SINGAPORE: Jacky Wong, the third-generation owner of zi char institution Kok Sen, has been watching the increase in electricity and town gas tariffs with worry.
“I read the news. I am stressed,” he told The Straits Times, referring to escalating operational costs for his restaurants at City Square Mall and in Keong Saik Road. “I foresee that many businesses will be affected.”
Wong had already begun passing on to customers price increases that had hit his business since the Iran war broke out in February.
These included the uptick in electricity prices in the quarter of April to June. Wong’s gas supplier also raised its charges from $9.30 per cubic metre to $10.30 per cubic metre during that time.
As a result, Wong raised the service charge levied at his restaurants from 3 per cent to 5 per cent, and is considering raising it further, as energy costs have driven electricity and town gas tariffs to record highs in the current quarter starting July 1.
Grid operator SP Group and piped town gas provider City Energy review electricity and gas tariffs every quarter, based on guidelines set by the Energy Market Authority.
Electricity prices for homes have risen by 4.64 cents per kilowatt-hour (kWh) from the previous quarter to 31.91 cents per kWh, before goods and services tax (GST).
The overall electricity tariff, including for non-households, has gone up by an average of 17.5 per cent, or 4.66 cents per kWh, over the same period.
Meanwhile, the cost of town gas for households has climbed by 1.56 cents per kWh to 23.48 cents per kWh, before GST.
Businesses can also tap piped gas, or make arrangements with other suppliers if they use gas cylinders.
Higher costs have also affected how The Patissier cake shop in Tyrwhitt Road operates.
Chow Choon Kit, who owns the business with his wife, told ST that its electricity bill has spiked from around $1,900 in March to $3,200 in May, because it buys electricity at wholesale rates.
Spot electricity prices have surged as the Middle East conflict drove up energy prices and disrupted the supply of liquefied natural gas from the region, which is used to generate electricity in Singapore.
Chow added that his business is now spending around $1,500 a month to fulfil deliveries which would have previously cost $1,300, because of elevated fuel prices.
Despite this, he has not passed on the higher costs to customers.
Instead, he has optimised his baking processes to reduce the usage of ovens.
He has also cut the number of cake flavours offered over the counter, from as many as eight, to five or six.
Doing so has allowed the shop to reduce the amount of fridge space required and the number of fridges it keeps running.
Chow said: “We will continue to monitor our electricity usage and tighten further if possible. However, there is a limit to this, so we will probably end up having to absorb the increased cost.
“With costs rising for almost every baking ingredient over the past year, profit margins have been continually eroded. This increase in electricity cost is a further kick in the teeth.”
Continental car dealer Monster Motors, which has a brightly lit showroom in Upper Thomson Road, expects a $300 to $400 jump in its monthly electricity bill.
Chief executive Alastair Tay said: “We are heavily reliant on air-conditioning and lighting.”
To mitigate the rising costs, he has encouraged employees to switch off electronic equipment and lights before leaving the showroom.
The bigger electricity bill adds to other business challenges, Tay said.
Sales have fallen by as much as 40 per cent since the start of the Middle East conflict, he added, due to the surge in fuel prices and the uncertain economic environment.
Although the strong demand for electric vehicles has helped, some consumers are simply not keen to make big purchases.
“That’s what I feel,” Tay said. “I won’t buy big-ticket items when I am uncertain if my income can remain stable.”
Ang Yuit, president of the Association of Small and Medium Enterprises, said the increase in electricity and gas tariffs comes during a difficult time for businesses.
“There is a degree of stoicism because businesses understand that many of the costs are driven by external factors. But margins have already been very challenged,” he said.
“Businesses are trying to adapt and save where they can. Still, some might stop taking on certain orders or close, because it is just not profitable.”
Ang added that firms could benefit from the Energy Efficiency Grant – which co-funds investments in energy-efficient equipment – that will be expanded to all sectors and extended until March 31, 2028.
The expansion was part of nearly $1 billion in support measures announced in April in Parliament, amid the sharp rise in petrol and diesel prices.
The Singapore Business Federation (SBF) expects global energy and logistics disruptions to continue to intensify cost pressures.
SBF’s National Business Survey of business sentiments for the first quarter, released on July 1, found that large companies as well as small and medium-sized enterprises were expecting higher costs in the months ahead.
This came as the cost expectations sub-component of its Business Sentiment Index rose from 71 points in the fourth quarter of 2025 to 75.9 points in the first quarter of 2026.
SBF said: “Cost pressures are expected to intensify across most sectors, with manufacturing reporting the strongest anticipation of cost pressures ahead.”
Chow from The Patissier called for more support for the food and beverage industry, which has seen a constant churn of openings and closures.
He said: “The current cost situation may result in more local establishments going under. It will be a pity if we were to lose these brands, some of which have been in business for many years.”
Kok Sen’s Wong echoed the need for support, pointing to recent moves by bread manufacturer Gardenia and home-grown brand Tiger Beer to end production in Singapore.
“Gardenia and Tiger Beer foresaw the cost of operation in Singapore and shifted. More and more businesses will do the same if costs increase,” he said. - The Straits Times/ANN
