By Dylan Loh, Channel NewsAsia, 29 Apr 2014
Buying a product from Apple, Zara and IKEA could cost more in Singapore compared to 10 other cities, according to a study by the Monetary Authority of Singapore (MAS) and Ministry of Trade and Industry (MTI).
According to the study -- which analyses price differences for 647 items from the three global brands across the 11 cities --"Singapore's prices are found to be relatively high in most instances".
Releasing the findings on Tuesday as part of the its Macroeconomic Review, MAS said Singapore's prices are above the median for two-thirds of the items, and prices for about a quarter of them are below the median.
This means that for the same brand, prices in Singapore can be higher than in other cities for some items but lower for others.
Among the cities included in the study are London, Paris, New York, Shanghai and Hong Kong.
MAS added that for most of the items which are more expensive in Singapore, the price premiums do not exceed 20 per cent.
The report said pricing decisions of the firms are influenced by unit cost and demand for their products in the market.
Costs involved in importing products from further afield as well as Singapore's small market size appear to have contributed to higher prices.
"Singapore has a strong Sing dollar. That causes our imports of these duty goods (to be) slightly higher than the rest of the (countries),” said Steven Goh, executive director of the Orchard Road Business Asscociation.
He added that in Singapore, the “cost of operation is very high, especially rental and labour costs.”
A concern for businesses is the perception that things are generally expensive in Singapore. If this perception is reinforced over time, consumer spending in the country could slow, hurting the bottom-line of many firms.
Authorities have stressed that their study should not be taken as representative of differences in the overall cost of living across cities, since only three global brands were analysed.
MAS said the three global brands in the study -- Apple, Zara and IKEA -- were chosen given the large number of identical consumer electronics, furniture, and apparel products that could be compared across cities.
MAS said the three global brands in the study -- Apple, Zara and IKEA -- were chosen given the large number of identical consumer electronics, furniture, and apparel products that could be compared across cities.
The study also pointed out that Singapore is not the most expensive location, and it is most expensive for only six per cent of the products surveyed.
Pricier goods due to small S'pore market size: Survey
By Chia Yan Min, The Straits Times, 30 Apr 2014
By Chia Yan Min, The Straits Times, 30 Apr 2014
MOST savvy shoppers know that some consumer products from global brands can be pricier here than abroad.
The higher prices, a survey released yesterday found, are mainly due to Singapore's small market size and the higher transport costs of bringing products here.
The higher prices, a survey released yesterday found, are mainly due to Singapore's small market size and the higher transport costs of bringing products here.
It compared their prices across 11 cities: Singapore, Hong Kong, Kuala Lumpur, Shanghai, Taipei, Tokyo, Bangkok, Paris, London, Sydney and New York.
Prices here were above the median for two-thirds of the items and below the median mark for a quarter of them. The median is the midpoint of a range.
Only 21 items were found to be the cheapest here.
Still, the study pointed out that Singapore was not the priciest city overall. The Republic was the most expensive for only 6 per cent of the products sampled.
The brands were chosen for the large number of identical consumer electronics, furniture and apparel products available for comparison across cities.
The price comparisons did not include sales taxes such as Singapore's goods and services tax. When sales taxes were taken into account, the price differences narrowed between Singapore and cities such as Paris, London and Shanghai, where sales taxes are significantly higher.
The Republic's small market size is likely the main reason behind the higher prices of some goods compared with other high- cost cities such as Hong Kong and New York, the study found.
Pricing decisions are influenced by unit cost. Bigger markets allow retailers to spread overheads over a larger sales volume.
Prices also tend to be lower in cities near the source country, as the three global brands build transport costs into prices.
In setting prices, retailers take into account differing demand conditions, including the intensity of competition and consumer preferences, said MAS and MTI.
Given that the study focused on only three brands, the findings should not be taken to represent differences in the overall cost of living across cities, they added.
