Contractors and workers pass a thermal scanner as part of the coronavirus outbreak
Contractors and workers pass a thermal scanner as part of the coronavirus outbreak

As Singapore raises health alert status, how are businesses affected by Coronavirus outbreak

Lee Kah Whye | Updated: Feb 10, 2020 10:33 IST

By Lee Kah Whye
Singapore, Feb 10 (ANI): Singapore's health authorities upgraded the nation's health alert status to orange, the second-highest level on its DORSCON (Disease Outbreak Response System Condition) four-point scale. This follows several locally transmitted cases of the Wuhan novel coronavirus (2019-nCoV) which are not linked to travel history to or from China.
At the time of writing this article, 37,609 people have been infected with the virus, out of which 814 people have died. Only two fatalities have occurred outside China. Singapore where 43 people have the virus is the country with the second-highest number of cases outside China. Japan with 96 has the most number testing positive for the virus out of which 69 are from Diamond Princess, the cruise ship anchored off the Japanese port of Yokohama with quarantined passengers.
During the last major coronavirus outbreak caused by the so-called SARS virus, based on World Health Organisation (WHO) figures, a total of 775 people died with 32 of the deaths happening in Singapore.
The orange alert status in Singapore means that offices, schools, government services centers, organizers of large-scale events must screen staff, students and visitors for fever and respiratory conditions like running nose and cough. Contact details of all visitors must also be noted. Companies have also been asked to review and ready their business continuity plans.
Hospitals have already implemented temperature scans and restrictions on visitors. All arriving visitors at the border crossing, ports and airports have to be temperature scanned.
One sector that is expected to be severely impacted is Singapore's MICE (Meetings, Incentive, Conferences, and Exhibitions) industry. Singapore is one of the world's foremost locations for MICE events. According to Colliers International, the industry brings in about USD 1.58 billion in tourism revenue.
In January, a meeting organized by British gas analysis firm Servomex at the Grand Hyatt has created an international scare with WHO starting an investigation into the event which was attended by 94 foreigners among the 109 guests. Already one Koreans, one Malaysian (who then went on to infect his sister) and one British man have been confirmed with the virus. So far, there are no reports of Indian nationals being affected.
The upcoming bi-annual Singapore Airshow, the largest aerospace exhibition in Asia, scheduled to start February 11, is expecting a dramatic plunge in attendance. In the 2018 edition, it attracted54,000 trade visitors from 147 countries with participation of1,016 companies from 50 countries, generating about USD 250 million of tourist receipts. This year's event has been hit with a spate of cancellations from exhibitors and prominent visitors. Reuters reported that a total of 70 exhibitors have canceled. Besides the cancellation from major aerospace firms like Lockheed Martin, Bombardier, Textron (makers of Bell helicopters and Cessna airplanes) and General Dynamics's Gulfstream and DeHavilland Canada, important decision-makers from the US Defence Department have decided not to attend out of safety concerns. Other companies and countries have also reported being reducing their contingent or pulling out entirely.
Following the travel ban imposed by the Singapore government on travelers from China, the travel and hospitality industry is bracing itself for a major slowdown. China represents the largest inbound travel market for Singapore. In 2019, about 3.7 million visitors came from China, which represents 19.5 percent of the total of 19 million international tourist arrivals. Visitors from other countries are also giving the island republic a miss due to concerns about the number of cases of the virus here.
DBS Group Research has lowered its growth forecast for Singapore in 2020 from 1.4 percent to 0.9 percent. Prior to the virus outbreak, Singapore had already been affected by the slow-down in global economic activity due to increasing trade protectionism.
DBS estimates that for every three months of Singapore's travel ban, there will be a decline of one million tourists resulting in a loss of USD 714 million in tourism receipts.
Shops in Chinatown, a popular tourist attraction especially among Chinese tourists, have reportedly seen the number of customers plummet between 50 to 80 percent. Elsewhere, hotels, restaurants, and retail outlets are expected to be significantly impacted with those catering to Chinese tourists most affected.
With approximately 30 percent of Singapore's gaming revenue contributed by the Chinese, the integrated resorts casinos, operated by resorts World Genting in Sentosa and Las Vegas Sands in Marina Bay are expected to report lower revenues although they have declined to quote numbers when asked by the media. Nikkei Asian Review quoted a Resorts World employee offering an anecdotal estimate of a 50 percent drop in visitor traffic during the usually busy Chinese New Year period.
The outbound travel sector is also affected with more and more Singaporeans cautious about going abroad and companies imposing travel restrictions on their executives.
Already, the largest local travel fair where many Singaporeans book their overseas travel packages has been postponed from February to May. This fair usually attracts over 100,000 visitors and 90 exhibitors.
The global manufacturing supply chain is expected to be disrupted due to China's position as its main pivot and the severity of the virus outbreak in China. Many of Singapore's manufacturers work closely with their Chinese counterparts and it will come as no surprise if Singapore's manufacturing output declines.
Compared with the SARS outbreak in 2003, the current Wuhan virus outbreak is set to have a broader and more profound global economic impact since China's GDP is now four times larger and more integrated with the world's economy.
The Singapore government has introduced various measures to alleviate the business impact of affected industries. This includes waiving license fees for hotels, travel agents and tour guides. It will also defray the cleaning costs of hotels that provided accommodation to those guests confirmed and suspected to have the virus. Companies and the self-employed will be reimbursed to the tune of SGD 100 (USD 72) per day for each worker who has to be quarantined due to the virus. More is relief is expected via Singapore's 2020 budget announcement on February 18.
A good reflection on which companies investors expect to be affected by the virus outbreak and to what degree can be gleaned from the stock market.
Singapore Airlines which has been reducing flights to China saw its share price fall slightly by about 4 percent during the week after Singapore imposed a travel ban on China and when the extent of the virus crisis became clearer. Ascott Residence Trust, which runs hotels and is controlled by Capitaland, Southeast Asia's largest property group, fell almost 10 percent. They have since regained some ground.
The FTSE ST China Index which tracks mid to large-sized Singapore listed companies that have a majority of their sales from or operating assets located in China has tumbled some 8 percent since the beginning of the year. (ANI)