Outbreak adds to push for resilient supply chains: Chan

S'pore needs to review supply chains so it is not overly reliant on single source: Minister

Trade and Industry Minister Chan Chun Sing with Sandpiper Communications chief executive Emma Smith at a dialogue at the American Chamber of Commerce Singapore yesterday.
Trade and Industry Minister Chan Chun Sing with Sandpiper Communications chief executive Emma Smith at a dialogue at the American Chamber of Commerce Singapore yesterday. PHOTO: AMERICAN CHAMBER OF COMMERCE SINGAPORE

In its efforts to contain the fallout from the coronavirus outbreak, Singapore is focused not only on mitigating disruption, but also on positioning businesses here for the eventual recovery, Minister for Trade and Industry Chan Chun Sing told business leaders at the launch of the American Chamber of Commerce's Covid-19 business impact survey yesterday.

In addition to using downtime to restructure its processes and upskill workers, Singapore needs to review its supply chains from labour to materials to ensure it is not overly dependent on any single source or market, he said.

The survey of 225 member firms, done in conjunction with Sandpiper Communications, sought to understand the impact of the outbreak on their operations and outlook and the business environment here.

"Technology has fundamentally changed supply chains in the region and beyond. Then a second wave came from United States-China trade issues, and now with the disease outbreak, these three sets of forces have really added impetus to our efforts to re-examine our supply chains.

"We are even going into where the components form that supply chain, in order for us to have a resilient supply chain. We also have to look at our markets mix and product mix. If we are not diversified... there will be a severe impact when there is an external shock," Mr Chan said.

This outbreak, coming on the heels of the US-China trade spat, should give Asean and businesses in the region "greater impetus to see how they can integrate their supply chains", he said.

"If Asean comes together, it's a 600 million population bloc... How do you integrate your digital space, information and payment space to become a more attractive proposition as a 600 million population bloc, rather than 10 disparate countries doing different things at different times?" he said. "There will be a reorganisation of supply chains at the global level. It is for Asean to seize that opportunity."

Mr Chan outlined scenarios that would affect how Singapore prepares for the recovery. Given that the virus so far seems to have a lower mortality rate than the severe acute respiratory syndrome, and is therefore expected to last longer than viruses with a high mortality rate, the likelihood of a V-shaped recovery is unlikely, he said.

If it is a U-shaped rebound, then the Government may need to create more measures to help businesses overcome this crisis for a longer period than was envisaged, he added.

"If this virus mutates into something that looks like seasonal flu and becomes endemic within the world's population, then... we are talking about how to deal with this as part of normal living," he said.

At this point, however, it is premature to speculate which scenario is more likely, he added.

Asked what can be done to help normal travel patterns resume, Mr Chan said the challenge so far is finding ways to shorten the time taken to give travellers a clean bill of health. "If that can come about quickly, that will help promote the resumption of travel."

Another problem is a lack of coordination among countries globally to contain the virus. "The first wave came from China... but that seems to be stabilising. Over the weekend, we saw a spike in new cases in Japan, Korea and Italy. The concern is, if other countries are not taking corresponding measures, then we may see these recurring waves, and that will complicate the worldwide mitigation efforts," he said.

On how the local biotech industry can support recovery, Mr Chan said: "Quick diagnostic kits are essential... Once we have the kit, how can we scale this up as fast as possible to proliferate the kit across the region to parties that require it?"

He said this required a certain manufacturing capability, with an eye to the costs and skills needed to deploy the kits.

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A version of this article appeared in the print edition of The Straits Times on February 27, 2020, with the headline Outbreak adds to push for resilient supply chains: Chan. Subscribe