I read with a heavy heart the list of businesses which have closed down due to COVID-19. Among the casualties are entrepreneurs I personally know, and businesses I had patronised in the not too distant past. The list is just the tip of the iceberg. The domino effect has started, and it will gain momentum like a tsunami.
Like I said in my earlier post, financial security will soon be an issue for many in Singapore, if it isn't one already. Behind every shuttered business is people; many with elderly parents and and young children, people with mouths to feed and bills to pay but no income to turn to.
COVID-19 is like compound interest. Unless swift and effective measures are taken to arrest the problem early, its numbers will increase exponentially. The world watched Italy rise from 650 to 10,000 cases within 2 weeks, and that was with the nation in lockdown. On 27 March, Singapore reached 683 cases without a lockdown, but with contact tracing and quarantine measures to help slow the spread. Today (13 June), we have surpassed 40,000, even after a Circuit Breaker from 7 April to 1 June. If only there were investments these days which can generate 5,785% returns in less than 3 months!
The shutdown of our economy took place about 2 and a half months after China's. Stories of grave hardship have started to emerge from there. Some have been without an income since January, and now almost 6 months down the line, are having difficulty paying for the roof over their heads. This is so even when China had successfully contained the disease, started re-opening its economy in early April, and has a robust self-reliant domestic economy to help bring things back up to speed.
We, on the other hand, are still fighting fires in the workers' dorms, have lifted the Circuit Breaker without widespread testing, and do not have any self-reliant domestic economy to speak of. To say that the situation here is even more bleak is a gross understatement.
Since we lag China by 2 and a half months, then all things being equal, I estimate that rapid decline in the state of our economy will take place around August to September this year, with record business closures and unemployment. The decline may take place sooner than that, having regard to the fact that the virus is yet to be controlled here and the lack of a self-reliant domestic economy. Or it may be delayed a little due to the S$100 billion worth of fiscal measures our government has taken to keep our economy on artificial life support.
However, one thing is clear; the sooner the ruling party waves the country through to Phase 2 of the re-opening and calls for the General Elections ("GE"), the fewer hard questions it will have to answer from disgruntled business owners, jobless people, ruined investors, etc and face their wrath.
I read an interesting article which traced stock market trends during an election year. It reminded me of the snap GE which Goh Chok Tong called in 2001. We were reeling from the after effects of the Asian Financial Crisis and bursting of the dot.com bubble at that time. The grim economic outlook helped the ruling party achieve a 75.3% win, the strongest mandate it had ever received from the people.
PM Lee is now hoping to do the same, asking for a strong mandate from the people in light of the storm. The situation is different this time though. Discord within his household has got his own siblings throwing the spotlight on the integrity of the ruling party and his leadership. More importantly, aside from being like compound interest, COVID-19 is also like the PSLE. It's a universal test for every country in the world, testing how well each government handles the crisis. The best of our 4G leadership was put in charge of handling the crisis from the start, and we have much egg on our face for the world to see now. Headlines like "From Gold Standard to Cautionary Tale" and "Cotton comes from Sheep" are still fresh in everyone's mind.
Be that as it may, I'm confident that the PAP will return to power come Polling Day. They may not garner as many votes as 75.3%, given the circumstances, but they will still have the mandate of the people.
Ahead of the polls, there will be plenty of people grumbling about their own plight, complaining about our Ministers continuing to draw million dollar salaries from taxpayers' funds, and questioning the suitability of the candidates in our 4G leadership in view of their recent report card. But come Polling Day, the silent majority will dominate the polls, as they have always done.
The GE will have little impact on the market conditions in Singapore, but the mindset of its people will. We're a nation which has been brought up to colour within the lines, to believe that good grades are paramount, and to submit to authority without question. Those traits have allowed us to build a stable and secure country, envied by millions around the world. On the other hand, we've become a society made up of people who do not think outside the box and are afraid to embrace change. Without a sense of imagination and the guts to effect change, a country cannot progress and move ahead of the world.
Any advantage over the region which our founding fathers bestowed upon us is fast slipping away. By simply looking at the listings on Singapore Exchange shrinking away year after year will give you an idea of how we're losing our footing and relevance in the financial world. More recently, the Singapore Exchange had the rug pulled from under its feet when MSCI moved its suite of derivatives listings from Singapore to Hong Kong.
You may argue that Singapore's stability has attracted funds from the world's rich to be parked here as a safe haven. When the Hong Kong riots worsened, wealthy Hong Kongers rushed to transfer funds here. As quickly as the rich can shift their funds here, they can transfer it away just as easily. Where will that leave our banks and the wealth banking industry? Together, the 3 local banks weigh at least a third of the STI.
As a nation, we must come together with a common vision of making our country competitive, forward-thinking and relevant once more. Where change is needed, we should be brave enough to effect the change. If we continue thinking the way we've always done, and ignore obvious defects in our system, we'll only have ourselves to blame when we get left behind by the world, and our children and grandchildren suffer the consequences.
Singapore is my home, and I care for it as much as the next citizen. For now, a single dominant ruling party system is probably the best way forward for us, so we can stay nimble, adapt and react quickly to the significant challenges ahead. However, the archaic system of a Party Whip must be done away with, so new alternative ideas can be fearlessly raised, debated and voted on for the benefit of the nation. More effective checks and balances than what we have now can also be applied. Hopefully, my wishes will come true and we can repair our international reputation and reclaim our spot as a vital trading port and leading financial centre for generations to come.