ARBITRARY PRICE INCREASES BY PETROLEUM COMPANIES (Government action)

Mr Ng Kah Ting asked the Minister for Finance (a) whether he will look into the question of arbitrary price increases by large and monopolistic commercial firms, in particular the giant petroleum companies; (b) what steps he proposes to take to save the public from having to shoulder the burden of any possible increase in freight charges in respect of petroleum brought to Singapore for refining; and (c) whether he will consider introducing legislation imposing limits on advertising expenditure in art effort to reduce the prices of petroleum products in Singapore.

Dr Goh Keng Swee: There are no arbitrary price increases by large and monopolistic commercial firms in Singapore where market conditions are generally highly competitive. We are, in fact, one of the few remaining outposts of free enterprise in the world.

The oil companies have decided not to increase the prices of their products. Though the oil companies at one time tried to increase the prices of their products, they finally decided not to do so. For some time they were considering how much of the increased freight could be passed on to the consumer and how much could be absorbed by them. Shell Company were in continuous touch with the Government, and they finally decided to meet the whole of their additional freight costs and retain existing prices. The other oil companies decided to do the same. I think they did the right thing in taking a long-term view of the situation.

As regards the third part of his question, the hon. Member assumes that reducing advertising expenditure would lead to lower prices. I do not think everyone would be as confident as he is about this. My own inclination is to allow free competition to settle market prices. Once you start fiddling with the market mechanism, you will find that one thing leads to another, and before you know where you are you have landed yourself in an unholy mess.

Mr Tang See Chim: Does the Minister agree that in regard to petroleum there is no such thing as a free market in Singapore? The price is fixed by the oil companies themselves.

Dr Goh Keng Swee: There is what is called non-price competition. Prices are agreed, as the hon. Member has suggested, but there is an immense amount of competition in getting a share of the market at those agreed prices. So in this sense we can say that there is free competition in the oil market, though it is not competition in terms of price cutting but competition in terms of non-price, that is, advertising, getting more retail outlets and that sort of thing.

Mr Ng Kah Ting (Punggol): Can the Minister give us the figures of the expenditure on advertising in respect of the oil companies?

Dr Goh Keng Swee: I am afraid I cannot.