A View On The Big Covid-19 Mountain: Three Principles That Singapore Will Hold On To

A View On The Big Covid-19 Mountain: Three Principles That Singapore Will Hold On To

As you know, my plan is to prepare you well for a ten (10) years period under intermittent Covid-19 measures.

Here is what I found today. An article in the local online newspaper (click here) that lays out the strategic view of the Singapore government for the coming months and years.

We are not returning to a pre-COVID-19 world’: Chan Chun Sing maps out ‘new path’ for Singapore

The speaker, Mr. Chan, is Singapore’s Trade and Industry Minister, his face is known from the TV, and he is a prominent part of the current national leadership team in Singapore. When he speaks about strategic issues at a press conference, his words are carefully balanced in order to prepare the audience for what is to come. That is done intentionally.

There is a cultural aspect of this. In Asian culture, and different from German culture, one would initially not present the audience with the full picture, if what is going to be presented is bad news. The saying is: “when you want to show your audience a big mountain, first explain that you are going to show them a mountain. Next, explain to them that it is going to be a big mountain. A really big mountain. Only then show the big mountain, by slowly opening a door so that the viewer can see developing what is behind that door.” I have received this teaching many years ago in Singapore, and I find it to be commonly used.

We are not returning to a pre-COVID-19 world

What Mr. Chan has to present to his audience is indeed very bad news:

“We are not returning to a pre-COVID-19 world … We must chart a new direction now,” said Trade and Industry Minister Chan Chun Sing on Tuesday (Aug 11), after Singapore announced what he described as its “worst quarterly performance on record”.

Data showed that the Singapore economy had contracted by 13.2 per cent on a year-on-year basis in the April to June quarter, worse than the 12.6 per cent decline seen in the Government’s advance estimate and a sharp deterioration from the 0.3 per cent contraction in the previous quarter.

“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.

“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,” said Mr Chan in a press conference.

Here was the first hint to the “big mountain” that is going to be shown. Mr. Chan speaks of “deeper forces reshaping the global economy and our position in the global value chains”. Different from other countries that have a big domestic market, Singapore is a tiny economy. And every shift in the global economy can have a tremendous influence on our domestic economy, and on our individual lives. In other words, we are the canary in the coal mine.

And yes, this will directly influence your daily life

Mr. Chan is coming to what this means for our individual lives.

The minister said he knew that some are still hoping for a quick recovery and a return to the “familiarity of the old normal”, but the “painful truth” is that “we are not returning to a pre-COVID-19 world” and that recovery will be some time yet and “not likely to be smooth”.

“We can expect recurring waves of infection and disruption,” he said.

That is what is going to happen. “Recurring waves of infection and disruption”, which can mean two months locked down and three months open, followed by the same thing. It does not help to lock down a society for only 2 weeks. You need 2 months in order to be effective. We just went through this. And this will go on for years. My own good guess is that this will go on for ten (10) years.


And yes, there is more on the way

That is not yet the entire picture. There is more mountain to come. Here is what Mr. Chan is telling his audience:

“WORLD HAS CHANGED IRREVOCABLY”

Mr Chan also highlighted the significance of several global changes beyond the outbreak.

The geopolitical environment that has allowed Singapore to thrive in the last 50 years has changed.

“The tensions amongst the major powers are increasing,” he said.

Mr Chan said he hoped geopolitical issues will not spill 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 added.

It is very clear to me which “tensions” Mr. Chan is referring to here. The USA and China are currently not at the best terms with each other. The USA is using a belt of islands in the South China sea as stationary aircraft carriers and as naval bases. At any time, the US could block China from leaving the South China sea. Although China is not a great seafaring nation it is very clear that China does not like that fact. And the US – without going into more detail – does not like the economical approach of China. These are only two of the many facettes of the difficult relationship between the US and China. And Singapore is in the midst of this, being a partner to both.

And of course could an open conflict between China and the US easily result in bad economical consequences for Singapore.

 

The Global Supply Chains Are Changing

Now that may hit the job market in Singapore: “can work remotely”.

Here is what Mr. Chan says about this:

Global companies are also reorganising their production and supply chains, with some reviewing the need for regional hubs and the way they organise their production to serve different markets.

“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.” said Mr Chan.

Mr Chan also pointed out how the nature of jobs has changed.

“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.

I fully agree with Mr. Chan, and I see exactly all that happening right under our noses.

Example 1: I know of a regional purchase manager of German origin who was on holidays on the remote island Siargao in the Philippines when the lockdown (in Singlish: “Circuit Breaker”) happened in April 2020. He just continued to do his work from there, until today. And he has no intention whatsoever to ever come back to Singapore, maybe except for a stop-over on the way back to Germany.

