Singapore on ‘Knife’s Edge’ as Case Spike Risks Labor Shortage

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Singapore, battling an uptick in Covid-19 cases after months of success in containing the pandemic, says the virus situation is at a tipping point as it grapples with the costs of imposing more restrictions.

Companies in the country’s construction, marine and process sectors will be especially hard-hit by stricter border measures imposed amid a rise in new Covid-19 cases, while the economy faces a shortage of foreign labor with entry approvals set for prolonged delays, according to Lawrence Wong, the minister who co-chairs the government’s virus taskforce.

Any company seeking to bring in foreign workers from higher-risk countries “will now face considerable delays,” and the waiting time for an entry approval could be more than six months, Wong said. The new restrictions treat every country and region of the world as “high-risk” except Australia, New Zealand, Brunei, mainland China, Taiwan, Hong Kong and Macau.

Wong told parliament Tuesday that Singapore can expect many new build-to-order projects to be delayed by a year or more, while companies in the marine and process sectors “may even have to forgo new opportunities.”

“We are now on the knife’s edge and our community case numbers can go either way over the next few weeks,” Wong said during the ministerial address, adding Singapore has a chance of getting things under control by the end of the month. “Our big concern is that if companies continue to face difficulties or are forced to close, we could then end up with higher unemployment and job losses for Singaporeans.”

Singapore on ‘Knife’s Edge’ as Case Spike Risks Labor Shortage

Defensive Posture

Singapore, which topped Bloomberg’s most recent Covid resilience ranking, is taking a defensive approach to the recent rise in cases. Infections in the community have sometimes reached double digits among a population of 5.7 million in the last week and a half.

Besides worries over growing clusters stemming from infections at the airport and a large public hospital, the several number of unlinked cases is also a cause for concern. The government last week started limiting social gatherings, curbed entry for most foreign workers and ordered mass testing across industries and areas where new cases have arisen.

The setback could slow Singapore’s economic recovery and complicates plans to host high-profile global gatherings, including the Shangri-La Dialogue next month and the Davos-based World Economic Forum in August, where the city-state hoped to showcase its success against the virus. It also has stalled a rally in one of Asia’s best-performing stock markets.

“We have hit a bump on our path to recovery and the coming few days and weeks are critical as we seek to uncover and break all chains of transmission,” Health minister Gan Kim Yong also said in parliament. He said about 1.8 million people have taken at least one dose of the vaccine as of May 9, representing nearly a third of the population, and inoculation will be widened to more age groups from the latter half of May.

“Things are very fluid and the outlook remains uncertain,” Wong said. “At the same time, businesses will also need to be more agile, and to start factoring the need to pivot plans or operating models at short notice.”

Business Confidence

International business chambers in Singapore have broadly restated their confidence in the long-term outlook, even as the various developments around worker entries and quarantine requirements have rattled the community. Both the British and American chambers of commerce pointed to survey data showing members have an unwavering commitment to the city-state and the region.

“Public trust in the Singapore government to do what is needed to protect public health is one of the top determinants of reputation during the pandemic.” said Hsien Hsien Lei, chief executive officer at the American Chamber of Commerce. The country remains attractive for factors including its advanced manufacturing, diverse business ecosystem, competitive tax system and overall ease of doing business, she said.

The Australian Chamber, too, said that Singapore’s conditions are still favorable compared to other economies.

“The risk mitigation approach from Singapore has so far afforded us a largely enviable sense of freedom and security when others around the world faced second and third waves of infections,” said Kate Baldock, executive director at the Australian Chamber of Commerce. “The sophisticated contact tracing and all the other things happening behind the scenes have kept us safe and made Singapore an example in how to manage this ongoing pandemic.”

©2021 Bloomberg L.P.

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