These are unprecedented times. And when we say ‘unprecedented,’ it is true. Neither the city-state of Singapore nor the global community has seen something like the COVID-19 outbreak in at least decades. Indeed, there was the SARS outbreak of 2002-2004 mainly concentrated in China, and the dengue outbreak of 2005, which gripped Singapore and claimed 27 lives. But the number of positive cases and fatalities caused globally by COVID-19 surpass all previous tragedies. At the same time, it is to remember that a pandemic not only shatters the society, it also disrupts the economy and all its players.
When one talks of the economy, we know that the Singaporean economy dominated by small and medium enterprises, dubbed as SMEs. They are at the heart of socio-economic development that the city-state has achieved in recent decades. SMEs manufactures, provide jobs, earn foreign currency, and are a participant in almost every segment. That the outbreak of COVID-19 will hit these units has already showing a downturn impact. Singaporean economy grew at its slowest rate in a decade in 2019. There was the US-China trade war and Brexit, combined with the increasingly protectionist attitude of many countries, which we thought would also shape how the economy performs in 2020. But the Covid-19 has created a catastrophe not just in SIngapore but globally across all industries.
But the entire landscape has changed. COVID-19 has compelled economists and analysts to re-think their stance for the year 2020. Skeptics have already warned that this could be a year of recession for the Singaporean Economy. From tenants asking landlords to provide them rebates in rents, to the Government providing monetary support of enterprises in the form of payouts to hired employees, these are all signs of a looming threat of a slowdown. In many places, the effects are already evident. There are fewer shoppers in shopping malls, and people are staying away from crowded places like cinema halls and busy marketplaces, restaurants, and theatres. Also, the inbound tourism has impacted due to travel ban. For many travel agencies the business revenue has been zero since February 2020. It has created an immense stressed environment in the entire economy and in specific among SMEs to survive.
Is there a way out? Can SMEs rework how they operate to tide over this crisis? These questions are far more important and worthy than discussing the negative impacts of COVID-19 on the economy. After all, we know that Singaporeans are a resilient lot, and their determination to emerge as a winner will be a key to better times. Singapore limited the impact of COVID-19 on the society by taking immediate measures is something that has got appreciated all over. Now what becomes of the economy in the coming days depends on how all stakeholders respond to the challenge. And since SMEs have always been at the forefront of the Singaporean economy, it will be their stance that will shape the future.
Here, let’s discuss some of the measures that SMEs need to take to stay afloat in the times of COVID-19 urgently.
Minimizing the Physical Contact
The outbreak of COVID-19 has taught us the significance of social distancing. People greeting and meeting each other, and physically visiting the stores is everyone’s desire. However, the human race today is more vulnerable to infectious diseases than ever. And the psychological impact that COVID-19 will leave on the minds of people will be such that many would prefer limiting their physical contact with the outside world. Of course, essential tasks like reporting to work and going to school will get done as usual. By contrast, non-essential tasks, including shopping for groceries and other household items, will be preferred to be done through the internet.
SMEs can now hope that gone are the days when customers only had the lure of significant discounts to shop online. Or that it was to save time and resources that people bought stuff through e-commerce. COVID-19 will reshape customer preferences in this regard. Here’s how. Singaporean prefers dining out or sauntering in malls, but this scenario has changed. To prevent infectious diseases, the WHO has recommended social distancing. It indisputably means that unless necessary, one would prefer to stay indoors. SMEs have to face this reality urgently. Almost every business needs to come on board the e-commerce ship. Take a cue from these facts.
Lazada, one of the prominent online grocery stores, has reported ‘unprecedented demand.’ It has come after people resorted to panic buying due to coronavirus scare. Another player, FairPrice, has said that demand through e-commerce has seen an uptick since the government upped its response to Covid-19 outbreak, so much so that their delivery wing is overburdened to execute orders. A well-known player in the delivery segment, Ninja Van, has reported a 300 percent rise in business, and most of the parcels are for health and pharmacy products. These facts tell us how vital it is for SMEs to find customers for their products and services beyond the conventional brick and mortar presence.
Tweaking the way Employees Work
Now that social distancing has become the most desired thing to prevent any further cases of COVID-19, the same cannot achieve unless the workforce has the flexibility to work from home. SMEs stand at a losing ground if they cannot manage their operations sans physical presence of employees. Indeed, some tasks cannot be done remotely. For instance, a delivery business cannot work unless workers are physically present to move parcels from one place to another. By contrast, a lot of job functions can be carried out without having the employee to report at work physically. For example, in the same delivery business, employees that handle the back-office tasks of allocating work to different delivery agents can surely stay at home and achieve the same productivity.
The government of the city-state has already set an example. Civil servants have reportedly been ordered to work from home (WFH) unless their job is such that it mandatorily requires physical presence in the office. Other companies, mainly multi-nationals, and including DBS, UOB, Google and Facebook, have also resorted to allowing work from home to their staff. Analysts have also said that those SMEs that are in the business of web development and other services, including finance and insurance and ICT, must consider allowing maximum employees to work from home since these job profiles are best-suited for this.
Because of this, it is time that SMEs make a proper roadmap for revamping business operations so that at times when the situation so demands, employees can immediately be ordered to work from home. For sure, there cannot be a compromise on productivity.
And the best part here is that there is evidence that establishes how Flexi-work arrangements, popularly called FWAs, result in a surge in the productivity of workers. It is also noted that FWAs enhance employees’ engagement in their jobs even as they result in better retention of employees. Another survey by Michael Page has revealed that as many as 70 percent of those responded said they willingly answer calls and emails even when not in their working hours.
Tapping Available Resources
The government of Singapore has been at the forefront in helping businesses and other stakeholders during the times of n-coronavirus. Widely appreciated for its incentives packages and other aids to firms, the Singaporean government has incorporated measures in the Budget 2020 to limit the adverse impacts of COVID-19. Now that the SMEs are already facing the heat and their cash flow has negatively affected, it is the best time to avail the resources that are at their disposal.
In this year’s budget, the government has committed more than S$6 billion to support not only households but also businesses. Almost S$4 billion will be expended by the government to help companies to maintain their cash flow and lessen their burden of paying wages to employees. By keeping the budget deficit at the higher side, the government has decided to intervene with a job support scheme where 8 percent of every local worker’s wage will come from the pockets of the government. The maximum benefit has been capped at S$3600 per month, and this scheme shall run for three months. Alongside, companies can also avail a 25 percent rebate in income tax and tap higher working capital loans to fight the cash crunch.
Top Singaporean conglomerate, Keppel Corp, with business interests in marine, infrastructure, and other sectors, has also announced a package to support SMEs of the city-state. The company has committed more than S$4.2 million to help households as well as small businesses. In the context of SMEs, Keppel Corp has said that they will clear the invoices coming from these players within a week, irrespective of what the credit arrangements with these suppliers are. Keppel Corp is said to have at least 3,000 SMEs as their suppliers, and rapid release of dues to these would surely improve their cash flow.
COVID-19 has come as a jolt to the economy, and only sustained efforts by SMEs can impede the economy from going into a downturn. The above-stated goals of having a sure online presence and making arrangements so that employees can work from home without any disruption to operations are a few steps that can better the results. At the same time, SMEs must not shy away from tapping the schemes of the government, which specifically come as a rescue measure for economy reeling under the outbreak impact. Singaporean SMEs are a resilient force, and their positive approach coupled with revamping measures, will not let COVID-19 harm their prospects even if the disease continues for a while.