April 18, 2024


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Singapore’s fundamentals still strong although COVID-19 could slow foreign investments: DPM Heng

SINGAPORE: The COVID-19 outbreak could slow down foreign investments but the country’s fundamentals remain strong and the reasons why global firms will want to invest in Singapore are still “intact”, said Deputy Prime Minister Heng Swee Keat on Monday (Mar 30).

Mr Heng was responding to a question on how the rapid spread of the novel coronavirus around the world could impact foreign investments and the Government’s revenue during an interview on CNBC’s “Squawk Box Asia”.

While the Economic Development Board (EDB) has been able to “bring in quite a lot of committed investments”, he noted that investors will likely take a wait-and-see attitude amid the uncertainty.

“We will see what happens but the good thing is that our fundamentals remain strong and the reasons why these companies want to invest in Singapore remain intact,” said Mr Heng.

“While there will be a slowdown in investment, we expect to be able to continue with this data and in fact, to emerge stronger.”

To do so, the country can look at sectors that are growing in importance.

These include pharmaceutical, artificial intelligence and infocomm technology (ICT), said Mr Heng, citing how companies have turned to holding teleconferences instead of physical meetings during the virus outbreak.

Last year, Singapore exceeded its forecast for investment commitments by pulling in S$15.2 billion despite a challenging year marked by global economic uncertainties. When announcing the figure in January, EDB had said that it aims to continue attracting S$8 billion to S$10 billion in investment commitments over the medium- to long-term.

READ: Singapore attracted S$15.2 billion in investments last year, beating forecast

Turning to revenue, Mr Heng, who is also Finance Minister, said a “negative” impact is to be expected.

This is especially so for sectors that are sentiment-drive, such as property, which will impact stamp duty collections for instance.

“When income comes down, the people’s spending will come down and with this lockdown, most activities will come down,” he added.

“Therefore, we are expecting a negative revenue impact.”


The COVID-19 pandemic has taken a toll on the Singapore economy, which contracted a worse-than-expected 2.2 per cent year-on-year in the first quarter and is expected to fall into recession this year.

For 2020, the official growth forecast has been downgraded to between -4 per cent and -1 per cent.

To shore up support for the economy and households, a record S$48 billion stimulus package was announced in a supplementary Budget last week. Together with the S$6.4 billion announced in Budget 2020, Singapore will earmark close to S$55 billion, or about 11 per cent of its gross domestic product (GDP), for its fight against COVID-19.

READ: Singapore’s economy contracts by 2.2% in Q1 as COVID-19 outbreak hits construction, services sectors

The Monetary Authority of Singapore (MAS) also eased monetary policy, as widely expected, on Monday. 

Making an unprecedented two-in-one decision, the central bank set the Singapore dollar nominal effective exchange rate (S$NEER) policy band on a zero per cent appreciation path and lowered the mid-point of the band. The last time the central bank lowered the band’s centre was during the global financial crisis in 2009.

Noting that monetary and fiscal policies will need be complementary, Mr Heng described the easing move by the MAS as “absolutely a correct one” that looks at how to maintain price stability and the conditions for longer-term growth.

However, the “firepower” for managing the economic fallout from COVID-19 “has to be fiscal policy”, he said.

He added that the Government will also have to look at structural policies with the world economy set to go through many changes and become “very different” after COVID-19.

READ: Singapore’s ‘bazooka’ stimulus to cushion COVID-19 pain, but recession still on the cards: Economists

READ: MAS eases monetary policy as economy reels from impact of COVID-19 

Citing the ongoing work by the Future Economy Council to transform the Singapore economy, Mr Heng said: “Even as we stabilise our economy … we must also look to the future and aim to emerge better, stronger.

With the latest easing move likely to weaken the local currency, Mr Heng was asked at what point a weaker Singapore dollar would become a problem given that the country is a major importer.

He replied that Singapore has been operating an exchange rate-based monetary policy for many years now and during previous crises such as the Asian Financial Crisis in 1998 and the global financial crisis in 2009.

“I’m confident we will have what it takes to guide this policy correctly, to the right level that will be important to stabilise the economy and to enable the efficient allocation of resources in the economy,” he said.

With the pandemic being an “unprecedented” crisis and uncertainty about how it could continue to evolve, Mr Heng also reiterated that the Government is “prepared to do even more if the situation warrants it”.


During the interview, Mr Heng was also asked about the timing of the next General Election, which must be held by April 2021.

Last week, Senior Minister Teo Chee Hean told Parliament that based on advice from the Attorney-General’s Chambers, to “delay an election beyond the required date in such a manner is unconstitutional”.

The only circumstances in which the elections can be put off is when a state of emergency has been declared.

READ: Unconstitutional to delay General Election and have president form caretaker government: Teo Chee Hean

READ: No decision yet on General Election amid COVID-19 outbreak, says PM Lee

Prime Minister Lee Hsien Loong had also said that planning an election amid the COVID-19 outbreak is a “very difficult decision” and the decision had not yet been made. 

In his response to CNBC, Mr Heng said fighting the novel coronavirus remains the Government’s “number one job”.

Various epidemiologists and infectious diseases experts have painted out three possible scenarios, he said.

The first is that the virus gets contained very quickly – a scenario that experts think is unlikely.

The second possibility is for “different parts of the world (to be) on different parts of the infection curve”.

The third scenario is that COVID-19 “becomes a worse pandemic” around the world. Noting how COVID-19 has placed “very good healthcare systems” in countries such as China, Europe and America under “great strain”, a spread to countries with less advanced healthcare systems will have a significant impact on the world, he said.

“So we are looking at a very uncertain state of the world,” said Mr Heng. “That is going to affect the economy and a whole range of activities. I think the challenges here will be quite significant.”

“The Prime Minister has indicated that he is considering different factors and he has set out his considerations quite clearly,” he added.

“He has said that he has not decided, so we will have to continue to monitor and see what is the best thing to do, for Singapore and Singaporeans.”

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