Barbara Carroll, NewsMax.com
Monday, April 21, 2003

Travel in Singapore is down about 60 percent, with hotel occupancy down 20 percent there and even more at many Hong Kong hotels, the London Times reported today. Retail sales have been cut by as much as half in both cities. Canadian hotels and restaurants are showing a sharp decline in domestic and tourism business. World conferences in Asia and Canada are being canceled, affecting an area of local economy that was previously a mainstay of such cities as Hong Kong and Toronto.

The backlash from cancellations of trade show affects retail shops, restaurants, hotels, airlines and cab companies. It also affects the production of items such as electronic parts made in Taiwan.

Many companies rely on trade shows to get new customers and to introduce new products. A company’s lifeline can be to the next big trade show, which may or may not occur in 2003. Many manufacturers are now planning to produce 20 to 30 percent less than last year.

Wire services quote a European buyer of fabrics from Asia as saying, “Some things you can look at a picture and get facts about it without even being there to buy it, but in my business you need to touch and see the product to know if you want it.”

Delays in transporting products is a big part of the financial loss for many big companies, the Taipei Times reported today. European, Australian, Canadian, American and other world ports are cautious about deliveries from planes and ships. There are also new precautions for dock workers and airline personnel from affected countries. Delays in shipments mean delays in customer satisfaction and sometimes payroll checks.

Fishing industries as far away as Auckland are feeling the financial effect of the new virus. Rock lobster fishermen in New Zealand are idle as their Chinese buyers remain reluctant to buy for a drastically reduced clientele. As restaurants remain near-empty in areas of Hong Kong and China, the boats that supply them with fish from Australia and lobster from New Zealand remain at the docks. The rock lobster market is usually worth $90 million a year.

Another casualty of a SARS economy are the 700 million Chinese who are employed in agricultural work in the outer provinces, the Straits Times reported today. Not only are these workers in harm’s way in rural areas where the disease is unreported and spreading without proper care, but their products are not in demand as fewer hotels restaurants need food for tourists who stay a world away. Job losses are part of the impact of the disease in small communities.

Economic Crises

It is becoming evident that SARS is causing the worst economic crisis in Southeast Asia since the wave of bank failures and currency devaluations that occurred there in 1988. Economists are joining the medical community in the guesswork as to how long this disease will persist. But economists, brokers and bankers also need to estimate out how long public fear about the disease will last.

The World Health Organization has made clear that SARS is a mutating virus, a member of the coronavirus family which is known to change into more virulent strains over time, as well as mutating into less virulent strains. “This disease is here to stay,” a Canadian physician commented. As the disease is here to stay, so are new economic measures to combat it.

Singapore’s government unveiled a $130 million aid package for the tourist industry.

The Macquarie Bank, an Australian institution, has given its Australian employees in Hong Kong the option of coming home, with the majority doing so. Since the U.S. allowed embassy workers to leave the SARS affected area, other banks have considered leaving Hong Kong and Singapore, but there are fears that doing so might invite retaliation by the governments in either place.

Malaysia said today that its banks, telecommunications companies and electricity suppliers would all be asked to help cut costs for corporate customers hardest hit by the SARS health scare, the Hindustan Times said today. Deputy Prime Minister Abdullah Ahmad Badawi said that this could be part of a soon-to-be-announced economic stimulus package aimed at helping Malaysian industries hurt by the worldwide disease.

So far Malaysia has reported only six probable cases, including one death, but the country's substantial tourist industry, which catered to more than 13 million visitors last year, has been hit badly by fear of traveling. Tourists, more than half of them foreign, contributed $11.2 billion to Malaysia's GDP in 2002, 19 percent of the total.

Stocks Sinking

The Singapore market has suffered from the SARS outbreak, trading 6 percent weaker by midday. Prime Minister Goh Chok Tong warned Saturday that the city state might be facing the worst crisis in its 37-year history.

Taiwanese shares linked to the Chinese economy dragged down the market in Taipei as investors worried that China would suffer badly from SARS, the Asian Times noted.

"China-concept stocks have risen three to five-fold since the year before last," said Maggie Chien of Capital Investment Management. "They have high valuations and are just waiting for some bad news to bring the valuation down. SARS could be that news."

Many Taiwanese companies have plants in China or use components made there. The market finished 2 percent weaker.

China's shares fell more than 2 percent in morning trade on worries about the effect of SARS on tourism and airlines.

Shares inched higher in Thailand and the Philippines and dipped in Malaysia.

WHO's Latest Statistics

According to World Health Organization, 3,861 cases with 217 deaths have been reported from 25 countries. This represents 495 new cases since Saturday, with 1,873 people recovered. The mortality rate has risen to 5 percent.

Read more on this subject in related Hot Topics:

China/Taiwan

Health Issues

SARS Epidemic

Editor's note:
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