(BLOOMBERG) – Singapore and Hong Kong, among the world’s most open economies, have practically shut their doors for more than a year to keep Covid-19 in check. But as the United States and Europe emerge from the pandemic, the cities’ businesses and expatriates are starting to question whether they have been too slow to reopen.
At stake are their reputations as top business and finance hubs in Asia, with Singapore’s reach stretching from India to Australia and Hong Kong as the gateway to mainland China. Tighter borders and quarantines, along with sustained local lockdowns, are taking a toll.
For Singapore, the extended closure has diminished its stature as host for high-profile global events and a travel hub via one of the world’s top-rated airports, particularly after winning plaudits for its early handling of the virus. The World Economic Forum’s annual gathering, planned for the city-state in August, has been nixed, as has this year’s Formula One race for October.
Hong Kong has the added pressure of Beijing’s tightening grip. A survey by the American Chamber of Commerce last month showed more than 40 per cent of its members might leave Hong Kong, highlighting concerns over a China-imposed national security law and the handling of the pandemic.
The next three to four months for Singapore will be a “tipping point,” said Ms Juliet Stannard, director of Citiprop Property Management, who has 21 years’ experience in the city’s real estate market. Expats may depart in the next six months if vaccinations and travel reopening do not go as planned – a danger she believes the Singapore Government fully recognises.
If the Government does not meet its vaccinations goals, “they know their international reputation will be tarnished”. Ms Stannard said.
Amid the efforts to reopen, Singapore sees the economy growing 4 per cent to 6 per cent this year after last year’s 5.4 per cent contraction, its worst performance since independence more than a half a century ago. Hong Kong’s government is forecasting growth of 3.5 per cent to 5.5 per cent this year.
In both cities, fewer people are arriving to replace those who have e left, said Mr Lee Quane, regional director with ECA International, which specialises in mobility. A reversal of that trend looks unlikely given ongoing restrictions and quarantine rules, while rival centers like New York and London open up.
“These are likely to be detrimental to both Hong Kong and Singapore’s attractiveness, and possibly hinder companies’ ability to attract staff to relocate to these locations into 2022,” Mr Quane said.
A big worry for foreign workers in both cities is how and when they will be able to return to Singapore or Hong Kong if they travel abroad, an especially fraught situation for those with virus-stricken families back home. If they are allowed back in, they could face quarantines of as long as three weeks.
Ms Rabab Ahmed, 39, and her consultant husband were not able to travel to New York from Singapore when his mother passed away from the virus in April last year, nor for her brother-in-law’s wedding because of the latest restrictions imposed last month.
“If Singapore denies us a re-entry, we’d be screwed,” said Ms Ahmed, an English-language teacher who moved to Singapore in December 2019, just as the pandemic was taking hold. “We are discussing that if it doesn’t get better by end of year, we’d move back to New York.”
Singapore says any easing of restrictions will depend on the pace of vaccinations: It aims to fully inoculate half the population by the end of August, and reach 75 per cent by October. So far, about 35 per cent of the total population has been inoculated, according to Bloomberg calculations.
“We have to stay agile and constantly calibrate our pandemic-related measures according to the evolving situation domestically and internationally,” said Ms Jillian Lim, executive vice-president of Singapore’s Economic Development Board. “Our top priority is to keep people in Singapore safe.”
The Hong Kong authorities “are constantly reviewing the situation and are aware of issues raised by international business on the need to facilitate international business travel and meetings”, the government said by e-mail.
People have left the city for various reasons, including the Covid-19 situation, which is not unique to Hong Kong, but it continues to attract overseas talent and significant inflow of investment, it said.
Elsewhere in Asia-Pacific, Australia, where roughly 30 per cent, or 7.5 million residents, were born overseas, pressure is building on the government to articulate a plan for opening international borders. The nation’s biggest business lobby has called on the government to start opening from this month, while the boss of Australia’s second-largest bank, Westpac Banking, said the country must find a way to “live with” the virus for some time.
“Closing ourselves off to the world for years and relying on lockdowns when outbreaks occur is not sustainable,” Mr Peter King wrote in a column last month.
Mr Junxian Lee, co-founder and chief executive officer at Moovaz, a Singapore-based international relocation company, saw the flight of expats last year as visas expired and some returned home to retire early or be near family.
While Moovaz is seeing some inbound demand thanks to Singapore’s early Covid-19-era success, the company’s 80 per cent year-on-year revenue boost is largely due to increased demand for departures, Mr Lee said.
Singapore has seen a drop in the foreign workforce over the past year. At the end of 2020, the number of Employment Passes, which are issued for higher-skilled roles that pay at least $4,500 per month, slipped 8.6 per cent from the previous year, according to Ministry of Manpower data. The total foreign workforce, including lower-skilled and household workers, fell almost 14 per cent to about 1.23 million, following a 3 per cent gain in 2019.
But firms are not ready to uproot just yet, particularly given Singapore’s reputation for open and fair business, as well as safety and quality of life.
“The impact of a slow vaccine uptake is that the next few months become a real test of whether Singapore can stay nimble enough to limit any serious damage to its business-friendly reputation and role as an international trade and finance centre,” said Mr Arv Sreedhar, Singapore-based managing director at investment firm Atlantic Partners Asia.
In a potential sign of progress, Hong Kong is moving toward shortening quarantines for most fully vaccinated travellers who pass antibody tests, a source familiar with the matter said Thursday, easing a border policy that had been criticised as among the strictest in the world.
Once the pandemic is tamed, public sentiment will change, according to Mr Robert Chipman, chief executive for Hong Kong with the global relocation service Asian Tigers Group.
“The border issues, as annoying as they are,” Mr Chipman said, “are transitory.”