Singapore’s Recovery Hinges On Taming The Number Of COVID-19 Cases Among Foreign Workers

The number of COVID-19 cases has been rising in the hundreds with each passing day even as Singapore is in circuit-breaker mode. Most of the numbers were contributed by the foreign workers living in the dormitories.

On 31st March, Westlite Toh Guan reported 5 cases of residents testing positive for COVID-19. It became the very first worker’s dorm to be identified as a COVID-19 cluster.

Five days later on the 5th April, it was gazetted as an isolation area together with the S11 dormitory at Ponggol. More than 20,000 foreign workers are confined to their rooms for the next 14 days.

From that moment on, there was no looking back. The close living quarters in Purpose Built Worker’s Accommodation (PBWA) caused a massive spike in the number of cases in a very short period of time. In barely two weeks, 15 dorms have emerged as clusters and more than 1,800 work permit holders have tested positive for the virus.

Since then, the military has been roped in to provide logistical support and more than 7,000 essential workers have been moved into temporary accommodations in military camps, vacant HDB flats and even floating hotels. Dorms with clusters have been locked down; workers are to stay in their rooms and meals are provided by caterers. There are plans to station teams of medical personnel at all 43 PBWA in Singapore and to intensify testing in the days to come.

Even then, the spread shows no sign of abating. On 16th April, 728 cases were reported, with 654 arising from dorms. This is the highest number of daily reported cases in Singapore to date.

Finger Pointing – Anyone but me

When things do not turn out well, Singaporeans are fast to engage in the National Sport of finger pointing.

Some blame the Government for not having the foresight to see it coming. Others blame the people for blaming the government. There were even a few who blame the workers living in the dorms for having poor personal hygiene standards, leading to the rapid spread of the virus. Most reserve their strongest words for the dormitory operators who are set up to profit from the helpless and exploited workers.

Even though other dorm operators had many more premises affected, there is a significant amount of animosity directed at SGX-listed Centurion, partly because Centurion Westlite Toh Guan was one of the very first dorm to be infected. Also because as a listed company, Centurion is an easy target.

Who is Centurion?

Tucked away in a nondescript light industrial building along Ubi Road, the offices of mainboard listed Centurion Corporation could not have been more inconspicuous.

The story of Centurion is the story of David Loh and Han Seng Juan.

The two men had seen their lives intertwined from the very beginning. Maternal cousins born one year apart, both spent their undergraduate years at the University of Oregon.
Both started their careers as dealer representatives in the stock broking industry. After graduating, the elder Han returned to join UOB Securities as a dealer in 1987 while Loh joined Ong and Company in 1989. Then, trades were still done by picking up the phone and calling up your broker, who is your news agent, analyst and trade executor all rolled into one. Internet trading did not arrive until many years on.

According to their bio in Centurion’s annual report, both joined UOB Kay Hian the very same month in July 1996. Three years later, Loh was sent to helm the Kay Hian Hong Kong office. According to a Business Times report dated 13 Sep 2008, it was there where David built up relationships with institutional clients in Hong Kong and China.

What we lacked in quality however, we made up for in quantity. In 2007 alone it was estimated that approximately 170 Chinese companies were listed on the Mainboard and secondary bourse of SGX. There was an IPO every other week, and most of them were brokered by Loh and Han.

Dubbed the A-Team or the Dream Team, they had a stranglehold on the mainland IPO market.

And it is impossible to sit near a waterfall and not get wet. They were reported to have taken stakes in many of the companies pre-IPO, so when the companies went public, their investments were realised many times over.

In the same Business Times report, Loh was asked how many Chinese IPOs has he handled. He responded ‘I really cannot remember, but probably over 150 in the last couple of years’.

The Summit RTO

In the wake of the global financial crisis, the IPO market went quiet and they eventually bowed out by letting their trading licenses lapse in July 2009. But this was not before they were reported to have made close to one billion dollars in those heady years, putting them on par with the King of Remisiers, Peter Lim.

In yet another Business Times article reporting on their departure, Loh was reported to have said – It has been a tremendous ride for us in the last few years in the stockbroking industry, but it is time to look forward to focusing our efforts on growing our investments and interests both in Singapore and the region.

