The covid-19 crisis is not the first crisis Singapore had faced.
Singapore’s openness exposes itself particularly to contagion via trade linkages.
1973: OIL SHOCK
Members of the Organisation of the Petroleum Exporting Countries, led by Saudi Arabia, cut oil production and shipments to the US and other countries perceived as supporting Israel in the Arab-Israeli War. It brought the era of cheap and plentiful oil to an end and the global economy to its knees.
A newly industrialised economy, Singapore was relatively unscathed. Shoring up growth were its outward market orientation and strong performance in higher value-added electronics, petrochemicals, and component and precision engineering.
1985: STRUCTURAL CRACKS, RISE OF SERVICES
Singapore experienced its worst recession caused by a slump in world trade in 1985, especially in the US. Unemployment spiked to 6 per cent.
High wage and business costs within Singapore outstripped productivity, resulting in a loss of international competitiveness.
Singapore responded by slashing employer contributions to the Central Provident Fund from 25 to 10 per cent, freezing overall wage levels for 1986 and 1987, and reducing corporate income and personal income taxes from 40 to around 30 per cent.
Singapore could export its way out of the crisis. Its economy rebounded, growing from 2.1 per cent in 1986 to post 9.8 per cent in 1987.
The crisis led to a fundamental review of prevailing policies and strategies. Structural reforms undertaken in the 1980s that continued into the 1990s included wage flexibility in the labour market, promoting innovation and entrepreneurship, and liberalising services sectors such as finance, telecommunications and utilities.
1998: The Asian Financial Crisis
The collapse of the Thai baht in 1997 sparked panic that caused other regional currencies such as the Philippine peso, Indonesian rupiah and Malaysian ringgit to also face selling pressure.
Soon, foreign investors lost confidence and left. Singapore, with its extensive trade and financial links, took a beating. Economic growth plunged from around 8% in 1997 to 1.5%.
The Government unveiled a $10.5 billion aid package to alleviate the burden on households, as well as tax rebates. Wages, Employers’ CPF contribution rate, foreign worker levies, land and factory rentals and vehicle-related costs were cut. The National Wages Council encouraged a monthly variable component for pay to enable firms to adjust labour costs quickly and effectively. The Local Enterprise Finance Scheme was extended to boost working capital flows to businesses.
2001-2003: DOT.COM BUST, SEPT 11 AND SARS
In 2001, the dot.com bubble burst. Terrorist attacked the New York’s World Trade Centre. Enron and WorldCom went bankrupt. Singapore, Hong Kong, Taiwan and Malaysia suffered full-blown recessions.
In July 2001, Singapore announced a $2.2 billion package to help with business costs, including tax and rental rebates. A few months later, it provided another boost of an $11.3 billion package that included tax cuts and emergency cash for the poor and jobless. The building of public infrastructure was also hastened to stimulate the economy.
The Sars epidemic struck in 2003. Singapore pumped $230 million into a Sars relief package for the travel and tourism sectors; and a $1 billion package of rebates, incentive schemes and infrastructure projects to help businesses and the vulnerable.
The CPF employer contribution rate was cut and monetary policy was also eased. Singapore’s growth bounced back to 9 per cent in 2004.
2008-2009: GLOBAL FINANCIAL MELTDOWN
The US housing bubble burst. The Lehman Brothers collapsed. It was the biggest financial crisis since the Great Depression in the 1930s.
Singapore introduced a historic Budget – the size of the $20.5 billion Resilience Package was unprecedented in the history of independent Singapore. $5.1 billion to preserve jobs through schemes such as Jobs Credit with cash grants for employees’ wages; $5.8 billion to stimulate bank lending through the Special Risk-Sharing Initiative; tax rebates and other concessions amounting to $2.6 billion; another $2.6 billion in targeted help and support for households and the community; and billions in infrastructure projects brought forward.
Lastly, President SR Nathan gave his approval for the Government to draw $4.9 billion from past reserves to help fund the Resilience Package.
2020 : CORONOVIRUS OUTBREAK
The Government has dedicated close to $100 billion – or nearly 20 per cent of GDP – to support Singaporeans in this battle against Covid-19, “a landmark package, and a necessary response to an unprecedented crisis”.
Altogether, the Government is looking at drawing up to a total of $52 billion from past reserves this financial year to enable Singaporeans to tide over this crisis and emerge stronger
The Singapore is committed to saving jobs for Singaporeans and helping with their livelihoods.
This means JSS payments will now be for 10 months, with firms receiving this additional support in October.
Households with at least one Singapore citizen will also get a one-off $100 Solidarity Credit to offset their utility bills, which is on top of the U-Save Special Payment that was previously announced.
Singapore also launched an SGUnited Jobs and Skills Package to create close to 100,000 opportunities in three areas: 40,000 jobs, 25,000 traineeships and 30,000 paid skills training places.
“While we will try to preserve jobs in the midst of this crisis, we cannot protect every job,” Deputy Prime Minister Heng Swee Keat had said. “However, you have my assurance that the Government will protect every worker.”
“Our promise to workers is this: As long as you are willing to pick up new skills and adapt, to access available opportunities to work or learn, the Government will provide our strongest support to help you,” he said.
Singapore will keep its people safe, preserve their jobs and livelihoods, as well as help viable enterprises stay strong.