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Singapore needs to rein in costs: NMP Tan Su Shan

Singapore needs to rein in costs or it will “price itself out of the market,” said Nominated MP Tan Su Shan in Parliament on Monday (May 26).

SINGAPORE: Singapore needs to rein in costs or it will “price itself out of the market,” said Nominated MP Tan Su Shan in Parliament on Monday (May 26).

"Whilst we can dispute the validity of many economists report on Singapore being one of the costliest cities in the region, the fact is, as a First World City, we are no longer cheap," Ms Tan said, citing an example of rig builders' interest to shift to China due to cost.

Ms Tan said since the Monetary Authority of Singapore has chosen to maintain a strong, stable Singapore dollar, it is likely that most of Singapore's inflation cost will come from domestic cost pressures.

She added that Singapore's export competitiveness has been eroded by an appreciation of the Sing-dollar real effective exchange rate and domestic cost pressures due to the tight labour market.

She said Singapore's Asian rivals are competing not just in low-skilled manufacturing, but also in high-tech value-added services and products, and this is why Singapore needs to push for reforms to extend education and skills training for all.

On retirement adequacy, Ms Tan said while the average Singaporean in full-time employment can expect an income replacement ratio of around 68 per cent -- well within the OECD recommended range -- several Singaporeans have “some way to go in terms of knowledge and readiness for retirement planning.”

"Just looking at the huge amount of online media surrounding CPF now, some of them very negative, it is clear we need to do more to educate CPF members," Ms Tan said.

Citing surveys and reports, Ms Tan said fewer than one in three Singaporeans are aware of how much CPF funds they have, while nearly half could not save for retirement due to day-to-day living expenses.

She said in calculating retirement adequacy, there may be a need to factor in a higher rate of inflation and it would be useful if the government could also provide a medium term projection of Singapore's inflation rate.

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