News / Economy

Singapore, Malaysia Face Economic Hit from Prolonged Smog

Tourists visit a sightseeing spot as the Marina Bay Sands Hotel in the background is shrouded with haze in Singapore, June 22, 2013.
Tourists visit a sightseeing spot as the Marina Bay Sands Hotel in the background is shrouded with haze in Singapore, June 22, 2013.
Reuters
Singapore and Malaysia could face a bigger economic impact than from their worst air pollution crisis 16 years ago if slash-and-burn fires in Indonesia continue to rage in the coming weeks, turning off tourists and raising business costs.
 
Restaurants, tourist attractions and some other businesses are already feeling the pain as haze envelopes the Southeast Asian neighbors, from Singapore's upscale shopping districts to Malaysia's popular beach resorts.
 
The haze crisis in 1997 lasted about three months and cost Southeast Asia an estimated $9 billion from disruptions to air travel, health expenses and other business impacts. Economists and businesses say the costs are already mounting about a week since air pollution levels in the countries shot up to unhealthy and sometimes hazardous levels.
 
“The haze has definitely affected our business. Our sales fell around 40 percent in the past week,'' said Goo Wai Chien, who sells pizza and pasta at a hawker center in Singapore's business district. “But hopefully the situation is improving.''
 
Much depends on how long the haze lasts and which way the wind blows the smoke that is coming mostly from fires set on palm oil plantations on Indonesia's Sumatra island. Singapore Prime Minister Lee Hsien Loong has said the haze, which eased over the weekend and on Monday in the city state, could last a few weeks or until the dry season ends in Sumatra in September or October.
 
Extinguishing the fires, which smolder deep within peat,  depends almost entirely on levels of rainfall.
 
Irvin Seah, DBS economist in Singapore, said the overall impact could be worse than in 1997 if the haze drags on.
 
“In 1997, the level of pollution was not this severe, and on the other hand the tourism industry's contribution to the economy was relatively smaller back then.''
 
Tourism makes up 6.4 percent of Malaysia's economy and about 5 to 6 percent of Singapore's. Analysts see that sector taking an immediate knock, even if they cannot quantify the damage.
 
“The impact will be negative,'' ANZ, a bank, said in a research report, referring to Singapore. “Shopping, restaurants, bars and outdoor entertainment will all suffer during this hazy period.''
 
Hotels, restaurants and other hospitality businesses also benefit from Singapore's prominence as a center for industry meetings and trade shows.
 
Tourism, health fears
 
Perceptions of Singapore, which usually enjoys clear skies and relatively little pollution, could be the biggest casualty if the smoke hangs over the island through September.
 
A conference this week on global nuclear issues with dozens of high-profile experts, including former U.S. secretary of state George Shultz and former secretary of defense William Perry, was postponed “due to increasingly hazardous weather conditions in Singapore'', the organizers said.
 
“It would create a very negative impression and also deter tourist inflows. It would deter people thinking about moving to work in Singapore,'' said P.K. Basu, regional head of research and economics at Maybank Kim Eng.
 
Brokerage CLSA has estimated the damage to Singapore - a major financial center, aviation hub and tourism destination - could end up being hundreds of millions of dollars. Other analysts said it could top $1 billion.
 
Singapore and its $271 billion economy cannot afford a big hit from a prolonged pollution crisis or any loss of confidence.
 
The economy - which is dominated by services, followed by manufacturing and construction - was stronger than expected in the first quarter due to a surge in the financial sector.
 
But exports have been weak, especially electronics, and economists now expect growth of 2.3 percent this year, slower than the median estimate of 2.8 percent in March, according to the central bank's latest quarterly survey released this month.
 
Francis Tan, an economist at United Overseas Bank, said if the smog in Singapore extends until September, with pollution rising to unhealthy levels from time to time, it could shave 0.3 to 0.5 percentage points off his 2013 growth forecast of 3 percent. That would mean up to $1.2 billion in economic losses.
 
Among the biggest costs that businesses face from the haze is illness.
 
Hospitals and clinics in areas badly affected by haze in recent days had recorded a rise of more than 100 percent in asthma cases, Malaysia's director-general of health Noor Hisham Abdullah was quoted as saying by the Bernama state news agency.
 
Patients reporting other respiratory problems and conjunctivitis had also jumped, he said.
 
