ASSESSED IMPACT OF COVID-19 LOCKDOWN IN CHINA ON SUPPLY CHAINS AND MEASURES TO ENSURE ACCESSIBILITY OF ESSENTIAL GOODS AND SERVICES

MP He Ting Ru

Ms He Ting Ru asked the Minister for Trade and Industry (a) in view of the various lockdowns in China due to the latest COVID-19 outbreak, what is the assessed impact to supply chains and rising prices in Singapore; (b) which industries or goods and services have been or are anticipated to be most badly hit; and (c) whether any further measures are being taken to alleviate this impact particularly for the availability and accessibility of essential goods and services.

The Minister of State for Trade and Industry (Ms Low Yen Ling) (for the Minister for Trade and Industry): Mr Speaker, the recent outbreaks of COVID-19 cases in China have prompted movement controls to be imposed in various Chinese cities, including Shanghai. As a major supplier of many goods to the world, the reduction in economic activity in China will inevitably lead to some supply chain disruptions, particularly delays in the fulfilment of manufacturing orders and shipping time. However, cargo is still able to leave from Shanghai port and where necessary, is being re-directed to other ports in China or other transport modes such as air.

Industries in Singapore will feel the impact of the supply chain disruptions to varying degrees, depending on their dependence on imported supplies from China and their contingency plan. Since the outbreak of COVID-19, many companies have strengthened their business continuity plans (BCPs) and supply chain resilience plans, which include holding more inventory buffers and diversifying their supplier sources to mitigate the impact of supply disruptions.

Our key imports from China include electronics, machinery and metals. These are primarily intermediate goods that are required by companies in the manufacturing and construction sectors. Based on feedback from companies in these sectors, we understand that most of them have been able to cope with the delays in shipments from China thus far.

We also do not expect the lockdowns in the Shanghai port to significantly affect Singapore’s supplies of essential food and healthcare items, as our reliance on China is relatively low and the cities where we import most of our food supplies are not classified as high-risk ones for now. The Government will continue to adopt a multi-pronged approach of import diversification, local production and stockpiling, which will help to minimise supply shocks.

Nonetheless, as the lockdowns in China have further strained global supply chains, which are already under stress due to the Russia-Ukraine conflict, they are likely to exacerbate global inflationary pressures in the near term. How the effects play out over the longer term will depend on the scale and the extent of the lockdowns and their impact on China’s economy.

The Government recognises that rising cost pressures and higher frequency of supply disruptions have affected businesses. To cope with these challenges, some businesses have had to hold higher inventory buffers which will require more working capital. To support companies with their cashflow needs, we had announced at Budget 2022 an extension of the Temporary Bridging Loan (TBL) Programme and the enhanced Trade Loan Scheme up to 30 September 2022. In addition, the three rounds of tightening of Singapore’s monetary policy over the past six months should also help moderate the pass-through effects of external inflationary pressures.

Furthermore, the Government has announced more assistance for lower-income households to cope with higher prices. As the Minister for Finance mentioned in his Ministerial Statement just last month on 4 April 2022 in Parliament, the SSOs or Social Service Offices will provide a minimum duration of six months’ support for all new ComCare Short- to Medium-Term Assistance (SMTA) clients who apply between April and September this year. Households who are already on ComCare SMTA can also have their assistance extended for at least another three months if they require further help.

The SSOs will continue to exercise flexibility to provide those in need with financial assistance and support. This includes providing ComCare recipients with more cash assistance during this period to cope with inflationary pressures. We will certainly continue to monitor the situation closely.

Ministry of Trade and Industry
9 May 2022

https://sprs.parl.gov.sg/search/sprs3topic?reportid=oral-answer-2829

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