COVID-19 – An unprecedented crisis and also a tantalising opportunity

1 May 2020 07:57 am - 0     - {{hitsCtrl.values.hits}}

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Henry Kissinger, in one of his infrequent statements says, “When the COVID-19 pandemic is over, many countries’ institutions will be perceived as having failed. Whether this judgment is objectively fair is irrelevant. The reality is the world will never be the same after the coronavirus. To argue now about the past only makes it harder to do what has to be done.”


The changes being forced upon the world by COVID-19 can and must be viewed as the new opportunity, which will enable those who grasp it to evolve into a dynamic new global socio-economic environment. A challenging new landscape beckons, as underlined by Kissinger. The reality is that the world will never be the same after COVID-19. And those who aspire to survive and succeed must also make the clever choices in the major drama of our times.


I spent 15 years of my life in New York City, the throbbing heart of the American economy and the greased skateboard of the world economy. But today, it is eerily quiet. Even after 9/11, the city briefly faltered but recovered its swagger rapidly. But COVID-19 has caused an unprecedented and unmanageable crisis and the city is facing an unusual emptying after Governor Cuomo ordered the shutdown of all non-essential businesses in the state. 


New York hospitals are overwhelmed as COVID-19 cases soared to more than 222,000 and 14,500 deaths, accounting for more than 40 percent of America’s cases and 7 percent of the world’s. Alarmingly, the number is not going to remain static. (The US has recorded over 712,000 confirmed cases and 32,000 deaths, leaving China way behind). Afro-Americans account for over 70 percent of the infected.


The devastating mantel of COVID-19 are visible everywhere. The usual posies of fresh flowers, red roses, carnations, at the 9/11 Memorial, are missing. The sadly fluttering postcard-sized stars and stripes, abandoned behind a makeshift plastic railing, look forlorn and faded. 


Broadway, the “Great White Way”, is missing its glitz. The subway system is eerily silent. Times Square, normally such a roiling mass of raucous humanity, is almost devoid of people. 


The state saw its first case just four weeks ago and plunged rapidly into crisis. On March 29, New York reported 367,920 and 10,993 deaths.


After an almost comical and widely documented denial of the threat of COVID-19 by the US Administration initially and the ungainly and crude (continuing) attempt to score political mileage at the expense of China, a furious and uncoordinated flurry of remedial action has been launched as the epicentre of the outbreak in the US has become New York. An almost disorganised rush to secure respirator and mask supplies bemused and simultaneously annoyed the rest of the world. 


One is tempted to suggest that if the US had taken pre-emptive action early, instead of seeking to score political mileage by piling blame on China, many lives, which are being lost now by the thousands, could have been saved. Anthony Fauci, Director of the National Institute of Allergy and Infectious Diseases, warned on March 29 that between 100,000 and 200,000 Americans could die of the disease.


According to the Johns Hopkins Coronavirus Resource Centre, the global death toll from COVID-19 has reached a new grim milestone of 154,000 deaths, now predominantly in Western Europe and in the US. Over 2,250,000 have been infected in 183 countries. It has not left too many communities untouched. The UK heir to the throne, Prince Charles, was infected and was placed in isolation and Prime Minister Boris Johnson was treated in the ICU. The Queen made an unprecedented address to the nation seeking to provide reassurance to an unsettled people.


The Olympics and other glamorous international sporting events have been postponed. Football tournaments, the Wimbledon Tennis tournament, Tour de France, marathons traditionally run at this time of the year, have all fallen victim to COVID-19.


Around the world, COVID-19 has forced a fundamentally changed approach to life, work and business, a possibility which was predicted by some commentators over the years but now is rapidly becoming a daily reality. Information technology (IT) and artificial intelligence (AI) are being used more than ever to compensate for the disruptions caused by COVID-19 and are likely to stay.


The changes forced upon the world by COVID-19 can and must be viewed as the new opportunity, which will enable those who grasp it to evolve into a dynamic new global socio-economic environment. A challenging new environment beckons, as underlined by Kissinger. The reality is that the world will never be the same after COVID-19. And those who aspire to survive and succeed must also make the clever choices in the major drama of our times.

 


Lockdowns
Lockdowns and curfews enforced around the world, including Sri Lanka, have driven professional and social life out of the physical world and into the virtual realm. The cynical dream of computer geeks for decades is actually being realised. Individuals and families are being restricted to their own homes and confronting both the negative and positive aspects of it. 


