LIFTING OF IMPORT DUTY (Particulars)

Mr Teong Eng Siong asked the Minister for Finance (a) if be is aware that after the lifting of import duty on certain goods, those goods are still being sold at high prices, and if he intends to look into the matter; and (b) on how many kinds of goods has import duty been lifted since 1st January, 1973; what has been the loss in revenue; and what has been the benefit to consumers.

The Minister for Finance (Mr Hon Sui Sen): Mr Speaker, Sir, I propose to answer the Member's questions in reverse order.

Since January this year, the import duties on 151 items have been lifted. These are mainly food items, building and construction materials, household goods and other consumer products. The Government will lose approximately $19.6 million annually in revenue. The consumers, on the other hand, should benefit both in terms of lower prices in some of the imported commodities and a greater variety and regularity of supplies. In other cases, where the duties have been mainly protective in nature, the prices of goods of local manufacture could also, because of possible competition from imports, be significantly lowered to the benefit of consumers.

In theory, the prices of imported goods should be cheaper at least to the extent of the duties which have been removed. In practice, importers who have paid duty on existing stocks and do not face immediate competition from other importers may not be willing to reduce prices immediately. I would expect importers, however, in their own enlightened self-interest, to reduce prices on new stocks which are no longer subject to duty. The Department of Trade is keeping a close watch on the prices of goods on which duties have been lifted, and if the prices are not reduced the importers will be required to explain why.

Importers, who are competing against local manufacturers and have not been importing in the past because of the duty, may need some time to establish fresh links with overseas suppliers. When such links have been established, the Government expects that prices in Singapore will at least be comparable to international prices. It is heartening to note that prices of some of the imported items which are no more subject to import duties have gone down by 10 to 30 per cent, but in other cases the prices have remained high or even increased because of the world wide shortage and increasing cost of production.