Minister Lim Hng Kiang's reply to Parliament Questions on Inflation

Question No 732 of Notice Paper No. 57 of 2011

Name and Constituency of Member of Parliament
Mdm Cynthia Phua, Aljunied GRC

Question
*732. Mdm Cynthia Phua: To ask the Minister for Trade and Industry with continued high oil prices coupled with the recent disruptions in food supply chains arising from natural disasters (a) what is the Ministry's projection on inflation for Singapore in the next six months; (b) what is the Ministry doing to mitigate the effects of inflation especially on essential foodstuff; and (c) what is the Ministry doing to ensure that Singapore is able to import food produce from alternative sources.

Answer
Mr Speaker Sir, I have covered my Ministry’s response on the outlook for inflation in an earlier response.

As a small and open economy, Singapore is obviously a price taker in the global market. With almost all of our food and energy needs imported, we are vulnerable to any increase in global commodity prices.

However, the government adopts various measures to mitigate the effects of higher inflation on households. One of the key strategies is to allow the Singapore dollar to strengthen. This would dampen the cost of imported goods including essential food items. But we are mindful that strengthening the Singapore dollar too much could hurt export competitiveness.

Hence, the government has also rolled out the ‘Grow & Share’ Package to help Singaporeans cope with the rising costs of living. The initiatives include – Growth Dividends for all adult Singaporeans, with most getting between $600 to $800, Workfare Special Bonuses for those on Workfare, and a 20% rebate on personal income tax for Year of Assessment 2011, up to a maximum of $2,000. To help with specific households expenditures, there are also additional U-Save rebates of up to $360, rebates for Service & Conservancy Changes of up to 3 months, and others. For the lower and middle income Singaporean families, the benefits they receive from ‘Grow & Share’ are significantly more than the increase in costs they will face.

The Government has also set up the Retail Price Watch Group (RPWG), headed by the Minister of State for Trade & Industry and Manpower Lee Yi Shyan, to keep a close watch on excessive price increases and anti-competitive behavior from businesses in Singapore. The RPWG works with grassroots leaders to provide the public with information about competitive alternatives. This gives consumers more choices.

To date, the RPWG has also implemented various initiatives to help moderate the inflationary pressures consumers face. For example, the RPWG has worked with various supermarkets, such as NTUC Fair price and Sheng Siong, to maintain the prices of various house-brands of essential food items for the next six months. Through the “I Support RPWG” label, the RPWG has helped identify businesses that have recently decided to maintain prices or provide promotions for their customers. About 1000 food stalls in hawker centers and food courts are part of this initiative. This informs consumers of the range of affordable food options. It also helps to promote patronage of the stalls that are providing good value.

To ensure food supply resilience in Singapore, Singapore has been actively pursuing the strategy of import source diversification. By buying from many sources, Singapore is better buffered against potential food shortages and to a lesser extent from food price volatility.

The Agri-Food & Veterinary Authority (AVA) of Singapore has been leading food diversification efforts. They have also worked closely with International Enterprise (IE) Singapore to encourage companies to source food from a variety of sources and to enter into upstream sourcing, for example through contract farming. This will provide better leverage over the food supply chains. Various sourcing missions have been carried out to diversify the sources of our food imports such as seafood and fruits & vegetables. To enhance the diversification efforts, a $10 million Food Fund was also launched in December 2009 to allow food companies to explore new food sources overseas, raise local farming productivity and enhance local farming capabilities.

The government will continue to monitor the external situation and ensure that there will not be any disruption to Singapore’s food supply.