ECONOMYNEXT – Sri Lanka was at one time talking about trying to be a Singapore, and then a Malaysia, and now it is talking about trying to be a Korea and others are also talking of Vietnam as a poster child.
Sri Lanka is not a Vietnam largely because of a bad central bank, import substitution, rent seeking and unstable policy involving the state, and strong anti-private sector attitude prevalent among bureaucrats and politicians.
There is an overall lack of a framework to develop some working policies, with all policy essentially made as some election gimmick.
The country is also burdened by an anti-private sector attitude and central planning without policy development. To say that Sri Lanka has central planning while Vietnam, a communist, one party state is less control oriented, is saying a lot.
Sri Lanka’s current economic problems and the Coronavirus response is a case in point. Sri Lanka’s Coronavirus response was successful up to September 2020, but there were many gaps, especially in testing, that were covered up by a very tight lockdown.
Though some of the gaps were closed, as mistakes were found other gaps remained. All this was exposed in September, when the country tried to keep the economy open and fight the disease at the same time.
Coronavirus – from index case to community transmission
An infectious disease like Coronavirus comes from abroad. The first carrier is the index case or F0. F0 meets F1 and passes it on. Then it goes to F2. These are isolated cases.
Then a cluster develops. A person may travel to the other end of the city and another cluster develops. Then one person travels to the next city and develops another cluster. Yet another cluster may develop in a different city.
This is a situation where the virus is in clusters. Pretty soon, clusters start to cross infect each other. Then the distinctions become blurred, and we get one big cluster-f! as some people would say.
Next, you have community transmission.
If a city has community transmission it can be isolated and locked down like in Wuhan. Does Colombo have community transmission?
In heavily infected areas herd immunity like conditions will have to emerge before the spread stops.
A large cluster is usually detectable
From what has been happening in other countries with strong control it seems that where a cluster expands to a couple of hundred there will be people with symptoms, and it is detectable.
When a cluster expands to a few hundred, one or two persons will turn up in hospital or Intensive Care Units.
This was the experience of Vietnam in July-August’s Da Nang city cluster, and in the case of the Bandaranaike Pura cluster in Colombo.
In the case of the Minuwangoda cluster, a random check carried out by Gampaha Hospital as part of the country’s testing system detected the first patient.
This was one of the good features of Sri Lanka’s anti-Covid strategy. In Vietnam random tests are carried out on ICU patients.
Best Practice – Testing to trace not to diagnose
Compared to Vietnam, which is one of the most successful countries in the world in combating the disease, Sri Lanka made several miss-steps and was late in correcting them compared to Vietnam where policy developed fast.
In Vietnam, all first contacts (F1) of an index case (F0) are quarantined. Contacts of F1 (F2s) are home quarantined. If an F1 test positive (two tests are carried out 24 hours apart), F2s are quarantined.
Quarantined persons are also tested twice inside at least. They are tested before release and tested after two weeks to give a certificate.
In the early days Sri Lanka made a series of glaring miss-steps.
Doctors refused to do tests outside the hospital saying PCR tests were diagnostic tests not screening tests. It does not matter what the test is, as long as it gets the job done.
This investigation algorithm was developed in Vietnam early in the game.
Sri Lanka also did not test those in quarantine at first, or test before release or after release. The Kandakadu cluster is a result of lack of testing after the 14-day quarantine period.
Sri Lanka also avoided bringing rapid tests with doctors saying the samples were not good. Rapid antigen tests are particularly useful to track older contacts that have developed the disease, when a cluster or a case is found late.
The public excuse of Health Ministry doctors was that PCR was better and the viral particles could be detected before antigens developed. Yes, if you find contacts early, but not if you are late and are trying to catch up.
In the first wave many of these problems were covered by a very tight lockdown. Sri Lanka however did one thing right with the Gampaha Hospital finding the first case in the Minuwangoda factory and with the health system having a random testing algorithm for respiratory and other cases.
But from then on, a series of errors were made.
