Be prepared for the long haul on Covid-19: Foreign Minister Vivian Balakrishnan

Foreign Minister Vivian Balakrishnan (left) told CNBC's Sri Jegarajah and Martin Soong on March 11, 2020, that Covid-19 and its economic aftermath is going to last "at least a year, which means anything we do needs to be sustainable and sensible for the long term". PHOTO: SCREENGRAB FROM CNBC

SINGAPORE - Be prepared for the long haul and be organised. That's the approach the Singapore Government is taking on the coronavirus, said Foreign Minister Vivian Balakrishnan.

"We should assume the worst, even if we are hoping for the best," he said in an interview on CNBC last Wednesday (March 11).

"You know the Singapore Government - we take things very, very seriously. We prepare for the worst. We get all our measures lined up, coordinated. We communicate with our people, people understand what we are doing."

In the interview with CNBC presenters Sri Jegarajah and Martin Soong, Dr Balakrishnan - an eye doctor before he went into politics - also spoke about how Covid-19 and its economic aftermath is going to last "at least a year, which means anything we do needs to be sustainable and sensible for the long term".

He also spoke about "test kit diplomacy".

"What we need to do as a world is to share best practices, to rapidly develop test kits, vaccines, antivirals. We need to share the fruits of applied research. We need to coordinate our measures."

Asked about the timing of the general election, he said: "You will have to ask the Prime Minister that."

He added: "But the election is not the most important thing right now. The most important thing is that we get over this. We get over this together, and we get over this together with our neighbouring countries, our region and at the global level. This is a time to focus on delivery, on getting things done. The politics will take care of itself."

Here is a transcript of the interview:

Presenter (Sri Jegarajah): I am very pleased to say that Vivian Balakrishnan, Singapore's Minister for Foreign Affairs, joins us now for a CNBC exclusive interview. Minister, thank you very much for joining us today. Where do we go from here, in terms of Singapore's response, because the number of cases has been rising? We have seen a very, very determined effort by the authorities here to contain the situation. But I am just wondering, there is a narrative now about even closing schools and raising the Dorscon (Disease Outbreak Response System Condition) level even higher. Do we need to go there?

Minister: I think we should first set it in context. This is a global phenomenon. It is all but a pandemic. You just revealed it is 113,000 cases worldwide. In fact, most of the new cases are now arising outside of China. I think the first point I want to make is that this is a global phenomenon. Maps which do not reveal any cases probably are indications of a lack of testing. So that is the first point - it is worldwide. The next point I want to make is going to sound a bit scary for financial markets. It is that this problem and its aftermath - its economic aftermath - is going to last at least a year, which means anything we do needs to be sustainable and sensible for the long term. The next point, which is worth thinking through, is that if you look at mortality rates across the world, we believe the key reason for variation is the adequacy of your healthcare systems. Which means, as long as your healthcare systems are not overwhelmed, we believe you can get mortality rates to about 1 per cent, hopefully even lower. Those are three things which you need to understand.

Sri Jegarajah: What makes you think that the situation is going to drive on for at least a year? The economic ripple effects.

Minister: Because you can see that the genie is out of the bottle. If this had been like Sars, confined to East Asia - China, Japan, Korea, Singapore - and given the kind of social and medical procedures that we could take, there was a chance for containment. Now that it has exploded, you look in East Asia, at Iran, at Italy; and watch the numbers in the United States. Unfortunately, I think the genie is out of the bottle.

Sri Jegarajah: Do we have to be concerned about recession?

Minister: That is just a matter of numbers. I think you have to be concerned about a major impact because it is a global phenomenon, and it is going to last quite some time. In the case of Sars, let me speak from a medical perspective, it took us about four months to get over. It took us probably about six months for the economic impact to wear out. This time, it is going to be longer, and it is going to be all countries. You need to be psychologically prepared. If I zoom in now to Singapore, in the initial phase, it was obviously about border control - preventing the import of cases. The next phase is hard containment, which means identify, isolate, treat, keep mortality low. Beyond that, you have another phase of delay, meaning you want to ensure that the peak of the epidemic does not exceed the intensive care capacity of your systems. That means a whole host of social distancing and other measures, which by the way, have not only a social impact, but also an economic impact. All governments have to adopt the right balance for the circumstances that they confront. Then you get to mitigation. In the case of Singapore, we are continuing to maintain border controls. We are checking everyone that comes in very, very carefully. But now that we recognise that this is a global phenomenon and Singapore cannot lock itself out of the world nor can we shut down, it means from time to time, we will be importing cases. In fact, if you speak to the Chinese - and I have been in touch with them - I think they are now more worried about importation of cases into China rather than their own containment efforts locally.

