- After a phased re-opening,
Singapore is cautiously returning to the "new normal," but the impact of the pandemic is still being felt throughout theeconomy . - The pandemic has reiterated the need for businesses and individuals to be digitally ready.
The annual Singapore Food Festival, a array of local culinary experiences and events, is usually a pitstop for foodies in the city-state. But its 27th edition this year was markedly different as it moved entirely online, with virtual masterclasses and ingredient kits sent to the homes of participants instead.
After a three-month "circuit-breaker" from April to June — a soft lockdown imposed by the Singaporean government — the country is still in phase two of its re-opening, where most retail, food and beverage, and sports facilities can operate. However, large-scale gatherings and entertainment venues, like the annual food festival, did not receive the green light, requiring organizers to quickly adapt to a new reality.
An uncertain global and local outlook weigh on the labor market
While the circuit breaker did its job to control community spread, it led to a sharp contraction of the Singaporean economy by 13.2% on a year-on-year basis in the second quarter. The economic situation was worsened by a weak external demand amidst a global economic downturn.
The virtual food festival was just one of the many initiatives by Singapore's tourism authorities to revive a sluggish lifestyle and tourism sector, which has been badly hit by the pandemic.
Among the worst-performing sectors are construction, transportation, accommodation, and food and beverage. Some firms have had to hand out pay cuts, while others were left with no choice but to let workers go. All this contributed to Singapore's overall unemployment rate of 2.9%, the highest in more than a decade.
Government support for affected industries and individuals has been swift with close to SG$100 billion dedicated in a bid to equally protect vulnerable jobs and workers, as well as boost growth in high-performing sectors. Officials assess that the budgets are estimated to avert a loss in real GDP of about 5.5% in 2020 and reduce the rise in the resident unemployment rate by 1.7 percentage points.
Even with generous government support, experts warned that businesses must also do their part to stay resilient. They should thoroughly assess their own "developmental potential, taking into account the industry and sector that they are in, and whether the business itself has strong fundamentals," Mr Kurt Wee, president of the Association of Small and Medium Enterprises, said. "Once this has been established, businesses can then consider how they can diversify and grow their revenue streams amid COVID-19."
Future-proofing Singapore's businesses
Shifts in consumer behavior brought about by the pandemic accelerated adoption of technologies as people and businesses adapted to new habits. Kian Bin Teo, chief financial officer of Thunes, a global cross-border payments network headquartered in Singapore, echoed the push.
"We see many clients, partners, accelerating their interest to work with us, because of the urgency to go digital," he said.
The company connects financial institutions, technology companies, money transfer operators, and banks, to enable seamless cross-border payments. It reported an 80% increase in transaction volumes for the second quarter, noting a clear shift toward mobile wallets — a trend accelerated by the push towards digital payments because of the pandemic.
"This trend will put us in a very good state for the long-term. It validates that we're on the right path," Teo said.
Others, who were not intrinsically digital, seized the opportunity to innovate. Sin Mui Heng (SMH) Food Industries, which makes chilled and frozen dim sum, were met with operational and supply chain challenges at the start of the pandemic. With hotels and restaurants drastically cutting down their wholesale orders, SMH focused on attracting direct consumers.
"We dished out whatever we could in the shortest time. These included direct factory sales, work-from-home dim sum packages, marketing to consumers via Facebook, Instagram; and we got ourselves listed on more online stores," SMH's Director of Operations Johnson Tay and Director of Business Development Evan Tay told The Straits Times.
The key to businesses' survival was how quickly business leaders were willing to adapt to a culture of innovation. "Organizations across Singapore realized how much their ability to innovate fuels their performance and business resilience during the crisis. They were also forced to innovate and accelerate transformation in response to the challenges and new market conditions," Sandra Ng of IDC
The global trend of protectionism has not gone unnoticed, and being an open economy, Singapore could be adversely affected by it. The pandemic has no doubt prompted countries to "look inwards," S. Iswaran, Singapore's Minister for Communications and Information said. "[But] we believe that a more effective way to build resilience is through openness and greater diversification."
He points to the country's network of Free Trade Agreements and digital economy agreements which will facilitate businesses to connect seamlessly with overseas partners. In addition, enterprises in Singapore are given financial incentives to embark on digital transformation, not just to overcome the immediate challenges from the pandemic, but also to reap long-term economic benefits.
A resilient outlook, built on a strong foundation
Even as the pandemic lingers, the city-state's strong position as a financial and investment hub and its ability to weather shocks puts it in good stead for recovery. It has continued to attract investment — SG$3.3 billion in capital over the first half of 2020 — bringing total funding this year on track to rival the SG$6.5 billion raised the year before.
Fundraising rounds from tech startups led the pack, with Grab raising its latest Series I round of SG$1.2 billion in February, and logistics startup Ninja Van's SG$390 million in April, as noted in a PwC report.
Notably, robust leadership and swift government responses to transform the economy will go a long way in ensuring the country's continuity. But the most important factor will be in Singapore's forward-looking mindset. Being a small country surrounded by bigger neighbors, it is in the country's DNA to constantly prove and re-invent itself.
No investment in nurturing, enriching, and advancing its citizens is considered too hefty — helping to continually maintain a competitive edge and keep its place among global leaders.