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Singapore
This Week in AsiaOpinion
Inderjit Singh
Inderjit Singh

Opinion | Coronavirus: Singapore must take aggressive action to support its economy – and its people

  • The time to be conservative is past, as the city state has the firepower to keep businesses and individuals afloat
  • The pandemic will cause structural changes to the global economy, and how Singapore responds will see further stress or allow it to seize opportunities

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Dark clouds loom above the Singapore’s skyline on February 10. Photo: Xinhua
Inderjit Singh
The Covid-19 pandemic has forced economies into a tailspin, kicking off a long-drawn and painful downturn. We will soon start to see real, massive corporate and banking failures as well as individual bankruptcies that could last for the next two to three years.
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Singapore is saddled with long-term structural issues and short-term issues caused by the Covid-19 issue and the related panic it has created. The long-term issues the country already had will now create much bigger problems for companies looking to survive this unprecedented downturn. The short-term issues will also aggravate the situation.

While we should expect record bankruptcies and company closures in the coming months, business costs are not likely to drop in tandem, making things worse for companies and people. We will see an acceleration of structural changes in our economy. How the government responds will either cause further stress or allow Singapore to tap opportunities in these uncertain times.

Measures announced as part of the budget seem far from sufficient, even before the global financial meltdown happened. But more can be done in the second stimulus package that finance minister Heng Swee Keat is expected to announce on Thursday.

Heng Swee Keat, Singapore's deputy prime minister and finance minister, is expected to announce a second stimulus package on Thursday. Photo: Bloomberg
Heng Swee Keat, Singapore's deputy prime minister and finance minister, is expected to announce a second stimulus package on Thursday. Photo: Bloomberg
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LONGER-TERM ISSUES AND IMPACT

Costs in Singapore are mainly driven by the “real-estate economy”, with wages and rental making up a high component of total business costs. Why is this? Companies need to pay higher wages so Singaporeans – more than 90 per cent of whom are homeowners – can pay for inflated property prices. Rental, taxes and running costs paid by companies in the city state are also high.

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