Bruegel Podcast “The Sound of Economics: Singapore’s Experience in Dealing with COVID-19” with Minister for Foreign Affairs Dr Vivian Balakrishnan, 19 May 2020

Bruegel (Head of Governance and Outreach Giuseppe Porcaro): Minister, we are very grateful to have you with us, and for the possibility to learn more about how Singapore has been tackling the COVID-19 crisis, but also more broadly, to learn about the economic impact on Singapore and the regional and global economic consequences of the current situation. But first things first, could you please start by giving our listeners an overview about the situation in Singapore regarding the COVID-19 pandemic, and what have been the actions taken by the government?

Minister: Well, this has been the most consequential crisis of our generation. Singapore is a tiny city-state. Our trade volume is three and a half times our GDP, so we depend on free trade; we function as a hub for people, finance, and ideas.  It is a challenge to be confronted by this once-in-a-generation crisis, which has affected the whole world. This is unlike SARS 17 years ago; this is not an infection only in East Asia, this is an infection globally. 

My second point is that it has occurred in very quick succession across the entire globe, and therefore has led to simultaneous lockdowns, shutdowns or various forms of restrictions, which have had a very heavy economic impact both on the supply and on the demand side, and obviously including on trade. The point I want to emphasise here is that this global crisis occurring simultaneously has a profound impact on a tiny city-state like ours, which depends on connectivity; on the flow of people, the flow of finance. We function best when the world is stable and everything is running well, so it has been a challenge.

A third point I would make is that we were also one of the early countries affected beyond China. Singapore has very strong dynamic relations with China, particularly on the economic front, and in terms of tourism as well, so by late January we already had our first case. If you look at what happened over the past four months, in the first wave, it was basically imports from tourism, which in turn set off small secondary clusters locally, which have been settled. Then there was the second wave in February/March, and we basically had about five to six hundred imported cases. These were our own people returning home from the rest of the world, who were seeking safe refuge. In this time and age, citizenship must have its privileges, and obviously we had to take our people back. Out of these thousands who came back, 500 to 600 of them were infected with COVID-19, so we had to deal with imported cases. This also has been settled. Today the number of imported cases will run at about zero.

The big challenge which I would say we have been dealing with over the past six weeks, and which I’m reasonably confident is plateauing, is the situation with our migrant workers in dormitories. For this I would take reference from what the WHO described. The WHO said migrant worker dormitories were like ships on land, and it is an apt analogy. If you think about what happened on the Diamond Princess, a luxury cruise liner with six-star accommodation; or on the aircraft carrier Theodore Roosevelt, which is a military installation with thousands of people. If you follow the WHO analogy of ships on land, what we have learnt is that this virus is far more contagious than anticipated initially, and when you have people living in close quarters, interacting socially and at workplaces intensively, this virus thrives very well in such a milieu. This is what we’ve been dealing with, the situation in our migrant worker dormitories, but I'm confident that this will also be resolved in due time. 

For the last six weeks we’ve had what we call a Circuit Breaker, which is a gentler form of a lockdown. What that has done is to bring the numbers all the way down. In terms of local transmission, I think today we had perhaps one citizen who got infected. Even for foreigners who are working and living in our community, the cases are practically in the single digits. We still have cases in the dormitories, but that’s really a function of testing, because we are doing very aggressive testing. The vast majority of them are not showing any symptoms, but in our own Singaporean way, we test them very methodically and aggressively. We will still continue to show positive cases, but overall I’m confident of where we’re at. But let's not underestimate this virus. It’s turned out to be a far more potent threat to health, to the economy, even to society and politics. I don’t think we will get back to status quo ante anytime soon. In fact, there will be a new normal, and we will all have to learn to live with the implications of this new normal, both on the economic front and on the social front.   

Bruegel (Director Guntram Wolff): Thank you very much Minister. Perhaps we can spend a bit more time on the Singapore experience, and ask you a few follow-up questions on the specific policy responses that you took in Singapore.  One of the starting points, also at the time when we initially approached the Singapore government to interact with you, was the success of your early strategy, especially the success of the tracking apps or the success of technology in containing the virus. You have described that this has become much more complicated for migrant workers that live in very closed dormitories with little access to bathrooms and so on. Can you describe a bit more the initial phase of the reaction, and especially the use of technology in containing the virus, and do you think that this kind of technology can be scaled globally and be used to contain the virus, or is that not possible because the world operates differently from a city-state like Singapore?

