivery agents will continue to be a vital way to allow us to enjoy the conveniences that we want while giving the underemployed an accessible and honest way to earn additional income.

Digital Economy

As more Malaysians embrace instant fulfilment and experiential consumption, the sharing economy will inevitably grow while taking on its own Malaysian identity. Statistics show that there were fewer than a dozen local players in the Malaysian sharing economy in 2013, but this number grew to more than 80 local companies by 2019. Indeed, the sharing economy in Malaysia is forecast to contribute up to US$14 billion to the GDP by 2025 should there not be any long-term structural impacts resulting from the COVID-19 fallout. The gig economy and freelancing are also set to grow as the landscape becomes better able to support more jobs. It is not unlikely that a previous forecast of 650,000 freelance jobs by this year will be an understatement, as economic uncertainty and job losses drive more people towards self-employment.

One thing made very clear during this crisis is the fragile nature of most businesses and the need to have contingencies for unprecedented events. In our current moment of despair, we have seen the COVID-19 pandemic becoming one of the greatest digital disruptors of our generation - forcing businesses to embrace new digital means of conducting business and facilitating transactions. In this sliver of hope in today’s dark times, we must certainly embrace the opportunity to find the elements in our economy and society that are impervious to viruses or economic headwinds alike.

With initiatives like the National Fiberisation and Connectivity Plan targeting to connect more Malaysians to the Digital Economy, we foresee a more geographically diverse group of Malaysians becoming part of the nation’s rapid urbanisation, where 76 per cent of the population is already urban. With a bigger population of digital natives, there will be a larger group of knowledgeable consumers to drive creative destruction and innovation in areas like logistics and transportation, tourism and hospitality, retail and F&B services.

At this juncture, there is huge uncertainty surrounding the fate of the global economy and the true impact of this unprecedented pandemic. Even as we embrace the sharing economy as a solution to problems in these uncertain times, the last thing we want is to create a tyranny of the minority - at a time when populism is on the rise due to global uncertainty. So let us fight together, not just as one nation but as a collective force of humanity against the tyranny of fear. Perhaps this shared consciousness, awareness and resolve is the final missing piece in the sharing economy puzzle.

-- BERNAMA

Leon Foong, an Oxford graduate with a first-class B.A. in Economics and Management, is the CEO of SOCAR Malaysia, a car-sharing platform that seeks to make driving more accessible to people living in Malaysia by using technology.