Though self-isolation means no longer seeing relatives, especially the aged, friends and colleagues in person, it has opened a window on their private, domestic selves via the Internet, along with unflattering camera angles. 
Many readers, video conferencing for hours every day, will find themselves unexpectedly familiar with other people’s homes, their kitchen layouts, wall decorations and interior designs, depending on how they position their devices. This may add a new personal dimension to social and professional interactions that were previously camouflaged by custom, propriety and expectation.


Traditional concepts of privacy and the way we relate to the domestic environment of relatives, friends and colleagues, will undergo modification. Live streaming, which is almost a cottage industry in China, might catch on elsewhere as well.


Will we now arrange our living room to present a pleasant eye full before switching the camera on our computers?

 


A new work environment
Many pilot projects were tested over the years on how effective working from home in a virtually connected office would be. Some corporations actually began implementing the concept as did government agencies, hoping that work life would become more satisfying and the costs would be reduced. The United Nations (UN), traditional and conservative, began testing this concept in the 2000s, mainly as a cost-saving measure and has adopted it with gusto in response to COVID-19. 


With properly trained staff and with the right equipment, this novel approach to office work could be successfully streamlined. The only limits would be imposed by the imagination of the corporation, the skills of the workers and equipment. Trainers will have their work cut out at the beginning. One recalls the resistance to desktop computers at the beginning. 


The new challenge would be to ensure that the virtual office provides the same motivation and incentives as the traditional one and the ease of access to colleagues. Confronted by COVID-19, many corporations have rapidly converted themselves into virtual offices, especially in the major financial hubs such as New York, London, Tokyo, Shanghai, Singapore and Sydney. The financial sector, always a pioneer, is already deeply involved in online transactions. This work is only going to spread into all aspects of office work. 


Ordering stocks, managing supply chains and delivery to customers, will be done online. Singapore is actively encouraging companies to let their staff work from home. New Yorkers are even enjoying the transition, which had been occurring for some time. Women and men, who mixed and balanced their home duties and work, would find the virtual office and teleconferencing attractive. 


Costly international conferences with casts of hundreds will become a thing of the past, as teleconferencing is adapted to serve the needs of global negotiations. One will only have nostalgic memories of those long hours spent in the UN conference rooms, where much passion was generated with little achieved. But a good time was had by all. The European Union (EU) has set the trend in high-level video conferencing. Lufthansa set the trend by calling the first-ever virtual Annual General Meeting (AGM).

 


Medicine
The traditional world of medicine is being disrupted with doctors beginning to provide consultations online. Most, if not all, information required by the physician will be readily available online. With 5G, it will become possible to substitute much of the face-to-face consultations. Many Sri Lankan doctors have taken the initial steps in this direction. In China, doctors use AI provided by Huawei to detect COVID-19 in CT scans. 


In Israel, Tyto Care Ltd offers in-home medical exams, using AI to deliver clinical-grade data to remotely located doctors for diagnosis. China’s Baidu devised an algorithm that can analyse the biological structure of the new coronavirus and made it available to scientists everywhere. 


While the traditional reassurance of your doctor being in your presence will be missing, the doctor at the other end of the line would be as or more effective and will be dealing with a range of complaints remotely. Already, hospitals communicate more with each other online. With AI to assist, some surgeries are beginning to be performed by doctors located remotely. These are developments that will be here to stay. 

 


E-government and e-commerce
A much discussed innovation in recent years, which will now get a unique opportunity to flourish, is e-government. Many government services, now compelled to be delivered online due to the impact of COVID-19, should continue to be provided through the same medium, once the delivery systems are refined. This would be more efficient, convenient and cheaper.


E-commerce, already being widely used in many developed countries, will necessarily become more readily employed in developing countries also. Those who clamber aboard the new train, as some have done already, are likely to be more competitive in the post-COVID-19 world. Sri Lanka had the first online tea 
auction ever. 

 


Home deliveries of daily needs
New Yorkers were used to home deliveries of groceries and food. The Latino on a pedal bicycle delivering food may now be replaced with motorised vehicles delivering to whole communities after the orders had been placed and payments made online. Fresh Direct pioneered this system. 


Poorer countries, such as Sri Lanka, have tentatively begun to use home deliveries and the quicker that they make the transition in an effective manner, the better that their economies will be able to cope with the new world forced on us by COVID-19. The home delivery system needs to be refined further so that payments could also be made hassle free. Sri Lanka’s existing bread delivery system (Choon paan) could be adapted to the delivery of groceries, fish and other needs) also.


