ANTI-INFLATION, ANTI-PROFITEERING AND ANTI-CARTEL PRACTICES IN SINGAPORE

4.20 p.m.

Mr Eugene Yap Giau Cheng (Mountbatten): Mr Speaker, Sir, the octopus that squeezes competition out of this society must itself be squeezed out of society lest it gets destructive.

Therefore, Sir, it is high time, Milton Friedman or no Milton Friedman, that the invisible hand of the Singapore Government must come down harder on those associations and traders who are taking advantage of the world inflationary trend by insisting on increasing their prices under cover of these now well-known words today: "Well, everything has gone up, we must also up our prices too." The recent increase in prices of tea and coffee can be quoted as examples to my speech today. As you know, Sir, coffee and tea are to some people like pants are to them, and the moment we are unaware of this we will be caught with our pants down before we know anything.

The arm-twisting tactics of some of these trade associations are a blatant act against the interest of consumers. Hence, we must rapidly act to destroy this octopus, which I have referred to, so that it will not strangle free competition. The question is: What are we going to do about it? If nothing is done, other establishments may be tempted to follow suit, with similar price increases. No doubt the five to ten cents increase seems rather small but this adds on and eventually it will affect the real income of workers, particularly those who are in the lower income bracket. If we allow such a blatant disregard for consumers, we may be faced with even worse cases of profiteering in the future.

CASE, the Consumers Association of Singapore, of course, is doing its best to discourage such practices. However, in order that CASE can succeed, consumers will have to be prepared to lend their support. The Government too will have to support CASE in its activities. As long as a suitable environment is lacking for CASE to act on it, then it will be a case of nothing but hot air. CASE will, to all purposes, be futile and ineffective.

An hon. Member: No case!

Mr Eugene Yap Giau Cheng: No case. So far no case. It is a very well known fact that the Singapore Government has been very successful in many things it has set out to do. Now, this is a simple problem and I think we will be successful provided we do not sit tight and allow such things to go on unchecked. I refer to the Kheng Keow Coffee Merchants Restaurant and Bar Owners Association and the Singapore Foochow Coffee Restaurant and Bar Merchants Association, and their blatant disregard of the advice of the Trade Department.

What can we do? Two things we can do. One, we can pass laws to discourage profiteering. But, of course, without proper research and in-depth thinking, we should not move in this direction yet. The other is the one simple thing that the Ministry of Trade and Industry can do, and that is to encourage the NTUC to look into the possibility of tendering for coffee shops in HDB new towns or perhaps to approach the Ministry of the Environment to see if one or two stalls could be allocated to the NTUC in each hawker centre so that we can create some kind of competition, hence giving the consumer a choice. And if there is a free choice for the consumers, prices can be regulated easily. It is precisely because of wanting the absence of free choice that these two merchant associations have formed themselves into what I would call "a trade association" with an instinct for monopolistic dealings which can act against the interest of consumers. Before these dealings could develop into full-blown monopolies, the Government must act immediately to control their activities; otherwise they will take every opportunity to raise prices in agreement. These will be the people responsible for what I would call "creeping inflation in Singapore". They are just like those who sip in our cup; they dip in our dish; they sit down by our fire. We find them in the dye-vat, the washing bowl and the powdering tub. I suspect that when Sir John Culpepper said this of Monopolies, he too was beginning to feel that certain monopolies and cartels in those days were simply plaguing the people of the country and eating holes into their pockets.

Let these associations go free and you will see the next natural thing would be for the hawkers to come out and say, "As others have raised prices, we must also raise our prices because we have to buy their coffee", and so on. Then the fruit seller, the farmer and the baker will also raise their prices. And it goes on like a merry-go-round, except that it is not merry at all.

If the NTUC can succeed in running coffee shops well, they can probably kill two birds with one stone. For one thing, the increased number of coffee shops will make for a more competitive market. For labour, the NTUC can look to the less severely handicapped people for their services, and I am sure these handicapped people will be only too pleased to work for NTUC for a reasonable salary and they will also feel that they are contributing towards the common good of society. Hence, we will be able to provide a useful source of employment for the not-so-seriously handicapped.

