3 Reasons Why The Southeast Asia Haze is a Risk To Your Business

Since early September, a thick haze has been clouding Singapore, Malaysia and Indonesia, the cause of the problem. Every year, fires are set off to clear forest land in Indonesian Borneo for agriculture, usually palm oil plantations. This year it appears worse due to severe drought caused by El Nino.

What does the haze have to do with your business if you’re based a safe distance away?

Most businesses worldwide rely heavily on goods and services from Asia, be it directly or indirectly. In affected areas, many people are unable to work due to illness, people are dissuaded from travelling to work and outdoor businesses are effected due to the increasingly hazardous weather conditions. Additionally, it impacts on businesses that rely heavily on aviation and shipping for import or export. Overall, the haze poses a major threat to the supply chain, resulting in financial losses amounting to billions of dollars.

It is predicted that the haze could last till the end of November, which means it will have lasted more than three months. The prolonged crisis is likely to create a negative impression on the region, deterring expat and tourist inflow.

Here is why your business could be affected…

1. Businesses with offices and/or staff travelling to the region could easily be affected as a result of flights and other transport disruptions due to low visibility, as well as respiratory illnesses caused by the hazardous smog. According to Greenpeace, around 110,000 deaths occur annually from pollution-related illnesses stemming from the haze. Health issues impact on workers and their ability to perform tasks on schedule. Schools in Kuala Lumpur closed their doors, with subsequent impacts on parents’ ability to go to work. The Singapore World Cup finals were cancelled due to the haze.

2. Secondly, any of your direct or indirect customers based in the affected region may be cancelling or delaying orders as their business slows down. Cancellation of flight bookings is already impacting greatly on tourism and the related service industry. Businesses such as restaurants, hotels and retailers that rely heavily on tourists will take a hit unless proper risk management strategies had been implemented.

3. Thirdly, your suppliers in the region may be struggling, thus delaying your raw materials and/or services. You may be affected directly, or indirectly through upstream impacts on your suppliers’ own suppliers. In the lead-up to Christmas, many businesses normally have maximum sales, which means the impacts are hurting even more. For example, Singapore businesses are taking a hit of 12-30%, and to recover some of it, they are now announcing post-haze promotions.

In terms of best practice Business Continuity Planning (BCP), businesses that are service oriented can operate remotely through conference calls, whilst staff remain in the comfort of their own homes. And for those relying on external suppliers, having a dual supplier policy in place could have assisted in preparing for the current situation.

It is wise to take action now, as the regular haze problems are not likely to disappear over the coming years.

If you want your BCP to work when you need it most, contact us at www.businessasusual.net.au. And if you’re keen on training, you can also have a look at our upcoming courses.

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