SINGAPORE: Support measures must be “targeted” in order to help the different types of businesses survive the impact of the COVID-19 pandemic, said Trade and Industry Minister Chan Chun Sing on Thursday (Aug 13).
Speaking during an interview on CNA’s Asia First, he said there are three different types of companies.
The first type refers to those that continue to see a growing market despite the pandemic-fuelled downturn, such as those in the biopharma and precision engineering industries.
The second category includes those in sectors such as retail, and food and beverage where demand has shrunk temporarily but will eventually recover.
The third type of companies has been the hardest hit, according to Mr Chan, as “demand is not likely to come back in the short to medium term”. This includes companies in the social entertainment industry.
READ: 'We are not returning to a pre-COVID-19 world': Chan Chun Sing maps out 'new path' for Singapore
When asked by CNA if the Government would extend existing support measures for businesses or announce another stimulus package, he said: “We need different measures for the different type of companies - some to help them grow faster, some to help them consolidate their capacity while preserving their core capabilities, and some to help them pivot into new products and new markets.
“So the measures are quite different and must be targeted in order for them to be useful to the respective companies.”
The minister added that the focus should not be on stimulating demand, given that the larger challenge remains with weak external demand which a stimulus package “would not be entirely helpful”.
“No matter what we do domestically, it will be very hard for us to replace the external demand that we used to have,” Mr Chan said.
“So what we need to do is a package to help our companies pivot into new markets and new product range, so that we can … seize the new opportunities in the new environment.”
These new opportunities are being seen in the region now as companies reshuffle their production and supply chains, he added.
“So this is where we need to … make sure that as the global companies reshuffle their global footprint of production and supply chains, some of them will land in Singapore.
“At the same time, we must make sure that we continue to defend the regional HQs (headquarters) and factories that have been planted here so that we can retain the jobs for our people, as many as possible,” he said.
READ: Singapore’s economic situation remains dire, with recovery likely to be ‘slow and uneven’: MAS
In a press conference earlier this week, Mr Chan said Deputy Prime Minister and Finance Minister Heng Swee Keat will be addressing matters related to support measures “in due course”.
Mr Heng, in a Facebook post on Wednesday, said he has assured business and union leaders that the Government remains committed to supporting workers and companies.
He also wrote that he has been having “intensive discussions” with government agencies to review and adjust support schemes as the situation develops.
“TOUGH” DECISIONS TO BE MADE
Data released this week showed the Singapore economy contracting 6.7 per cent in the first half of the year, with a record quarterly slump in the second quarter amid a two-month “circuit breaker” and weak external demand.
Policymakers expect the economy to contract by between 5 per cent and 7 per cent this year, indicating that Singapore is on track for its worst ever recession since independence.
Asked if he is concerned that the economic and employment situation in Singapore could worsen, Mr Chan highlighted three factors that would determine the country’s growth trajectory in the coming months.
External demand, which will be swayed by recurring waves of infections in other parts of the world and the resulting impact on economies and supply chains, is one of them but that will not be within the country’s control, he said.
The other factors that are within control include whether Singapore can progressively and sustainably re-open its domestic economy.
There has been “good progress” but the minister cautioned against complacency given the experience of how recurring waves of infections have prompted other economies to impose shutdowns again.
“So if we can open safely and sustainably, we will be able to progressively recover from the third and fourth quarter this year,” he said.
More importantly, proactive and “tough” decisions will have to be made to redeploy “capital, land, labour and other factors of production into more productive areas of work”, said Mr Chan.
These tough decisions revolve around how to help different businesses tide through the pandemic, particularly with the group that will not see demand return in the short to medium term.
“We'll have to make some tough decisions on how we can help them pivot into new products and new markets,” said Mr Chan.
“For example people in the social entertainment industry, until and unless we can come up with a new model of how we can do business safely in this COVID-19 environment, it’d be very difficult for us so imagine them coming back online like what they used to do in the previous operating model.”
Mr Chan added that it can be difficult for some entrepreneurs to come to terms with the changing world after spending much time and effort building up their businesses, but he said the Government will be committed to helping them pivot to new markets and products.
Watch the full interview: