RELATIVELY high wages may be eroding Singapores competitiveness, but there is no reason to panic as the republic is still an attractive place to do business.
Addressing concerns that other factors like land and the cost of utilities are still too high, Deputy Prime Minister Lee Hsien Loong produced evidence to show Singapores cost structure was not wildly out of line with that of the regions economies.
In particular, the cost of land has been falling significantly over the past 10 years, he said.
We have to judge Singapore on our overall competitiveness. Wages are important, but so is our overall competitiveness, he said.
Referring to an economic report quoted on Tuesday by Deputy Prime Minister Tony Tan, Lee said that while the republic was more expensive than developing economies, compared with more developed countries Singapore was still competitive.
According to the report, Singapores wages appeared higher than those of developed countries like the United States.
To which Lee said: That is true, but that is only one part of the picture and we also have to look at the rest of the picture to complete the perspective.
It is the whole picture that Lee asked Singaporeans to consider. Apart from addressing wage costs in current changes to the Central Provident Fund scheme, the government has tackled many other components of our business costs.
One area was the income tax regime, which Lee said was one of the lowest in the world. Another was utility charges, which had been made cheaper than those of many other countries thanks to the liberalisation of the energy market.
As for the traditional bugbear of stratospheric property prices, Lee said that land costs and rentals had fallen significantly since 1994 as much as 41% for office properties.
You will see the trend has been down. And if you compare the decline, not from 1994 but from the peak, which was around 1996 and 1997, you will know that the decline was even sharper, he said.
Earlier during the Parliamentary debate, Minister of State for Trade and Industry Raymond Lim said the government was looking to benchmark industrial rents here against international rates.
This would help it to keep industrial rents competitive through an industrial land sales programme, he said.
Nominated MP Gan See Khem, however, said relative costs of running businesses had become high enough to outweigh Singapores high quality of labour, outstanding infrastructure and supportive government and legal structures.
Her view was echoed by economists who felt that business costs here were still relatively high even after taking into account productivity. The Straits Times/Asia News Network
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