Covid-19 has wreaked havoc on almost every economy, but those that take the opportunity to adapt and transform will emerge stronger, Trade and Industry Minister Gan Kim Yong told Parliament on Monday.

Singapore, he added, has to turn this once-in-a-generation crisis into a once-in-a-generation opportunity, to develop new areas of growth, and deepen links to the global economy.

Finance Minister Lawrence Wong also told the House on Tuesday that rapid shifts in the external environment will have profound implications for Singapore.

What are some of these shifts, and what challenges - and opportunities - will they bring?

The Straits Times explores five key areas.

1. Regional outlook amid digital disruption

Compared to past crises, South-east Asian governments have undertaken highly expansionary fiscal policies in response to Covid-19. These have played a crucial role in limiting the pandemic's fallout. A surge in global demand for personal protective equipment, electronics and other goods to facilitate working from home boosted the region's exports.

But with the epicentre of the outbreak shifting to Indonesia, and Singapore battling clusters of infections linked to KTV lounges and a fishery port, the question remains as to whether the region can keep a lid on the virus.

The Asian Development Bank has cut its growth outlook for South-east Asia, with expansion expected to be 4 per cent this year, down 0.4 percentage point from its last projection in April. This means the region is no longer expected to return to its pre-pandemic level of output by the end of this year.

One bright spot amid the uncertainty is the digital economy.

Covid-19 drove up digital adoption globally in the past year. More than one in three digital services consumers are new to them, according to research by Bain, Google and Temasek.

At home, the Government plans to launch two 5G networks - next-generation mobile Internet connectivity with faster speeds - across the island by 2025.

Singapore also clinched the top spot in professional services firm KPMG's global ranking of leading technology innovation hubs outside of Silicon Valley/San Francisco for the second year running. It is enhancing its network of digital economy agreements, the latest being a pact with the United Kingdom that will establish rules for cross-border data flows and ensure strong data protection.

OCBC Bank's head of treasury research and strategy Selena Ling calls the structural shift to a digital economy "unstoppable".

Singapore already has a head start in advanced manufacturing, especially semiconductors, biochemicals and petrochemicals, and has encouraged digitalisation through incentives and tax policies, she says.

Ironically, a crackdown by the US and China may mean opportunities for neutral third countries to be a base for manufacturing and initial public offerings.

Fears over regulatory scrutiny of Chinese tech firms have grown ever since Beijing clamped down on ride-hailing app Didi, just days after its New York flotation. The Chinese authorities then took aim at the private education providers with sweeping measures, including barring curriculum-based tuition firms from raising money through stock market listings. Another blow to the tech sector came on Wednesday, when the Chinese authorities ordered Tencent and others to deal with pop-up windows on apps they said could contain misleading information.

Aside from being a neutral market, having a common data infrastructure under the Singapore Trade Data Exchange next year will allow firms to swap information and access previously unavailable or hard-to-obtain data, such as real-time cargo location.

Mr Rakesh Agarwal, partner, advisory, KPMG, says similar initiatives can be planned for other key sectors such as life sciences, for visibility and management of critical advanced pharmaceutical ingredients procurement or operations.

Other sectors could include high-tech semiconductors and high-end discrete manufacturing - or the production of items like cars, smartphones and robots.

2. Shifting supply chains amid US-China rivalry

A semiconductor shortage led to car production grinding to a halt all over the world this year. Other chip-reliant products such as computers, medical devices and smartphones also faced delays. Meanwhile, a clampdown by the European Union and India on vaccine exports disrupted global efforts to inoculate people against Covid-19.

Spooked by the risk of depending on just a few markets for supply and demand, governments everywhere are switching from the pursuit of efficiency to a new focus on resilience and self-reliance.

Already, Singapore has seen some benefits from these global shifts, as more firms look to diversify their production base amid rising US-China disputes. In June, US-based semiconductor manufacturer GlobalFoundries announced that it would invest US$4 billion to build chip-making facilities in Singapore.