The Ministry of Trade and Industry must therefore probe very seriously into the thinking behind those who run trade associations like some form of cooperative, not for the good of the society but against the interest of society.

I think it is safe to say that the future years ahead will not be so bright and happy, especially in a shaky world economy and ever-increasing fuel oil prices. I believe that a special committee in the Ministry of Trade and Industry has been formed to look into ways and means to fight inflation, what we call "imported inflation". I think this Committee should not only look at ways to deal with imported inflation but at the same time to look into "home-engineered" profiteering and such other bad words that describe the evil ways of businessmen. They want to make a quick buck and get away with it. We must deal with them summarily. Even if it means the formation of another committee, it will be worth the while to enforce this. Of course, prices of goods and services must rise, but when they do rise, then explanations in detail must be given. The Government can take the lead here.

I am glad that the Public Utilities Board has in one way or another done so, as can be seen in the report in the Straits Times of 15th November, 1980, entitled "PUB fuel oil bill may rise to $975 million". Of course, by saying this I am not in any way suggesting on behalf of PUB or otherwise that there will be a rise in PUB charges, because I am not in a position to say so. But at least they have done something to explain the rise in fuel oil charges, and therefore their operation.

I have stated many times that Singaporeans are intelligent people, and I am saying it again and again that Singaporeans, being intelligent as they are, can understand explanations behind the rise of various charges. If this is done, therefore, it leaves behind the blatant profiteers who are not able to explain their rise in prices. They will be chased out of their wits for reasons to increase their prices, as they will then face greater consumer pressure and criticism. This will be an opportune time for the invisible hand of Government to stretch out, to feel and probe with unfaltering fingers and prescribe some bitter medicine to cure their profiteering itch. 4.31 p.m.

The Minister for Trade and Industry (Mr Goh Chok Tong): Mr Speaker, Sir, the Member for Mountbatten has touched on the fundamental of economics, i.e. how prices of goods and services should be determined. I am not at all convinced, Mr Speaker, Sir, that prices should be determined on the basis of cost plus a profit margin. If that was so, there would be very little incentive for business operators to cut down costs. They can pay more to their employees. They would not worry too much about the cost of imports because they can easily pass on, with the approval of some authority, the increased cost. Therefore, I am not convinced that prices should be on the basis of cost plus a profit margin. Neither am I convinced that prices should be fixed, whether by cartel or by the Department of Trade.

I have spent some years of my working life in Fullerton Building drinking coffee supplied by the canteen operator. The canteen operator was given the canteen premises free of rent but the prices in which they could charge were controlled by the Ministry of Finance. The premises was tendered out to canteen operators and normally the operator that submitted the lowest price-list would be given the contract to provide beverages and food to the staff in Fullerton Building. Prices were, therefore, fixed at a low level. For example, a glass of coffee with milk, when I was there, cost 10 cents. Up to now, I am not sure whether the coffee with condensed milk that I drank tasted like Singapore River water or dish-water.

Price determination of goods and services is therefore best left to market forces, i.e. to supply and demand. In this way, the consumer has almost as much power as the supplier in determining prices. If prices are too high, consumers can always withdraw consumption of that particular item or services or they can look for alternative forms of goods and services. But that does not mean that the Government has no interest in the level of prices of goods and services in Singapore, in particular, the prices of essential goods. There is a committee on Profiteering and Inflation in my Ministry, whose role it is to ensure that there are no restrictive practices to force up prices artificially. It is the primary role of the Committee on Profiteering and Inflation to ensure that no business operators group themselves together to fix prices by artificially restraining supply in order to enhance their profits.

