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Singapore's economy: SARS gloom and
doom
By Tony Sitathan
SINGAPORE - For its quick and timely response to
curb and contain the spread of the severe acute
respiratory syndrome virus, Singapore was almost awarded
SARS-free status for not reporting any new incidents for
a two-week period, from the World Health Organization
(WHO), recently. Unfortunately its hopes were dashed
when a Singaporean was diagnosed with SARS several days
ago.
Calling this an isolated incident, however,
Singapore is preparing for a post-SARS recovery of both
its economy and its business confidence. It already has
earned kudos from the Australian Chamber of Commerce in
Singapore (AustCham), which welcomed the recent comments
by Qantas chief executive officer Geoff Dixon, who
recently visited Changi International Airport. He was
confident that the SARS situation would have no impact
on the Australian airline's position as one of the
mainstays of the airport. Qantas is the second-largest
user of Changi's services after Singapore Airlines.
The Australian chamber, similarly to the US
Chamber of Commerce, has issued statements confirming
that the Singapore government's measured, transparent
and effective approach to fighting and containing SARS
has reaffirmed a high level of trust among the business
community. The two chambers felt that the open and
honest communication with all sectors of the population,
including expatriates, has worked to abate the fear of
traveling to Singapore.
However, the damage done
to Singapore in dollars-and-cents terms is staggering.
Singapore's exposure to SARS has cost it nearly US$570
million, or close to S$1 billion. The effect has been so
damaging that Singapore's unemployment level has moved
to a record high of 5.5 percent.
"Singapore's
tourist sector has been decimated," said Angeline Woo,
the general manager of Trans-Global Travel Services
based in Hong Kong. "We are seeing fewer bookings of
tourists going to Singapore from Hong Kong. It has
dropped by almost 70 percent over the last four months."
The official drop in tourist arrivals has been pegged
between 30 and 40 percent this year according to figures
disclosed by the Ministry of Trade and Industry. It was
a drop described as unprecedented in the history of
Singapore.
Singapore has been reliant on its
services sector for maintaining its economic growth.
Singapore's reputation as a convention and exhibition
center has also been badly affected as several
conventions have been canceled by event organizers. With
the slowdown in tourism, its hospitality industry
including the traffic in its national airline has been
badly affected. "The airport is almost empty and traffic
load for planes has been halved in most cases. Singapore
Airlines for instance has slashed 298 flights from its
weekly schedule, causing a near 28 percent reduction
while layoffs in its engineering section are to be
announced later," said a senior traffic engineer with
SIA Engineering Division.
The government has
announced that its growth forecast for 2003 has been
halved while maintaining that its rise in gross domestic
product will not exceed 2.5 percent. Some analysts even
maintained that if the SARS continues well into the
second half of 2003, Singapore could well see a negative
growth since its manufacturing sector would equally be
affected.
According to a recent survey by the
Singapore Confederation of Industries (SCI), the impact
of SARS has been somewhat mild compared with the
negative spin in the services sector. It was revealed
that manufacturing sales might fall by up to 20 percent
and production could post a fall of less than 10 percent
in coming months if the SARS outbreak is not prolonged
any further. However, if the SARS outbreak is prolonged,
losses could be higher. "Manufacturing, considered the
heart of Singapore's economy, would throttle and weak
sales demand for finished goods would decline by more
than 30 percent should the SARS outbreak not be
contained," said Andrew Song, a regional economist with
an investment bank in Singapore.
In order to
assist the manufacturing sector, several manufacturing
firms have wanted the government to extend property and
rental rebates for another six months, and postpone the
increase in its goods and services tax (GST) from 4
percent to 5 percent until next year.
Besides the
manufacturing sector, the information and communication
(infocomm) industry is also a victim of SARS. According
to information-technology (IT) research group Gartner
and International Data Corp (IDC), buying decisions for
major infocomm purchases have been postponed, especially
hardware updates and upgrades. Gartner said
personal-computer sales growth in Singapore in 2003 is
expected to be near zero because of the SARS outbreak.
It has also predicted poorer semiconductor sales for the
Asian region, including Singapore, in a report this
month.
IDC has also predicted weaker sales and a
lower market forecasts for Singapore after taking into
account the SARS outbreak. It intends to lower its
full-year as well as quarterly forecasts for the IT
market in Singapore, once it has updated its forecasts
toward the second half of May and early June. It had
earlier forecast Singapore's overall IT market at about
US$3.19 billion in gross revenue in 2003, up a modest
4.5 percent from last year's $3.05 billion. Although the
situation could improve, it would be overly optimistic
to paint a rosy picture for the rest of 2003, maintained
the report.
While Singapore is battling with a
crisis on confidence, the effect of SARS on the
Singapore economy seems to take a page from Deputy Prime
Minister Dr Tony Tan, who described the SARS attack as
similar to the September 11, 2001, incident in the
United States. Only this time instead of losing lives to
a terrorist attack, Singapore seems to be losing its
engines of growth in a battle of economic wills.
(©2003 Asia Times Online Co, Ltd. All rights
reserved. Please contact content@atimes.com for
information on our sales and syndication policies.)
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