Government monitoring businesses to stop them from using increased costs as excuse to profiteer: DPM Wong

SINGAPORE: The government will monitor businesses to make sure that there is no profiteering, where businesses might use cost increases as an excuse to raise prices more than necessary, said Deputy Prime Minister Lawrence Wong on Thursday (Sep 28).

He was responding to a question about how businesses may be affected by the recent announcements on the increase in the price of water and a switch towards healthier food ingredients. Water prices will rise by about 18 per cent over the next two years in two phases.

Mr Wong announced on Thursday an additional S$1.1 billion (US$800 million) support package to help Singaporean households with the rising cost of living.

Eligible Singaporeans will receive an additional cash payout of up to S$200, while households will get S$200 more in Community Development Council (CDC) vouchers, as part of the government's latest effort to help people cope with rising prices.

These measures build on several waves of enhancements to the Assurance Package that were announced during Budget 2023 in February, as well as last year.

Other measures announced on Thursday include additional U-Save rebates to help with the latest increase in carbon tax and water prices, along with subsidies and vouchers to help with public transport fare increases that were announced last week.

In rolling out these measures, the government has to make sure that there is no profiteering, which consumers may be concerned about, said Mr Wong, who is also Finance Minister. 

“Whether it’s hawkers or other businesses, (they) may use these price increases as an excuse to profiteer, increase prices more than necessary,” he said.

"We have a committee set up against profiteering, we will continue to monitor against such behaviour."

The Committee Against Profiteering, chaired by Minister of State for Trade and Industry Low Yen Ling, was reconvened in 2022.

It will ensure businesses will not use the Goods and Services Tax (GST) hikes as an excuse to raise prices, and will focus on daily items commonly used or consumed by households in Singapore.

The committee was first set up in 1994 alongside the introduction of GST in Singapore. It was also reconvened during the previous rounds of GST increases in 2003 and 2007.

SUPPORTING BUSINESSES, ATTRACTING INVESTMENTS

Mr Wong also responded to a question about why there was no support rolled out for businesses in the additional package of measures announced on Thursday. 

If business costs have gone up, then it is not sustainable for the businesses to run on a deficit and they will have to make themselves viable, which will ultimately reflect in inflation, he said. 

“That’s why we focus on inflation, we focus on the impact on consumers. And our focus has been to look at the impact, particularly on lower- and middle-income consumers, families and do our best to support them,” said Mr Wong, adding that this is Singapore’s “main strategy” for coping with inflation. 

The “most important thing” for businesses is that the government cannot permanently subsidise businesses. They must be self-sustaining, profitable and viable, he said. 

“What’s important for business is to continue to restructure, continue to focus on moving up the value chain, be more efficient, be more productive, and all the schemes we have in the Budget so far have been supporting this direction,” said Mr Wong. 

In the coming Budget, the government will think of ways to "help businesses along this path, not so much to prop up unviable businesses", but to help them become more productive and more efficient, he added.

When asked whether Singapore will still be an attractive place for businesses despite high inflation and concerns about the cost of living, Mr Wong said whether companies will come to Singapore is not just dependent on the country’s economic growth prospects. 

“We have many attractive qualities in Singapore. We are stable, we are reliable, we have excellent connectivity, we have a high-quality workforce, we have a very attractive business environment, so these are all very good competitive advantages for us,” he added. 

“Even now, amidst this uncertain economic environment, we continue to get a good pipeline of very attractive high-quality investments wanting to come into Singapore.” 

As long as Singapore pays attention to its overall competitiveness, it will be able to anchor more of such investments and continue to create good jobs for Singaporeans, said Mr Wong. 

WATER-STRESSED NATION

Mr Wong also addressed the impending increase in the price of water.

"Water is yet a different matter altogether because water is such an essential resource for Singapore," he said. 

"It’s a strategic resource, it’s a matter of national security. We will always be a water-stressed nation, and we must appreciate the importance of water to Singapore."

This is why the government has always "made the effort to price water properly" so that consumers understand "what the full price of water is" and make every effort to conserve water so that Singapore can always be confident that it will have enough water for its needs, said Mr Wong. 

“I think it’s right for them (PUB) to explain and to announce the increases that are necessary to ensure that it’s able to recover the full cost and not just kick the can down the road and not do so,” he said, adding that the latter approach would be detrimental to Singapore’s interests. 

Responding to a question about how support packages seem to be rolled out more regularly now, Mr Wong pointed to economic uncertainties in recent years as the reason for more off-Budget packages. 

“Will this be the pattern in the future? No one can tell. Our preference, of course, will be to prepare and provide for things within the Budget itself,” he added. 

“But if there are these unpredictable changes in the external environment, then certainly the government will always stand ready to respond promptly and swiftly, and to make sure we provide all the necessary support for Singaporeans.”