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6/16/2007

Price increases - No sweat

Prices A relentless spiral Creeping pre-GST price hikes lighten the pockets of Singaporeans. By Seah Chiang Nee. Jun 16, 2007 MIDDLE class Singaporeans are being weighed down by rising costs of daily necessities that seem to show no sign of abatement. Hardly a week passes without a report or two of some service or bread-and-butter item becoming more expensive and biting into people’s fixed incomes. The surge started with condos (one that cost S$1mil or RM2.2 a year ago is now S$1.3mil or RM2.9) and cars, moving to the MRT, buses, taxis, hospitals, polyclinics, mail and utilities. The latest one hit some 750,000 households who subscribe to cable TV. They will soon have to pay S$4 more for the Basic Package – and a whooping S$15 (up from S$5) for the sports channels that televise English football. This has got soccer fans hopping mad with some threatening to cancel subscription, an unlikely solution since cable television is a monopoly run by a single operator. It is also the most important source of entertainment for the Singapore family, which is embittered at the arbitrary hike and the absence of a market alternative. In recent weeks, inflation worsened as merchants jumped into the bandwagon, hiking prices in restaurants, supermarkets, food courts, coffee shops and retail outlets. This affects the budget of every Singaporean but the hardest hit are the middle class and lower-income workers. To put it in perspective, not all shops everywhere are doing it and those that do are not raising prices for every single item in their premises. It is a sporadic, selective practice that depends on the person and the location. Some are reluctant to charge more for fear of losing customers. A stall near my home has just hiked his nasi lemak and mee rebus from S$2 to S$2.20. Across the road, a glass of sugar cane water is up 20 cents to S$1.20. In some places – but not all – chicken rice, the closest to a national dish here, now costs 50 cents more at S$3.50. Condensed milk, bubble tea and Campbell soup have become dearer. For consumers, the worst is to come. On July 1, Singaporeans will have to pay a higher Goods and Services Tax (GST) when it is increased from 5 to 7%. “The price increases look unstoppable and the government is either unable or unwilling to take action to deal with it,” said a retired teacher. In the government’s view, inflation here is largely imported or due to globalisation and represents only an insignificant rise in the Consumer Price Index. The only watchdog, the Consumers Association of Singapore (CASE), has been a relative bystander especially when the perpetrator is the government or a Temasek-linked company. Inflation is not only a Singaporean phenomenon. It is also threatening stronger economies like the US and China, which are considering higher interest rates to dampen it. With an expected growth of 6% this year, Singapore is not spared. But the government’s strong business role and preoccupation with the bottom line are part of the dilemma. There are other official causes. Firstly, the authorities themselves had started the ball rolling when they raised charges for public services like education, hospitals and utilities. Secondly, the government is Singapore’s biggest landowner, owning some 70% of it and thus has a powerful say on prices. Rents in Temasek-controlled commercial and shopping properties have risen significantly. The impact on the retail trade is inevitable. In addition some of these linked companies operate a total or near-monopoly services that limit market competition. “Monopolistic price increases have happened all too often,” a commentator of current affairs observed. “It is time the ministers form a committee to look into government monopoly or cartel collusion to fix prices to ensure there is no infringement of the Fair Trading Act”. What is more worrying is structural inflation. As it speeds towards becoming into a global city with a large number of rich and talented foreigners, Singapore would likely take on a new high-cost structure. Becoming another city like New York, Tokyo or Paris, stirs excitement, but the cost of living is bound to take after them as well. The present predicament may be a sign of things to come. Singapore’s economy is gradually favouring the businessman over the ordinary worker. Some economists think the price surge will eventually settle back when the economy slows. “But many of the basic food prices, once raised, will not become cheaper ever again,” exclaimed a housewife. “We’re stuck with them.” There is rumbling in the heartland where 85% of Singaporeans live. The price hikes of basic goods and services are hurting many citizens with average or low incomes. The government is watching with some concern, although it has so far taken little public steps to combat the snowballing increases. When the GST increase comes into effect next month, the Singaporean pocket will be hit even harder. He will have to pay a 7% tax of almost every product or service, unless an exemption is stipulated. The authorities are dishing out S$100-S$400 a year to each adult over next four years to mitigate its impact. The poorer people get the higher sum. Apart from possible political fallout, the government will likely want to prevent higher costs from derailing its strategy of attracting foreign investment and talent. Already American businessmen have complained that spiralling rents are creating problems for them, forcing a number to relocate elsewhere. Cases of condo rents at choice areas rising up to by 50-70% once a lease expires have been growing, a trend that could benefit Singapore’s neighbours. (This article was published in The Star, Malaysia, on June 16, 2007) Price increases are expected when the GST goes up by 2%. And the Singaporeans should have no problem facing the increases. Thanks to the govt who have the foresight to anticipate the increases and has given several hundred dollars to every Singaporeans in advance. That's thoughtful. For me, it will be more money in the kitty as I will not be spending more than before. I will cut down on my food intake, 1 pack of 3 in 1 Super Coffee instead of 2, go to the barber once in two months instead of every month, use less water, lesser colgate, lesser hair cream. And drop one station earlier from the MRT and walk. It has the additional benefit of exercising my leg muscles. And all these with govt handouts safely in the kitty. Isn't that nice?