Sri Jegarajah: I am glad you mentioned China. The fact that Xi Jinping is now visiting Wuhan, optically does that suggest that China is near or at an all clear?

Minister: I think when you are dealing with an epidemic of a new virus, you are never complacent about it. For both China and Singapore, we may have handled the first phase reasonably well, but we will not be complacent. You should not sound the all-clear. I think President Xi's visit to Wuhan is part of his overall campaign to make sure that the situation is under control across the whole of China. It is an enormous effort that they have undertaken.

Presenter (Martin Soong): Minister, you mentioned that the new risk is importation now. The Costa Fortuna that was allowed to dock in Singapore yesterday with more than 2,000 passengers - walk and talk us through exactly what was done with and for the passengers to mitigate the risk of importation.

Minister: First of all, I need to tell you that Singapore was its home port. Secondly, every single passenger on board embarked on that cruise from Singapore. They have been tested and checked before they got on board. They had to come back here because it is the home port, and this is where the cruise was scheduled to end. Having said that, in an abundance of caution, we checked every single passenger. Then we accompanied them to the airport. I think by now, most of them have probably left.

Sri Jegarajah: Can I confirm that there are 60 Italian nationals on board the vessel and that they are clear?

Minister: They were all clear, they were all well before they even embarked on the cruise. I think the point about cruise ships and this virus is that if you do not maintain strict levels of discipline, hygiene and containment, ships and cruises are very dangerous. But if they started off clean and you maintain that, and you monitor that very carefully, it can be done. I am not recommending people to go on cruises right now; I am just explaining to you why it had to come back to Singapore, how we handled it, and that it can be handled safely.

Martin Soong: Singapore's policy response to coronavirus, the execution as well, has been held up in multiple places as a model for how this should be handled by the government, and probably rightly so as well. You are, as Foreign Minister, Singapore's face to the world, with regard to how the island is handling this crisis. Let me ask you for the people at home - 166 cases. We have noticed in the last two, three days or so, the number of confirmed infections has jumped. We are into triple digits now. How concerned should people be?

Minister: I think we should remain eternally vigilant. From time to time, a case, if it goes under the radar and someone with the virus is actively participating in social events - that person can spread. I think that is very clear. In fact, that is what has happened in this case. That is why we are taking additional precautions, as I said, on social distancing - cancelling or postponing some events, especially if it involves more senior citizens because they are more vulnerable. These measures need to be taken. The point I am trying to make is that this is going to be with us for one year. From time to time, cases will come in; and from time to time, a cluster will pop up. It is important to identify early, go into quarantine, contact trace. We can damp it down. But even when we damp down this cluster, keep a lookout for the next. We have to be in this position for quite some time. That is the point I am making.

Sri Jegarajah: It is very clear that the Government and all the agencies under the Government are not letting down their guard. They are not getting complacent in the least. But I am just wondering, Minister, do you have a working time frame as to when we can see an endpoint to the virus, to this outbreak? Because we have been hearing a lot about the summer months in the Northern Hemisphere, it tends to burn itself out, it tends to die a natural death when we are talking about this virus. Does the Government have a working time frame on when that potentially could happen?

Minister: Let me speak as a doctor. This is a new virus. It is very dangerous and wishful to believe that it will behave according to previous viruses. We do not make the assumption that this will disappear in the summer months. The situation that we are in right now, there are two possibilities. One is that this becomes a global pandemic and the impact would be horrendous. The other possibility is that it becomes endemic, which means it becomes part of the background viral load in the population.

Sri Jegarajah: Do you feel it is a pandemic in all but name on a global basis?

Minister: I think we should be prepared. We should assume the worst, even if we are hoping for the best. You know the Singapore Government - we take things very, very seriously. We prepare for the worst. We get all our measures lined up, coordinated. We communicate with our people, people understand what we are doing. My main point I am leaving with you today is - be prepared for the long haul and be organised. It is not just whole-of-government, it is whole-of-nation. In fact, this is an acid test of every single country's quality of healthcare, standard of governance and social capital. If any one of this tripod is weak, it will be exposed, and exposed quite unmercifully by this epidemic.

Martin Soong: Minister, I do not mean to put you in an uncomfortable position, but because you are Foreign Minister I am obligated to ask you about this. We have been talking this morning about how markets have come back; rebounded, and strongly. It is because they are hoping or betting that the Trump administration is going to come out with some sort of fiscal package to offset the negative impact of the coronavirus. But now, they are pricing in disappointment because a press conference promised yesterday is apparently not going to eventuate. More broadly, there is this sense that the US is almost laughably far behind in terms of preparedness to fight this virus. Is that fair?

Minister: I would not want to engage in that kind of polemic. As I said just now this is a critical, clear, and present danger to all countries. And it is a test of preparedness on all fronts - healthcare, governance and social capital. The United States has enormous resources at its disposal. It is a matter of getting it organised and delivered. So let us wait and see. And I would never count the Americans out.

Sri Jegarajah: There is a perception that Europe, now, is the new epicentre of this virus outbreak. What is your message to Singaporeans who are choosing to travel there either for business, study, leisure, or who are already there?

Minister: Well most Singaporeans who are in Italy have returned. And we are keeping tabs on every single one. In my ministry, one of our functions is to keep track of Singaporeans who go overseas and who may run into trouble. And we have given the commitment that we will leave no Singaporean behind. We are also asking everyone to eRegister so that we can communicate, we can stay in close touch. So that is the privilege of citizenship. A crisis is also a test of the value of your citizenship, of your society, and of your government. That is what we are all confronting.

Martin Soong: Minister I have to ask you this. One of your Cabinet colleagues, Lawrence Wong, this was yesterday, was talking about the possibility of closing schools in Singapore. To date, this is not a measure that the Government has decided it wants to, or needs to, undertake. Let me ask you - how close is the Government to closing schools, what would it take to trigger that kind of response?

Minister: Again, to put it in context, closing schools is just one of a suite of measures for social distancing. The key parameter for judgment is whether you need to take such extreme measures because you are worried that your infection rate will exceed your treatment capacity. It is a very dynamic thing, and we have to watch this very closely. But just to give you an idea of numbers. The latest data indicates that in 19 days, if you miss it, the number of cases will increase by a factor of 10. That is actually what happened, probably, in Europe and in Iran. In the case of Singapore, we are determined not to take our eyes off the ball. Watch out for our announcements on a daily basis because we are watching this very closely. We know how quickly things can move. It is that vigilance, quick action, coordinated action and ability to not just announce things, but to deliver it. One great advantage we have in Singapore is not just being able to deliver, but that our people do it. That social capital of trust and compliance when the chips are down in an extreme situation is absolutely crucial.

Martin Soong: You talked about the capacity to manage this crisis in terms of human resources, in terms of physical capacity as well. Hospitals, healthcare system, et cetera. We have had the number of infections jump to double digits in the last two, three days or so, and we have a number of patients in ICU also, almost double...

Minister: We have about nine, last I checked. About nine cases in ICU. It is no accident that so far, we have had zero mortality. I cannot assume that we will have zero mortality; that is not possible. If you look at the experience of China, mortality is higher in areas where you have overwhelmed your intensive care capacity. In the case of Singapore - I have spoken to the doctors on the front line, and they tell me - we have got the resources, staff, equipment. We have the bandwidth to do our best for these patients. That is the key difference. We have more than enough capacity for now, and our objective is to make sure that we always stay ahead of the curve. But let me tell you as a doctor, these are things you cannot just build up overnight. It takes years and years of investment in people, in systems, in capacity. From a foreign policy point of view, we now have test kit diplomacy. What we need to do as a world is to share best practices, to rapidly develop test kits, vaccines, antivirals. We need to share the fruits of applied research. We need to coordinate our measures. If you look globally at what is happening - in China, they are trying to reboot their economy. In Japan and Korea, they are trying to get to grips with community transmission. In Italy, it has had to adopt some possibly unthinkable measures, and to lock down the whole of Italy. And the rest of the world should be on standby, and make sure we do all that it takes to ensure that we do not overwhelm healthcare facilities.

Sri Jegarajah: Minister, I have lived here for 20 years and I have got to say that the response; I have seen Sars, and I have seen the response here to Covid-19. It has been nothing short of remarkable and the Government is on a crisis footing. Nonetheless, I hope you do not think this a fatuous question - but is this going to affect the timing of the election?

Minister: You will have to ask the Prime Minister that. But the election is not the most important thing right now. The most important thing is that we get over this. We get over this together, and we get over this together with our neighbouring countries, our region, and at the global level. This is a time to focus on delivery, on getting things done. The politics will take care of itself.

Sri Jegarajah: Do you think that this changes the relationship between Singapore and China?

Minister: The relationship between Singapore and China is excellent. Let me give you some data for that. It is true that we were one of the first to announce some travel measures. But I can tell you that China has also told me that they understood. They understood our unique circumstances as a tiny hyper-connected, trans-shipment and travel hub - why we needed to be even more careful than others. Secondly, there has been close communication, both at the political and professional levels. The fact that China published the genome in early-January was the reason why we were also able to develop PCR test kits, which, in a nice circle, we were able to provide them when they needed some additional help. Now, we are continuing to discuss, not only overcoming the problem in the containment phase, but we are also looking beyond that. Beyond this phase, beyond this month, for the next one year - how do we reboot the economy? How do we handle a sustainable posture for travel? And how do we keep life going? There is also a fallacy that there is a trade-off between healthcare and the economy. Actually, they are both sides of the same coin. If you do not have an economy, if you do not have resources which you can devote for healthcare and keeping your society going, you then face a very sticky situation. We are working very closely with China. I can tell you our relations are excellent, based on trust, and based on a long track record of interaction.

Sri Jegarajah: Can I pick up on your point about test kit diplomacy? When you look at your neighbours and partners within the region, I am thinking specifically about Indonesia where there has been very few cases reported. Is that symptomatic of a lack of testing facilities and test kits, and is Singapore out there helping Indonesia? Are you concerned about imported cases from Indonesia? We do not really have a clear idea of the situation there.

Minister: Let us again put things in context. We have the world's busiest land crossing. Every day 300,000 people cross between Malaysia and Singapore. Four of the world's 10 most busy air routes are in Asean. Singapore-KL, Singapore-Jakarta, Bangkok-Jakarta, et cetera. Thirty-seven per cent of all travel within Asean is intra-Asean travel. I have told my fellow foreign ministers we are actually one hot zone. We are all in it together. I can tell you, without revealing details, that we are sharing information, we are sharing capacity, and we are coordinating our measures. We are in it together and we cannot resolve this unless the whole world, and in particular for us in our region, Asean, gets it right.

Martin Soong: So we are directing assistance to Indonesia, also to Malaysia?

Minister: We are working very closely with them both, very, very closely. It is not just a form of words to say "We are in the same boat". This virus has shown that it does not respect passports, boundaries, politics. It is time to work together. Finger pointing, making unnecessary comments are not helpful. Let us just get on with it.

Martin Soong: I need to sneak in one final question which is totally unrelated to the coronavirus; or if not, only obliquely here. The situation that has been going on with oil - there is a price war that has erupted; Saudi Arabia, Russia. It seems as though Russia is targeting the US and US shale, which makes us wonder. The Trump administration, should it be, is it going to be, reaching out to MBS (Crown Prince Mohammad bin Salman) and the Saudis - they have a more direct line there - or is it going to be - (US President Donald Trump) calls his buddy (Russian President Vladimir Putin) on the phone and goes "Look, listen, you have got to help us out here". What happens here?

Minister: That is a profound question with many answers. Number one, the world is undergoing an energy transformation. The whole question of fossil fuels, renewables, that needs to be sorted out. Number two, the main change in fossil fuels has been the advent of shale oil and gas, and the fact that the United States is now independent, energy independent. That is a major phenomenon for which I think people have not yet completely understood the ramifications. The next point is that this virus has also brought to a head the fact that you are going to get multiple downstream impacts on the economy. First, you get the immediate fear, which immediately has an impact on tourism, hotels, retail, and the rest of it. The secondary impact is on supply chains. We did not have time to discuss it today, but supply chain disruption has got profound impact on economic growth, everywhere. The third impact is on energy. You have a demand side collapse, at least in the immediate to medium term; you have got a systemic problem, because of shale gas. Those are the challenges. My expectation is great volatility economically: equities, commodities.

Martin Soong: Minister, fantastic talking to you. Thank you so much for your time.

Minister: Thank you. All the best.

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