Why Phase 2 (Heightened Alert) Could Potentially Be Worse Than Circuit Breaker For Singapore Businesses

Phase 2 Heightened Alert

Perhaps the writing was always on the wall. Across the world, many countries that successfully controlled the initial wave of COVID-19 community cases (including Singapore) have found their countries hit by second waves of new community cases once they started reopening their borders.

After our 2-month Circuit Breaker last year from 7 April to 2 June, Singapore’s economy took slow but gradual steps to reopen in multiple phases. In fact, on 5 April 2021, Singapore entered into a semi-normal state of daily living with safe distancing measures significantly eased. On 27 April 2021, we were even declared by Bloomberg as the best place to be in the world during the COVID-19 pandemic.  

As a stark reminder to all of us that the pandemic isn’t going away anytime soon and that no country is immune to it, it took less than two weeks (since the Bloomberg article) for COVID-19 community cases to quickly become a worsening problem in Singapore. On 4 May 2021, the government announced tightening measures that will take place from 8 May 2021 to 31 May 2021, the first time since circuit breaker that Singapore has been forced to take a step back to re-shut parts of our economy. 

Less than a week later, the government announced even more measures. On 14 May 2021, it was announced that we will be entering Phase 2 (Heightened Alert) from 16 May 2021 to 13 June 2021. You can read more about what businesses can or cannot do during this phase here.

The current Phase 2 (Heightened Alert) is somewhat similar to Phase One. For those who still remember, Phase One (2 June 2020 to 18 June 2020) was when workplaces were allowed to open though work-from-home remains the default for those who can telecommute. Households were permitted to receive up to 2 visitors per day though there were restrictions on who we can visit. Similar to the current situation, dining in was not allowed during both Circuit Breaker and Phase One.

Do note however, schools will shift to home-based learning from 19 May to 28 May when the current school terms end. Tuition and enrichment centres must shift online or suspend activities till 13 June 2021. Even before, we can imagine many parents may want to take a break from sending their kids to classes.

For business owners and self-employed individuals, the differences in terms of financial support provided by the government this time around will be quite different from what it was last year, which may not bode well for many businesses. 

What Has Changed For Businesses Since The Start Of May 2021?

In the pandemic world we live in, three weeks is a very long time, and a lot has happened to Singapore during that period. 

On 27 April 2021, there was just one community case reported and you would be forgiven for feeling optimistic in the near-term as the economy continued to reopen. Less than three weeks later, it feels like we could be back to square one, very similar to the Circuit Breaker last year.

On one hand, unless you are in the F&B, education or fitness industry, everything is somewhat similar to what it was three weeks ago when Singapore felt much more optimistic. For example, if you own a retail business or an events company, your business can continue operating as long as you adhere to safe distancing measures. And because of that, companies from these industries will not be receiving any additional financial support, such as the Job Support Scheme (JSS).

Thus far, the only industries that will receive an increase in JSS support are F&B businesses, and understandably so. Since F&B companies are directly impacted due to the no dine-in rule, they will receive 50% of JSS wage support from 16 May to 13 July 2021. 

However, the problem is that it assumes businesses in other sectors such as retail, education or events management will not be severely impacted. This isn’t true. Suppose you are the owner of a fashion retail business, you can expect business for the next few weeks to be poor because of lower foot traffic, restriction on the number of people that can enter both the shopping mall and your shop, plus the fact that the government itself is discouraging people from going out for non-essential reasons in the first place. At the same time, you continue to incur rent, staff costs and operating costs because your business isn’t required to close, with no rental rebate or salary subsidies. 

Read Also: 7 Biggest Losers In The Phase 2 “Heightened Alert” Announcement On 14 May 2021

In 2020, The Government Was Quick To Provide Blanket Support For Most Businesses 

In 2020, the Singapore government was quick to provide financial support in the form of JSS payouts and rental rebates to all Singapore SMEs and even larger businesses, regardless of how much (or little) they had been impacted by COVID-19. The idea then was that it was better to quickly support local SMEs to prevent firms from closing and unemployment from increasing rapidly. 

This time around, the government appears to have taken a different approach. Rather than supporting all businesses including those that may not be impacted, they are choosing only to support the industries that are directly impacted by requirements to halt part of their business.

Thus far, only the sports industry is getting the Sports Resilience Package while the F&B sector will receive higher JSS support

Read Also: Closure Of Gyms And Indoor Fitness Studios: What Is Allowed And Not Allowed?

Will Phase 2 (Heightened Alert) Be Worse For Singapore Businesses?

I believe that the current situation that we find ourselves in was something that many people did not expect. At the risk of making a controversial statement, I don’t think the government was expecting this either. Otherwise, the announcement made on 24 March that allowed 75% of staff back in the office from 5 April wouldn’t have been made in the first place. I also think many business owners and self-employed individuals didn’t expect Singapore to go into the current Phase 2 (Heightened Measures).

That said, I do think we have no one but ourselves to blame. 

In 2020, the COVID-19 global pandemic was something that no governments or business owners could have anticipated. If you sign a lease to open an F&B business in December 2019 or decided to go into self-employment in January 2020 to be a wedding organiser, you were just downright unlucky. That is why I thought the government did a good job in quickly providing rental rebatesJSS payout and also the Self-Employed Relief Scheme (SIRS) to businesses and self-employed individuals.

However, though the current COVID-19 situation that we are facing in Singapore may bring a little déjà vu, I don’t think we should expect the same level of government support for business owners and self-employed individuals in 2021. 

The reason is simple. While business or self-employment opportunities do present themselves during a pandemic, they come with their own sets of risks. If you had started a business or went into self-employment in 2020, then you went in with the knowledge that COVID-19 is still very much around. For example, some businesses may have expanded their office footprint in 2020 in anticipation for expansion and also because rents were lower. However, they enter into these lease agreements fully aware (or at least, they should have been) that we are still living in uncertain times.

Read Also: Office Rentals Are Down – But Should You Sign A Longer Lease In 2021?

For those who started a business in 2020 or 2021, this is not an easy pill to swallow. We all want to support local entrepreneurs who took the courage and risk to start a business when they identified opportunities during the pandemic. However, we can’t ignore the fact that starting a business during a pandemic was always going to be a risky endeavor. 

And unfortunately, for those who just started a business, opened a new store or renewed their office lease, we are stuck with the financial commitment. The hope now is these latest measures will stem the tide of community cases so that businesses can resume sooner rather than later.

For Existing Businesses Yet To Pivot, The Future Does Not Look Good

We have all heard numerous times that 2020 was an unprecedented year. Companies had their employees working virtually for months, and some continued to stay remote even after they are allowed to return to the office. Restaurants that insisted for years to only serve dine-in customers or takeaway suddenly launched online ordering and delivery within three days. COVID-19 forced us to change, evolve or even pivot our business at a record speed that many of us never realised was possible. 

While some businesses had exited, the rest of us who were able to survive had a full year to adapt. We could make our workforce more agile and take advantage of government grants like the PSG to digitalise our products and services

However, while 2020 was an unprecedented year, 2021 isn’t. If our business had been unable to adapt over the past year and is now suffering the same issues as we were in 2020, then perhaps it’s worth asking whether we are running a business that can realistically survive in the new normal. 

Read Also: Why Cash In Bank (And Not Profit) Is The Number One Priority That Business Owners Need To Care About

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