The Malaysian capital, Kuala Lumpur, was veiled in thick smog on Monday, a day after parts of the southern state of Johor declared an emergency as pollution readings rose above the hazardous level.
 
Cheah Tuck Wing, the executive director of the Malaysia-Australia Business Council, said companies in Johor - which has attracted growing investment from neighboring Singapore - were already seeing a rise in worker sickness.
 
“People are not well and it will definitely affect production, that goes without saying. It has definitely impacted business, especially factories where a huge number of people are working.''

You May Like

Photogallery Obama Announces Plan to Send 3,000 Troops to Liberia in Ebola Fight

At US Centers for Disease Control and Prevention, Obama details troop deployment and other pieces of US plan More

China Muslims Work to Change Perceptions After Knife Attacks

Muslims in Kunming say that they condemn the violence, it is not a reflection of the true beliefs of their faith More

Humanitarian Aid, Equipment Blocked in Cameroon

Move is seen as a developing supply crisis in West Africa More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Enviropreneur Seeks to Save the Environment, Empower the Communityi
X
September 16, 2014 2:06 PM
Lorna Rutto, a former banker, is now an ‘enviropreneur’ - turning plastic waste into furniture and fences discusses the challenges she faces in Africa with raw materials and the environment.
Video

Video Enviropreneur Seeks to Save the Environment, Empower the Community

Lorna Rutto, a former banker, is now an ‘enviropreneur’ - turning plastic waste into furniture and fences discusses the challenges she faces in Africa with raw materials and the environment.
Video

Video West Trades Accusations Over Ransoms

As world leaders try to forge a common response to the threat posed by Islamic State militants in Iraq and Syria, there is simmering tension over differing policies on paying ransoms. In the past month, the jihadist group has beheaded two Americans and one Briton. Both countries refuse to pay ransom money. As Henry Ridgwell reports for VOA from London, there is uncertainty in the approach of some other European nations.
Video

Video Scotland Independence Bid Stokes Global Interest

The people of Scotland are preparing to vote on whether to become independent and break away from the rest of Britain, in a referendum being watched carefully in many other countries. Some see it as a risky experiment; while others hope a successful vote for independence might energize their own separatist demands. Foreign immigrants to Scotland have a front row seat for the vote. VOA’s Henry Ridgwell spoke to some of them in Edinburgh.
Video

Video Washington DC Mural Artists Help Beautify City

Like many cities, Washington has a graffiti problem. Buildings and homes, especially in low-income neighborhoods, are often targets of illegal artwork. But as we hear from VOA’s Julie Taboh, officials in the nation's capital have come up with an innovative program that uses the talents of local artists to beautify the city.
Video

Video US Muslim Leaders Condemn Islamic State

Leaders of America's Muslim community are condemning the violent extremism of the Islamic State group in Iraq and Syria. The U.S. Muslim leaders say militants are exploiting their faith in a failed effort to justify violent extremism. VOA correspondent Meredith Buel reports.
Video

Video Americans' Reaction Mixed on Obama Strategy for Islamic State Militants

President Barack Obama’s televised speech on how the United States plans to “degrade and destroy” the group known as the Islamic State reached a prime-time audience of millions. And it came as Americans appear more willing to embrace a bolder, tougher approach to foreign policy. VOA producer Katherine Gypson and reporter Jeff Seldin have this report from Washington.
Video

Video Authorities Allege LA Fashion Industry-Cartel Ties

U.S. officials say they have broken up crime rings that funneled tens of millions of dollars from Mexican drug cartels through fashion businesses in Los Angeles. Mike O'Sullivan reports that authorities announced nine arrests, as 1,000 law enforcement agents fanned out through the city on Wednesday.
Video

Video Bedouin Woman Runs Successful Business in Palestinian City

A Bedouin woman is breaking social taboos by running a successful vacation resort in the Palestinian town of Jericho. Bedouins are a sub-group of Arabs known for their semi-nomadic lifestyle. Zlatica Hoke says the resort in the West Bank's Jordan Valley is a model of success for women in the region.


Carnage and mayhem are part of daily life in northern Nigeria, the result of a terror campaign by the Islamist group Boko Haram. Fears are growing that Nigeria’s government may not know how to counter it, and may be making things worse. More

AppleAndroid

World Currencies

EUR
USD
0.7735
JPY
USD
107.03
GBP
USD
0.6155
CAD
USD
1.1011
INR
USD
60.954

Rates may not be current.