Singapore Polytechnic senior retail lecturer Sarah Lim said retailers in larger cities can take advantage of economies of scale to spread out high labour and rental costs - major bugbears in the smaller retail scene here.
The Republic's modestly sized market is also unable to support many large retail players.
"Competition is stiffer in markets like New York and London, where there are a lot of players... Retailers will therefore have to price (items) more competitively," Ms Lim said.
If the sampled items are more popular here than in other cities, that may also affect price differences, said Singapore Retailers Association executive director Lau Chuen Wei.
A more important point is that price differentials between Singapore and the 10 cities are "fairly moderate" when including sales taxes. "We use this figure because that is the real figure to the consumer," said Ms Lau. "So, for a shopper, shopping in Singapore is likely to give the best deal, all purchases considered."
Restructuring to weigh on S'pore's growth: MAS
Higher costs from productivity push a drag, but modest growth on track
By Alvin Foo, The Straits Times, 30 Apr 2014
THE economic restructuring under way to lift productivity will throw up more "transitional frictions" like higher labour costs that will weigh on overall expansion, the Monetary Authority of Singapore (MAS) said yesterday.
Higher costs from productivity push a drag, but modest growth on track
By Alvin Foo, The Straits Times, 30 Apr 2014
THE economic restructuring under way to lift productivity will throw up more "transitional frictions" like higher labour costs that will weigh on overall expansion, the Monetary Authority of Singapore (MAS) said yesterday.
But it added in its twice-yearly review that the economy should remain on a "modest growth" path this year, even amid muted activity in the first quarter and the restructuring issues.
"Domestic demand in the G-3 economies continues to provide the greatest support for Singapore's GDP growth," MAS said. The G-3 refers to the world's key economies of the United States, Europe and Japan.
G-3 growth is expected to nearly double from 1 per cent last year to 1.9 per cent this year.
MAS noted that Singapore's economic recovery is expected to continue, buoyed by "strengthening corporate demand from the G-3 economies" as well as "steady expansions in the domestic-oriented industries".
Factors such as an expected rise in US consumer and business spending, a euro zone recovery and bright domestic demand in Japan bode well for Singapore's economy.
But MAS also cautioned that supply-side constraints due to higher labour costs and tighter profit margins could continue to affect growth this year.
Singapore's gross domestic product (GDP) is officially forecast to expand between 2 per cent and 4 per cent this year.
OCBC economist Selena Ling said: "The Singapore economy could benefit more from the modest global growth recovery without the domestic labour market supply constraints due to economic restructuring."
CIMB economist Song Seng Wun said Singapore was still in an early phase of restructuring.
"The next couple of years will be crucial to see how businesses adapt... they have to come to terms with the fact that there is no U-turn on the foreign worker policy."
The report also noted that workers here should see sustained wage increases amid a tight job market, even as productivity gains remain modest.
Overall resident wage growth, which surged to 4.3 per cent last year from 2.3 per cent in 2012, could see further upward pressures, it added.
The more favourable global environment should provide support to Singapore's outward-oriented sectors as a whole.
These industries accounted for about half of GDP growth last year, and they are likely to contribute more to expansion this year, with trade-related sectors such as manufacturing, wholesale trade and transport and storage accounting for the bulk of the improvement.
In contrast, the financial services sector is expected to see slower growth following last year's exceptional performance, it added.
Another key trend highlighted is the rising importance of services as a growth engine.
The "gradual deepening of knowledge-based services expertise, a more highly educated workforce, and increasing fragmentation and digitisation" has led to the sector's increasing centrality, said MAS.
It also maintained its inflation forecasts, with overall inflation projected to come in around 1.5 per cent to 2.5 per cent this year. Core inflation, which excludes housing and private road transport costs, is anticipated to be between 2 per cent and 3 per cent.
"It seems like the peak of pressures on prices and wages will be in the second half of this year," said Barclays economist Leong Wai Ho, adding these pressures should start to ease thereafter.
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