Impact of COVID-19 Restrictions on Singapore’s Economy and Robustness of National Stockpile of Essential Items

Miss Cheng Li Hui asked the Minister for Trade and Industry in view of the lockdown of countries during the current COVID-19 outbreak (a) how do the travel restrictions affect Singapore; (b) how will our economy be affected by the slowdown in movement of goods and supplies especially with the lockdown of Malaysia; and (c) what measures are in the pipeline to help affected businesses tide through this challenging period.

Mr Speaker, Sir, the COVID-19 pandemic has severely diminished global production capacities and disrupted global supply chains as countries take stringent measures such as restricting movement, shutting down businesses and factories to contain the outbreak.

Restrictions on air travel have considerably diminished global air cargo capacity and connectivity. This has impacted the availability, cost, and timeliness of a connected air freight network. Seaport capacities are also increasingly under stress. Ports and vessels are not able to continue with usual operational and cost efficiencies as the worsening outbreak hampers logistics chains within countries.

In Singapore, we have adopted a multi-pronged strategy to deal with this unprecedented disruption to global supply chains.

For food, we have a strategy developed over many years that entails a combination of stockpiling, import diversification and local production. The size of our stockpile is determined by a range of factors such as our consumption rate, the supply chain reliability, resupply rate and frequency, shelf life of the products and the cost of storage, the duration of possible disruptions and our local production surge capacities.

Maintaining the necessary stockpile for each and every item is a dynamic task that requires constant watch over the fluid global supply situation. Beyond the factors mentioned, we must also watch the rising protectionist measures by countries to secure their own supplies which compound the global supply chain disruptions. Panic buying will also further distort our usual consumption rate and planning assumptions.

As the lockdowns in exporting countries persist, the ability of countries to produce and export will come under increasing strain. For instance, while the Government has worked with Malaysia to ensure that goods, especially food and essentials, continue to flow between our countries following the implementation of Malaysia's Movement Control Order, we cannot be certain how long this will last as the global COVID-19 outbreak continues to escalate. But we must certainly plan and be ready for further disruptions.

Miss Cheng asked about the key lessons from this episode. There are several learning points for all of us, be it in the Government, business or at the individual level.

First, panic buying severely disrupts the usual consumption rate and our stockpile efforts. No amount of stockpile will ever be sufficient if individuals hoard. To fear is human. However, in order for us to not succumb to such fears, we must remind ourselves and each other that collective defence is our strongest defence. We can take comfort in the fact that we are not in this battle alone which will help us guard against individual fears and irrational behaviour. Another way to overcome our individual fears is for us to remember the more vulnerable amongst us. To remember that we all have a responsibility to care for one another, especially in times of crisis. For example, we can all play our part by purchasing responsibly and help calm those who are fearful.

Second, our domestic last mile logistics from the warehouses to the retailers can be disrupted by panic buying. We have a finite number of delivery slots, vehicles and drivers. In the event of a run on supplies, a vicious cycle is created. We have to mobilise logistic players from other sources to help restock our supplies, in turn impacting those supply chains and creating a cascading effect. The compounding disruptions further increase fear and heighten the possibilities of more irrational behaviours. If we are not careful, it becomes a self-fulfilling and self-feeding frenzy.

Third, we can adapt and adjust our consumption choices. For example, we can switch to frozen or canned options when fresh ones are not available. We can also switch to alternative brands if our preferred ones are not available. If we are adaptable, it strengthens our bargaining position and avoids us being held ransom to price escalation by a few.

Fourth, diversification entails our discipline to open up multiple sources of supplies in peacetime, even if it results in slightly higher prices. Otherwise, in a crisis, we will find that we lack alternative supply lines to keep us going. We will then be at the mercy of profiteers.

Meanwhile, Singapore is working hard with like-minded partners to ensure that trade continues to flow unimpeded and that critical infrastructure such as the air and seaports remain open to support supply chains globally. Just two weeks ago, Singapore, together with Australia, Brunei Darussalam, Canada, Chile, Myanmar and New Zealand, issued a Joint Ministerial Statement affirming our collective commitment to ensuring supply chain connectivity to facilitate the flow of goods including essential supplies amidst the COVID-19 situation. This initiative has since gained momentum, with Lao People's Democratic Republic and Uruguay having since come on board. At the same time, we have also kept our trading lines with other countries, such as China and South Korea open. At last week's G20 Trade Ministers Meeting held via video-conference, the participating Ministers agreed that the world must work together to maintain global productions systems and trade links, there by engendering long-term confidence in investors, businesses and consumers.

The outbreak will weigh significantly on global growth, with several major economies expected to go into recession this year. Singapore is unlikely to be an exception. The sharp fall in external demand, along with the plunge in tourist arrivals and cutback in domestic consumption are all expected to severely affect our economy. Hence, the Government has so far put forth about S$55 billion through the Unity and Resilience Budgets to help Singaporeans, businesses and workers tide through this difficult period. In particular, the Resilience Budget has introduced and enhanced measures to protect jobs, help enterprises overcome immediate challenges and strengthen resilience for our economy and society to emerge stronger.

Deputy Prime Minister Heng will soon deliver a Ministerial Statement in Parliament on additional support for businesses and their workers, households and vulnerable groups, to better cope with the upcoming circuit breaker measures.