Flaws in Sri Lanka’s strategy led to big increases in September’s outbreak, including how first contacts are defined, how they are quarantined and how contacts and isolated and cases are investigated and linked or assumed to be part of a main cluster.
Definition of F1 contact
Sri Lanka has to revise the way first contacts are defined for testing. This is especially when a factory or other concentrated workplace is involved.
This problem was evident in the Navy cluster. In Vietnam the entire camp of 5,000 would have been tested and infected people would have been plucked out periodically as they got infected, and thus killed the outbreak within two weeks.
But Sri Lanka did sporadic testing until the entire camp got infected over a period running into several weeks.
Vietnam tested entire apartment blocks and small villages.
This problem again came up with the Minuwangoda factory. Authorities tested 150 people that they thought were close contacts. This was the same error as was made in the Navy camp.
Nobody who has been tested for PCR as a first contact should go home until the PCR results come.
In the case of the Minuwangoda factory, even if 150 people were defined as close contacts, the rest should have been categorized as F2 and home quarantined.
When to Lockdown
Sri Lanka has to revise the criteria for a lockdown of a given area. Public Health Inspectors and the system were simply overwhelmed when 700 persons tested positive.
Immediate lockdowns are needed when large numbers are found. This was done with a couple of days delay in the case of the fish market.
If 700 persons are found at one go, there has to be more than two levels of infections, perhaps three, as well as cross infections.
Anyone in the factory, and her house, were potential first contacts. Lunchroom contacts are particularly vulnerable when masks are removed and people talk.
They should all have been institutionally quarantined and tested. But they were tested and sent home, to infect more people as results were awaited. Somewhat similar processes were followed in other factories.
The process followed in Vietnam is to quarantine every first contact and test them twice in 24 hours, which will also take care of any errors.
Growth is exponential from one week to the next. This is why early action to curtail travel helps.
Assuming one person infected between 5 to 10 persons, there could be as much as three levels of infections, but cross infections will quickly consume the entire factory, because growth is exponential.
The SARS-CoV-2 strain that hit Vietnam in July was the one with the D614G mutation hit Sri Lanka in September, according to researchers.
According to some estimates each infected person in turn infects about 5.7 persons if no mitigation is done. Vietnam researchers have estimated that up to March 2020 about 1 to 3 persons seem to have been infected. In the July – August outbreak up to 6 had been infected.
If each person infected seven others, in three levels around 350 will be infected – (1 x 7) x 7 x 7 = 343.
If each person infected 6 other in three levels about 200 will be infected – (1 x 6) x 6 x 6 = 343.
If each person infected 5 other in three levels over 100 will be infected – (1 x 5) x 5 x 5 = 125.
In a factory where people run into each other multiple times in a day, the spread may be faster. If one person infects 10, 1000 will be reached in three stages (1 x10) x 10 x10 = 1000.
Vietnamese researchers say there is a window of six days to find the F2 contacts. But in practice, some people may develop the disease slower, or even faster.
If each infection takes about 6 days, then a cluster must be around three weeks old for three levels to be infected.
Vietnam doctors estimated that four generations of infections had passed before the Da Nang cluster was discovered at an intensive care unit. At each level infections grow exponentially.
At the next generation with six people the total would be around 1300 – (1 x 6) x 6 x 6 x 6 = 1,296
At the next generation with seven people the total would be around 2,400 – (1×7) x 7 x 7 x 7 – 2,401.
The 700 people in turn may have infected another one or two outside. That means at least 1,500 others. There are no health inspectors to chase up such a large number.
In such a case a large area must be locked down. Vietnam did not have curfews but they placed border controls and asked people to stay at home and only go out for essential needs.
Linking to a cluster
Authorities were insisting that everyone had some link to the Minuwangoda cluster. Suddenly they found a large cluster.
Then everyone is linked to the fish-market cluster.
This cannot be. The cluster is so large that it is quite clear that many who were earlier said to have been linked the Minuwangoda cluster were in fact from the Minuwangoda cluster.
