I read that Nokia has decided to move its Asian headquarters from Singapore to Beijing, citing high operating cost and other reasons. Google choose Kuala Lumpur to be their regional base, instead of Singapore.
A friend, who was in charge of planning for a large multi-national company with wafer fab operations in various countries in Asia told me that it is too costly to manufacture in Singapore. He said that a factory in Singapore that requires spare parts pay 2 to 3 times of the price that a Taiwan factory pays to their local suppliers. Someone, the Singapore suppliers charge too much, even for spare parts that are imported from overseas.
A few people have told me that they can buy electronic products from Hong Kong at a price 20% lower than Singapore.
These are all signs of Singapore becoming too costly for business. I hope that our Ministry of Trade and Industry and Ministry of Finance are aware of these indicators. They are quite worrying.
A friend, who was in charge of planning for a large multi-national company with wafer fab operations in various countries in Asia told me that it is too costly to manufacture in Singapore. He said that a factory in Singapore that requires spare parts pay 2 to 3 times of the price that a Taiwan factory pays to their local suppliers. Someone, the Singapore suppliers charge too much, even for spare parts that are imported from overseas.
A few people have told me that they can buy electronic products from Hong Kong at a price 20% lower than Singapore.
These are all signs of Singapore becoming too costly for business. I hope that our Ministry of Trade and Industry and Ministry of Finance are aware of these indicators. They are quite worrying.
18 comments:
One big culprit for our high cost is the GST of 7% (remember that Hong Kong and Malaysia has no GST).
The impact of GST is more than 7%. It has a multiplier effect (although in theory the input GST is offset against the output GST) and there is the added burden of compliance.
GST is a wasteful and inefficient tax, as it requires a lot of work to keep track and account for the tax. And the work means more accounting staff that has to be paid quite high salaries.
Some countries need GST because they have a generous welfare system - but not Singapore. Like Hong Kong, Singapore earns a large revenue from land sales and both have a low income tax rate. Hong Kong decided that they do not need GST - which I agree.
I hope that our leaders realise that GST is a major source of our high business cost and act early to remove it.
Another big culprit is the shor-sightedness of our top civil servants. The introduce online processes to reduce the work for their staff but add many times of the work on the public.
Their websites are complicated. They do not provide adequate staff to man their helplines. This cause the admin staff of companies to spend a lot of time, and high cost, to comply with submitting returns and other government regulations.
All of these burdens and inefficiencies add to the high operating cost in Singapore. I know, because I run a small company, and have to suffer these burden.
When the Government introduces different rates of CPF contribution for different age groups and categories of employees, they add a big burden to businesses, just to compute the CPF contributions monthly. I know, because I just computed the CPF of my employees, after my admin staff left me. The admin staff was costly, but he had to spend a lot of time on doing this type of complicated work.
Relatively speaking,nothing beats the high rent and the utility charges born by businesses.
@yuyuan. Hong Kong also has high rents but they can sell 20% cheaper than Singapore.
The competition in Hong Kong is very much keener than Singapore. The media is open and 100% free. The profiteering can be easily exposed and checked. The role of government is to govern and govern fairly and firmly. In additon, the government does not get involved or own big shares in commercial business through GLCs(Government Link Companies) are among other likely reasons that they can sell cheaper than us.
On the whole, their economic engines are largely propelled by private sectors. By nature, the productivity is much higher.
Hi Mr Tan,
Maybe your future admin staff can consider doing an Excel spreadsheet to handle the formula for calculating the CPF contribution of your staff. It is a one-off job. Once done, it will raise productivity of subsequent months. Of course, maybe there may be a good reason why this was not done and I am simply shooting my mouth on something which I don't know.
For small businesses, they can choose not to be a GST-registered business if the revenue is below SGD1m. This can save them plenty of administrative cost. There are pros and cons. I think for small businesses selling software products directly to non-GST registered customers with little purchases from suppliers, staying non GST-registered make sense.
In Tampines GRC, there are big signages (about 20 feet tall and 30 feet wide) that displays giant portraits of the Tampines GRC team.
I've seen them replaced every time there is a religious holiday.
e.g.
National Day
Christmas
Chinese New Year
1) How much this is costing the Singapore tax payer?
2) Happening only in Tampines GRC or all GRCs and SMCs?
3) Are Opposition GRCs & SMCs also doing this?
4) Why waste money? Give to the poor & needy instead?
5) If government has too much money to spend, then cancel GST instead.
it is also extremely costly to purchase electonic items in singapore too.
a PC component can be shipped in from USA and still be about 35% cheaper even after including shipping costs, than the price of the same component at Sim Lim Square.
that alone has influenced me to ship in PC components directly from the USA and not purchase from Sim Lim Square in future.
What to do? Our Government taxes almost everything (houses, vehicles,consumables, leisure)
This very high cost won't be able to sustain once Malaysia. Indonesia or
the Asean countries open up even more. Less investment will flow to
this tiny island.
@hyom. I am aware that small busienss can opt out of GST. But, they actually suffer a big disadvantage - and many people do not realize it. However, this is a separate matter. I believe that GST and its added cost is a key factor for Singapore's competitiveness against Hong Kong, and a source of our high cost!
I am also aware that it is possible to program Excel to calculate CPF contribution, but it is better to avoid the complexity in the first place! We make things difficult, then spend money to find a solution. This is why Singapore has become so costly.
There are pros and cons to being non GST-registered for small businesses. In fact, I am sure you know better in this area because I remembered you wrote a Straits Times article about it.
I was thinking that your former admin staff should have done the Excel worksheet before leaving. It would have saved everyone's time. Maybe he/she was too busy then. But I think it is a worthwhile project to set aside some time to do.
Just bought a samsung galaxy s2 phone case on eBay for $9.55 (including postage and exchange rate costs). Retails for $35 in Singapore. That's an example of how uncompetitive we are.
Btw, the pouch is from South Korea.
Thanks for painting the reality of business in Singapore!
Could we compensate the high cost for a place where there is no natural disaster, and a relatively safe environment?
Not just business. High cost of living for all.
http://news.insing.com/tabloid/more-singaporeans-choose-to-move-to-johor/id-87263f00
My colleague is also one of those who has chosen to live in JB and work in Singapore. Guess where he would retire.
Ask Singaporeans again this National Day: "what would you defend?" What answer would one expect? "Defend our way of living", "defend our home(land)"? Sigh...
Forgot the link
http://news.insing.com/tabloid/more-singaporeans-choose-to-move-to-johor/id-87263f00
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