This article is part of our COVID-19 series to aid small businesses as part of our Economy of Communion initiative
COVID-19 has certainly turned the world upside down. Not in a hundred years has the world seen a single global event that had the capacity to halt international trade: the lifeblood of Singapore. The expected impact of the slowdown of world trade for Singapore has seen the Singapore government revise the country’s growth decline forecast from a drop of between minus 0.5% to minus 2.5% in March 2020 to minus 4% to minus 7% in May of the same year. This impact may be even more devastating as parts of the world in North and South America are witnessing a resurgence of COVID-19 cases, bringing the total COVID-19 cases to almost 9.4 million and climbing, with a death toll of over 490K.
A central lesson vis-à-vis trade that COVID-19 has taught us is the need for businesses to be quick and adaptable but steadfast: be it in ensuring that they can switch to alternative suppliers when their standard supply chains are affected, rely on their hard built reputations to build new partnerships to help endure the new COVID-19 economic reality, or even create new channels to serve existing customers or prospect for new ones.
At national and international levels, COVID-19 has highlighted the importance of effective governance to help national economies survive and mitigate the crashing impact this pandemic has on trade and lives. Political efficacy can now be measured by the ability of a government to effectively:
- mitigate the spread of COVID-19
- enlist enough on the ground to ensure that interim controls installed
- assure its international partners that keeping trade routes and channels open with each other is mutually beneficial, even in the midst of increasing COVID-19 cases.
The management of the COVID-19 crisis in New Zealand is exemplary of what a capable and vigilant government can do to soften the impact of a black swan event. Amidst the global human movement control restrictions imposed, Singapore has been fortunate to see the continuous flow of goods and services, partly as a result of the various Free Trade Agreements (FTAs) that the Singapore government has worked hard to secure over the years. These FTAs will play a significant role in ensuring that Singapore businesses will continue to have preferential access to markets and customers even as many parts of the world turn to more protectionist policies to shield their domestic economies. Singapore’s global reputation and proactive engagement of the various countries through tools such as the FTAs could explain the strange expansion of Non-Oil Exports (17.6%) in March 2020.
As companies respond to the global economic crisis brought about by COVID-19, they should strategically leverage on the market access the government has created through the various FTAs. Amidst the expected rising global protectionist tendencies, Singapore businesses can look forward to the conclusion of more FTAs such as the Regional Comprehensive Economic Partnership (RCEP) Agreement which will cover ASEAN 10 and Australia, China, New Zealand and South Korea this year. The RCEP is expected to help Singapore enjoy lower import cost of items brought in and lower the tariff barriers of Singapore exports into the economies of the signatories. Against the backdrop of COVID-19, one would also expect that the conclusion of RCEP would include consideration for the expansion and cooperation of wider regional digital economies amongst partners. Singapore government has also expressed a drive towards signing more multilateral and bilateral digital partnership agreements to help Singapore companies explore grow overseas markets. Resources such as GlobalConnect@SBF are available to help companies understand how they can leverage on the FTAs to ride out the current economic challenges.
Rita King is a Senior Consultant at Consulus with more than a decade of experience serving in government and international trade initiatives. She had worked on helping SME in trade issues and launched the iAdvisory programme when she served in International Enterprise Singapore.
Group CEO of Consulus, Lawrence Chong will deliver a talk for SBF members about Covid19: Business Model Innovation and Design on the 1st of July. More details available here.