Air travel recovery to be slow despite bilateral arrangements, leeway for vaccinated travellers: Lawrence Wong

WHILE supply chains and trade have shown resilience during the Covid-19 pandemic, the outlook is gloomier for air travel, said Finance Minister Lawrence Wong at CNBC's Evolve Global Summit on Wednesday afternoon.

Mr Wong, who co-chairs the multi-ministry taskforce on Covid-19, said he was "somewhat less sanguine about the prospects for air travel" compared to trade.

The region is still facing waves of infection, and vaccination rates in many countries are not high enough, he said. "So I don't think we will be able to see open and free travel in the region, in particular, anytime soon."

There might perhaps be some travel arrangements among countries with low and stable infections, and perhaps shorter quarantine times for vaccinated travellers, he added. "But for the most part, all of that is not going to add up to what we used to have pre-Covid. So air travel, I'm afraid, will take some time to recover."

In a wide-ranging interview, Mr Wong also addressed topics such as further reopening, taxation and the environment.

Asked how the situation looks ahead of the planned loosening of some Covid-19 curbs on June 21, Mr Wong was circumspect, saying: "Well, it's something we continue to monitor every day. With this virus, you can never tell what happens in the next few days, because there will always be surprises."

Singapore is reopening in a calibrated manner, and will have more confidence to ease up further when half the population is fully vaccinated by August, as planned, he added.

On the Group of Seven's (G-7) plans for a global minimum corporate tax rate, Mr Wong acknowledged the fiscal pressures that have led to calls for greater international cooperation on synchronising taxation systems.

But "the new rules cannot be set by the G-7 countries alone", he added: "It really needs a multilateral consensus amongst all countries big and small, and to ensure a level playing field across all jurisdictions.

"So when these new rules are in place, Singapore will certainly adjust our tax systems accordingly to be in line with the global consensus, and also in consultation with businesses here."

Countries must be careful that a new threshold - such as the G-7's suggested 15 per cent rate - does not end up becoming a maximum rate that restricts countries from generating more revenue.

"Also, we have to be careful that any new rules that are in place do not inadvertently lead to reduced incentives for businesses to invest and innovate."

The interview also touched on emerging areas. Asked whether cryptocurrency has a role in Singapore's future, Mr Wong noted that many central banks are studying the use of central bank digital currencies (CBDCs), and Singapore itself is looking at digital currencies to settle payments within the banking system.

But that is at the wholesale level, to make cross-border payments faster and cheaper while remaining secure, he added. Singapore is "not in a hurry" to consider CBDCs at the retail level, where the public can use these as fiat currency.

Singapore has an established digital payment ecosystem that does not need retail CBDCs, he said. The authorities are also carefully studying the potential downsides, including the possible impact on monetary and financial stability.