Minister: Well, thank you for that series of very profound questions on different themes. The first point I want to emphasise is the need for preparation. In the case of Singapore, we had a tough time 17 years ago with SARS, and ever since then, we’ve been preparing for the next pandemic. We now have a National Centre of Infectious Diseases; we built up our ICU capacity; we built up the number of isolation capacities. Therefore, when this occurred, we were confident that at least on the health care front, we were prepared in terms of the doctors, the nurses, the laboratories, the professionals, the isolation facilities, the intensive care facilities, the number of ventilators. I think if any country does not start with that initial advantage, you are facing a very grave challenge. So that’s the first point: in terms of facilities and professionals, we were ready.

The next point I would make is that it’s very important to be on the lookout to anticipate problems, and to take early action. For instance, we were one of the first to impose travel restrictions. Our trading partners and our tourist sources were not happy with us, but we had to explain that we had a responsibility both to our own local population, as well as to the millions of people who transit through Singapore, to keep Singapore safe. So that is not really so much a health care call as a political call, which means to keep a lookout and be prepared to take early decisive action. 

Similarly, when China published the genome of this virus – and they did so actually in early January – our labs immediately began to work on PCR primers, as well as antibody tests. Those have turned out to be very useful. The point here again is being prepared, and being able to act quickly to get testing and other scientific and laboratory facilities ready very early on. A related sub-point: if you think back to late January and even early to middle February – this was the time when even China was really snowed under, inundated with cases – even back then, the fact that we were prepared and able to, in our own small way, help with supplies of tests and PPE to China at the point of greatest need.   

If you fast forward to today, now that they have overcome the problems and their manufacturing is back to full steam, or almost full steam as far as healthcare is concerned, they in turn have now been able to supply us the necessary equipment, tests, and so on. The point I’m trying to make here is that being prepared and being prepared to help others at their point of greatest need, and then in due time when circumstances change and that is reciprocated – it’s actually a point about interdependence, collaboration and cooperation. That I think is a point worth making in the midst of this crisis, when many countries have been tempted to just turn inwards, deal with their own problems, and not pay attention to what’s happening around and externally. Precisely because this is a global problem, and none of us are going to be out of danger unless every country in every community is equally safe, there is a need for us to maintain this commitment to multilateralism and globalisation in the fullest sense of the word. It’s not just empty talk, but actually acting on that basis. That we found was crucial and defined our early reaction to it. 

If you turn your mind to the nuts and bolts of what does it really mean when we talk about dealing with the problem domestically: number one, I already alluded to the fact that we had sufficient facilities and wonderful health care professionals. That is the reason why our mortality rates are so low. Today we have had 22 fatalities, and the denominator of cases detected is more than 28,000. You can see in terms of case-fatality rate, it is one of the lowest in the world. This again reflects the quality of health care and facilities, and in particular the point is that we never overwhelmed our health care facilities. If you think about Europe: it has good and excellent healthcare facilities - and I speak from personal experience having interacted with the professionals in Europe - but you will see that in parts of Europe there are rather high mortality rates. It’s not because of any failure on the part of health care professionals, but rather because health care systems were overwhelmed by the rapid number of cases. Singapore has been able to avoid that. 

The other critical ingredient which worked to our advantage was contact tracing, and the ability to isolate people quickly and effectively, so that they did not pose a threat of onward transmission. If you look at this virus, you will see that most infections occur at home, at the workplace or places where there is active social interaction, such as places of worship, karaoke outlets, and restaurants. That’s where the role of contact tracing becomes absolutely crucial. To make things more complicated, we subsequently discovered that this virus was different from SARS, in the sense that people were contagious even before they showed symptoms, even when or even if they have very mild upper respiratory tract symptoms, whereas in the case of SARS, most infections occurred in hospitals for people who had pneumonia. What this meant was that COVID-19 is so much harder to control, because it needed early urgent and quick interventions. 

On technology, I believe you cannot remove humans from the center of the equation. Let me try to explain why. First, you need a human being to exercise judgment: which interactions, which venues, or which activities place the person at risk, either of getting the infection, or in turn infecting others. Second, is that I believe when someone is diagnosed with a condition, you want a human being to inform you that your test is positive; what does it mean; what do you need to do; what precautions you need to take; what is the danger to your family etc. I don’t believe this kind of human counselling, this human encounter can be outsourced to a machine, algorithm or to a smart app on a phone. The key point is that the human remains in the center of the system.

Having said that, the purpose of technology is to facilitate that very human-centric work. In our case, we were among one of the first in the world to use Bluetooth proximity data to facilitate the human identification of close contacts. When we came up with this, we were immediately confronted with several policy, and in a sense political choices. The key is privacy, and this one point which I want to emphasise is that a lot of the debate out there now on contact tracing apps is bifurcated into two groups: the so-called centralized system, where Big Brother knows everything; or decentralized system, where it’s anonymous, decentralised and you're depending on an algorithm to inform you and then you’re depending on people exercising judgment as to what they need to do about it.