On October 21 the first set of 21 cases were discovered from random sampling.
But as far back as October 10 a fisherman in a multi-day boat was found infected and Dikkowita fishery harbour was closed.
Other isolated cases started turning up in hospitals.
But officials insisted that there was some connection to Minuwangoda that was not evident to the people concerned.
That is a flawed strategy. This clearly shows that the way Sri Lanka is linking people is not correct.
People who independently turn up in hospital probably could be indicative of a couple of hundred undiscovered cases.
If people cannot recall meeting a known contact, then an assumption must be made that it is from a cluster or sub-cluster and start tracing backwards also using antigen and PCR tests, not just forward. If it cannot be done fast the area must be locked down assuming a cluster.
Sri Lanka’s decision to home quarantine should also be reconsidered. While it may work with curfews, it will not be effective without a curfew.
Teh problem with home quarantine is F1 contacts and F2 contacts are lumped together. Even if the contact tracers get to F1 fast (before the incubation period) family members who are F2 are also likely to get infected as they stay home until the disease develops.
Of course not all F2s will get infected. But that is gamble that the most successful countries did not engage in.
Korea is doing home quarantine without a lockdown. Every day people die.
They die despite the existence of a very sophisticated health system with Extracorporeal Membrane Oxygenation (ECMO), which is a heart lung machine used when ventilators no longer work and Continuous Renal Replacement Therapy (CRRT), when kidney function fails.
About 50 to 100 persons are confirmed every day with a high number of tests done and with easy access. There is steady trickle of deaths.
Over 460 people have died in Korea due to covid-19.
In Vietnam with institutionalized quarantine the number of deaths is just 35 .
This is Cambodia. There are zero deaths and 300 odd cases.
This is Thailand.
This is Bhutan.
This is Mongolia
These countries succeeded because they got on the tracing game early from January and February 2020. They shared borders or had close ties with China. Sri Lanka also home quarantined Chinese workers and got on the job early.
Chicken or Egg?
The first case of the current wave turned up in Gampaha Hospital from the Brandix cluster on October 4th.
But the Dikkowita multi-day boat case incident came on October 10th. Soon after, cases started turning up in other hospitals as vigilant hospital staff picked up on them.
Authorities insisted that they had a link to the Minuwangoda cluster, though the patients themselves had no recall of meeting people linked to the cluster.
The principle is that if people turn up in hospital on their own, there may be more around. When a number of fish traders turned up from several places including Bloemendhal authorities tested the Peliyagoda fish market.
According to the chief medical officer of the Colombo Municipality, the fish market had ideal conditions for transmission.
It was cold, it was wet, people worked from early morning, and they shared tea and other drinks. And people came from all over the country.
Then health officials said there had been cross infections with Minuwangoda.
The infections were wrongly classified as from the Minuwangoda cluster instead of tracing backwards.
The first case in Brandix was six days before the infected Dikkowita multi-day fisherman was.
Clearly the fishermen must have been infected independently of the factory. The same source could have hit both places.
Sri Lanka had import controls, this raises the question whether fishermen who were engaged in smuggling could also be a source of infection.
Currently the focus is on airline crews and Sea Marshalls. Even if this outbreak is controlled, import controls will continue to be a risk.
There is another big gap with Vietnam not just in Coronavirus control, but in overall policy.
Vietnam is a tall long country, which provides for decentralized administration.
In the Coronavirus crisis, action plans were developed in Hanoi and Ho Chi Minh City with variations and within broad guidelines.
For all intents and purposes, the North (around Hanoi), the South (around Ho Chi Minh City) and the centre (around Da Nang) operate as federal states.
Economic and other policies evolve independently in Ho Chi Minh City and Hanoi, though Hanoi usually has the final say.
This was seen in the case of the Coronavirus pandemic.
When the central government decided to lift social isolation on May 23, there were concerns in the South. Some decisions had been reversed.
