SINGAPORE: While 2003’s severe acute respiratory syndrome (SARS) epidemic can serve as a guide on what to prescribe for businesses affected by the new COVID-19 outbreak, Trade and Industry Minister Chan Chun Sing said “each crisis is different” and the Government’s support measures will have to take into account these differences.
He noted that in the nearly 20 years since SARS, China’s gross domestic product (GDP) has quadrupled while its share of the world’s GDP has doubled.
The Chinese economy also has “very different” linkages with the world now.
“In 2003, you probably don’t see China being so involved in the production of high-end technology products as part of the global supply chain and global value chain, but today you find that to be much more integrated,” Mr Chan told reporters on Friday (Feb 14) after a closed-door meeting with 25 members of the Singapore Business Federation (SBF).
“So for example, if the Foxconn factories in China stop production, it affects the entire global supply chain for many of the smartphones across the world.”
These changes mean that Singapore will need to assess impact on its economy on two fronts, he added.
One is the direct impact given how trade volumes between Singapore and China have increased since 17 years ago.
Singapore also has to watch out for an indirect impact based on China’s tighter and changing linkages with the global economy.
For example, the local manufacturing sector could be “much more impacted” this time round, given how China is now more involved in many of the high-tech manufacturing activities, Mr Chan explained.
Meanwhile, the minister pointed out how Singapore’s economy has grown to be much more diversified compared to 2003.
“That’s why I say that while we can look at SARS as a reference point, we must also be cognizant of the differences we are facing compared to 2003,” Mr Chan said.
In 2003, the Government released a S$230 million relief package that included property tax rebates for shops, restaurants and hotels, working capital loans for small and medium-sized enterprises, as well as lower foreign worker levies for certain hotel staff.
READ: Wuhan coronavirus - Licence fees waived for hotels, travel agents and tour guides, cleaning costs subsidised
Thus far for the outbreak of COVID-19, there have been some targeted measures for sectors facing immediate pressure. The Singapore Tourism Board (STB) has said it will waive licence fees for hotels, travel agents and tour guides, while a S$77 million package was announced on Thursday to help taxi and private-hire drivers. More support is set to be announced in the Government’s Budget on Feb 18.
“Each crisis is different from the rest,” Mr Chan said on Friday. “So when we apply the measures, we can take reference from the past but we cannot apply the same measures … because the nature of the challenge has changed.”
BUSINESSES CONCERNED ABOUT “SEVERE’ IMPACT
At a separate event on Friday, Prime Minister Lee Hsien Loong warned that the ongoing outbreak will have a significant impact on the local economy for the next couple of quarters.
Business leaders present at the SBF meeting said the hit thus far has been “severe”. Some sounded concerns about cash flow, supply chain disruptions and manpower constraints.
Resorts World Sentosa CEO Tan Hee Teck said tourist arrivals at its integrated resort has dropped “very significantly” and employees have been asked “to take their annual leave earlier” as business slows.
Apart from tourism, SBF chairman Teo Siong Seng said those in the food and beverage (F&B) sector have also seen their business drop by as much as 50 per cent. With their revenues taking a hit, some of these companies have had to put their workers on no-pay leave.
Amid the “very severe impact”, Mr Teo said companies are hoping for rent rebates, wage offsets and training subsidies to be included in the upcoming Budget, as well as possible “off-Budget measures” if the virus outbreak is prolonged.
Mr Teo also raised the issue of manpower shortage amid new rules stating that all work pass holders with travel history to China in the last 14 days will need to get approval from the authorities before entering Singapore and subsequently be on a 14-day leave of absence.
He said the F&B association has asked if workers can be brought in from “non-traditional” source markets.
Mr Teo is also hoping that the Manpower Ministry can allow more flexibility in the transfer of foreign workers by allowing these workers to be re-employed by another employer without having to first return to their home countries.
Addressing these concerns, Mr Chan said the Budget will include measures to “stabilise the current situation” by supporting workers and businesses, as well as initiatives to help companies prepare for a recovery.
These include measures to help business alleviate cash flow issues, he said.
The minister noted that businesses should also help one another during this difficult period, with big companies paying the smaller firms promptly for instance.
On supply chain disruptions, the minister said the ongoing COVID-19 outbreak has “brought home the importance of diversification”.
“Even prior to this COVIT-19 and … the US-China trade issues last year, many companies have already started to undertake measures to diversify their supply chains and I think this will continue,” he said.
This strategy of diversification should also apply to the country’s foreign workforce, he added, noting that this is an “ongoing work” given various constraints and considerations like skill-set match.
Despite these challenges, Mr Chan said business leaders have expressed confidence in the measures that Singapore has taken thus far against the virus outbreak, and are also taking the opportunity to review business models and re-train workers so as to position themselves for a recovery.
SBF’s Mr Teo said even though it remains an unknown as to when the outbreak could end, the International Monetary Fund is expecting the Chinese economy to see a “V-shaped recovery” when that happens.
Therefore, businesses should take the ongoing lull as an opportunity to keep up with transformation efforts. “While looking at how to handle the crisis, we also have to be prepared for the recovery,” he said.