In the case of Singapore, we very deliberately decided that we would not take either extreme. Let me explain how our system works. We created an app called TraceTogether, and we open sourced the protocol called BlueTrace. We open sourced it because we wanted people to be able to check and understand the system, but the real key thing was to build up trust – that this was not a nefarious Big Brother surveillance operation. So, we’ve maintained that commitment to open source and open standards.

Second, we have made sure that all the data that is captured by the app resides in your own device, in your own phone. If you are never infected with COVID-19, or if you have never become a close contact or person at risk of being infected or infecting others, that data would never leave your phone, and that data would also be erased after 14 days. My point is don’t get trapped into extremes. We can create a system based on open source, open standards which collects data, which is protected, encrypted and private. But if you’re diagnosed, a human being will call you up, explain the implications, will invite you, with consent, to upload that data in order to facilitate human contact tracing. I just wanted to re-emphasise those two points: you cannot remove the human from the center, and you must continue to protect privacy and build trust. If we can do that, then and only then can we scale up contact tracing. If you look at the way contact tracing is practiced today, it was pretty much the same 50 years ago. The methodology has not really changed. The purpose of technology is just to make that process faster and scalable, so that we can deal with a pandemic on the scale that we are currently confronting. Sorry to belabour that point but I wanted to put technology in its place.

Bruegel (Porcaro): Thank You Minister, because you really made the point very clear. I'm personally very interested about the use of technology and a human-centric approach that that you just discussed. You are also responsible for Singapore’s Smart Nation initiative, so there will be existing technology infrastructure used in government initiatives, and I suppose that all these now would not be happening in a vacuum. What we’ve been seeing on TV, like the use of robot dogs and other kinds of devices, make Singapore look like a scene from a science-fiction movie. What is your reflection on Singapore’s wider strategy on the use of technology, and how has this pandemic accelerated Singapore’s Smart Nation initiative?

Minister: Thank you, that’s another good set of questions. I think you're referring to the robot Spot. We didn’t choose it because it looks like a dog. Let me explain. We wanted a remotely controlled robotic platform which would be able to climb up steps, to climb down slopes, to cross water, and we quickly discovered that in fact, a wheeled vehicle was not ideal. It needed legs, and four legs makes it more stable than two legs. It just happened, incidentally, to look somewhat like a dog and walk something like a dog, but that was not intentional. There were actually more prosaic functional reasons for it.

Second point I want to make is that even in the case of Spot, you’ll notice I said remote-controlled. There is a human operator, it’s just that the human operator is not at that site itself. He's in a remote location, but that human operator can talk to the person that this robot happens to meet, and there is still human interaction.

The next point I wanted to make: we are also very careful. We needed this robot to help us with social distancing, and to ensure that there were no emergencies or risks from overcrowding at parks. So it needed to be able to sense and to count the number of human beings, but we did not want it to be able to identify human beings, and we had to make sure that that was in place. We have also informed people of the limitations of the technology.

The point which I'm trying to drive at again is that all this does not occur in a vacuum. You need a society that understands what is going on, that appreciates the reasons why we are doing something, and has sufficient trust that the operators have the goodwill and the longer-term interests of society at heart. That’s why we’ve been able to do what we do, paying attention all the time to public trust and protection of privacy. I think that’s absolutely crucial. This gives me an opportunity to reiterate the point that it’s not technology for its own sake; it must be human-centric, it must be based on human values, and optimised for human welfare. That’s the way to do it.

Bruegel (Wolff): Thank you very much for this further elaboration, and the robot dog is indeed a very good thing for television, and I think also worked very nicely in limiting excessive social contacts. We should perhaps move on from the technology aspect, even though I find it a fascinating debate myself, and I would love to discuss further the technology issues including all these questions around the capability of these kind of apps to be scaled globally. In the European Union, every country is working on its own version of an app, but the uptake is not very big, so in a sense we lose out on the capacity to have these apps work together, which is essentially what you need in a globalised world. Perhaps Minister you might want to add a quick word on this before we move on to an issue that you raised earlier, which is the virus’ impact on the global economic system, and the fact that it lasts so long. I think it would be fantastic to hear your views on this, but perhaps a few words first on the scalability of the apps globally. 