And invest they did.

In July 2007, SM Summit, a local listed storage media manufacturer entered a deal to purchase TES Envirocorp, an E-waste manufacturer. Loh and Han are shareholders in both companies. This deal served to increase their deemed interest to above 40%.

Four years on in June 2011, using the Westlite operated dormitory as a conduit, Loh and Han entered into a reverse take over agreement with the founder and CEO Lee Kerk Chong. With that, they made their first foray into the PBWA business. They were back in the game.

Lee maintained a 15% stake in the company; it was renamed Centurion Corporation and the optical storage business was gradually wound down. Lee eventually retired from the company in 2016.

Fast forward to 2019, Centurion now runs close to 60,000 beds in Singapore and Malaysia alone. For the previous year, they generated $38m in operating profits for a total profit of $100m if we were to include valuation gains in their properties. 

Would Centurion Survive?

Centurion’s business is mainly to provide accommodation for workers and students. Both businesses are hit by Covid-19 as non-essential work has stopped and students are staying home to learn instead.

Pre-COVID, Westlite PBWAs are operating at 98% occupancy. According to an analyst note by CGS CIMB, almost 70% of their accommodated workers are from the construction and Oil and Gas industry. Moving forward it remains to be seen what effect COVID19 would have on these industries. 

Centurion is geared at 136% debt-to-equity or 55% debt-to-assets. These ratios are nearly double that of their closest competitor, Wee Hur, who had a debt-to-equity of 71% and debt-to-asset of 29%.

That said, these are not sky-high leverage that would bankrupt Centurion because of the availability of government aids, cheap loans and equity funding options. Centurion would take a temporary hit to their revenue and profits.

Ministry of Manpower and PBWA

The Ministry of Manpower regulates the type of accommodation Work Permit Holders can be accommodated in. They range from Purpose Built Workers Accommodation, Factory Converted Dorms, On-site Dorms and Non Purpose Built Accommodations. 

According to MOM statistics, there are close to one million work permit holders in Singapore. Removing the 250 thousand foreign domestic workers who live with their employees, there remains 750 thousand workers whose housing needs have to be seen to.

Regulation ensures that all blue collar Work Permit Holders in Singapore are housed in appropriate accommodations. The majority of them are from Bangladesh, India and China and they work in construction sites, shipyards, petrochemical refineries or even as cleaners in neighbourhood estates. 

The massive spike in cases for the foreign worker’s population has shined a spotlight on the living conditions of these workers.Whether or not this mass importation of foreign labour is necessary for economic growth has been the subject of much debate. There is no single clear answer and each decision we take will have its trade offs. 

What is for sure is that MOM’s solution to clean, affordable housing for these workers lies in large scale PBWAs. In a Facebook post dated 6th April and titled “Should Standards in Foreign Worker Dormitories be Raised?”, Manpower Minister Josephine Teo laid out the rationale behind these 43 dedicated workers quarters. She further explained that each dormitory must comply with minimum standards of accommodation and that MOM officers conduct regular inspections to ensure that licensing regulations are adhered to. 

She went on to add “ Every time we attempt to raise standards, employers yelp – these are added costs which they must eventually pass on. They ask MOM, “are people prepared to pay more? Nevertheless, I hope the COVID-19 episode demonstrates to the employers and the wider public that raising standards at worker dormitories is not only the right thing to do, but also in our own interests.”

The National Narrative

The Government is doing everything it can to isolate, test and treat the workers. 

Some of the more sanguine amongst us would claim that the virus is contained within the community – our community, and that as long as the ‘local’ population is COVID free, the government should lift the circuit breaker restrictions. However, let us not forget that foreign workers are part of our community – albeit in a less visible manner. 

When that is done and dusted, I will be thankful if our National Narrative would have been shifted ever so slightly to how we actually treat the less privileged members of our society. The issue is bigger than Centurion, and bigger than COVID19.

We need to rethink our relationship with how we treat our foreign workers. And that relationship is predicated on how the strong approach the weak and on how the rich connect with the poor

It is no longer about us and them. Because as COVID19 has shown, if they are not well, neither will we ever be.