by Robin Low
“A Friend in Need is a Friend Indeed” is a proverb that tells us that a true friend is one that helps someone at the time of need. In the COVID-19 crisis reveals a lot of information. How companies respond to the crisis and how fast they pivot shows how adaptable some companies are. Sometimes it is hard to judge how effective a government’s response to the crisis because the government does have a lot of resources to brand itself to look good. However, a simple comparison of the results can quickly reveal if the aggressive testing or “gold standard” strategies work.
The number of infections may not be a good number to consider as countries have various population sizes, but dividing it either by the total surface area or by the total population let us see how our state compares to other countries.
Some leaders claim that they carried out more tests than any other countries, and while this statement may be true, the numbers itself does not put things into context. The US did carry out 400,000 tests in March while South Korea did 360,000 tests, but the US has more than six times higher population than South Korea.
While the virus reveals how some of your elected officials fail to deliver on promises, what will affect citizens now is their recovery plans and their ability to execute on those plans.
From experience, when the world recovers from WWII, which impacted trade, economy, and many lives are lost, we would expect unemployment and deep depression as the need to produce weapons and employing soldiers would no longer be necessary.
In the US, the measured GDP did drop after WWII: It was 13 percent lower in 1947 than in 1944. But this was a GDP accounting quirk, not an indication of a stalled private economy or economic hardship. A prewar appliance factory converted to munitions production, when sold to the government for $10 million in 1944, added $10 million to measured GDP. The same factory turned back to civilian production might make a million toasters in 1947 that sold for $8 million — adding only $8 million to GDP. Unemployment dropped, and the business community did not share the economists’ despair, and it quickly became a period of rapid economic growth.
In Japan, the period post-WWII. Japan adopted a comprehensive policy of modernization in pursuit of parity with the industrial West; the devastated Japanese economy rose quickly from the ashes of World War II, and in 1956, it overtook the prewar 1940 level.
In Singapore, the COVID-19 crisis has shown a lot of gaps in Singapore’s economic model, but there are some plans in place to correct this. There is no doubt that this COVID-19 crisis is going to hit Singapore harder than other countries in the region as Singapore relied more on logistics, energy, tourism, and finance, many of which are not going to see recovery anytime soon. With the crash in oil with plunging demand during the COVID-19 crisis, speculators without physical storage or the logistical capacity to take delivery of oil had to “exit their positions at crazy levels.” And this revealed oil trading giant Hin Leong, when they owed banks US$3.85 billion.
The tourism industry, along with finance, will be deeply impacted as these industries would be slow to recover as countries get affected by the second wave, making other countries think twice or have stricter measures for travel. Not everything is doom and gloom. With the new focus on agritech to make food more secure, new opportunities open, which may see more companies starting up and entering back into agriculture.
With the current infection among foreign workers, there may also be a reform in the construction industry to use more technology and less low skilled labor. The current model by paying low wages to low skilled foreign workers, is becoming a risk to the healthcare of Singaporeans. Not only does this practice depress the wages of Singaporeans, this sector also has very low productivity, which is bad for growth in the long run.
When companies adopt more technology to allow more senior workers to access these construction jobs, as well as the logistics sector, I believe that the higher salaries of these jobs and the use of technology will make Singaporeans take on these jobs.
With more technology getting adopted, some of the new changes are inevitable. We already see rapid transformation in the past few months a more people go digital and get on zoom for meetings and classes. More people now shop online and with cost savings and ease, some sectors like retail may change permanently.
We need leaders to adopt a long-term view and understand sustainable economic growth. The overreliance of foreign workers, resulting in more than 1.5 million of them living in Singapore, probably made the COVID-19 crisis worse than it would have been, and this serves as a reminder that poorly thought of policies could negatively impact everyone. What worked 30 years ago may not work the same way today. Our old way of growth by trading and relying on MNCs is not working as well as before. This COVID-19 crisis may be prolonged, and these black swan events may happen more often, and “business as usual” is no longer valid. It is time to toss out the old playbook.