Singapore’s prospects as ASEAN hub cloudy

Year: 2020

On Senior Minister Tharman Shanmugaratnam’s comments surrounding Singapore’s future growth prospects, FMG CEO Devadas advises that Singapore’s attractiveness as Asean’s hub might be dampened due to changes in organisational strategies post-Covid, reduction in aviation links with Singapore and our high number of Covid-19 cases:

“FMG agrees with Mr Tharman Shanmugaratnam on the underlying point behind his comments, that notwithstanding COVID-19 impacts, future growth prospects for Asia remain promising.

However, we are not sanguine on the future of Singapore’s Hub and RHQ strategies. We anticipate that MNCs may elect to mitigate risk against future pandemics or shocks by distributing, rather than concentrating, their operations despite the undisputed ‘trust and reliability’ advantages offered by Singapore. Similarly, companies may elect to downsize their RHQs to become ‘RHQ-lite’ through a hybrid of smaller RHQs complemented by country offices.

Again this may be a permanent shift as an organisational strategy, resulting from the extreme Covid-19 impacts in eroding Singapore’s historical advantage of aviation connectivity. Other than the finance sector, most RHQs relied on that connectivity to monitor their regional exposures and operations.

The dramatic reduction in aviation links to and from Singapore are not just from the generalised global precautions on travel but also specific to Singapore’s government’s missteps in managing COVID-19 with respect to its foreign workers, resulting in larger gross numbers of infections making other countries reluctant to “Green Lane” with us.”