Example 2: I have sent three foreigners that were working in our firm in Singapore back to where they came from, and they will continue to work for us from their home countries. That is good for us because there are no more complicated local regulations when someone works for us remotely. As always, some worrywarts will always find remote reasons why that cannot be done because the home governments of these people will find ways to make that difficult. But how would these governments want to prevent such practices if they happen on large scale?

Times Will Become Bad And That Will Cause Frictions

The article continues with Mr. Chan´s speech:

Finally, changes in the economy “will cause more societal frictions and tensions” – between those who have more and those with less, between foreign and local, and even a Singaporean and a permanent resident, said Mr Chan.

“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 said.

The last thing that is wanted in Singapore is a division of the society. There have been unrests back in the 60ies of the last century and nobody in Singapore likes to talk about those times today. We don`t want this back.

 

Not All Is Bad. We Have A Plan.

In short words, the plan is “accept change”. This is what Mr. Chan says:

THE WAY FORWARD

“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 Mr Chan, adding that the Government will work together with the people to “help them understand the need for changes and to implement them smoothly”.

In the next few months, the Government will provide “regular updates” on the economy and job situation, “sector by sector”, said Mr Chan.

“We will involve the unions, trade associations 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 added.

 

Now To The Three Principles For The New Path Ahead

Mr Chan outlined three principles Singapore will hold on to as it attempts to chart a new path ahead.

First (principle), the country will open for business, “safely and sustainability”. “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,” said Mr Chan.

That is probably the most tangible immediate take-away from Mr. Chan`s speech: you can still have your office with people there but if anything happens, it is on your own risk. And don`t cry for government help. Your office may be closed for a while, and your staff may not be able to come to your office while being isolated.

That policy will clearly lead to less office space in the future, together with more home offices. And with more shared office space in the heartlands of Singapore, for those who do not want to work from home. A hotdesk in a shared workspace company is currently S$ 250.00 per month in Katong, a suburb of Singapore, with unlimited use of the office facilities. For comparison, costs for maintaining a workplace in a proprietary office space in the central business district are at least S$ 750.00 per month, plus IT costs.

All that will also come with an easier administration of the island. No more rush hours, no more traffic jams, no more MRT breakdowns. Easier city planning, less facilities. Nicer living, better work-life balance, if there is such a thing in Singapore.

 

Next: Subsidies

All bureaucrats in this world want a larger budget next year, and the Singapore government is not different. This is the plan.

Second (principle), the Government will help businesses and workers make sense of and adjust to the new world.

Firms with opportunities, notwithstanding COVID-19 and perhaps because of COVID-19, will be given a boost so they can grow. “Because as you grow, we will create more jobs and opportunities for our workers,” said Mr Chan.

Examples of such firms are those in infocommunications technology, biopharma, supply chains and precision engineering.

The article continues:

Firms suffering a drop in demand now but will eventually recover will have their core capabilities preserved so they can “emerge stronger”, said Mr Chan.

Overall efforts to help such firms include helping them with their cash flows, from the Jobs Support Scheme to rental relief schemes. Over time, support should be redirected to these companies to help them generate fresh revenue and become more cost-efficient.

Finally, the Government will help firms whose industries have permanently changed to reinvent themselves, and pivot into new markets …, said Mr Chan.

Not much to add here. Let`s see how this works out in the very near future.

We Change The World (Again)

The speech continues, and it is full of surprises.

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”.

Singapore will also break new ground for digital free trade agreements to open more markets for its businesses while preserving existing access to conventional markets, said Mr Chan.

Digital trade is about selling atoms (tangible goods) and electrons (information). It seems like a no-brainer to me that if you sell atoms over the Internet, the same rules apply as for brick-and-mortar shops. There are already some very favorable regulations in place for selling atoms from Singapore to the USA and to the EU. But does this also mean that electrons that are sold from Singapore over the Internet to another country can be tax-free? Now that would indeed be a major business advantage for Singapore. I am all in.

And Mr. Chan would not be a Singaporean if his final statements did not set a call-to-action:

The minister said that while the future may be uncertain and conditions challenging, the commitment to every Singaporean remains unchanged.

“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.

We for our part have already started two years ago: much less office space. No more proprietary data center. All business operations in a virtual team, in the cloud.

 

Conclusion

What we read is an uncomfortable outlook.

If you think that it will be different for yourself because you live in Germany, in Australia, or in the USA, you will probably soon be proven wrong.

Read “Who moved my cheese” now, in order to be better prepared (click here).

And read my two earlier articles about depressions and recessions (click here and click here).

And don`t forget, prepare for ten (10) years intermittent lock-downs (click here).

And, oh yes, the word “vaccine” was not mentioned in Mr. Chan`s speech. And that was not because he does not know what a vaccine is.

 

Martin “Fight” Schweiger







Did you like what you just read? Then subscribe to my free Tip of the Week!