Why green light was given for SingPost postage rate hike

Singapore

PARLIAMENT was on Wednesday given an insight into Singapore Post (SingPost) as an employer and the national postal service-operator when the government explained why it had allowed it to raise postage rates from Oct 1, in light of declining letter volumes and rising operating costs.

SingPost, in the face of these trends, has not taken to cost-cutting moves such as reducing its staff strength, closing post offices and scaling back on its daily deliveries. Instead, it has treated its workers "responsibly" by raising their salaries and hiring more older people, and drawn up a S$100 million service-improvement plan for initiatives such as automated sorting machines.

These issues were a "key consideration" for the Infocomm Development Authority of Singapore (IDA), which gave the go-ahead for the first revision to postage rates in eight years, said Minister of State for Communications and Information Sim Ann. She was responding to queries from Non-Constituency Member of Parliament Lina Chiam, who asked why SingPost had raised postage rates despite having made higher profits and mail revenue last year.

From Oct 1, domestic mail postage went up by between four and 20 Singapore cents. Postage for mail under 20g rose from 26 cents to 30 cents. International mail postage adjustments ranged from five to 25 cents, while the charge for international registered mail increased from S$2.20 to S$2.50.

Ms Sim said SingPost had been facing pressures from higher labour and operating costs in the last few years. On top of these, the rates it paid to overseas postal operators had gone up by about 40 per cent since 2010, and will go up by more than 30 per cent by 2017. Such rates are set by the Universal Postal Union.

Mrs Chiam later asked whether future increments to local and international postage rates would come even if SingPost continued making profits, bearing in mind too that it was listed on the Singapore Exchange and was running a monopoly for an essential service.

Ms Sim explained that most of SingPost's profits come from unregulated mail and unregulated business sectors not related to its postal segment. She added that the IDA would first have to study the impact on consumers if another rise in postage rates is mooted.

In September, when the higher postage rates were first announced, SingPost group chief executive Wolfgang Baier said that while the revised rates would contribute about S$16 million in revenue per year, three-quarters of that would go towards investments in infrastructure, staff and other initiatives.

Asked to disclose the number of complaints against SingPost in the last three years, Ms Sim said the figure was "fairly low" - at an average of 100 complaints for the estimated 1 billion mail items a year, or one complaint for every 10 million letters.

"IDA takes a serious view of all complaints, and will impose penalties on SingPost for non-compliance for IDA's postal quality-of-service framework. IDA will monitor SingPost's service-enhancement measures so as to improve the reliability and quality of basic postal services," she said.

SingPost shares ended trading half a cent higher at S$1.95 on Wednesday. The stock has been on a rally since May, when a unit of Chinese e-commerce giant Alibaba said it would buy a 10.35 per cent stake in the firm for S$312.5 million, or S$1.42 a share.