Minister: Well I think everybody is devising their own systems. My own view is that if everyone committed to open-source and sharing those platforms, and in particular making sure our platforms are interoperable, whilst respecting our domestic political priorities on protecting people's privacy and making sure that everything we do rests on a foundation of public trust – I think if we can do that effectively together, it will be crucial. And the reason why it is crucial is this: when we overcome the initial phase of the disruption caused by COVID-19, we are going to have to reopen, we are going to have to be able to resume travel, to resume trade, to rebuild those supply chains. Without respect for each other’s domestic standards and priorities, without interoperability of our systems and our technological solutions, it will make it much harder for us to rebuild those supply chains, those green lanes for the resumption of travel, and for all the other things that keep the global economy going. 

In a sense it segues quite nicely into your next question, which is where we see the global economy. My first point is that we are deeply worried. In our lifetime, for the three of us at least, I don’t think we’ve ever faced a crisis on this scale, simultaneously occurring in all countries, and for which even in the most optimistic scenario  – that is an effective vaccine becoming available – we’re still talking about at least a year or perhaps even longer. And in fact it may be wishful thinking that we will get back to life as normal, status quo ante. In fact it is more likely that we are going to have to deal with a new normal.

That’s the first point, all of us simultaneously affected, and it has damaged both supply and demand, and of course all our central banks, all our finance ministries have opened up all the taps to ensure that there’s a lot of liquidity. But even then, I don’t think any of us can conclude that there is no risk of this crisis morphing into a financial crisis as well. It’s not just the real factories and the real world where supply and demand are being affected, but also on the finance front. At some point, all this opening of fiscal and monetary taps will have to be withdrawn; the debts will have to be paid, and that’s not going to be easy.

In the case of Singapore, we are very fortunate because we’ve got big reserves, and all the measures that we’ve rolled out now, all the fiscal support that we are extending to our population, whether is it depending on current reserves as well as beginning to tap on past reserves – we can do everything now without taking on new debt, without passing the burden of debt servicing to our children and grandchildren. There are very few governments with this blessing, we are fortunate to have them. Nevertheless, if there is a global and economic financial crisis occurring at the same time, we will be severely affected because as I said earlier, trade is three and a half times our GDP.

The next element that we’re worried about is the relationship between China and the United States. It is a complex and complicated topic in which both politics and economics combine to create a very difficult situation. If the two superpowers cannot effectively collaborate, then there are many global problems that will be well-nigh impossible to solve. Climate change and pandemics are further examples of global problems that will require a global leadership and global collaboration. Listening to the rhetoric on both sides, it’s a source of deep anxiety for the rest of us, including, I’m sure, for those of you in Europe.

And then you have the problem of supply chains being bifurcated. I think one lesson which we’ve all taken from this is that you cannot, in the name of efficiency, depend on just-in-time, and assume that everything will work in peacetime as well as in a crisis. I think all of us will have to pay more attention to paying the premium for insurance for resilience – as I said stockpiles, preparation, critical resources, the ability to either manufacture or to diversify your sources. All this will have a profound impact on the global supply chains that we have witnessed developing over the past two or three decades. How and where this evolution will go, we’ll have to watch very closely. Certainly in the case of us in Singapore, and also in places like in Europe, especially for Germany, we have to pay attention to this.

Another related source of economic concern is commodity prices. Although Singapore does not have any hydrocarbon resources, we have companies that are world-class producers of jack-up rigs and related equipment. A collapse or great volatility in commodity prices also affects our economy. If we extend the list, think about tourism, entertainment, culture, services, airlines, ports, and airports - all those are decimated right now. How quickly will they rebound? It’s an open question. So if you’re a pessimist, there’s no shortage of candidates. 

One final point I'll make before I take another question is that I completely agree with Richard Haass, the President of the Council on Foreign Relations, that this crisis has accelerated history rather than reshaped history. I agree with him because if you think about it: even before this crisis erupted, there were already strains in the relationship between the two superpowers. There was already pushback against globalisation. There were already profound questions about global supply chains and their resilience. There were already questions about the future of jobs, and there were questions about the role of digital technologies and artificial intelligence, surveillance and so on and so forth. In a sense what this crisis has caused us, is to in fact accelerate our search for solutions to these fundamental challenges, these fundamental strategic challenges that in fact have been confronting us for the past few years. It’s not new, but now, we do not have the luxury of time. We need to work quickly, we need to resolve how we’re going to do it domestically, and then how to interoperate and operate globalisation with a new normal. We have our hands full in the months and years to come.

Bruegel (Porcaro): Thank you Minister, you basically already answered some of the questions that I wanted to ask you as follow up. I was looking at our listeners and there is a question from Jan von Hearth on whether you could elaborate on the role of Singapore in the regional response to COVID-19, in the context of ASEAN.

