Amid the Covid-19 outbreak, businesses have to consider diversifying their supply chains: Chan Chun Sing

SINGAPORE — The Covid-19 situation is forcing businesses to think even harder about diversification — from making sure that their supply of labour comes from different countries, to housing their foreign workers in different dormitories, said Trade and Industry Minister Chan Chun Sing.

His comments came after a two-hour dialogue with about 25 corporate leaders in Singapore on Friday (Feb 14), where they aired their concerns about the impact that the virus has had on their businesses.

Mr Chan told reporters that the outbreak has mainly affected tourism-related sectors, the food and beverage sectors and the retail sectors but there are some sub-sectors that are still holding up pretty well.

For other sectors, such as manufacturing, Mr Chan said the business leaders are not only concerned about the potential disruptions to the supply chain from China, but also the supply chains that come indirectly from China to the rest of the world and to Singapore.

Business leaders also cited short term cash flow as being another concern, he said, although they added that they are taking steps to diversify their sources of supply chains and labour.

He noted that because of the United States-China trade war last year, some companies had already begun undertaking measures to diversify their supply chains and it is likely that the Covid-19 outbreak will push more businesses to do the same.

With regard to the supply of labour, Mr Chan said the business leaders agreed that there is a need to reassess where their manpower comes from so that they can avoid relying on a particular country for labour.

However, Mr Chan added that the more pressing issue for local businesses is ensuring that their workers do not all stay in the same dormitories.

“Some of the companies, especially the smaller ones, might conveniently house their workers all at the same place.

“But that is not a very resilient business continuity plan and I think we want to help many of these smaller companies to diversify their supply chain and mitigate these risks at the local level.”

To mitigate the problem of cash flow, Mr Chan said that business leaders can do their part by helping each other tide through the challenging times.

“The larger contractors must not withhold payment from the smaller contractors, otherwise it will impact the entire ecosystem negatively,” he said.

Agreeing, Mr Ernie Koh, who is the executive director of furniture manufacturer Koda and an adviser to the Singapore Furniture Industries Council, said companies whose “balance sheets are strong” and can pull through the current downturn should help support those who are struggling.

“I have always believed in supporting local businesses… Everyone has to stay afloat and with the big boys helping the small ones, we can all stay afloat (through this period),” said Mr Koh, who was one of the representatives present at the closed-door meeting.

BUSINESSES CONFIDENT OVER GOVERNMENT MEASURES

Speaking to reporters after the meeting, Mr Chan said he was also happy with the feedback from the business leaders that they are confident with the measures that have been taken by the Government to combat the outbreak.

“Many of them said they are assured that Singapore has expanded its surveillance regime to help detect more cases compared to some other countries who may not have been as rigorous in their detection and surveillance processes,” he said.

The business leaders also told Mr Chan that they were looking forward to “position themselves for the recovery” and rebound from the ongoing crisis.

To do so, the companies have taken advantage of the current situation to strengthen the training of their workers, review their current business models and production processes, said Mr Chan.

“I think this speaks very well for our business community that while they manage the current situation, they also have an eye for the future to make sure that we can be the fastest one to recover (from the crisis).“

Mr Alexander Melchers, vice-president of the Singapore National Employers Federation, said that after the Sars outbreak in 2003 was contained, the rebound for businesses was significant.

That is why Mr Melchers, whose firm C Melchers Gmbh & Co is in the luxury goods business, has already started to make preparations for when the economy picks up again.

“I’m telling my staff and the people that I work with to get ready for the upturn. There will be a rebound and we want to be ready for it. The staff needs to be there and they need to be skilled, ready and motivated,” he said.

MEASURES TO SUPPORT WORKERS TO BE ANNOUNCED DURING BUDGET 2020

When asked on how the Government will support businesses who are struggling during this period, Mr Chan said additional measures to support businesses and workers during this downturn will be announced on Tuesday in Budget 2020.

The Budget Speech will be delivered by Deputy Prime Minister and Finance Minister Heng Swee Keat in Parliament on Feb 18 at 3pm.

Mr Chan added that the authorities have taken lessons from previous national crises such as the Sars outbreak, the global financial crisis and H1N1 when designing the measures. But since each crisis still has its own unique set of challenges, he cautioned that the measures will not necessarily be the same.

“So while we can take a lesson from the past, we must also apply them in context,” he said.