SINGAPORE — Recent moves to raise productivity, restrict foreign labour supply and increase wages are “happening together and too fast”, hurting firms already grappling with high costs and labour shortage, said Member of Parliament (MP) Inderjit Singh during the Budget debate yesterday.
Some companies are already mulling over relocation to cheaper places, such as Iskandar Malaysia, he added, noting that several firms from Singapore have already set up shop in the Johor development corridor.
To stay near their suppliers and subcontractors, multi-national companies will also follow small and medium companies into Iskandar, and Singapore risks a hollowing-out of its economy in the future, said the Ang Mo Kio GRC MP.
“The exodus may be larger than we imagine, and so we should not ignore the potential impact to our economy as job losses may become a serious national problem,” added Mr Singh, one of several MPs who raised concerns over rising business costs in Parliament yesterday.
He also blamed escalating rental costs on the Government’s “mistaken” land divestment policy, which he said had reduced JTC’s ownership of industrial property from 18 per cent 10 years ago to only 3 per cent today.
As a result, the Government has lost the ability to influence rental prices, resulting in developers and investors — many of whom are non-productive large investors, such as real estate investment trusts (REITs) — making money out of high rentals, he added.
Mr Singh called on the Government to reverse the policy, even if it means buying back some of the REITs.
The call for state intervention in business rentals was echoed by Ms Denise Phua (Moulmein-Kallang GRC), who said many REITs were taking a cut of tenants’ sales in addition to base rentals.
“Sad will be the day when the only tenants that can afford retail space are luxury brands, and those that can afford good office space are non-SME tenants,” she said.
Noting that rising rental costs have led surviving traditional businesses to charge similar prices with malls and food courts, Mr Zaqy Mohamad (Chua Chu Kang GRC) called on the Housing and Development Board and National Environment Agency to provide a “greater balance” of more affordable rental spaces in HDB estates.
Nominated MP R Dhinakaran said there was not much in Budget 2014 for businesses to cheer about.
The Government could perhaps have funded 75 per cent of the Pioneer Generation Package out of this year’s Budget — with the remainder coming over the next few years — and “allowed more leeway” to help businesses and small and medium enterprises with costs and labour shortage.
“If we don’t give them some hope for survival, they will not even look at making productivity improvements for the long run”, he said.