There is no one epidemiological unit in Vietnam. There are multiple Centres for Disease Control who can try out their own strategies and do their own procurements.
In Korea, pharma companies developed tests and produced rapid test them.
Vietnam also produced fast test kits them and started exporting. Some countries bought them without WHO approval seeing how effective they were at the home country.
Unlike Sri Lanka, highly effective private sector-oriented bureaucrats are employed by the Communist Party and People’s Committee of Ho Chi Minh City, Hanoi and elsewhere.
There is no one BOI-type agency in Vietnam. There are several approving authorities in several regions.
If investors are not happy with Hanoi, they can go to Ho Chi Minh City. In fact, they did for several decades.
The HCMC area now accounts for 25 percent of the GDP of Vietnam.
Salaries are higher. People migrate from Hanoi to HCMC for jobs. Now companies are going to the North since salaries are lower.
This is why policy making is important. If a private company makes a mistake, it goes bankrupt.
When a government makes a mistake, the entire society pays a price. That is why central planning failed in Vietnam. And now they are cautious.
They no longer expropriate, which Sri Lanka is still doing.
When Vietnam freed trade, there were no rent-seeking private business to object. There were only state corporations.
Vietnam goes after countries to sign trade deals after unilaterally freeing trade.
The Vietnam-US bilateral trade agreement – which is now leading to privatizations and investor protection – was signed at the instigation of far thinking Vietnamese policymakers, helped by US free traders (before Trumpist Mercantilism) who recognized kindred spirits across the negotiating table.
The BTA transformed the country’s laws and has now paved the way for subsequent decrees that led to banks and other firms to be listed, among other changes.
When Vietnam re-opened the economy in Đổi Mới (renewal) in 1986 the economy collapsed due to money printing.
The central bank was reformed from 1989 onwards and the currency stabilized, giving a foundation for growth. That was the first driver of growth.
This graph is taken from a presentation made by Professor Nguyen Thien Nhan, Member of the Politburo of the CPV and Secretary of Ho Chi Minh city Party Committee, a top policy czar in the South.
But it was the US-Vietnam bilateral trade deal in 2000 that led to the real take-off.
Vietnam is shrinking the state sector, though there are some concerns about the current Prime Minister.
In Sri Lanka bureaucrats and politicians are very anti-private-enterprise.
In the case of testing, Colombo based Advocata Institute called for private voluntary testing of factories and offices and drivers with companies being allowed to negotiate bulk discounts to do random testing after curfews are lifted.
As late as October a senior health official said that the government stopped private hospitals from ‘marketing’ tests and doctor recommendations were required.
If private hospitals had in fact ‘marketed’ tests to private firms the outbreak would have been found earlier and there would have been more capacity.
If they had been allowed – or encouraged even – to bring cheaper rapid antigen tests there would have been more capacity. Rapid tests are good enough for random testing.
But in Sri Lanka, the National Medical Regulatory Authority which was set up on a plan originally proposed by Senaka Bibile, a Marxist raided a private hospital.
The NMRA also placed price controls and created shortages of masks when suppliers put up prices and air freight charges went up, showing that the ideology behind the agency is a risk.
In Vietnam, the representatives of the National Assembly (members of parliament) do not have a declared religion as such.
Dollarization is widespread (again due to the currency collapses in the 1980s and in the war years) and salaries are routinely denominated in US dollars protecting workers from the state failure of central banking.
People also hold gold giving competition to the State Bank of Vietnam.
Vietnam also has a much better central bank having learned lessons from the collapses in the 1980s, though it is essentially a central planning agency.
Sri Lanka seems to be more Marxist and ideological than Vietnam, which is supposed to be a socialist republic.
Sri Lanka has change the way policies are made, fix the central bank, and give more freedom to the people if it wants to catch up with Vietnam.
This column is based on ‘The Price Signal by Bellwether‘ published in the November 2020 issue of the Echelon Magazine. To read Bellwether columns as soon as they are published, subscribe to Echelon Magazine at this link. The i-tunes app can be downloaded from here.