The COVID-19 pandemic has redefined the way businesses are carried out across the world. Analysts predict that Singapore economy will shrink by 11.8 per cent in the second quarter, which could be Singapore’s worst recession. In order to cope with this crisis, the Singapore government has dedicated close to $100 billion or nearly 20 per cent of GDP to help businesses and individuals.
The impact of a bleak economic performance here in Singapore is indisputable but to what extent has COVID-19 affected businesses and which sectors are more severely hit than others? Hear from the C-suites in a networking forum hosted by Nexia TS as they share their thoughts on the challenges they have faced, how the crisis has impacted ways of doing business and their insights on what might lie ahead.
“COVID-19 – The perfect storm”
Marcel Tjia, Executive Director & CEO, Interra Resources
Interra Resources is a Singapore listed company in the oil and gas industry. We have operations in Indonesia and Myanmar. This is the perfect storm of falling oil prices amidst current economic backdrop and COVID-19 -so this is a trying situation. What gives me a lot of hope is that the demand for oil can come back quite sharply. The demand for oil comes from transportation which we may see a V-shaped recovery. I’m mildly optimistic that for the rest of the year there will be a decent recovery if there is no large second wave of COVID-19 cases.
“Retail is almost a standstill”
Lucy Cher, CFO, Singapore Myanmar Investco Limited
The company is directly impacted by the COVID-19 situation because the airport is closed thus retail is almost a standstill. There are also no dine-in services for F&B in Yangon, Myanmar therefore, we are impacted. What we are doing now is looking at the government-backed financing schemes. It has been 2 months since we have started the application for this government-backed assistance, and we are still waiting for the local banks’ approval.
“Focused on what we can control”
Caroyln Choo, CEO, Worldwide Hotels
The hotel industry is badly hit since there are no overseas guest and hotels are not allowed to check in any local guests for staycation during the circuit breaker period. We must create new demand and create new growth areas. We are working with government to generate a new use for the hotels and some of our hotels are housing foreign workers to keep our cashflow going. Even though the room rates are very low, we need to secure some form of cashflow to survive the COVID-19 crisis. We are also challenging new norms.
The new standard for a 5-star hotel is providing the highest standards of hygiene and cleanliness hence we are preparing all our hotels to be SG-Clean certified. With stricter protocols and standard operation procedures to increase hygiene and cleanliness, and minimising contact points with our guests, we hope to see a bigger market share when international travel resumes.
“Change the way we think about going digital”
Sharad Tibewara, CEO, Polymet SA
Sales for restaurants and F&Bs are down during the COVID-19 period. As a result of this, the sales of alcoholic beverages to these F&B industries are also affected. When people don’t travel, the sales of F&B also go down. For the polymer business, we used to run the entire business based on human-to-human relationship.
Now we see that the business can go digital via WhatsApp and Zoom, there will be significant cost savings for the distribution business if we can implement this transformation at the operational level.
“Cash is king”
Chin Chee Choon, Advisory Leader, Nexia TS
In time of crisis, it is important to think outside the box and look for other business opportunities. A good case to look at is this precision engineering company that produces scanners that I have come across. Now that demand has dropped, they had to look at new business opportunities.
One of it is to produce scanners that use facial recognition technology. These facial recognition scanners allow temperatures to be taken automatically as people walk pass them. Based on the forum discussion, the consensus across the board is that recovery will take place somewhere mid of next year, so businesses need to preserve their cash to ride through this storm – cash is king now.
Look at new growth areas for recurring business”
Loh Ji Kin, Assurance Leader, Nexia TS
It is a unanimous consensus that COVID-19 will take a long while before we are back to normalcy. Opportunities are amid the challenges we face. We must continuously be looking out for new areas of growth where there are recurring business opportunities. Regardless of the type business we are in, we must readapt and make necessary changes.
“Consider M&A deals”
Ong Hwee Li, CEO, SAC Capital
Companies looking for funding through IPO during this period may face difficulties in raising a meaningful sum because valuation and pricing are on the downside. Instead, companies with tight cashflow can consider M&A or sell-out as an alternative if the business is in the wrong industry. There has been an increase in enquiries for M&A, trade sales or partial sell-out services.
We are also seeing a demand for some opportunities to invest in some listed companies in Singapore where the share price has come down but the question is whether the owners of these listed companies are willing to give up their equities at the current share prices which are lower than the pre-COVID prices.
“Rethink your business model”
Bill Foo, Chairman, Tung Lok Group
Pre-COVID, we were looking at ways to expand our business offices. Post-COVID, there are some questions regarding whether we need that much office space? Do we need everyone to be working at the same place? For our business models if we can’t go out and meet customers to sell like in the real estate agency, then what can we do? We need to rethink about our business models and make necessary adjustments to adapt to the new business environment and different price points.
“This pandemic is not end of the world”
Chia Ming Ting, CEO, The Global Serve
Going forward there should be more optimism in the economy as I see some progress in the current situation. Countries are reopening; factories are gradually resuming its operations and vessels are starting to move. We also see more activities in Europe even though the environment there is generally quite pessimistic. People’s mindset changes after this COVID-19 pandemic because we realise whether there is business or not, it is not the end of the world.
“Tech future remains bright”
Daphne Ng, Co-Founder of Dedoco and Executive Director of RootAnt Global.
The tech future remains bright. Digital banking space will be very vibrant as banks realise that they are meeting customers (physically) lesser and with COVID-19, it forces the banks to look at other mobile (digital) banking services. We are going into that space quite quickly.
“Be productive and cost-conscious”
Jazz Chong, Founder, Ode to Art Singapore
Art galleries are not being spared in this crisis that rest of the world is going through. We are mainly feeling the financial squeeze from slower volume of sales. One way or other it is to be more productive and be cost conscious regarding the way we are operating now.
“We are all in the same boat”
Henry Tan, Group CEO & Chief Innovation Officer, Nexia TS
Don’t just do nothing. Do something. Transformation is the key as we continue to operate on what we have and what we can. COVID-19 changes the way how businesses are done as it changes a lot of mindset. People are willing to collaborate more as compared to pre-COVID times.
The pandemic has taught us to come together as one, to collaborate, and make businesses work. Given that we are all in the same boat (in this current situation) – think positively and don’t stop looking out for any opportunities ahead.
Businesses regardless of size will need to be proactive in managing the risks and challenges presented by the COVID-19 crisis. Based on key hightlights from the COVID-19 KEY IMPLICATIONS FOR BOARDS by CPA Australia ESG Centre of Excellence , it suggests that for organisation to survive they should respond to the changing demands; recover to emerge stronger; and reimagine the next normal.
Strong leadership is required to undertake the critical role of monitoring the performance of the organisation, carefully reviewing management’s scenario analysis, identifying and accessing funding and reviewing updated cashflow forecasts.
When businesses are faced with uncertainties, it is vital to continuously monitor the financial performance of the organisation, including updated cash flow models and focus on cost management and expenditure. Other important strategies to consider is exploring options for the business to pivot and create alternative revenue streams.
Reinventing is a leap into the future. One thing is certain, many organisations will look to build resilience into all aspects of their business. Digital transformation projects will continue with robotic process automation and artificial intelligence will be used to streamline operations, empower employees, engage customers and transform products.
For more information, please contact:
Chin Chee Choon
Advisory Leader, Assurance Director
Loh Ji Kin
Assurance Leader, Assurance