8 comments:

Anonymous said...

in the end you'll sweat and smell like those smelly uncle who sting n stink like never bathe.

Anonymous said...

It is time the ministers form a committee to look into Government monopoly or cartel collusion to fix prices? Holy cow, you must be joking!

The Government has a finger in every pie - property development, banking, transport, telecommunications etc and you expect the so-called ministerial committee to put a stop to those monopolistic practices. Look into maybe, but not to act I suppose.

CASE a watchdog? More of a showdog like a poodle or pekingese or a chihuahua. Who do they usually put in charge of CASE?

But don't worry. Very soon our mainstream-media will run an exercise to compare prices with London, New York and Tokyo and ...

Anonymous said...

HDB flats dun worry no shortage, go stay far far if you cant afford no problem... what i heard is different, people are grabbing hdb flats like on-the-spot auction becos rental increases have forced strong demand from unexpected quarters. Are we logistically ready to take in more businesses and population increase? That depends on where u come from. Developers, tycoons, landowners and vested investors will definitely have a resounding yes!

I think the govt should hike stamp duties and percentage mortgage upfront deposits to stamp excessive profiteering, and they should do it yesterday.

Anonymous said...

The cause of inflation is mainly due to property speculation. Properties are exchanging hands like crazy in the subsale market. Developers have a roaring time upping the benchmarks of new launches further driving up the prices. Their land bank assets has gone up many times over. The ordinary folks in the street who are not playing the game have to pay the price for hikes across the board resulting from these bubbles. It is high time the govt think out of the box and stamp excessive speculation with incremental anti speculative measures measures as a pre-emptive move before it gets too serious. Thats what they are paid such salaries for!

Anonymous said...

Or drink tap water, bathe 2 days once, eat apples for dinner, DIY cut botak, save a few dollars every month and retire after 90

Anonymous said...

CASE is talking about reporting shops raising prices after GST increase. What are they talking about? In the last two or three months shops and hawkers have already increased the prices of most things. Do you think those shopkeepers and hawkers are dumb enough to wait until after July 1 to increase prices. CASE is always one or two steps behind reality.

Anonymous said...

Eeeeeh! We don't want nua nua* ang dao here la, pls!
Drink half less kopi. Improper teeth brushing. Hair all oily, messy & si bay chao!
This kind of ang dao how to think so clever and write clever things here hah?

We want clean & good ang dao.
We ai peen yu cheen!! **

* Hokkien:
*Nua nua: rotten & slimy
**cheap & fresh!

redbean said...

only ang tau tng then got nua nua ang tau.

kacang puteh ang tau quite firm one. actually kacang puteh never sell ang tau. only roasted white bean and green bean.