The world is battling the Covid-19 pandemic, but Singapore is already looking ahead to transform the economy to take advantage of a post-Covid future.

Deputy Prime Minister and Finance Minister Heng Swee Keat's Ministerial Statement on Oct. 5 in Parliament focused on what lies beyond the horizon, as the relatively low numbers of new infections reported in Singapore over the past few weeks have led to some guarded optimism.

Action taken has prevented deeper financial wounds

Heng divulged that the near S$100 billion allocated for mitigating the economic impact of Covid-19 will prevent a further 5.6 per cent contraction of GDP in 2020, and a further 4.8 per cent in 2021.

Measures such as the Job Support Scheme will help to save an estimated 155,000 resident jobs over two years.

"This outcome has only been possible with the collective determination, adaptability, and sacrifice of our people and businesses," said Heng.

He previously announced an extension of the JSS to certain sectors until March 2021 and a new Jobs Growth Initiative in his Ministerial Statement of Aug. 2020.

Surviving the pandemic

Heng noted that even during the pandemic, some sectors such as IT and e-commerce have been doing well.

However, for sectors that required more movement of people, such as aviation and tourism, the government's aim is to preserve core capabilities by boosting support for training and courses.

He said the best way to protect workers is to help their companies stay afloat, with restructuring and retraining that enables them to retain their employees.

The National Jobs Council, implementing the SGUnited Jobs and Skills Package, is working to match job-seekers to opportunities, along with other agencies such as Workforce Singapore.

Heng added, "I encourage everyone to step out of your comfort zones and keep an open mind to learn new skills and take on new jobs."

Roadmap for the future

But even as we take steps to survive in the short-term, the economy must transform in order to ensure long-term prosperity.

Heng noted certain structural shifts in the global economy that Singapore must be ready for:

• Waning support for globalisation.
• Rise of the digital economy.
• The growing importance of Asia in the world economy (also with some Asian countries recovering more quickly from Covid-19)
• Growing concern for sustainability and the environment.

Heng also pointed out Singapore's labour situation:

"At home, we face slowing resident labour force growth. Future economic growth will come from raising productivity across the economy. So we must make the best use of the skills and talents of our people and use new technology as a key complement."

He also stressed that the actions the government will take are not for economic growth for its own sake, but for ensuring that Singaporeans can continue to have a good life, which he called the "guiding principle".

1. Remaking Singapore as a "global-Asia node" of innovation and enterprise

Singapore has long been touted as a "gateway to Asia", but Heng plans to rebuild physical connectivity (like travel and trade) while expanding Singapore's digital connectivity in order to broaden links at the heart of Asia's growth.

Singapore is committed to reviving its status as an air hub, by gradually reopening borders and establishing Singapore as a safe destination.

On the digital side, Singapore has concluded Digital Economy Agreements with countries like Australia, New Zealand, and have ongoing talks with South Korea to establish rules for digital trade and allow local companies to access these markets more easily.

Local companies have also made strides in digitalising their operations, hastened by the constraints of Covid-19 measures, with over 27,000 such projects since January 2020.

A new five-year Research, Innovation and Enterprise plan will be unveiled in Dec. 2020 to enhance research in areas of "national priority" such as early childhood development and senior care. It will be integrated with the work of the Future Economy Council to see how technology can be used to empower businesses.

2. Inclusive growth

Skills will grow obsolete faster, so the government is investing heavily in reskilling and upgrading for each worker. He urged companies to make full use of government schemes that develop their workers' skills.

Heng also added:

"Even as we level up the skills of every worker at every age, we still need to bring in global talent to complement our Singapore talent. By building on complementary strengths, we can build cutting-edge capabilities in our workforce and our firms, and plug into global networks. This will ultimately benefit all Singaporean workers."

There has been renewed debate in the public over the number of foreign workers in Singapore, given the wave of retrenchments, but Heng said foreign workforce policies such as the Employment Pass and S Pass will be continually updated to ensure they benefit Singaporeans.

The government will also continue to provide targeted support for vulnerable workers, such as low-income, older workers, and those with disabilities.

In addition, Heng explicitly called for a change in mindset as well, saying, "It is a continuing journey to improve the job market for our more vulnerable workers. Beyond incentives, we need to shift culture and employer mindsets."

3. Economic resilience

If there's one thing Covid-19 has taught us, it is the importance of being prepared versus scrambling to catch up after a crisis has already hit.

Heng said that investing in economic resilience can also be a competitive advantage.

One way is to produce essential supplies locally (like masks and test kits in the context of a pandemic), which can both be used ourselves and exported for sale.

Another example is upgrading our local agriculture industry. Not only can we produce more to feed ourselves, we can also develop valuable technology that can also be exported for sale.

The green economy is another growth area, as investing in sustainable technologies could provide more opportunities in the future as other countries look to shift their economies to a more sustainable footing.

Heng said that not only does this strengthen our economy, it helps us recover from shocks quicker, and adds to our value proposition as a vital hub of innovation. Also, more jobs.

Fiscal position

Heng also gave an update on Singapore's fiscal position.

The continued support for Covid-19 measures will cost a further S$8 billion, including those he mentioned in the speech. However, this will be funded by re-allocating money from areas with reduced spending, such as development projects.

As some time has passed since the initial Fortitude Budget, the government has a clearer picture of the economic situation and revenues.

There is a revised draw of S$1.5 billion for measures already announced in the previous Budgets, such as the Foreign Worker Levy waiver, to which the President had already given in-principle approval.

There will be no additional draw on reserves for the latest round of support package measures, and the total draw on past reserves remains within S$52 billion.

Singapore will be in a weak fiscal position due to the pandemic that has devastated economies worldwide. Revenue collections from sources like GST are estimated to be down 14 per cent.

However, due to our reserves, we are in a relatively better position than other countries who had to borrow historic levels of debt that will take "generations" to pay off. Added Heng:

"We have avoided this outcome, because successive generations have built up strong reserves ahead of this crisis. We must have the discipline to start earning, saving, and investing for the future again. Covid-19 is not our first crisis, and certainly will not be our last."

However, Singapore's guiding principle will be "prudence, not austerity", and it will continue to invest money in national priorities such as healthcare.

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Top photos via YouTube / gov.sg and Hu Chen on Unsplash.