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Government prepared to do more to soften impact of rising food prices

By Dominique Loh, Channel NewsAsia
26 April 2008

SINGAPORE: The Singapore government is prepared to do more to soften the impact of rising food prices - if necessary - in the next Budget.

Senior Minister Goh Chok Tong revealed this when speaking to Marine Parade residents at a community event on Saturday.

Mr Goh believes food prices will remain high in the next year or so because it may take time for supply to adjust to the demand of higher consumption levels worldwide.

SM Goh added that it is a situation that is beyond Singapore's control as Singapore is dependent on food imports.

He said that since 2006, global food prices have spiked by 43 per cent. With crude oil getting more expensive, it only compounds the problem. This means that transportation as well as the energy needed to process food are now more expensive.

Between 2000 and 2006, global food prices rose by only about five per cent annually.

But with crops being converted to bio fuels because of rising crude oil prices, it's a double whammy, as this has reduced food supply by some 40 per cent.

Mr Goh said: "As far as Singapore is concerned, we (are) price takers. We have no control over the prices of the imports. But we have done a couple of things where we allowed the Singapore dollar to strengthen through monetary policy.

"A stronger dollar means we can buy things cheaper. Foreign currencies are cheaper as compared to the Singapore dollar."

Another strategy is diversifying the sources of food imports from all over the world.

However, Singaporeans are still feeling the pinch. The low income families are most affected as they spend a large proportion of their household income on food.

Colin Yap, a Marine Parade resident, said: "Pay have not been going up much recently and we got a big family to feed. Our weekly expenditure at the supermarket has gone up quite a bit. My wife is asking for more allowance to spend (on) marketing now."

Jason Lim, another Marine Parade resident, said: "I think the government is also looking into how they can help the lower income. So I think that is a good move. The increase in prices is expected. Even the countries that can produce their own food are facing the problem."

Already, the government is giving out some S$3 billion to help Singaporeans tide over the Goods and Services Tax increase and the escalating food prices.

While it is difficult to estimate how long the problem will last, Mr Goh said the government is willing to give more help.

SM Goh said: "If necessary, next year, provided we have the surpluses in the budget, we can do some of this. We can do perhaps even more of this to cushion the rising food prices for Singaporeans.

"But more importantly, the job you have to do is to ensure stability. There is co-operation between employers and unions and government to create an environment which allows us to attract more investors to Singapore to create jobs."

Mr Goh said healthy increases in wages is one effective way for Singaporeans to overcome the rising prices of food. - CNA/vm