Gearing Up for a Better and Stronger Post-COVID Future

Jan 20, 2022, 12:26 PM
Summary:
A in depth discussion on gearing up for a better and stronger Post-COVID future

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2020 has been a very challenging year. The COVID-19 pandemic has caused great disruption and decimation to businesses and the economy, both locally and globally. According to the Singapore Business Federation (SBF) National Business Survey (NBS) 2020/2021, close to 63 percent of businesses reported that they have been negatively impacted by the COVID-19 pandemic, with an average decline in revenue of 31 percent. Both SMEs and large companies were affected by the pandemic, with some sectors more affected than others. Sectors such as Construction and Engineering, Retail, Real Estate, Hotels, Restaurants and Accommodations and Manufacturing had the highest proportion of companies reporting being negatively impacted. Conversely, sectors such as the Logistics and Transportation and IT and Professional Services had a higher proportion of companies reporting positive or no impact from the pandemic.

The SBF National Business Survey, conducted in October and November 2020 and involving 1,075 companies, also revealed that overseas business expansion was hindered by the pandemic, with 47 percent of businesses reporting contractions to their overseas business activities, and only 27 percent being likely to expand overseas in the next 12 months. Half of businesses reported that it will take them at least one to two years for their overseas business to resume normal operations.

Despite these challenges, most business owners remained optimistic, according to NBS. Many businesses believe the economy will improve in 2021, with 69 percent feeling confident in sustaining their business over the next 12 months.

Across sectors, there are opportunities for businesses to regain their confidence, reinforce their resilience and strengthen their recovery from the COVID-19 pandemic. However, with the recovery uncertain and uneven, there remain challenges for businesses to overcome in order to thrive in 2021 and beyond.

Signs of Recovery

The Singapore economy marked its worst recession in 2020, with a negative growth of 5.4 percent. However, Singapore may be in for a better-than-expected recovery this year.

On 28 April 2021, the Monetary Authority of Singapore (MAS) said the country’s gross domestic product (GDP) “could exceed 6 percent” in 2021 - the upper end of an official forecast range - barring a setback in the global economic recovery or a surge in locally transmitted COVID-19 cases.

Near-term economic prospects have brightened on the back of strengthening external demand, said the central bank in its latest half-yearly macroeconomic review.

“There are upside risks to growth such as from a stronger-than-anticipated upturn in the global electronics cycle, but these are accompanied by downside risks pertaining to the mutation of the virus and efficacy of vaccination,” MAS wrote.

In his May Day message on 30 April 2021, Prime Minister Lee Hsien Loong highlighted that, “This will bring us back to where we were before COVID-19 struck.” He added that beyond this year, new opportunities are opening up, with the pandemic accelerating trends such as digitalisation, automation and sustainability across all sectors. “To seize them, we need to transform our economy for a different, post-COVID-19 world,” Mr Lee reiterated.

Preliminary data for the first quarter of 2020 showed a turnaround after three quarters of contraction, with strong manufacturing activity aiding a 0.2 percent expansion.

Making the most gains in the first quarter was the manufacturing sector, which grew 7.5 percent year-on-year. Accounting for about one-fifth of Singapore’s economy, the sector has been a bright spot in the pandemic-fuelled downturn, and its outlook remains buoyant.

This is largely due to growth in clusters such as precision engineering, biomedical manufacturing and electronics, which have benefited from the boom in electronics demand as businesses look to digital solutions in a post-COVID world. Further adoption of 5G networks, continued proliferation of emerging technologies such as artificial intelligence, and the introduction of new smartphone models and wearable devices will also continue to fuel demand for high-end electronics parts and components. These augur well for the local manufacturing sector.

Growth however is likely to remain disparate across sectors. Conversely, prospects for the worst-hit sectors, including air transport and accommodation, have deteriorated amid a global surge in COVID-19 infections and the emergence of more contagious strains. These have diminished hopes for a substantial reopening of international borders in the near term.

