SINGAPORE – Faced with contracting growth and the worst recession in its history, Singapore is preparing to gradually reopen its economy as it struggles to contain a Covid-19 outbreak that has rapidly spread among foreign workers, resulting in the highest per capita infection rate in Asia.
The city-state’s Ministry of Trade and Industry (MTI) on Tuesday (May 26) downgraded its full-year growth forecast for 2020 to between -4% and -7%, down from an initial projection of -1% to -4% in March. MTI cited deep uncertainties in the global economy and risks of subsequent waves of infections in major economies as reasons for its revised outlook.
Deputy Prime Minister Heng Swee Keat shortly after unveiled an unprecedented fourth budget, dubbed the “Fortitude Budget”, containing various measures to bolster job creation and support affected workers and businesses that will be unable to immediately open as Singapore begins a three-phase plan to lift virus-curbing restrictions from June 2.
The city-state’s strategic national reserves will be drawn upon to fund the additional S$33 billion (US$23.2 billion) spending package. Singapore has thus far committed S$92.9 billion ($65.4 billion) – equivalent to around 20% of annual economic output – to stoke its economy since the beginning of this year.
“This is really about the hit to the economy likely being longer, and about creating job opportunities in an environment where there is a lot more uncertainty about how the shape of the recovery is going to unfold. It is necessitated by the severity of the downturn,” said Song Seng Wun, an economist with CIMB Private Bank.
“The risk of a further downward revision is certainly there,” he added. “Much really depends on the next three to six months and to what extent global confidence returns as small businesses switch on their lights or whether the need for safety distancing rules becomes even more important in the event of a second or third wave of infection.”
Coronavirus infections in Singapore have sharply risen since April with clusters at foreign worker dormitories accounting for more than 90% of total cases. Hundreds of new dormitory infections continue to be reported daily, while cases among citizens and permanent residents in the wider community are often in single digits.
The low rate of transmission outside the worker dormitories has paved the way for Singapore to ease its restrictive “circuit breaker” measures introduced in early April. But the formal expiry of the partial lockdown won’t entail a return to business as usual as the wealthy city-state intends to reopen its economy over several months.
With an effective vaccine or treatment for coronavirus not yet in sight, authorities have opted to phase in a “new normal” where most activities can eventually resume within safe limitations. But as a third of the labor force resumes work from next week, the government also anticipates a rise in new coronavirus cases.
“We do expect that … as some of the circuit breaker measures are rolled back or relaxed, we will likely to see the number of cases in the community go up,” said Health Minister Gan Kim Yong at a press conference earlier this month. Stricter measures may also be reintroduced to “suppress the number of cases” if a large infection cluster emerges, he added.
Singapore recorded a total of 32,876 cases as of Wednesday (May 27), with just three of its 533 new cases occurring outside foreign worker dormitories. Despite the ever-rising caseload, the island nation has achieved one of the world’s lowest Covid-19 mortality rates, with only 23 deaths since the outbreak began in late January.
It is also one of the top testers globally with around 49,000 tests per million people. Authorities announced this month plans to test all 323,000 foreign workers living in dormitories in preparation for reopening the economy, with the aim of ramping up daily testing capacity to 40,000 from around 8,000 currently.
While it took around three months from the end of January for Singapore to reach its 10,000-case milestone, official data shows a subsequent 20,000 cases accruing in only a single month from late April as testing increased. The government earlier this month claimed that the Covid-19 outbreak in the dormitories had stabilized.
“The dormitory situation has been a challenge not just for Singapore, but for all countries making heavy use of guest workers,” said infectious disease specialist Benjamin Rolfe. “Just as we have seen in cruise ships, environments where people live in extremely close quarters will always be hotspots. The situation is improving, but there is no silver bullet.
“Whilst community cases do remain low, this virus has the deadly combination of pre-symptomatic transmission and asymptomatic cases. We still don’t know enough about transmission from children or from asymptomatic cases. In that context, we cannot assume low numbers are sufficient to ease the lockdown,” he cautioned.
Many safe distancing restrictions will continue to be maintained as Singapore begins its reopening plan, the initial phase of which is expected to last at least four weeks until July.
Staff employed within critical sectors such as health care and infrastructure and businesses that operate in settings deemed as having lower transmission risks will begin returning to work by the first week of June. While schools are set to gradually reopen, retail stores and restaurants will remain closed throughout phase one.
While phase two will in theory last for several months and see restrictions on social gatherings loosened and the reopening of dine-in restaurants and retail stores, phase three will establish guidelines for a “new normal” that will remain in force until an effective vaccine or treatment for Covid-19 is developed.
Foreign workers in the construction industry will return to work next month in what will be a key Covid-19 test for employers as they implement rigorous new safety measures including regular testing.
Around 20,000 construction workers, or 5% of the sector’s workforce, have continued to carry out work on critical infrastructure projects during the circuit breaker period.
Another 20,000 workers will resume work in June, and their employers will have to house and separate laborers based on the projects they are assigned to, with no cross-deployment or interaction between workers consigned to different projects allowed.
“The plans being laid out have a scientific rigor to them, though it assumes that testing can always give clear-cut answers, and that asymptomatic transmission post-testing will definitely not occur,” said Alex Au, vice president of non-profit advocacy group Transient Workers Count Too (TWC2).
“Both, in my view, are highly uncertain assumptions, which means that despite these minutely careful measures, we can still expect leakage. This also means that draconian measures [at dormitories] will likely be in place for a long time more, regardless of the mental health and financial worries of migrant workers,” he told Asia Times.
Laavanya Kathiravelu, an assistant professor at Singapore’s Nanyang Technological University who studies migrant labor, cautioned that the weak bargaining power of foreign laborers and employment practices that force pay cuts on workers when they take leave on medical grounds could undermine plans to reopen the building sector.
“Given the nature of work on construction sites, social distancing may be impossible to implement in certain situations. Independent monitors should enforce proper social distancing and hygiene levels on work sites. Employers who may be keen to encourage high levels of productivity may take unnecessary risks as well,” Kathiravelu said.
“Employers who threaten to withhold salaries or revoke visas of workers who do not return to work may force men who are not fully recovered to return prematurely. Because many get paid only for the days and times that they work, they are also less likely to report that they are sick for fear of losing their pay,” she added.
Research unit Fitch Solutions forecasts that Singapore’s construction sector will be the worst hit in the Asia Pacific region given its near-total dependence on migrant laborers who have fallen ill by their thousands. It expects the sector to contract sharply by 10.3% year-on-year in real terms with a gradual recovery in the second-half of this year.