Enduring solution to rising business costs needed: Inderjit

Singapore

THE government needs to find a permanent solution to rising business costs, instead of allocating large amounts of funds from each year's budget to cushion companies against growing expenditures, said Member of Parliament Inderjit Singh (Ang Mo Kio GRC) on Wednesday.

However, he also called for a mandatory minimum wage for low-wage Singaporeans - a move that will inevitably raise business costs further.

Speaking on the second day of the budget debate in Parliament, he gave voice to businesses, particularly small and medium-sized enterprises (SMEs), which continue to face escalating business costs, whether from wages or rentals.

Noting that companies have already begun relocating their operations outside Singapore, in lower-cost environments such as Malaysia and Vietnam, Mr Singh said: "(This exodus) is going to accelerate further unless we do something about the rising cost of doing business here . . . Once companies relocate, they are unlikely to come back."

He said that the current approach of setting aside significant sums every year to help companies cover the higher costs of doing business "cannot be a permanent solution".

"For the longer term, we need to identify and resolve some deeper structural factors in the economy which have led to high business costs in Singapore. This needs a focused, experienced, and diverse team to study the factors for a concerted period of time.

"I would urge the government to focus on this and set up a Cost Competitiveness Committee, like what we did 30 years ago to address the same type of problems in 1985. We have nothing to lose by forming such a high-level committee - at worst, we will confirm our cost structures are not wrong; at best, we'll be able to solve some of these problems."

Non-Constituency MP Lina Chiam called for every type of business cost to be reviewed, including foreign worker levies and utilities costs.

Later in his speech, Mr Singh urged the government to do more for low-wage workers, and to take another step to build a more inclusive society - a path which was opened up after the 2011 general election.

He described Singapore's progressive wage model (PWM) as a "good start" for a longer-term minimum wage system, but said that it "does not provide the comprehensive longer-term solution that is needed".

Launched in 2012, the PWM is a wage ladder that puts workers in low-wage jobs on track for higher salaries as they undergo training and make productivity gains. The PWM has so far been applied only to resident cleaners, and is to be extended to the security industry next year.

Mr Singh said: "Some companies have gotten around the PWM by reclassifying the jobs in the two sectors (affected), while employers in sectors not covered by the PWM have little incentive to redesign their jobs.

"Singaporeans earning very low wages who have a family to support cannot cope with unrealistically low salaries, no matter which sector they work in.

" I think we should formalise a national minimum wage so that Singaporeans are more self-sufficient and don't have to rely on regular government interventions for them to cope."

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