Following the release of Singapore’s economic figures for Q2 of 2020, Trade and Industry Minister Chan Chun Sing said on Tuesday (11 August) that “we (Singapore) are not returning to a pre-COVID-19 world… We must chart a new direction now”.
He described the latest data released by his Ministry as Singapore’s “worst quarterly performance on record”.
On Tuesday, the Ministry of Trade and Industry (MTI) stated that the gross domestic product (GDP) will decrease between 5 and 7 per cent, after initially predicting that the economy will shrink between 4 and 7 per cent.
Singapore has, in fact, entered its worst recession since independence as the Government downgrades the country’s growth forecast for 2020.
MTI said in a press release that in the second quarter of this year, the trade-reliant economy reduced by 13.2 per cent, as compared to the same period last year. This percentage is worse that the initial estimation of 12.6 per cent.
Responding to this data, Mr Chan said in a press conference: “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.
He added, “The numbers reflect the impact of COVID-19, as well as deeper forces reshaping the global economy and our position in the global value chains”.
Although he knows that some people are still hoping for a quick recovery of the economy and everything will go return back to the “familiarity of the old normal”, but he expressed that the “painful truth” is that “we are not returning to a pre-COVID-19 world” and that it will take some time for the economy to recover and it will “not likely to be smooth”.
“We can expect recurring waves of infection and disruption,” he added.
Separately, Mr Chan also mentioned that Singapore’s geopolitical environment, which has allowed it to thrive for the last 50 years, has now changed.
He pointed out that “the tensions amongst the major powers are increasing”.
As such, the Minister hope that geopolitical issues will not lead into “open conflict, further (destabilising) the rest of the world”.
“We must avoid being caught between the conflicts of major powers or be stranded in a fragmenting world of trade relations and technological standards,” he reiterated.
He continued, “New investments will come our way … some existing ones may also diversify away from Singapore … It is a fluid landscape and we must do everything we can to defend our capabilities and capacities”.
If that’s not all, Mr Chan also highlighted that the nature of jobs have also took a drastic turn.
“With remote work, more global job opportunities for our workers will come. But it also means that other workers, in other countries, can do our jobs from their homes.
“You might have noticed that some jobs in the regional headquarters here are being advertised as ‘can work in Singapore’ or ‘can work remotely’. This will affect many PMET jobs, which can be done virtually or through automation and AI,” he said.
Additionally, Mr Chan also pointed out that the changes in the economy “will cause more societal frictions and tensions”. This will happen between those who have more and those who have less, between foreign and local, and even with a Singaporean and a permanent resident, the Minister explained.
“We will need to better take care of those affected by job and business losses. We have and will continue to do these in a sustainable way that is not divisive, affirm the dignity of work and strengthen our social fabric. These tensions, unless well managed, can divide our society,” he noted.
“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,” Mr Chan said.
He added that the Government will work hand in hand with the public in order to “help them understand the need for changes and to implement them smoothly”.
Mr Chan also said that the Government will furnish the public with “regular updates” on the economy and job situation “sector by sector” in the next few months.
“We will involve the unions, trade association and employers. We will visit companies in various sectors, work with unions and associations, discuss with them the changes and chart the way forward to get us through this crisis,” he said.
As to how the Government plans to chart a new path moving forward, Mr Chan outlined three key principles.
The first is that Singapore will open for business, “safely and sustainability”, Mr Chan said
“It will not be a binary option of open or close. It can be done. We must stay open while isolating the impacted clusters quickly and tightly,” he noted.
The second is that the Government will provide assistance to businesses and workers to make sense of adjust to the new world.
Companies will be given opportunities to help them grow. “Because as you grow, we will create more jobs and opportunities for our workers,” he said.
Some of the industries that will be given help are infocommunications technology, biopharma, supply chains and precision engineering.
Mr Chan also stated that efforts that will be given to such firms include helping them with their cash flows, from the Jobs Support Scheme to rental relief schemes.
Lastly, the Government will also assist industries that have been permanently changed to reinvent itself, and pivot into new markets, Mr Chan said.
A third principle the Government will go by is support for businesses through establishing the “right macro conditions”, said Mr Chan.
“To preserve Singapore’s ability to compete for jobs for our people, we will strengthen our links with the world for markets, supplies, technology and talent,” he said, adding that Singapore’s aviation and port hub status “can never be taken for granted”.
If that’s not all, the city-state will also break new ground for digital free trade agreements in order to open more markets for its businesses, while still maintaining existing access to conventional markets, the Minister said.
“We will do our utmost to prepare our people … We will not wait for the COVID-19 situation to blow over. We will start now,” he said.