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Oral reply to PQ on supply disruptions from COVID

Oral reply to PQ on supply disruptions from COVID

Questions

 

Miss Cheng Li Hui: To ask the Minister for Trade and Industry (a) what are the current plans in place for crises in terms of preparing for an adequate national stockpile and whether they are sufficiently robust; (b) how can the Government and the community work hand-in-hand to assure the public of adequate stockpiles; and (c) whether there are any lessons derived from the hoarding behaviour in the aftermath of raising the DORSCON level in February 2020.

 

Miss Cheng Li Hui: To ask the Minister for Trade and Industry in view of the lockdown of countries during the current COVID-19 outbreak (a) how do the travel restrictions affect Singapore; (b) how will our economy be affected by the slowdown in movement of goods and supplies especially with the lockdown of Malaysia; and (c) what measures are in the pipeline to help affected businesses tide through this challenging period.

 

Oral reply by Minister for Trade and Industry Mr Chan Chun Sing

1. The COVID-19 pandemic has severely diminished global production capacities and disrupted global supply chains as countries take stringent measures such as restricting movement, shutting down businesses and factories to contain the outbreak.

2. Restrictions on air travel have considerably diminished global air cargo capacity and connectivity. This has impacted the availability, cost, and timeliness of a connected air freight network. Seaport capacities are also increasingly under stress. Ports and vessels are not able to continue with usual operational and cost efficiencies as the worsening outbreak hampers logistics chains within countries.

3. In Singapore, we have adopted a multi-pronged strategy to deal with this unprecedented disruption to global supply chains.

4. For food, we have a strategy developed over many years that entails a combination of stockpiling, import diversification, and local production. The size of our stockpile is determined by a range of factors such as our consumption rate, the supply chain reliability, resupply rate and frequency, shelf life of the products and the cost of storage, the duration of possible disruptions and our local production surge capacities.

5. Maintaining the necessary stockpile for each and every item is a dynamic task that requires constant watch over the fluid global supply landscape. Beyond the factors mentioned, we must also watch the rising protectionist measures by countries to secure their own supplies which compound the global supply chain disruptions. Panic buying will also further distort our usual consumption rate and planning assumptions.

6. As the lockdowns in exporting countries persist, the ability of countries to produce and export will come under increasing strain. For instance, while the Government has worked with Malaysia to ensure that goods, especially food and essentials, continue to flow between our countries following the implementation of Malaysia’s Movement Control Order, we cannot be certain how long this will last as the global COVID-19 outbreak continues to escalate. But we must certainly plan and be ready for further disruptions.

7. Ms Cheng asked about the key lessons from this episode. There are several learning points for all of us, be it at the government, business or individual levels.

8. First, panic buying severely disrupts the usual consumption rate and our stockpile efforts. No amount of stockpile will ever be sufficient if individuals hoard. To fear is human. However, in order for us to not succumb to such fears, we must remind ourselves and each other that collective defence is our strongest defence. We can take comfort in the fact that we are not in this battle alone which will help us guard against individual fears and irrational behaviour. Another way to overcome our individual fears is for us to remember the more vulnerable amongst us. To remember that we all have a responsibility to care for one another, especially in times of crisis. For example, we can all play our part by purchasing responsibly and help calm those who are fearful.

9. Second, our domestic last mile logistics from the warehouses to the retailers can be disrupted by panic buying. We have a finite number of delivery slots, vehicles and drivers. In the event of a run on supplies, a vicious cycle is created. We will have to mobilise logistic players from other sources to restock our supplies, in turn impacting those supply chains and creating a cascading effect. The compounding disruptions further increase fear and heighten the possibilities of more irrational behaviours. If we are not careful, it becomes a self-fulfilling and self-sustaining frenzy.

10. Third, we can adapt and adjust our consumption choices. For example, we can switch to frozen or canned options when fresh ones are not available. We can also switch to alternative brands if our preferred ones are not available. If we are adaptable, it strengthens our bargaining position and avoids us being held ransom to price escalation by a few.

11. Fourth, diversification entails our discipline to open up multiple sources of supplies in peacetime, even if it results in slightly higher prices. Otherwise, in a crisis, we will find that we lack alternative supply lines to keep us going. We will then be at the mercy of profiteers.

12. Meanwhile, Singapore is working hard with like-minded partners to ensure that trade continues to flow unimpeded, and that critical infrastructure such as the air and seaports remain open to support supply chains globally. Just two weeks ago, Singapore, together with Australia, Brunei Darussalam, Canada, Chile, Myanmar and New Zealand, issued a joint ministerial statement affirming our collective commitment to ensuring supply chain connectivity to facilitate the flow of goods including essential supplies amidst the COVID-19 situation. This initiative has since gained momentum, with Lao People’s Democratic Republic and Uruguay having come on board. At the same time, we have also kept open our trading lines with other countries, such as China and South Korea. At last week’s G20 Trade Ministers Meeting held via videoconference, the participating Ministers agreed that the world must work together to maintain global productions systems and trade links, there by engendering long term confidence in investors, businesses and consumers.

13. The outbreak will weigh significantly on global growth, with several major economies expected to go into recession this year. Singapore is unlikely to be an exception. The sharp fall in external demand, along with the plunge in tourist arrivals and cutback in domestic consumption are all expected to severely affect the economy. Hence, the Government has so far put forth about $55 billion through the Unity and Resilience Budgets to help Singaporeans, businesses and workers tide through this difficult period. In particular, the Resilience Budget has introduced and enhanced measures to protect jobs, help enterprises overcome immediate challenges and strengthen resilience for our economy and society to emerge stronger. DPM Heng will soon deliver a Ministerial Statement in Parliament on additional support for businesses and their workers, households and vulnerable groups, to better cope with the upcoming circuit breaker measures.

14. Throughout this crisis, the Government along with our economic agencies, essential firms, suppliers and logistics providers - both in Singapore and around the world - have been working tirelessly to ensure Singapore continues to function and shelves remain stocked. They have shown tremendous ingenuity and tenacity during these unprecedented circumstances, helping secure supplies for us from wherever possible. The best way to show our appreciation to them is to treasure what we have been able to obtain despite the circumstances, and never waste any food and materials that we have been able to secure.

15. All of us must do our part to support their efforts. We must remain calm and consume responsibly. Do not panic as our markets, supermarkets and food establishments will continue to operate in spite of the additional precautionary measures from tomorrow. Going forward, even when the outbreak recedes, we must continue to pursue our multi-pronged strategy of stockpiling, import diversification, and local production to remain resilient. We must also be psychologically prepared that all of us need to make adjustments in a crisis.

 

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