How much bad news can we take in one week?
Singapore’s unemployment rate hit 2.9 percent in the second quarter. Under the prolonged Covid-19 pandemic, we still manage to maintain low unemployment. Thanks to the government’s more than $15 billion payout under the Job Support Scheme. It is also because our unemployment rate excludes the unemployed non-residents, the underemployed, temporary workers, freelancers, those under pay cut and foreigners sent home after losing their jobs.
There were 90,500 unemployed residents in June 2020. Retrenchment of 6,700 workers is more than doubled in the second quarter and also higher than the 2nd quarter of 2003 during the SARS outbreak. Total employment excluding foreign domestic workers fell by 121,800, more than four times the decline in the first quarter. The decline in total employment since the start of this year has gone up to 147,500.
The curse of dividend payouts
As if it is not bad enough, GIC reported its worst annualized return since 2009. This Wednesday MAS advised local banks to limit dividend payouts to have enough capital that can buffer their capacity to offer loans during the economic fallout from Covid-19.
July ends its last week with incessant announcements of bad results from SGX listed companies. Far East Consortium’s acquisition of 70 percent controlling stake in the troubled Eagle Hospitality Trust falls through. There is a long list of Reits one by one reporting their plunge in Dividend DPUs (Distribution Per Unit):
– First Reit -79.5 percent
– Ascott Residence Trust -69 percent
– CDL Hospitality Trust -60 to 70 percent
– SPH Reit -64 percent
– Sabana Reit -65.7 percent
– ESR-Reit -42.2 percent
– Suntec Reit -31.3 percent
– CapitaLand Retail China Trust -41.4 percent
– CapitaLand Commercial Trust -23.2 percent
– Captaland Mall Trust -27.7 percent
– Mapletree Industrial Trust -7.4 percent
This is bad news for the retirees who live on the high dividend payouts of local banks and Reits. It reminds me again in April all UK banks including HSBC and Standard Chartered were asked to comply with Bank of England’s request to cancel all dividend payouts. Over 3,000 Hong Kong investors demanded HSBC to reinstate 2019 dividends by removing compensation of top management for one year. Of course, it fell on deaf ears. This is a a wake-up call for me. It dashes my dream of holding blue chip shares for dividend payouts in my old age. During bad times, nobody owes you a living.
How bad is our aviation industry?
It never rains but it pours. The stock price of Singapore Airlines plunged to its lowest in 22 years since 1998 after reporting a S$1.12 billion loss last quarter. SIA’s announcement is a week after SATS posted its first-ever quarterly loss of S$6.3 million since the company’s listing. As of end July, Singapore Changi Airport ranks ninth in the world’s top ten airports with the largest number of grounded aircraft. The airport now has 124 parked jets. The hot and humid weather in Singapore is unsuitable for long-term parking of planes because of the risk of corrosion to aircraft parts.
This week our new Transport Minister Ong Ye Kung said his top and immediate priority is to revive air travel and maintain Singapore’s hub status. He explained that Changi Airport is a vital organ to Singapore’s economic body. It adds vitality and competitiveness to all sectors of Singapore. And the country’s hub status is tied to jobs and its economic competitiveness.
How to revive the aviation sector with such low level of inbound and outbound travel? The effect of Covid-19 may last one to two years. It is also risky to depend on reciprocal arrangement with individual countries for bilateral travel. If there is a sudden surge of new cases or a second wave of outbreak, both countries may point fingers at each other. It wastes all previous efforts when everything has to go back to square one again.
Proposal to save travel-related business and employment
To save businesses and jobs in travel and tourist-related industries, many Asian countries are now practicing in-country travel: Low-cost airlines in South Korea survive on adding more domestic flights for local travelers. Japan has a “Go To Travel” campaign covering half of eligible travel expenses up to 20,000 yen (US$187) per night. The Thai government has rolled out a 22.4 billion baht (US$718 million) stimulus package to subsidize locals booking tickets and hotels in all tourist destinations in Thailand. Bali is reopened to domestic tourism from July 31, with 4,000 Indonesians visiting on the first day.
In-country travel in the Little Red Dot can be a little bit tricky. But it is still possible for domestic travel if we can use our imagination and think out of the box.
