By Royston Yang
SINGAPORE — The world has a new enemy today, and it's not in the form of trade wars, invasion of privacy or climate change. This new enemy is, in fact, invisible and insidious, and comes in the form of a virus now named the "Novel Coronavirus", or also known as the "Wuhan Virus" from the Chinese city where it originated.
This new virus has evoked bad memories of the previous mini-pandemic known as SARS (Severe Acute Respiratory Syndrome) back in 2003-2004, and has so far sickened a total of 17,200 people and killed 361 at the time of writing. The World Health Organisation has declared the Wuhan virus an international emergency and governments around the world are scrambling to restrict the flow of passengers from China in order to contain the rapidly-spreading disease.
In Singapore, though the situation has (so far) been under control and not as dire as during the SARS crisis, it has been quieter overall on the streets as more people stay indoors for fear of catching the virus. Travel restrictions have also been imposed on Chinese tourists, which have impacted many businesses in Singapore such as hotels and cafes. Chinese tourists account for around 20% of Singapore's total international visitor arrivals, with around 3.6 million coming to Singapore in 2019.
The government is cognizant that the current situation may get worse and has met up with business owners and leaders to come up with measures to address this malaise.
Let's have a look back at history to review the measures taken during the SARS outbreak, and then try to assess how the upcoming Budget 2020 may be impacted.
The SARS Relief Package
In 2003, the government unveiled a Budget that introduced a SARS Relief Package in order to offset part of the negative impact from SARS. Back then, visitor arrivals for March 2003 fell by 15% and 61% in just the first 13 days of April 2003. The hardest-hit industries included tourism and transport-related industries such as airline, hotels and taxi services. The previous estimate of a 2% to 5% GDP growth was revised to just 0.5% to 2.5%.
In essence, the SARS Relief Package, which cost the Government S$230 million, helped to reduce taxes, foreign worker levy and provided bridging loan services for smaller, medium enterprises. The measures were aimed at reducing expenses for businesses worst-hit by the virus and to help struggling ones stay afloat until the threat had passed.
Course support fees were raised and an additional training grant was provided to help businesses to retrain and retain their staff. For the transport sector, diesel tax rebates and a waiver of taxi operator license fees were announced.
Providing targeted help in Budget 2020
Fast forward to 2020, the Ministry of Finance and the Ministry Trade and Industry released a joint statement on Saturday (1 Feb) to warn of knock-on effects of the Wuhan virus on both tourism and transport industries. Heng Swee Keat, Deputy Prime Minister and Finance Minister, also mentioned that these two industries will receive targeted help on top of broad economic measures to stimulate a slowing economy.
As the Wuhan virus' impact may be wider and longer than SARS due to its apparent ease of transmission and difficulty in detection during the incubation phase, Singapore is ready to hunker down with a set of longer-term measures to help affected industries and protect jobs. These measures may differ from the SARS-era ones in that they have a longer-lasting impact and cover a broader range of industries, including those that may not be directly affected.
Taking a leaf from history
There have already been several measures announced by the government in recent days. It will waive license fees for hotels, travel agents and tourist guides, and also defray the costs of disinfecting and cleaning of hotels that had both confirmed and suspected cases of the Wuhan virus. The financial assistance package is set to be backdated to January 23 when the first case of the virus was detected in Singapore, and the government is also studying the possibility of providing bridging loans to businesses to help them tide over their cash flow difficulties.
If we take a leaf from history, then for Budget 2020, there should be a targeted package from the government to assist industries that have been impacted by the Wuhan virus. This could include many of the same measures announced in the SARS Relief Package, including (but not limited to) tax reliefs and reductions, assistance with foreign worker levy, training grants and fee waivers and the provision of a bridging loan fund that smaller, struggling businesses can tap on.
Other possible measures may include higher fuel rebates for transport-related industries such as taxis, tax rebates for businesses badly hit by the drop in tourists and spending, and claimable allowances for businesses who have been the most badly impacted (i.e. those with the bulk of their operations in China).
More details will be revealed when the Finance Minister announces details of the Budget on February 18. Till then, businesses and individuals hard-hit by the virus will have to cope the best they can.
*This story is contributed by The Smart Investor which aims to educate people on how to invest smartly by providing investing education and stock commentary.