In February, the Republic launched a South-east Asia Manufacturing Alliance for global manufacturers to tap a network of industrial parks here and in the region, and to diversify supply chains. The alliance will also help local small and medium-sized enterprises access overseas markets.

There are three pillars to supply chain resilience for Singapore to consider, says KPMG's Mr Agarwal: diversification, digital transformation, and periodic supply chain risk assessments.

In low-end manufacturing, Singapore is the regional hub for multiple companies which have operations in countries such as Indonesia, Malaysia, the Philippines and Vietnam. It provides strategic overview of supply chain matters and expertise in risk management and innovation.

In high-end manufacturing, Singapore leads in high-tech, industrial automation and biotech. It can be a potential second hub besides the US or Europe for these firms' diversification strategy.

Integrated, benchmarked and periodic risk assessments across the value chain are also key, and here Mr Agarwal stresses that having an integrated and predictive view takes "a lot more than just compiling a dashboard".

He says: "Aside from a regulated environment that facilitates data analytics, it requires talent to be available. Singapore will play a key role in supporting and providing knowledge leadership in supply chain resilience across multiple industries."

3. Staying open to talent while growing Singaporean core

Singapore has long tapped foreign manpower to complement its small and ageing local workforce.

Foreigners do essential jobs that are not attractive to locals, and bridge critical skills gaps in high-skill areas such as digital technology, advanced manufacturing and cutting-edge research.

But this model is coming under strain amid growing unhappiness among locals over job competition from foreigners - or what Singapore's central bank chief Ravi Menon calls an "affective divide".

Free trade pacts such as the India-Singapore Comprehensive Economic Cooperation Agreement have become collateral damage, with some peddling falsehoods that it gives Indian job seekers a free pass here despite the authorities' assurances to the contrary.

A business hub such as Singapore, said Mr Menon at a recent Institute of Policy Studies lecture, cannot afford to be seen as lacking in opportunity for its own citizens, nor unwelcoming of foreigners.

He suggested raising the minimum qualifying salary for S Pass and Employment Pass holders over time; and directly targeting discriminatory hiring by imposing financial penalties, slashing bonuses as well as freezing promotions in firms that unfairly favour foreigners.

Associate Professor Lawrence Loh, director of the Centre for Governance and Sustainability at the NUS Business School, agrees that raising the S Pass minimum salary is a quick way to shift hiring to locals, and to incentivise firms to automate and be more productive.

But hiking this minimum salary instantly could also drive up costs, and lead to difficulties in finding workers at that particular salary or skill range, he says, and the challenge is still in determining the benchmark.

He suggests complementing this with incentives to hire younger workers, particularly school leavers and graduates whose salaries would fall in the same band as S Pass holders.

He says: "The younger workers are often in a Catch-22 situation as they cannot get jobs unless they have experience, yet they cannot get experience unless they are employed."

4. Stiffer competition for tax dollar and investments

On July 10, the Group of 20 (G-20) finance ministers and central bankers put their stamp of approval on a landmark pact that would revamp how countries tax multinational firms. The deal was also backed by over 130 nations in talks led by the Organisation for Economic Cooperation and Development.

The next steps for the October G-20 meeting will be to fix a globally agreed minimum tax rate, and work out how tax revenue will be allocated among countries.

The deal to back a global minimum corporate tax rate of at least 15 per cent will make it harder for Singapore to attract investments. While the country's headline tax rate is 17 per cent, many multinational enterprises may have effective tax rates which are below the proposed minimum rate, due to tax reliefs and incentives.

Soon, these firms will have to accept a higher effective tax rate wherever they operate.

Could measures which were less conceivable in the past, such as a capital gains tax regime, be considered to reduce tax leakage to other jurisdictions? What other incentives can Singapore explore, given that neighbouring countries have also sweetened deals to lure investors?

The Malaysian government, for instance, proposed a 100 per cent investment tax allowance for five years for some companies that relocate their overseas manufacturing facilities to the country.