What was already available in Japan, Korea and China a few years ago, of all payments being made through a QR code via a smartphone, will now become the norm elsewhere. Ali Pay has made payments and cash transfers a simple exercise. Department stores were already offering their products online and now COVID-19 will make their practice become the norm.


In China, Alibaba’s Tabao’s regular daily turnover is bigger than the turnover on Black Friday in the whole of the USA. Delivery in China through services such as SF Express takes less than a day. Habits of convenience, once formed and the facility appreciated, will stay forever. 


The developing countries have much to adopt from the digitalised world.

 


Distant learning
Students staying at home because their schools have closed will be another opportunity for teachers offering online teaching, using either the television set or the computer. For centuries, teaching happened in establishments where children and young adults in universities were brought together and they were instructed in groups. 


With schools and universities closed, education will have to continue and online teaching will be the ready option. It is happening already in Australia and New Zealand and might come to stay in 
those countries. 


Some of the older teachers will find the new challenge daunting. The Sri Lanka government has encouraged the use of the TV for teaching purposes. This will be an innovation that is likely to continue into the future. The teachers who attract hundreds to their auditoria in the afternoons could now switch to the electronic medium.

 


Environment
The lack of motor cars on the roads and closed factories has resulted in an unexpected bonus – less pollution. Beijing’s air quality is the best in years. New Delhi has enjoyed a blue sky. The waterways of Venice, devoid of gondolas, have attracted dolphins again. Seeing the benefits to nature, New Zealand is considering limiting camping sites. 


Nature reserves are enjoying a well-deserved rest and now would be the time to plan for a sustainable future. With no tourists, the beaches of Sri Lanka have witnessed dear playing in the surf. Online work will have the added benefit of reducing global warming. The challenge would be to manage the post-COVID-19 world, continuing to emphasise the importance of respecting and conserving nature.

 


Tourism
Due to the unparalleled travel restrictions across the world, grounding airlines and global airport closures, international tourist arrivals will likely decrease by over 30 percent or more in 2020, when compared with 2019. International tourism receipts will decline in excess of US $ 300-450 billion, almost one-third of the US $ 1.5 trillion generated in 2019. 


According to the International Air Transport Association (IATA), the coronavirus pandemic has sent global air passenger demand plunging 14 percent in February 2020, marking the steepest decline in traffic since the 9/11 attacks in 2001. The German giant, Lufthansa, does not expect the aviation industry to return to pre-crisis levels for some years. 


Delta Air Lines has said that it expected the second quarter revenue to plunge 90 percent and that it was leaching more than US $ 60 million in cash a day. United Airlines has said that it’s losing US $ 100 million a day in revenue. The aviation industry expects 25 million jobs to be lost. Adding to the disaster to international tourism, cruise lines have almost stopped operating. 


Hurtigruten, the world’s largest expedition cruise line, will extend the temporary suspension of operations from pole to pole. Hurtigruten CEO Danie says that the situation is a serious setback for the company, for the local communities and for its guests. 


Sri Lanka tourism sector directly employs close to 600,000 while a further 300,000 are employed indirectly. Almost a million workers face redundancy. 


The crisis would provide the opportunity for managers to plan for the recovery and attend to the necessary upgrades, reduce staff, update publicity material, link-ups with new travel promoters and retrain staff. 


Singapore’s Changi has used the lull in traffic to undertake modernisation of its Terminal 2. The world was forced to get used to stricter security checks at airports after 9/11. Now, the travelling public will need to get used to more intrusive health checks at airports. Always a pioneer, Emirates has already begun to testing its passengers prior to boarding. Aircraft may have to switch to cargo transportation until normalcy returns.


Domestic tourism will need to be encouraged to cushion the loss from international tourism. Countries such as Sri Lanka, which has so far dealt with COVID-19 admirably, will exert a subliminal pull as international tourism recovers. It will need to work on how this factor, which could be effectively exploited from now itself. Where the necessary promotional measures are undertaken, this will provide the incentive to attract the initial wave of travellers, who may not be from the high-end. 


Governments must assist by encouraging banks to roll over loans and themselves undertaking tax and other relief measures. After all, many governments, especially in developing countries, will look to tourism, the golden sector, to lead the economic recovery, including by generating employment and revenue before the other sectors swing into full activity post COVID-19. 

