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Commentary: The contours of Singapore’s post-COVID economy are getting sharper

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SINGAPORE: What do papadums have to do with Singapore’s post-COVID economy? A lot, apparently.

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While much of the attention has been focused on the latest economic data which shows Singapore’s economy is on a positive path to recovery, a curious case of papadums reveals where these pockets of opportunity may lie. .

Indeed, while it appears the recovery may be uneven across sectors, the contours of Singapore’s post-COVID economy are becoming sharper – and it is vital for businesses to identify the best one. way of positioning itself for the recovery.

READ: Commentary: Manufacturing remains the key driver of Singapore’s economy. It just looks different

Overall, there are encouraging signs for the national economy. Singapore’s gross domestic product (GDP) grew 0.2% year-over-year in the first quarter of 2021, a turnaround after three-quarters of contraction, based on advance estimates from the Ministry of Commerce and of Industry published on April 14.

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It’s still early days, but there is cautious optimism that Singapore’s economy is emerging from the pandemic. Interestingly, Q1 GDP for 2021 is slightly higher than the same time last year, just before the breaker.

FUEL DIGITALIZATION RECOVERY

Although the economic recovery is narrow and limited to a few sectors for the moment, the growth momentum is strong. Singapore factory output rose for a fifth consecutive month, according to monthly manufacturing performance data released by the Economic Development Board (EDB) last month.

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Never mind the slight 1.7% drop in March, as this was in part due to the weak global oil and gas market and travel restrictions – leading to lower orders in the marine engineering sectors and offshore and aerospace.

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The positive result is the strong momentum of digitization, which has seen electronic production continue to increase – 33.7% in March 2021 compared to the same period last year and 28.1% since the start of the year. year compared to the same period last year. .

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Some good has emerged from the pandemic where companies have been forced to pivot towards digitization and remote working.

They also embrace cloud services, data centers and 5G markets, which explains the higher production of semiconductors, computing peripherals and data storage segments.

Biochemists check a bioreactor used for manufacturing medical products at Takeda Pharmaceuticals (Asia-Pacific) in Singapore. Among its products, Takeda facility cultivates hamster ovary cells to make ingredients for drugs to treat hemophilia UKTN / Roslan RAHMAN

The growth of these segments is expected to accelerate as digitization continues at a rapid pace.

There is no doubt that strong global demand for semiconductors has also led to strong growth in Singapore’s exports, although petrochemical trade has also supported this surge.

Domestic non-oil exports (NODX) also rose 12.1% year-on-year in March, with exports to China leading the strong rebound with an increase of 46.4% from the previous month as the Chinese market demanded more specialized machinery, petrochemicals. and primary chemicals.

This is important because the growth in petrochemical exports is an indicator of a broader recovery and growth in other sectors around the world.

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Nonetheless, sectors such as transport and storage are experiencing persistent weakness, still plagued by travel restrictions induced by the pandemic.

As countries take small steps to create travel bubbles and roll out vaccination to their populations on a larger scale, the massive reopening of international borders is unlikely to happen this year.

Sectors based on footfall, such as retail and food and beverage, are also expected to experience a slower recovery, with the lack of tourists and a move towards e-commerce.

The construction sector is currently supported by a resumption of construction activity in the public and private sectors.

However, labor supply challenges – particularly with recent restrictions on labor force from India due to the explosion of infections in that country – coupled with shortages material supply and working arrangements with safe distancing measures mean this sector will face strong headwinds.

Despite this, corporate sentiment is on the rise and at its highest since the start of the pandemic last year, according to the SBF-Experian SME Index (for the second and third quarters of 2021), a study that measures sentiment. local businesses SMEs.

(Hear Singapore economists debate tradeoffs in which sectors, businesses and workers to help during this COVID-19 slowdown at the heart of the UKTN issue released in August 2020 🙂

BUILDING RESILIENCE THROUGH DIGITALIZATION AND TRANSFORMATION

So what do these metrics mean for businesses and industries here?

The manufacturing, information and communications, finance and insurance sectors are expected to remain resilient for the remainder of the year, if current conditions continue.

Singapore unveiled a new multibillion-dollar package to help pandemic-stricken businesses and

Singapore unveiled new multibillion-dollar package to help pandemic-stricken businesses and fund vaccination campaign UKTN / Roslan RAHMAN

This is in line with global trends and is not surprising given that the pandemic has accelerated digitization across a wide range of industries and businesses.

In addition, 72% of companies with a high level of transformation are confident in the sustainability of their activity over the next 12 months, according to the recent SBF national survey of companies conducted in October and November 2020.

One of these companies is Exceed Tech, an electronics manufacturer that designs and produces ultra-sensitive sensors targeting the industrial, telematics and healthcare markets.

It has successfully implemented a system to remotely track operations at its production facilities in Shenzhen, China from its headquarters in Singapore, through the Industry 4.0 Human Capital Initiative (IHCI) Enabler program, a program supported by Workforce Singapore.

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His management gained greater visibility of shop operations, to make more informed decisions, which resulted in a 21 percent increase in production. The company has also leveraged the insight provided by the data to improve the accuracy of its assembly line and reduce operating costs by nearly 30%.

BEYOND OUR SHORES

As the export data shows, there are overseas opportunities that Singapore businesses must seize despite the pandemic.

Caught up in day-to-day operations, internationalization is perhaps the furthest thing from the minds of SMEs. But with an open mind and the right state of mind, they can discover unexpected opportunities.

(ks) SG PME in Batam

Despite the pandemic, some Singaporean companies operating in Indonesia are still doing good business. (Photo: Kiki Siregar)

So here’s where the papadums predict the spicy story of Singapore’s economic outlook.

Bhavani Stores worked closely with GlobalConnect @ SBF, a program supported by Enterprise Singapore, on a food basket project to showcase Singapore food products in Vietnamese supermarkets earlier this year during the Vietnamese New Year holiday.

It helped their uncle Saba’s Poppadoms papadum snack brand gain a foothold in Vietnam. The company is now in the process of offering its “Poppadoms” to more supermarkets in Vietnam through local distributors.

STRAIGHT SIZE LABOR

However, even as companies overcome these challenges and seek to seize the opportunities ahead, the pandemic has also impacted jobs and workers in many ways.

Labor-intensive sectors such as manufacturing, healthcare, food service and retail have faced labor shortages with the impact of travel restrictions on the economy. influx of foreign labor.

Jobs that companies are looking to fill include service crews, cooks, drivers, plant operators, and patient service associates. This shortfall is mostly in the S $ 2,000 to S $ 3,000 salary range, in roles requiring repetitive tasks, such as machine operation, customer service and people skills.

The labor shortage has resulted in more job jumps and higher staff turnover for companies, along with higher costs, and is not expected to abate anytime soon. Businesses must consider transforming and redesigning jobs to cope with the difficult workforce situation.

Migrant worker receives medical treatment at overnight clinic

A migrant worker receives medical treatment at a night clinic. (Photo: Singapore Minister of Manpower)

As they digitize and transform, businesses need to upgrade the skills of staff, especially core employees, to handle more complex, cognition-driven tasks. Workers must also evolve to become more versatile to take on more critical tasks.

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There are many government programs available to help businesses and workers upgrade, and businesses and workers should put them to good use.

The road to recovery is in sight. Our professional associations and chambers of commerce stand ready to help our businesses recover and seize new opportunities to emerge stronger from the pandemic.

Lam Yi Young is CEO of the Singapore Business Federation.

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