It is not all doom and gloom. What is bad news for classic zero-tax havens such as Bermuda and the Cayman Islands could be good news for Singapore if companies relocate from there.

But the best response is still to strengthen non-tax factors that contribute to the Republic's overall competitiveness.

EY Asean international corporate tax advisory leader Chester Wee says Singapore's merits - in terms of its institutions, infrastructure, labour market as well as financial and legal systems - position it well as a hub for the region: "The country's relentless focus on productivity and innovation also drives differentiating value to investors. All of these will continue to make the country competitive."

What could encourage businesses activities here are grants and financing support, and offsets for land rent and electricity tariffs. Singapore will also have to double down on developing and expanding the tech talent pool, and maintaining the country's openness and global connectivity.

5. Floating solar farms and carbon exchange trading

The global transition away from hydrocarbons is especially challenging for Singapore, which lacks natural resources from which it can harness renewable energy.

It has to be innovative to overcome its disadvantages - from building floating solar farms on reservoirs, to exploring transmission lines to neighbouring countries to tap and trade in clean power.

In May, key players in the financing space moved to create a new global carbon exchange and marketplace. Climate Impact X - a joint venture funded by DBS Bank, Temasek, Standard Chartered and the Singapore Exchange - will offer different platforms and products for buyers and sellers of carbon credits.

The initiative was borne out of Singapore's Emerging Stronger Taskforce's Alliance for Action on Sustainability, which started to work on ways to transform the country into a "bright green spark" at a time when the issue is taking centrestage worldwide.

By allowing large-scale, high-quality carbon credits to be sold through standardised contracts in an exchange, Singapore can position itself as a carbon services and trading hub.

A key question is what a meaningful price for carbon should be, so that Singapore and the world can transition successfully to a green economy.

Singapore is the first country in South-east Asia to implement a carbon tax. But at $5 (US$3.75) per tonne of greenhouse gas emissions, some have called it an "outlier" among countries that have introduced a carbon price.

Professor Subodh Mhaisalkar, executive director of the Energy Research Institute at Nanyang Technological University, says Singapore's decision to have a simple carbon tax with no exemptions and tiers mirrors the implementation of the flat goods and services tax. "Pay per use for carbon makes perfect sense. Even if the tax is $5, a mechanism is in place, and the end users understand how this can be used to collect taxes and access incentives to decarbonise and improve energy efficiency."

Ms Melissa Low, a research fellow at NUS' Energy Studies Institute, points out that the Government has already committed to reviewing the tax level and post-2023 trajectory by next year in consultation with industry and experts, so as to give businesses time to adjust.

She says the Government could consider consulting more groups to get a fuller understanding of the carbon tax's impact on society.

The carbon tax already covers around 80 per cent of Singapore's total emissions. It does not appear that the authorities intend to extend the carbon tax to cover the remaining 20 per cent, which are contributed by many other sources and in varying amounts, she says.

"It may therefore be timely to enquire how the Government plans to account for these emissions if the sources are currently not tax liable - in other words, how can we nudge their behaviours?"

It would also be useful to understand how much of the collected tax has already been taken up by industry in its transition towards lower-carbon operations; whether existing grants have been effective; and if carbon tax revenue can be used to support initiatives that benefit wider society.

For example, she says, the revenue could be channelled towards upskilling workers to go into green jobs, and into initiatives such as the Enterprise Sustainability Programme to boost local enterprises' sustainability capabilities.

In the end, there has to be careful study of how the push to increase carbon taxes will affect Singapore's competitiveness, says Prof Mhaisalkar. He adds that while a carbon tax on electricity generation can be passed on to customers, the case for passing on the extra cost of oil refining to buyers in an open market is a difficult one to make.

But with few countries in the region having planned forward-looking carbon budgets, there is reason to be hopeful that Singapore can enjoy first-mover advantage, by attracting talent and supporting research and development efforts.

He stresses that greening is not just about infrastructure and taxes but also culture change, such as instilling the sustainability values that are often admired in Switzerland and Japan.