SINGAPORE: “We are not returning to a pre-COVID-19 world … We must chart a new direction now,” said Trade and Industry Minister Chan Chun Sing on Tuesday (Aug 11), after Singapore announced what he described as its “worst quarterly performance on record”.
Data showed that the Singapore economy had contracted by 13.2 per cent on a year-on-year basis in the April to June quarter, worse than the 12.6 per cent decline seen in the Government’s advance estimate and a sharp deterioration from the 0.3 per cent contraction in the previous quarter.
“To put things in context, this is our worst quarterly performance on record. The forecast for 2020 essentially means the growth generated over the past two to three years will be negated.
“The numbers reflect the impact of COVID-19, as well as deeper forces reshaping the global economy and our position in the global value chains,” said Mr Chan in a press conference.
The minister said he knew that some are still hoping for a quick recovery and a return to the “familiarity of the old normal”, but the “painful truth” is that “we are not returning to a pre-COVID-19 world” and that recovery will be some time yet and “not likely to be smooth”.
“We can expect recurring waves of infection and disruption,” he said.
“WORLD HAS CHANGED IRREVOCABLY”
Mr Chan also highlighted the significance of several global changes beyond the outbreak.
The geopolitical environment that has allowed Singapore to thrive in the last 50 years has changed.
“The tensions amongst the major powers are increasing,” he said.
Mr Chan said he hoped geopolitical issues will not spill into “open conflict, further (destabilising) the rest of the world”.
“We must avoid being caught between the conflicts of major powers or be stranded in a fragmenting world of trade relations and technological standards,” he added.
Global companies are also reorganising their production and supply chains, with some reviewing the need for regional hubs and the way they organise their production to serve different markets.
“New investments will come our way … some existing ones may also diversify away from Singapore ... It is a fluid landscape and we must do everything we can to defend our capabilities and capacities.” said Mr Chan.
Mr Chan also pointed out how the nature of jobs has changed.
“With remote work, more global job opportunities for our workers will come. But it also means that other workers, in other countries, can do our jobs from their homes.
“You might have noticed that some jobs in the regional headquarters here are being advertised as ‘can work in Singapore’ or ‘can work remotely’. This will affect many PMET jobs, which can be done virtually or through automation and AI,” he said.
Finally, changes in the economy “will cause more societal frictions and tensions” – between those who have more and those with less, between foreign and local, and even a Singaporean and a permanent resident, said Mr Chan.
“We will need to better take care of those affected by job and business losses.
“We have and will continue to do these in a sustainable way that is not divisive, affirm the dignity of work and strengthen our social fabric. These tensions, unless well managed, can divide our society,” he said.
THE WAY FORWARD
“We do not have all the answers yet and the ground realities are fast evolving, often without precedence, but we know that staying still is not an option,” said Mr Chan, adding that the Government will work together with the people to “help them understand the need for changes and to implement them smoothly”.
In the next few months, the Government will provide “regular updates” on the economy and job situation, “sector by sector”, said Mr Chan.
“We will involve the unions, trade associations and employers. We will visit companies in various sectors, work with unions and associations, discuss with them the changes and chart the way forward to get us through this crisis,” he added.
Mr Chan outlined three principles Singapore will hold on to as it attempts to chart a new path ahead.
First, the country will open for business, “safely and sustainability”. "It will not be a binary option of open or close. It can be done. We must stay open while isolating the impacted clusters quickly and tightly,” said Mr Chan.
Second, the Government will help businesses and workers make sense of and adjust to the new world.
Firms with opportunities, notwithstanding COVID-19 and perhaps because of COVID-19, will be given a boost so they can grow. “Because as you grow, we will create more jobs and opportunities for our workers,” said Mr Chan.
Examples of such firms are those in infocommunications technology, biopharma, supply chains and precision engineering.
Firms suffering a drop in demand now but will eventually recover will have their core capabilities preserved so they can “emerge stronger”, said Mr Chan.
Overall efforts to help such firms include helping them with their cash flows, from the Jobs Support Scheme to rental relief schemes. Over time, support should be redirected to these companies to help them generate fresh revenue and become more cost-efficient.
Finally, the Government will help firms whose industries have permanently changed to reinvent themselves, and pivot into new markets and markets, said Mr Chan.
A third principle the Government will go by is support for businesses through establishing the “right macro conditions”, said Mr Chan.
“To preserve Singapore’s ability to compete for jobs for our people, we will strengthen our links with the world for markets, supplies, technology and talent,” he said, adding that Singapore’s aviation and port hub status “can never be taken for granted”.
Singapore will also break new ground for digital free trade agreements to open more markets for its businesses while preserving existing access to conventional markets, said Mr Chan.
The minister said that while the future may be uncertain and conditions challenging, the Government’s commitment to every Singaporean remains unchanged.
“We will do our utmost to prepare our people … We will not wait for the COVID-19 situation to blow over. We will start now,” he said.
Watch the full news conference and subsequent Q&A session: