Uncertain future

End of lifeline may spell the end for some firms

Mr Ong Hanjie, managing director of EU Asia Holidays, says that even with the Jobs Support Scheme, the tour agency's current revenue cannot support staff wages. ST PHOTO: YONG LI XUAN
Mr Ong Hanjie, managing director of EU Asia Holidays, says that even with the Jobs Support Scheme, the tour agency's current revenue cannot support staff wages. ST PHOTO: YONG LI XUAN

While companies in sectors badly hit by Covid-19 appreciate the extension of the Jobs Support Scheme (JSS), smaller players are brooding over how to keep their businesses alive as the support gradually tapers off.

Especially for smaller companies in the hard-hit sectors of aviation, aerospace and tourism, the JSS has been a lifeline, helping to retain local staff and keeping businesses afloat as revenues plunged.

It has gone a long way in supporting tour agency EU Asia Holidays' 120-strong workforce, half of which is made up of local residents.

Managing director Ong Hanjie said the company's revenue has dipped by about 90 per cent.

"Even with the JSS, the current revenue cannot support staff wages," he said. "But we can't expect the Government to keep helping us, because it's not sustainable."

The company is now relying on its reserves and selling cruise and local tour packages to stay afloat.

Mr Ong said: "We're hopeful that there will be stronger tourist numbers by the end of this year. If not, we may have to consider cost-cutting measures, such as temporary layoffs."

Under the JSS, the Government pays a portion of the wages of employees who are Singaporeans or permanent residents.

For those in the worst-hit sectors, the JSS will provide wage subsidies for local employees until September.

Mr Pete L. Pela, owner and chief executive of Tall Ship Adventures, which hosts events such as corporate charters and dinner cruises on its ship, the Royal Albatross, said the company has been surviving largely on government support.

He said: "If regulations are relaxed and (corporate and private) events resume, then tapering off the JSS is appropriate. But if not, we will really struggle if government support is not maintained at the current levels."

The company is now focusing on improving food offerings for its luxury dining cruises to attract local customers.

ALMOST AT A STANDSTILL

The end of the JSS could possibly sound the death knell for some, such as money changer Straits Foreign Exchange in Bukit Batok.

Mr Oli Mohamed, 47, who has been running his business for about 12 years, is now relying on the JSS to pay his three local employees.

Business is almost at a standstill for him, with hardly anyone travelling.

Mr Oli said: "It's going to get really difficult when it gets to only 10 per cent of support. I plan to hold on for about one or two years. If things don't improve and we cannot get more support, I think I may have to close down."

GLIMMER OF HOPE

But the JSS has also provided a glimmer of hope for some hard-hit companies, such as by giving them the leeway to focus on upskilling their workforce and finding new growth opportunities as the pandemic drags on.

Pan Pacific Hotels Group chief executive Choe Peng Sum said: "The hospitality industry is manpower resource-heavy. The extended JSS will allow us to protect jobs and continue our workforce transformation, through reskilling and upskilling of our associates."

With government support, Mr Choe said, the group has been able to focus on rolling out new digital initiatives such as hybrid meeting packages and virtual wedding shows.

Similarly, airport ground-handling company dnata has found that the added support has allowed it to retrain its staff.

Its chief financial officer Musdalifa Abdullah said: "One of our many success stories was when we trained customer service officers to use the cargo systems. This allowed full redeployed opportunities to our cargo terminal, where we even had a staff member obtaining her forklift driving permit to pursue a new career direction."

Some companies are also diversifying their revenue streams.

Mr Kevin Chow, country director and chief executive of aerospace company Thales in Singapore, said: "We are aware that the industry will look very different once the worst of the pandemic is behind us. Therefore, the JSS is supporting our efforts in transforming our aerospace business in Singapore."

The company is exploring new business areas such as drone management.

The efforts have already paid off for some, such as precision engineering company Coway Engineering & Marketing, whose core business is in the aerospace and oil and gas industries.

Managing director Lien Whai Cheng said the JSS has been critical in helping it to retain its 40 workers, more than half of whom are local.

He said: "Because of JSS, we were able to keep all our workers. As we start to see gradual recovery, it is only reasonable that support starts to wear off."

The company has started to diversify its revenue streams to prepare for the cessation of the JSS, and is doing much better than earlier in the pandemic, said Mr Lien.

"We're venturing into areas such as semiconductors and defence, and business has picked up by about 10 per cent due to these efforts."

A version of this article appeared in the print edition of The Sunday Times on February 21, 2021, with the headline 'End of lifeline may spell the end for some firms'. Subscribe