COVID-19 has unprecedentedly devastated the global economy in the entire history of industrialisation, bypassing the Great Depression, in its magnitude and level of severity. Since the pandemic surfaced in Singapore last year, our Government has forked out S$100 billion to support our trade-reliant economy and mitigate the impact of COVID-19 on different industries.
During the fireside chat in the recent RSM-OCBC Singapore Budget 2021 Webinar, moderated by William Chua, Tax Partner of RSM; Tay Woon Teck, Business Consulting Partner of RSM with guest speaker Selena Ling, Head of Treasury Research & Strategy of OCBC Bank engaged in a number of thought-provoking exchanges. From the 2021 outlook of our economy, increase in zombie firms and industries, our Government’s support updates, to the speakers offering their views on the added pressure on our economy due to the strained relationship between the US and China, this webinar had us thinking what we can do to pull through this tough time.
Singapore’s Use of Budget and Reserves in 2020 and 2021
For the record, the Singapore Government has committed S$100 billion in fiscal year 2020 to cushion the impact of COVID-19, and set aside another S$11 billion in 2021 for the COVID-19 Resilient Package. In total, S$111 billion has been spent to manage the impact of COVID-19 to date. With this support, Singapore’s GDP experienced a four per cent contraction instead of the projected five to seven per cent, which came as a surprise. In other words, the GDP contraction could have been worse.
As we move into 2021, we are looking at partial normalisation as the Government continues to support industries that are worst hit by the pandemic, such as the aviation and the hospitality industries. As for the construction industry, the Ministry of Law has sought to help them out by offering temporary assistance in prolonging the time for construction companies to fulfil their contractual obligations.
Besides, the Government also advocates the preservation of jobs and core competencies/capabilities of companies through the job support scheme, whilst promoting entrepreneurship and business innovations.
Opportunities in Crises
As Woon Teck rightly put it, which Selena concurred, every crisis is an opportunity for enterprises to transform, and if appropriately handle, adversities can even bring hope. This is the time for enterprises to review their businesses strategies and change their paradigm.
With the Government’s support for entrepreneurship and business innovations, we are expecting to see more entrepreneurs emerging in the post-pandemic world, and bringing in innovative ideas that can help them build new businesses in time to come.
Our Government will also continue to help preserve jobs, and encourage training and retraining of employees to remain employable through the various schemes within the announced budget.
We should not be crippled by the pandemic despite the severe global impact. Instead, it is critical that we view this crisis as a time to calibrate our businesses and make use of the resources our Government offers to remain sustainable. This is also the time for us to strengthen our workforce through training and adopting new skills that are relevant to our business transformation.