Minister: Thank you. Well at several levels. First our leaders of 10 countries have been in touch through video conference summits and phone calls. There have been meetings convened both within ASEAN, as well as ASEAN plus China Japan and Korea. We had one session with the EU where High Representative Josep Borell hosted a session for all the ASEAN foreign ministries. So at that level, information exchange has been occurring. 

Beyond that, at the level of mutual assistance: test kits, PPEs, sharing of scientific medical information, and providing emergency equipment. All these have quietly been happening below the radar screen without too much publicity. It is however enough to remind us that we are interdependent, and that the only way we’re going to emerge from this crisis is collectively, as an entire region. In a way it’s a very similar challenge to what the EU faces, that you can’t just solve your own problems, you also have to look to your neighbours and make sure that they don’t run into too much trouble either.

The third thing which we are doing is studying how we will emerge from this crisis, and how we can facilitate that emergence by working together. Again I want to emphasise this theme of interoperability of how systems trust in each other’s testing and healthcare facilities, and making sure that there is mutual confidence and mutual support. All this are happening, but it’s still a long way more to go because this crisis is nowhere near the end. I think at the best we are near the end of the beginning. Rest assured we know that we are all vulnerable, and we will have to work together.

Bruegel (Wolff): Minister, thank you so much for talking about the regional aspect, but let me perhaps ask one question from one of our listeners which is specific on Singapore, and which I think is quite interesting. Singapore is a hub for trade, finance, people exchange, and education. As you laid down in the beginning, you’re particularly vulnerable to disruptions to global trade and collaboration that we are currently seeing. From your point of view, what do you see as the biggest hurdles that need to be overcome for Singapore to continue being an attractive hub for companies post pandemic?

Minister: That’s an excellent question, I think the most important thing is how you behave during a crisis - whether you’re open, whether you’re trustworthy, whether you’re reliable, whether you come through during a crisis. Let me give an example dealing specifically with our hub status. When this crisis was erupting, there were many Europeans marooned in different parts of the world. Obviously many in Asia, but even some beyond Asia. You would be aware that right now most airlines and airports are closed. If you go to an airport now, it’s likely to be empty. But there were thousands of Europeans who needed and wanted to go home. And South Americans, North Americans, and people from other parts of Asia. Because we are a hub, in fact Singapore was a key node, a key air bridge for all these repatriations. At the same time, we also had to make sure that this was done safely, so that it did not become an amplification point for the virus. This is something on which we worked very closely and effectively with the European Union, and if you speak to the people in Brussels, they will tell you that Singapore quietly but effectively did this.

Why do we do this? First for humanitarian reasons - people have needs, and if we can help, we should help. Second, if during the depths of a crisis, you realise who came through and who was reliable, who remained open – and at the same time open in a responsible way – investors making future decisions will remember that. We’ve continued to quietly, effectively and safely fulfil our role as a hub, both for goods, for people needing to return home, and of course for the flow of essential medical supplies. 

And here again I would say is another perhaps unintended consequence of being small and reliable - people know we will not impound supplies flowing through Singapore. If we need anything, we would purchase it at market rates. We will fulfil our contracts, and we will not declare and take or precipitate action and withhold the free flow of goods, especially of essential medical supplies. The point I’m making is that this reputation for probity, reliability, respect for the sanctity of contract is very important. I am sure after this crisis is over, people will remember, and we will let them make their own judgments and decisions. 

Bruegel (Wolff): Thank you very much indeed Minister. I think this last point - if investors indeed see what you just described, it might just be another element of the acceleration of trends that we’ve seen before the pandemic that Richard Haass was describing, as some investments might actually move away from some of the traditional hubs such as New York to Singapore, so this will be certainly be one of the interesting things to watch. It is certainly one of the big geopolitical trends that is being accelerated by this pandemic.

Giuseppe, I think we could go on forever, but Minister you’ve been very generous with your time, and you have really made a very clear exposition of Singapore’s thinking on these issues. I am sure many points will be seen differently by some of our listeners, so it is great to have this debate and to hear from you and get to know your point of view. It was really a very interesting presentation, and I would like to very much thank you for your availability this morning, or this afternoon in Singaporean time, and your frankness in your responses. Thank you so much Minister for joining us today, and over to you Giuseppe for the last words. 

Bruegel (Giuseppe): Thank you also from my side Minister, and again to all our listeners for tuning in to the Sound of Economics this morning. I would like to remind you as usual that you can find all the analysis from our scholars on the Coronavirus crisis and beyond on our website. Again, thank you Minister for your time. Thank you Guntram. Until next time, goodbye.

Minister: Thank you very much, look forward to meeting you all in person and shaking real hands.

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