Across other sectors, construction activities should be supported by a backlog of projects and an anticipated pick-up in demand this year although manpower shortages and rising material costs are challenges to face.

Improving consumer sentiment should continue to support the retail and food and beverage sectors, but some modern services segments that performed well during the pandemic may see growth moderating, including the fund management segment in the coming quarters.

Charting a Post-Pandemic Economy

In an effort to help the economy recover from the blows of the COVID-19, the Emerging Stronger Taskforce (EST) was launched in May 2020 to chart Singapore’s post-pandemic economy. Co-chaired by National Development Minister Desmond Lee and PSA International Group Chief Executive Tan Chong Meng, the task force is composed of members from government and the private sector.

Based on insights from their partners, the EST shared a vision for a “Virtually Unlimited Singapore” in a 118-page report released on 17 May 2021, which made five recommendations to drive the Singapore’s transformation as a node for technology, innovation, and enterprise.

1. Virtually Unlimited – Creating New Virtual Frontiers

The task force recommended taking Singapore’s smart nation aspirations globally by building on the strong foundations of its digitalisation efforts so far. This means building a vibrant virtual marketplace for goods and services that support the creation and trading of new products and digital services.

The task force encourages the use of virtual training and workforce solutions to help Singapore companies tap global resources to better serve global demand from Singapore.

This is the time to redefine Singapore’s relevance as a safe and smart city for trade, business, work and leisure.

2. Sustainable Nation – Seizing Growth Opportunities From Sustainability

Singapore should establish itself as a sustainability hub to serve global demand amid a growing green economy, while concurrently fulfilling its own sustainability commitments.

Efforts should be made to establish Singapore as a carbon trading and services hub, and strengthen its food resilience through advancements in agritech.

Singapore can strengthen its food resilience through advancements in agritech, improve the economic viability and sustainability of indoor vertical farming and identify broader agritech opportunities that the country should invest and lead in the years ahead.

Through end-to-end digitalisation, Singapore can strengthen the traceability and accountability of industry value chains.

3. Sustainable Nation – Enabling Global Champions and Growing an Agile and Strong Singapore Core

The task force recommended to support the growth of innovative and international large local enterprises through innovation, internationalisation, mergers and acquisitions, and talent development. Singapore must also enable a broad base of companies to succeed, including small and medium-sized enterprises and micro enterprises, it said.

The task force said Singapore should adopt an approach to skills upgrading and reskilling that entails identifying job disruption and training needs early, as well as developing workforce training plans so that businesses and workers can be more resilient and be future-ready.

4. Stronger Together – Institutionalising the Alliances for Action (AfAs) Model

Having seen the initial success of Alliances for Action (AfAs), an industry-led partnership between private and public sector stakeholders, EST suggested institutionalising them.

In the economic domain, future AfAs should be primarily established under the Future Economy Council (FEC), and serve as an additional platform for private-public collaboration and a key enabler for transformative economic growth.

They should also take into account learning points from the task force’s AfAs, and set up key criteria for commissioning and closing them. The report noted that not every AfA will succeed in delivering the outcomes it sets out to achieve. The FEC should therefore continue to refine the AfA model by learning from successes and gaining insights from challenges and failures.

5. Stronger Together – Strengthening International Partnerships

Singapore should position itself as a partner for recovery and growth, and foster win-win partnerships with its Southeast Asian neighbours at all levels, deepening Singapore’s engagement and knowledge of the region; and strengthening its digital connectivity across the territory towards a single digital area that will promote strong and inclusive digital recovery.

“In the next phase of our economic transformation, greater collaboration between the Government, businesses, and unions will be critical to identify new areas of growth and the new skills that are needed. If we can work together to support our businesses and workers to take on these new opportunities, we will be able to emerge stronger together,” said ESG in a press statement.
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Tags:
  • Business Transformation
  • digitalisation
  • Post-Covid