When I asked my younger daughter what she missed most about overseas holidays. Her answer was inflight-entertainment and hotel stay. Below is a suggestion on an in-country getaway if you too miss the Singapore Airline experience and your 5-star hotel stay. How about a hybrid version of actual and virtual flight experience?
1) Check in for flight SQUnited at Changi Airport using contactless check-in kiosks.
2) Go through the Immigration using the self-service or express lanes.
3) Visit the KrisFlyer lounge or any airport lounge that you usually go.
4) Proceed to the assigned departure gate to board the flight.
5) Enjoy your hot towel, refreshment and inflight entertainment.
6) After 55 minutes, option to alight and proceed to shopping and lunch/dinner at Jewel Changi Airport. Enjoy one-night stay at Crowne Plaza Changi Airport.
7) Option 2 to fly with the crew to any overseas resort destination. Flight makes a U-turn half-way and return to Changi Airport. Onboard SIA hop-on bus to visit selected Singapore attractions. Enjoy one-night stay at choice of 5-star hotel in town.
8) Option 3 to fly with the crew and land at Seletar Airport. Free and easy tour with lunch/dinner at Seletar Aerospace Park. Enjoy one-night stay at Orchid Country Club. Take return flight back to Changi Airport the next day.
Of course, the short getaway cannot be compared to beach holidays in Bali, Phuket, Koh Samui or Lombok. But nothing can’t be done if we stay united in lowering our expectations altogether. Keep your sense of humor during hard times.
Besides, we may have 147,500 unemployed residents. But there are still many residents and non-residents who are not affected by pay cut; who are high net worth individuals; who are still cash rich. All these people cannot go overseas for vacation now. This is the best alternative to travel and a good way to help them spend their money.
Just hanging the national flag outside our home is not enough this National Day. It’s time we played our part in in-country travel to help the business and employment of our national airline, our airport, hotels, eateries, retail chains, etc. Think about how our generous patronage can make a significant impact on the revenue and share price of SIA, SATS, retail operators, commercial property landlords and all the commercial and hospitality Reits.
All we need to do is to have faith at this crazy time. If Trump can turn the dying Kodak around by simply rebranding the photo company into a drug producer, and in two days’ time can make the company’s share price soar more than 500 percent before the company comes up with a single pill, how difficult is it to repeat the same magic here?
Passion made possible.
P.S. For the health of our club members, Property Club Singapore will not be organizing any seminar or workshop during the Covid-19 period. Members are now free to watch seminar videos of Year of the Pig Property Strategies and Singapore Property Market. Just log in and access them under the “Members Only” tab.
Members can continue to learn through our online courses at $299 for each course:
– Buying My First Private Property Online Course
– How to Buy Good Quality Properties Online Course
– Choosing Prime Properties In Singapore Online Course
(Click here to sign up as a member.)
Gosh… The worst part of any holiday trip is the crammed flight… Unless u can fly biz or first class
Don’t worry. They will practise safe distancing and unlimited helpings to masks and hand sanitizers.
Hi Vina, your pseudo air travel holiday is a wonderful innovative idea. Thanks!
Thank you! If they can give it a try, I think many Singaporeans are keen to support our national carrier, our airport and hotels.
Hilarious. This could work, if you are prepared to pay the same airfare! And not to mention, can accrue mileage too! Haha.
Oops I am thinking of using my mileage to pay for this in-country travel.
Taiwan started last month in July. A fake itinerary where you check in, go through passport control and security and even board the aircraft. You just never leave. The passengers got boarding passes, and proceeded through security and immigration before boarding an Airbus A330 of Taiwan’s largest carrier, China Airlines, where flight attendants chatted to them.
Your idea of Flight makes a U-turn half-way and return to Changi Airport is brilliant. But not sure whether aviation authority is ok with this and will SIA make a profit?
Great to know that Taiwan is also doing something similar. Just watched a CNA programme called “Grounded” that mentioned aircraft parked in Changi Airport need to turn on their engines for 30 minutes once a while for maintenance purpose. Hope they don’t mind having passengers on board if the engines have to be turned on anyway. I have emailed my suggestions to Mr Ong Ye Kung for their consideration. Hope we can contribute our part to help SIA and Changi Airport.