Singapore cannot afford to wait out for the coronavirus to abate, as the permanent changes it brings will hinder it from reverting to a pre-Covid-19 economy, Minister for Trade and Industry (MTI) Chan Chun Sing said on August 11.
This is a “painful truth”, he added while acknowledging the hope many harbour over an economic recovery and a return to the “familiarity of the old normal”.
His comments came as the republic recorded a 13.2% year-on-year plunge in its GDP for 2Q2020 ended June.
See: Singapore's economy declines a historic 13.2% in 2Q20; 2020 GDP lowered to -7% and -5% : MTI
“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,” Chan said at a virtual press conference.
“We can expect recurring waves of infection and disruption,” he added.
MTI has since revised its full-year growth estimate for Singapore to -7% and -5%, from its previous -7% and -4% forecast range.
To help Singapore tide this crisis, Chan outlined three principles.
“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 Chan, adding that the government will work together with people to “help them understand the need for changes and to implement them smoothly”.
Part of this involves reopening Singapore for business “safely and sustainably” while supporting business growth, job creation and market access.
Chan committed to “building resilient and sustainable systems” for industries that are on a growth trajectory. These include information and communications technology, biopharma and precision engineering.
Efforts to support industries facing lower patronage include helping them with their cash flows, and other costs such as labour through the Jobs Support Scheme and rental via rebates.
These measures will be re-directed over time to aid firms to generate fresh revenue sources and become more cost-efficient.
Other sectors such as tourism, business events and social entertainment – or what Chan referred to as “industries that have permanently changed" – will be receive support to “reinvent themselves, pivot into new markets and new products”.
Meanwhile, Chan stressed that the government will look to guide businesses through the uncertain macroeconomic climate. Already firms – both in Singapore and abroad – have been grappling with disruptions in global production and supply chains.
Such shifts are a double-edged sword, says Chan. On one hand the option of remote work allows Singaporean workers more international job opportunities, but it also means that other workers, in other countries, can do our jobs from their homes," he explained.
Chan’s game plan is to strengthen Singapore’s links to the global markets in the areas of supplies, technology and talent. This comes as Singapore’s aviation and port hub status “can never be taken for granted,” he asserts.
One approach is to explore digital free trade agreements to avail more markets to Singapore’s businesses while preserving existing access to its current partners, said Chan.
Particularly, he believes Singapore may benefit from diversification by manufacturers who are branching out of China and actively considering South-east Asian markets.
However, he notes this may mean that existing investors may move out from Singapore as well, especially if it is their sole production site.
"This is not the Asian financial crisis or the global financial crisis, where, if we hunker down, things will improve in a few months If we wait it out, we will likely be in worse shape than we are now. Therefore, we must chart a new direction now, for a very different and uncertain future,” Chan reiterates.
"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."