Throughout this crisis, the Government, along with our economic agencies, essential firms, suppliers and logistics providers – both in Singapore and around the world – have been working tirelessly to ensure Singapore continues to function and our shelves remain stocked. They have shown tremendous ingenuity and tenacity during these unprecedented circumstances, helping secure supplies for us from wherever possible. The best way to show our appreciation to them is to treasure what we have been able to obtain despite the circumstances, and never waste any food and materials that they have been able to secure for us.

All of us must do our part to support their efforts. We must remain calm and consume responsibly. Do not panic as our markets, supermarkets and food establishments will continue to operate in spite of the additional precautionary measures from tomorrow. Going forward, even when the outbreak recedes, we must continue to pursue our multi-pronged strategy of stockpiling, import diversification and local production to remain resilient. We must also be psychologically prepared that all of us will need to make adjustments in a crisis.

I thank the Minister. I have a few supplementary questions. There is another stockpile that people are concerned about which is actually about the mask. Many people read articles that suggested that other countries could be trying to hijack certain goods and products such as N95 masks from Singapore to their countries. Can the Minister share what are we doing to ensure there is sufficient Personal Protective Equipment (PPE) for healthcare workers? We know that there is a stockpile, but COVID-19 can be here for a long time and what are we doing to protect our healthcare, Police and SCDF personnel?

There is a report of mask production lines that were brought back to Singapore. Have they been located back? Have they started production? If so, what is the type of masks being produced and the capacity a day, and how self-sufficient are we?

For chronic illness patients as well, such as cancer patients, some face difficulties buying masks or they worry about the quality and source. So, can they get a prescription and buy from public hospitals' pharmacies?

Fourth, thanks for reassuring us on food supply, but what are the measures that you have in place to keep the cost of basic goods stable? And lastly, what impact with the circuit breaker have on our Singapore economy?

Mr Speaker, Sir, let me address the five supplementary questions in turn. To Miss Cheng's first question about some countries trying to hijack the production of masks, our position to everyone, every country is this: it makes more sense for all of us to work together to keep the supply chains open. It benefits not just us, it benefits everybody. But when every country starts to shut down their own production system only for themselves, actually it reduces the entire global capacity. So, if I may give an example, one particular country thought that they would keep the intermediate products to themselves and to increase their production capacity. But unfortunately, for that particular country, they do not have the processes for the other intermediate products and in the end they will not able to increase the capacities for everyone or even for themselves.

So, this is a good lesson for all of us. In order for us to have sufficient for everyone across the entire world, it is essential for every one of us to make sure that we uphold the integrity of the global supply chains, because today, very few of us produce everything ourselves. Many of us produce parts of it; the intermediate products, before they go onto the final product. So, this is how we have approached the issue and this is why we have worked with like-minded partners to make the Joint Ministerial Statement to uphold the integrity of the global supply chains.

The second point, in response to Miss Cheng's question, is that yes, we will continue to prioritise the surgical masks and the hospital-grade equipment for our frontline workers. This has been our stance from the beginning and we will continue to do so. This is also the reason why we have issued the reusable cloth mask for the general public because the needs for the general public are quite different from the needs of the frontline healthcare workers, and we will continue to preserve our stockpile of hospital-grade PPE for our healthcare workers.

Miss Cheng asked another question about our domestic mask production capacity. I would just like to say that, yes, we are building up our own capacity but at this point in time, it will not be appropriate for us to talk about this capacity at this point in time, because we are working with partners to secure the materials, the lines. But suffice to say that this is something that we have been looking at for some time.

Miss Cheng also had a question about vulnerable patients, vulnerable patients who need medical supplies including surgical masks will be able to obtain them from the medical professionals.

Miss Cheng's other supplementary question on the cost of goods – how do we keep it stable? As I have mentioned, the best ways for us to keep our goods stable are as follows.

One, continue to diversify our sources to make sure that we are not held ransom by any one particular source, and this is something that we must do conscientiously even during peacetime, even though it may cause us a bit more during peacetime, because we need to open up multiple channels, as many channels as possible to get our products.

Two, we must make sure that we have some domestic production capability to tide us through difficult moments when we are looking for alternative suppliers; and that applies to keeping the necessary stockpile to buy us time to open up new sources of supply as well.

Three, we must make sure that we do not panic and give reason for others to hold us ransom because we are unable to share what we have domestically.

The final supplementary question from Miss Cheng is on the impact of the circuit breaker measures. It will have a very serious impact on our economy but at this point in time, we must understand why we need to do this. If we all remain united, if we all take the measures seriously, and if we are successful in controlling the spread in the next one month, then we will be able to progressively resume normalcy and to reduce the impact of the measures. On the other hand, if we do not take the measures seriously and if in the next one month, we are unable to control the situation, then that might require us to extend the period which such measures are necessary and that will inflict even greater than damage to our economy.

So, it is in our collective interest to try our best to work together, bear with the inconveniences in the coming month, but let us get over this part together. If we can do that, then we can limit further damage to the economy. Otherwise, it becomes recurring waves of infections that we have to deal with and it will be very difficult for us to gradually, progressively attain normalcy.