While Singapore can benefit from global corporations’ need to diversify, it also has to grapple with MNCs reviewing the need for physical ...
SINGAPORE: As the head of a global manufacturing firm headquartered in the Republic, Mr Alessandro Perrotta has sent his Singaporean staff to be based in various countries — including Vietnam, Malaysia and Indonesia — where his company has operations.
While negotiations for a more integrated ASEAN have been taking place in fits and starts over the years, experts and business leaders say the pandemic has presented governments and companies in the region with a great opportunity to intensify the push for further integration.This is because COVID-19 has brought about permanent changes to the global economy as borders are shut, traditional supply chains disrupted and long-established working patterns upended.
Mr Douglas Foo, president of the Singapore Manufacturing Federation , said manufacturing companies are finding the option of using Asean as a manufacturing hub with Singapore as its base an even more attractive proposition amid the pandemic, as businesses are forced to be more resilient and agile. “This is not the Asian financial crisis or global financial crisis where if we hunker down, things will improve in a few months. If we wait it out, we will likely be in worse shape than we are now. Therefore we must chart a new direction now for a very different and uncertain future,” said Mr Chan.Global commerce, which has long been the lifeblood for Singapore, has stagnated.
With shipments delayed because of COVID-19, the world realised how densely concentrated supply chains are in China, especially for the automotives, consumer electronics and pharmaceuticals sectors, said Mr Alex Capri, visiting senior fellow at the National University of Singapore Business School. Mr Capri suggested that Singapore could also serve as an alternative location for the large semiconductor industry in Taiwan, with the island long been seen as a potential flashpoint between the US and China.
Mr Jeremy Fong, chief executive director of medical equipment manufacturer Fong’s Engineering, said that his clients mainly come from the US, which is experiencing one of the worst coronavirus outbreaks in the world. “There is a change from where focus was on supply chain efficiency, lead time from point A to point B at lowest possible cost, to now focusing on more supply chain resiliency … Everybody is now looking at other areas to get closer to production points. So ASEAN is definitely benefiting,” Mr Perrotta added.SINGAPORE’S MNC STRATEGY: THREATS AND OPPORTUNITIES
READ: Staycations and weekend getaways: Can domestic travel spark a revival of Southeast Asia’s tourism industry? “It’s a very small step to go from a regional HQ in Singapore to just having work done back in the main HQ,” he added. The subcontracting of certain business functions in a company to third-party vendors in other countries is also a manifestation of globalisation.
While there may be a fraction of companies which choose to permanently work from their home countries, Maybank Kim Eng economist Chua Hak Bin said a countering force to that would be the need for diversification. To minimise the possibility of global corporations leaving the island, Singapore could adopt several measures, such as gradually reinstating international travel, maintaining a competitive tax regime and remaining open to global talent, experts said.As part of its profound irrevocable impact, COVID-19 has pushed remote working, which has been around for some time, to the fore of a radically changed economic landscape.
“This will affect many PMET jobs, which can be done virtually or through automation and AI,” he said. In the ASEAN context, while Singaporean workers are generally more well-educated and skilled, there is however no lack of talent in other member countries due to their much larger labour pool, especially in the area of technology, he noted.
Remote working may be feasible for short-term projects, but it would not be possible for a management executive who has to deal with the daily operations, noted Mr Seah. READ: Allowing some travellers to take COVID-19 tests instead of serving stay-home notices is 'small, cautious step' to reopen aviation: Ong Ye Kung
But with ASEAN potentially a hotbed for foreign direct investments in a post-Covid-19 world, he said that Singapore has to double its efforts in investing more actively in the region. He said ASEAN can take the cue from the Asia-Pacific Economic Cooperation, which issues a business travel card that allows business travellers from member economies access to other APEC regions without a visa.
While ASEAN is poised to offer Singapore new opportunities as it seeks to adapt its economy to a post-pandemic world, experts and business leaders stressed that the Republic must continue to remain an open trading hub even as other countries are turning inwards. “Singapore research institutes and universities do excellent research and have great technologies, and what we lack is commercialising these,” said the former Member of Parliament.
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