AS THE economic slowdown deepens, some business leaders in Singapore are calling on the government to look at immediate relief measures to help firms rise to the challenge, even as it stays focussed on long-term transformation efforts for the long run.
"Despite Singapore's reputation as a highly free-market economy, the government has an outsized influence in the economy, and so has some levers to counteract a downturn," said Simon Baptist, global chief economist and managing director of The Economist Intelligence Unit, Asia. "There is also fiscal and monetary policy space, both of which I think should be used."
Flash figures earlier in July surprised with second quarter growth nearly flat at 0.1 per cent, prompting analysts to trim their full-year growth forecasts. Many also revised their expectations for the Monetary Authority of Singapore (MAS) policy meeting in October, with more now expecting the central bank to ease policy.
Mark Billington, regional director for Greater China and South-East Asia at the Institute of Chartered Accountants in England and Wales (ICAEW) said that with the sharp policy reversal by the United States Federal Reserve and benign inflationary pressures at home, the MAS will have room to reduce the appreciation bias of the Singapore dollar nominal effective exchange rate, so creating favourable conditions for the domestic market.
On the fiscal front, several business leaders cited public infrastructure projects as one channel through which the government can spur growth.
An expansionary Budget 2020 could help, said Fullerton Markets chief executive officer Mario Singh. But this is alongside helping firms and workers strengthen core competencies and build new capabilities, as well as continuing to attract global companies here, he said.
At one level, the government can focus on higher-growth sectors and new growth engines. These might include digital technology and the green economy, suggested Eastspring Investments chief investment officer Virginie Maisonneuve.
At a broader level, across industries, firms should be helped to not just ride out the slowdown, but improve themselves for the long run.
This does not mean ruling out immediate relief measures. "Active intervention is needed to keep afloat businesses and workers so that they do not sink," said PeopleWorldwide Consulting managing director David Leong, who proposed interim reductions in land rent and manpower levies, or employment grants to encourage hiring of retrenched workers.
Other ways to lower business costs include income tax rebates, tax deductions for investment, and cheaper trade financing, said Thakral Corporation independent director Dileep Nair.
Yet although relief measures or a stimulus package can be expected if a recession hits, "businesses should not always depend on this to ride out any economic downturn", said corporate advisory firm PLAN-B ICAG managing director Lim Soon Hock.
Real Estate Developers' Association of Singapore president Chia Ngiang Hong said firms "should take a cold hard look at their current operations and take decisive actions to restructure and reinvent if necessary", tapping government aid to do so.
Investing in transformation could itself help to reduce costs, said Rimini Street regional director for South-east Asia and Greater China Andrew Seow. "Digital transformation does not need to be a costly investment and resourceful organisations will find efficiencies that free up budget funds for innovation," he said.
And even without new relief measures, there are existing avenues of help. "I encourage other businesses to seriously explore the support schemes available to them as a small boost can go a long way in this challenging environment," said RHT Holdings CEO Jayaprakash Jagateesan.
Nonetheless, existing government measures could be enhanced, in light of the current slowdown. Adecco Group Asia Pacific's chief executive Ian Lee suggested that the Wage Credit Scheme, which co-funds wage increases in firms undergoing transformation, could be adjusted for a higher co-funding percentage in 2020, and extended to 2021 and beyond.
To encourage firms to venture into growth markets such as Asean, government agencies can provide more targeted guidance, such as information on how to make use of new regional agreements, or details on laws and regulations in each market, said Institute of Singapore Chartered Accountants CEO Lee Fook Chiew.
Singapore International Chamber of Commerce chief executive Victor Mills urged businesses to stay the course and focus on collaborating to innovate, using technology, and developing talent. More firms should also take advantage of free trade agreements, he added.
"If the headwinds are particularly strong you can be sure the government will intervene with appropriate help," he said. "For now, keep calm and carry on."
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