Singapore faces bigger contraction as Malaysia shuts borders

People walk across the Woodlands Causeway with their luggages last night, from Johor to Singapore, hours before Malaysia imposes a lockdown on travel due to the coronavirus outbreak. - Reuters

SINGAPORE: Malaysia’s movement control order is the latest threat to a Singapore economy already reeling from the coronavirus outbreak.

The city state relies heavily on its neighbour’s workers and food, and Malaysia’s move Monday night to ban all visitors and prevent residents from travelling overseas for about two weeks will choke off a key labour channel.

Maybank Kim Eng Research estimates that about 400,000 Malaysians working and studying in Singapore cross the border on a daily basis. The potential hit to the city state’s economy could therefore be large.

“Banning daily commuters will essentially cut off almost a 10th of Singapore’s labour force, hurting both the manufacturing and services industries, ” said Chua Hak Bin, a senior economist at Maybank in Singapore.

Singapore was already facing a recession because of virus-related disruptions to the city’s trade and tourism. Maybank was estimating a 0.3% contraction in gross domestic product in 2020, with the potential for a more severe decline if the Malaysia restriction takes a heavier toll on the economy.

“Malaysia and Singapore remain joined at the hip by geography and history, ” Chua said. “Malaysia’s movement control order, especially on travel and non-essential business, could have severe knock-on effects on Singapore’s economy.”

Singapore said yesterday it was working with companies to find solutions to house their Malaysian staff, working with hotels, dormitories, public-housing units and private apartments to offer affordable options.

“The government is looking into providing financial support for companies that need to urgently accommodate their affected workers, ” the Ministry of Manpower said in a statement. “We will prioritise the needs of firms that provide essential services such as healthcare, security, cleaning, waste management, facilities management, logistics and transport.” — Bloomberg