Hello from Singapore, where the situation has changed since last time Trade Secrets stopped by in March. After months in which life had somewhat returned to normal, authorities have reimposed strict social-distancing measures, banning dining in restaurants and limiting social gatherings to two people following a rise in new Covid-19 infections (the daily number of locally transmitted cases remains low for global standards, with today’s tally hitting 38).
The authorities have also tightened border controls, limiting the inflow of foreign labour — vital to the functioning of this island nation. That could hit sectors such as the marine industry, which has helped make Singapore a regional hub for world trade. Today’s piece looks at how dependent this business is on migrant workers, in what way the authorities are trying to minimise the blow and how this crucial source of labour has fared throughout the pandemic in the port city.
How the latest wave will rock marine life
Singapore’s migrant worker dormitories — where more than 300,000 people mostly from India, Bangladesh or China live in cramped rooms of up to 20 workers sleeping on bunk beds — were at the centre of the city’s worst Covid-19 outbreak last year. As local cases rise once more, authorities have become fearful that the dormitories could become the site of fresh outbreaks.
For months, the island nation registered single-digit or no locally transmitted daily infections after easing restrictions in December in an attempt to open up the economy. But authorities have now tightened border controls and distancing measures aggressively as the city state last week reported 71 locally transmitted cases.
Some of those restrictions have focused on India, which is fighting a new, devastating coronavirus wave.
Singapore last month barred all long-term residents and short-term visitors, who had travelled to or transited via India in the previous 21 days, from entering or transiting through the island nation. Singapore is also among the ports to have banned ships from changing crew members who have recently travelled from India.
Even that has not been enough to stop Covid clusters re-emerging in dormitories in recent weeks, though these now appear to have been contained.
“The majority of new arrivals from India work in the construction, marine and process sectors and they live in the dormitories,” Lawrence Wong, co-chair of Singapore’s Covid task force, said last month, adding that quarantine upon arrival could not fully prevent “leaks”.
“If such a leak were to happen among new Indian arrivals working in these sectors then a new strain may get leaked into the dormitory and, worse, even recovered or vaccinated workers may get infected and then we may see new clusters emerging again in our dormitories,” he said.
Authorities have since identified a new cluster at Changi airport that could involve the more easily transmissible B. 1.617.2 coronavirus variant that was first discovered in India. A separate cluster at a Singaporean hospital includes cases with this variant.
Migrant workers residing in dormitories account for almost 90 per cent of the country’s total number of infections so far. But tightening border controls with countries such as India will heavily impact productivity and profits in the marine sector. The sector is vital for a transshipment and bunkering hub such as Singapore, whose port is essential to a small city state with an open economy. The authorities are all too well aware of that — its economy plunged into recession last year during the pandemic, with gross domestic product contracting 5.4 per cent in 2020.
“Foreign workers account for as much as three-quarters of labour in the marine sector,” said Chua Hak Bin, senior economist at Maybank, adding that a drop in migrant worker arrivals would “drive wages higher and squeeze the margins for many of these foreign labour-reliant industries”.
Low-wage work permit holders (including domestic, marine and construction workers) make up the bulk of Singapore’s international workforce, which in turn accounts for a fifth of the city’s 5.7m population.
Singapore has been trying to reduce reliance on foreign labour. But the labour shortage due to Covid has been so severe that earlier this month the manpower ministry said it would increase foreign worker levy rebates in the construction, marine shipyard and process sectors from S$90 ($68) to S$250 ($188) per month per work permit holder.
“Tighter border restrictions and stricter safe management measures due to Covid-19 have resulted in significant manpower shortages and increased costs for the [construction, marine shipyard and process] sectors,” the ministry said, adding that the number of work permit holders employed in these industries in 2020 dropped almost 60,000, or 16 per cent.
While the marine sector, including shipyards and oil rig manufacturing, will be affected by the new restrictions, Irvin Seah, senior economist at DBS Bank, thinks the impact will not be as severe as in 2020, when worksites ceased operations completely. “Projects may get delayed but the work continues,” said Seah.
Trade Secrets’ hope is that this latest spate of Covid cases will remain under control — and out of migrant worker dormitories.
Trade links
In more entirely predictable news of things going awry with UK trade policy, splits are emerging within the Cabinet over the trade deal with Australia. The “ferocious” battle is being fought over concerns that any concessions to Australian farmers will provoke a backlash from Britain’s agriculture industry.
Irish broadcaster RTE reports this morning that the British government has suggested it could use the concept of force majeure to absolve it of its obligations to apply the Northern Ireland protocol. We don’t quite understand how you can apply a legal concept meant to relieve you of obligations that were unforeseen to something that many entirely foresaw, but there you go. (For anyone looking for an explainer of what force majeure is and when it ought to be applied, check out this Twitter thread from David Allen Green.)
The City of London, meanwhile, is losing some of its interest rate derivatives business to New York and Amsterdam.
Ahead of this week’s big health summit, the US has said it will ship another 20m Covid vaccine doses to other countries. That is in addition to the 60m Oxford/AstraZeneca shots it has already pledged. While the AstraZeneca shot has yet to be approved in the US, these additional doses will be ones that could have been used on people living in the US.
Nikkei has an interesting read ($, requires subscription) on Shinzo Abe, Japan’s former prime minister, returning to public life to help secure Japan’s semiconductor production as tensions in the Taiwan Strait threaten the world’s highly concentrated chip supply chain.
We’d highly recommend the latest episode of Bloomberg’s Odd Lots podcast. It’s a fascinating conversation with Ryan Petersen, chief executive of Flexport, who does a great job of explaining the ins and outs of the logjams along the world’s trade arteries.
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Source: Economy - ft.com