When the two associations, the Singapore Foochow Coffee Restaurant and Bar Merchants Association and the Kheng Keow Coffee Merchants Restaurant and Bar Owners Association, informed the Department of Trade on 4th November 1980 that they were going to raise prices, the Department immediately asked for cost data. These data were submitted on 14th November 1980 and on that very day the two associations held a press conference to announce that the prices of coffee, tea and other beverages would go up on 15th November 1980. I am not looking now into the justification of whether the price increases were right or wrong. But I would like to register our displeasure at the almost blatant disregard of Government authority. Surely the two associations should heed the request of the Department to defer price increases until the Department could have a look at the data submitted by the two associations. Government authority must prevail and must be seen to prevail.

The two associations, I understand, are registered under the Trade Unions Act, and under the Act they are permitted to impose restrictive conditions on trade and to fix prices. As I said earlier, I do not subscribe to the thesis that prices should be fixed either by the Department of Trade or by a cartel. Therefore, we would be looking into the feasibility and desirability of introducing legislation to prohibit such associations from engaging in price-fixing activities.

The Member for Mountbatten suggested that one of the ways to curb price increases by the two associations was for the Ministry to encourage NTUC to take up premises in HDB estates to run coffee shops or coffee houses. That decision must rest with NTUC. But on my part, I would not encourage NTUC to go into the coffee business or into the provision of soft drinks to customers. That is not the role of NTUC. There are other means whereby we can curtail unnecessary profiteering. But NTUC should not depart from its basic role of organizing workers to improve their welfare through better working conditions.

I support the observation of the Member for Mountbatten that CASE has a useful role to play, and for CASE to play a useful role both Government and consumers must support its activities. In the ultimate, whether we can succeed or cannot succeed in curbing profiteering, consumers must play the role. CASE, together with the Department of Trade, can help by publishing and publicising cost data. As I said earlier, prices are determined by market forces but, nevertheless, cost data might be useful to the public so that they can judge for themselves whether the supplier is charging an unreasonable profit and, if it is, whether they, as consumers, would wish to deny that supplier the benefit of exorbitant profit by not purchasing that particular item.

Dr Augustine Tan: Mr Speaker, Sir, I would agree substantially with the observations and comments made by the Hon. Minister for Trade and Industry. I think Government has no business in controlling prices. It is an impossible thing to do. In fact, if Government were to try to do so, the quality of coffee cannot be controlled. Neither can the quality of tea. And not only that, the size of the cup will have to be monitored from time to time to make sure that it remains the same.

Some time ago, CASE was after the hawkers for raising the price of a bowl of rice. I thought that was a silly thing to do because the hawkers can simply switch from 100% grade rice to a 10% grade, or mix the rice with something of a poorer grade, or put more water in the rice or reduce the size of the bowl. There are a number of things that they can do. So it is a self-defeating measure to adopt. At the same time, Sir, the case before us is one that surely must arouse the suspicion of the public because the cost conditions of the coffee shops are so widely divergent. Some of them are in rent-controlled premises, others are in the older HDB estates where the rentals are much lower and others are in the newer HDB estates where the rentals are much higher and yet they are asking for a uniform price for each and every coffee shop. Surely, even on the basis of cost plus pricing, it is unwarranted for each and every coffee seller to charge the same price. It smacks of cartelization and I would certainly urge the Minister to look into the possibility of breaking this particular monopoly and, also to be fair, to break other cartels that exist in Singapore. I have often wondered too, Sir, with all due respect to the Member for Mountbatten, why I should pay the same price for the same bottle of soft drinks, whether it be Pepsi-Cola, Coca-Cola, F&N soft drink or whichever soft drink.

Mr Goh Chok Tong: Just one concluding remark, Mr Speaker, Sir. The Member for Whampoa is, in fact, sharing the same sentiments as myself, that is, both of us are against price fixing because it is impossible to do so and both of us are against the formation of cartels to fix prices. As I remarked earlier, my Ministry is looking into the possibility of prohibiting cartels from engaging in price-fixing activity. They can have their associations. They can have their social activities. But they should not be allowed to fix prices.

Question put, and agreed to.

Resolved,

That Parliament do now adjourn.

Adjourned accordingly at Sixteen minutes to Five o'clock p.m. sine die.