Chan Chun Sing Says Covid-19 Will Shrink Economic Pie But Warns Against Closing Off S’pore
As Covid-19 devastates Singapore and the world, we all know the economic outlook isn’t going to be rosy.
We’ve found out just how dark it’s going to be, as the Ministry of Trade & Industry (MTI) has confirmed that Singapore’s gross domestic product (GDP) growth for 2020 is expected to contract by more than initially expected.
That means more Singaporeans will be going through job losses and uncertainties, and this will lead to friction between the “haves” and the “have-nots”, said Minister for Trade & Industry Chan Chun Sing.
The world has changed in 4 areas
In his speech, which was also posted on MTI’s website, he outlined 4 areas in which “the world has changed irrevocably” due to Covid-19.
One of them was that society will be more divided due to the economic problems.
1st way: More societal friction & tensions
With slowing GDP growth, more companies will start to shut down, downsize and retrench workers or hire fewer permanent ones.
This means people in Singapore will be vying for fewer jobs and jobs that just aren’t there.
There will always be people who have more money and resources than others, though, and this will create resentment.
That’s why Mr Chan believes that there will be more societal friction and tensions between:
- Those with more & those with less
- Singaporeans & foreigners
- Singaporeans & permanent residents
If these tensions aren’t well managed, they will divide Singapore, he said.
We can’t isolate ourselves from the world
With such dire economic prospects, more people will call for Singaporeans to be protected.
More people will also call for redistribution of wealth.
However, Mr Chan warned against closing off Singapore, saying,
We cannot isolate ourselves from the world.
If we do that, we’ll “reduce Singapore’s economic manoeuvring space”, he said.
The absence of “the world as our hinterland and market” will also limit Singaporeans’ opportunities, he added.
We must take care of the unemployed
However, there’s something that we can do, Mr Chan said.
We can take better care of Singaporeans who lose their jobs and their businesses.
And we must do that in a “sustainable way” that will not deepen the divisions in society, he said.
We also need to “affirm the dignity of work and strengthen our social fabric”.
2nd way: Remote working both a boon & bane
Due to Covid-19, many companies and workers have started Work-From-Home (WFH) arrangements.
Ultimately, more people will realise that it’s possible to run a company and do work remotely instead of in an office.
This is a double-edged sword: With WFH, Singaporeans will be able to access jobs from all over the world without having to move overseas.
However, this also means that foreigners can access jobs in Singapore from their respective countries.
Also, as many foreign companies had set up branches in Singapore over the years, and created jobs for Singaporeans, this may not be the case as much as they could also hire workers from their own companies via remote work.
Mr Chan said he’s already noticed that some of these companies have been advertising their jobs as “can work in Singapore” or “can work remotely” – meaning they can be taken up by workers from all over the world.
3rd way: Geopolitical environment has changed
The 2nd way that the world has changed is in terms of the geopolitical environment, which has played a part in Singapore’s growth.
He cited increasing “tensions amongst the major powers”, undoubtedly thinking about the fraught ties between the United States and China.
These tensions and competition don’t just influence politics, but trade, technology, and security too.
For example, US-China suspicious has led to the US trying to ban popular Chinese-owned apps like TikTok and WeChat on security grounds.
WhatsApp & WeChat an example of new challenges
One example cited by Mr Chan on how rising tensions can have an effect on business is the use of apps like WhatsApp and WeChat.
These apps are essential to communicate with business contacts.
But as WhatsApp has been blocked in China for awhile, WeChat is necessary to communicate with Chinese contacts.
However, US contacts must be contacted with WhatsApp, as it’s uncertain whether WeChat will be available in the US in the future.
4th way: Production & supply chain reorganisation
Due to Covid-19, companies all over the world are reorganising their production and supply chains.
That means that Singapore must adapt quickly to these changes or be bypassed, he said.
An example is that companies are reviewing their need for regional hubs or where their factories are located, and may not locate themselves solely in Singapore so that they’re not dependent on just one site.
The changing tax regulation of countries like the US may also means that foreign companies may reduce overseas investments in countries like Singapore.
However, Mr Chan also said that we might attract new investments eyeing the ASEAN region.
Thus, there will be new challenges but also opportunities for growth, he added.
We won’t be back to normal soon
In a Facebook post on Tuesday (11 Aug), Mr Chan also summed up part of his speech.
Overall, he emphasised that we aren’t returning to a “pre-Covid world”, meaning there will be no such thing as going back to the “old normal” of life we enjoyed before the pandemic.
Singapore’s recovery will take some time, and it won’t be smooth, but uneven across different industries.
Some industries will be permanently altered by the pandemic.
This is especially because we’re expecting Covid-19 to come back and ebb in waves, which will mean disruptions to our lives and livelihoods time and again.
We can’t wait for Covid-19 to go away
We can’t wait for Covid-19 to go away totally before trying to restart our economy, as it may take too long, and by then we’ll be dead in the water.
Thus, we have to build a new economy, and this must start now, Mr Chan said.
That includes creating more job opportunities for Singaporeans.
While the outlook is bleak, at least we know that we have to do something.
Featured image adapted from YouTube.