SINGAPORE: Whenever the issue of the rising cost of living is discussed in Singapore, it feels like flogging a dead horse.
After all, what can be done?
Singapore imports almost everything and has to accept the price of goods set by other countries. In other words, to use a technical term, it is a price taker.
End of discussion?
Except for one inconvenient truth - it is the number one issue that people say they are most concerned about, as almost every poll has shown.
According to Blackbox Research's SensingSG survey done last month, 34.8 per cent of respondents who are eligible to vote in the coming General Election cited it as their top worry, way ahead of the next which was about jobs (15.6 per cent)
UOB’s Asean Consumer Sentiment Survey released last year found that 71 per cent of Singaporeans are most vexed about rising inflation, higher than the Asean average of 63 per cent.
Other surveys have had similar findings.
There is no question therefore that it dominates people’s concern here. What is surprising is that for an issue that so many talk about, there seems to be an air of resignation about what can be done about it.
The official narrative so far is this - the government hears you and understands the difficulties people face with rising costs and will do what it can to help by giving handouts, through Community Development Council (CDC) vouchers and other financial assistance schemes.
“My team and I will do everything we can to help you get through this difficult period,” Prime Minister Lawrence Wong said in a speech in October, noting that inflation was a global issue affecting all countries.
“We cannot control global prices. But we can and have mitigated the impact on Singaporeans,” he added.
The measures included S$800 in CDC vouchers, S$400 utilities rebate for Housing and Development Board households and up to S$700 cash payouts for eligible Singaporeans.
These handouts do help to relieve the pain especially among the poorest, and it is good that the government recognises the severity of the problem and is tackling it.
Singapore is also in the fortunate position of having enough public funds to finance these measures.
The problem is that handouts are at most band aids that do not address the issue itself which is rising prices of things that people need. They will hence never be sufficient especially if prices keep going up.
A survey by Milieu done immediately after the Budget statement last year when these measures were announced found that six in 10 Singaporeans said they were inadequate to help them cope with rising prices.
Government handouts can do only so much to alleviate the pain because there is a limit to how much to give from public coffers. It can also by itself cause further price increases, as some have argued was the case with hawker centre food when patrons were able to use CDC vouchers.
The government’s approach is consistent with its longstanding view that prices are set by the free market and should not be arbitrarily controlled.
For many goods and services, this is true, but, in Singapore, as in other countries, there are areas in which the market isn’t completely free because of many reasons: Monopolies and oligopolies exist where a few big players dominate or when the state itself plays a large part in determining prices because it has other national objectives in mind.
Land prices, for example, are influenced by how the government, as the largest landlord here, controls supply and use.
The objective here is to safeguard its value and treat it as part of the national reserves for future generations. This isn’t wrong and there is much to be commended about being careful with one’s savings.
The issue is how to balance the need to preserve the value of national assets and managing prices so they are not a burdensome drag on businesses in a period of high inflation.
Transport cost is another issue where the government has had to balance its objective of keeping the roads free-flowing through the Certificate of Entitlement system and managing costs especially for businesses owning commercial vehicles. Traffic management is important in a city state and there are tricky trade-offs involved.
There is no magic silver bullet that will address these questions - whether on land or transport costs - and these issues will continue to be debated in the years to come.
It isn’t only about whether prices are going up or down but also about the actual prices themselves, and whether Singaporeans are paying more than they should.
How do prices here compare to those in similar countries, and are consumers getting a fair deal?
Two recent shopping experiences have made me question whether the market here is as free as it should be.
Last month, in Munich, Germany, while on a family holiday, I bought a pack of shaving razor blades, after misplacing mine. I was shocked by the price but pleasantly so - about S$3 for a pack of 10 disposable razor blades.
In Singapore, the cheapest equivalent blades here, at a major supermarket chain, cost almost three times as much, including its house brand.
The 10-pack razor I bought in Munich was from Cien, a brand I had not heard of and which you can’t find here. It works as well as any I’ve used, for a fraction of the cost.
My second experience was even more telling, with buying AA batteries for my digital lock at home. The manufacturer recommended using Energiser Max, which costs about S$22.30 for a pack of 20 at two major supermarket chains in Singapore.
I baulked at paying these prices and decided to check out the e-commerce retailer Lazada. The price? S$11.90 (S$13.29 with delivery), or almost half the price, sold by a local supplier.
Question: Why do the giant retailers here charge so much compared to similar products elsewhere and online? Why are they not as competitive as they should be, offering consumers more choices?
I can hazard a guess, apart from their higher overhead costs: When the market is dominated by a few players, there is no incentive to engage in a price war. Better to watch each other’s prices and charge accordingly.
How else to explain the almost similar prices for those batteries?
How to make the market more competitive especially with regards to pricing when it is dominated by a few players, which is also the case for petrol and consumer banking, as with supermarkets.
It is worthwhile looking into this question in Singapore. While it has to import most of its goods it doesn’t mean nothing can be done to ensure fair prices.
In fact, it is even more important to do so, precisely because it is so import-dependent.
These issues need to be debated more forcefully, including flogging dead horses.
Han Fook Kwang was a veteran newspaper editor and is senior fellow at the S Rajaratnam School of International Studies, Nanyang Technological University
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