 

At a later stage, Sri Lanka could make its personnel, doctors, health workers, military personnel, available to other countries. Little Cuba is doing this already. China has dispatched personnel to assist other countries. The UN (especially the World Health Organisation (WHO), United Nations Development Programme (UNDP), etc.) is bound to look for hundreds of experienced personnel to help other countries. With our growing and successful experience, we should be aiming to take a lead role in the international realm, individually or as a contributor, to the global effort.  


Sri Lanka, at an opportune time, should push the UN to establish a permanent standby humanitarian force, along the lines of the Peace-Keeping Force, to deal with humanitarian emergencies. 

 


Impact on developing countries
The COVID-19 crisis will be yet another obstacle to realising the development goals, including the Sustainable Development Goals (SDGs), of developing countries, due to the unanticipated disruptions caused by lockdowns and office closures and the interruption of global value chains and crash in tourism, falling commodity prices and foreign direct investment, as well as the consequences of capital flight and a stronger dollar. 


With unemployment soaring in the West, (22 million have filed for unemployment benefits in the USA), purchasing a new set of summer wear may not happen this year with many of the potential buyers in the developed world confined to their homes and perhaps without work.


Scores of clothing brands and retailers in the developed world have cancelled orders without assuming any financial responsibility. The countries that depended on apparel exports for their foreign exchange earnings, such as Bangladesh, Sri Lanka and the Mauritius, are confronting the prospect of silent factories and massive unemployment. While adjusting to producing or not producing the traditional export items for major brands will pose a severe challenge. Marketing managers and designers will need to focus on what could be produced for buyers whose needs may be limited or different. 


Over 80 percent of Sri Lanka’s garment exports are to the USA and Europe. Shopping malls being shut, the summer and autumn orders are unlikely to be placed. Sri Lanka’s garment sector would take a major hit and perhaps over 50 percent of the anticipated orders will not eventuate. The sector directly employs 350,000 and indirectly employs around 650,000.


Scores of clothing brands and retailers in the developed world have cancelled orders without assuming any financial responsibility. The countries that depended on apparel exports for their foreign exchange earnings, such as Bangladesh, Sri Lanka and the Mauritius, are confronting the prospect of silent factories and massive unemployment. 


Adjusting to producing or not producing the traditional export items for major brands will pose a severe challenge. Marketing managers and designers will need to focus on what could be provided to buyers whose needs may be limited or different. There may be other requirements in the world that may need to be met. Reduced Chinese demand for raw materials and leisure travel, as its economy stumbles, will have further negative implications.

China, which accounted for over 137 million tourists last year, may cease to be the driving force of global tourism. Sub-Saharan Africa is also expected to lose up to US $ 34 billion in export revenue, due to the reduced global demand.


The total economic impact of the coronavirus pandemic is hard to predict. The United Nations Conference on Trade and Development (UNCTAD) estimates lost output in the order of US $ 1 trillion, just around a third of Bloomberg’s expectation of US $ 2.7 trillion in losses. The Organisation for Economic Co-operation and Development (OECD) expects global economic growth to halve from already ‘anaemic’ levels. The World Trade Organisation (WTO) expects world trade to shrink by over 32 percent.


Heavily indebted developing countries are facing a crunch. The Institute for International Finance estimates that around US $ 67.45 billion has flowed out of emerging economies since late January, an amount larger than emerging market capital outflows in the aftermath of the 2008-2009 global financial crisis. Calls are already being made for debt roll over and debt forgiveness, including by Sri Lanka. Encouragingly, the G20 has agreed to suspend debt repayments of the world’s poorest 77 countries.


Without a coordinated and carefully calibrated response initiated by governments, thousands dependent on export-oriented factories will lose their jobs, forced into even more extreme poverty. The industrialisation dream of many developing countries will evaporate. 


The failure of the already faltering Agenda 2030 for the SDGs looks inevitable. 


Millions could face starvation and death without a more “coordinated global response, including helping countries that are less prepared or capable of responding to the crisis”, as “global solidarity is not only a moral imperative, it is in everyone’s interest”. 


While both developing and developed countries, including the US, have initiated a range of economic stimulus measures and some form of cash transfer or social assistance, as to whether they could be sustained is a critical question. Generating funds to help the developing world may not be politically easy in an environment where the developed world is also crippled by the virus.


(Dr. Palitha T.B. Kohona is a Sri Lankan-born diplomat and 
was a former Permanent 
Representative of Sri Lanka to the 
United Nations (UN))

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