SINGAPOREANS SHOPPING IN JOHOR BARU (Loss in GST revenue)

Assoc. Prof. Chin Tet Yung asked the Minister for Finance whether he is aware that as a result of the sharp depreciation of the Malaysian ringgit, large numbers of Singaporeans have been crossing the Causeway to shop in Johor Baru, causing a severe drop in business for Singapore retailers, especially those in Woodlands and, if so, whether he has an estimate of the loss in GST revenue arising from this; and whether, in view of this, he will review the GST exemption limits on goods brought into Singapore, to reduce this revenue loss and to encourage Singaporeans to shop in Singapore.

Dr Richard Hu Tsu Tau: Mr Speaker, Sir, in recent weeks, there has been an increase in the number of Singaporean shoppers to Johor Baru to take advantage of the depreciation of the Malaysian ringgit as well as shopping sales in Johor Baru. Customs and Excise Department has stepped up GST checks at the checkpoints to ensure that all Singaporean shoppers returning from Johor comply with the GST requirements.

A reasonable GST exemption is given for goods imported by bona fide travellers. The intention is to relieve a person from paying GST on a reasonable amount of purchases he may bring into Singapore. Currently, an adult traveller, which is a person 18 years old and above, who had been away for more than 48 hours is allowed an exemption from GST up to $400 of the value of the goods brought in. If a traveller is below the age of 18 years, the GST exemption is on the value of goods up to $200. The above limits are halved if he has been away less than 48 hours.

In October this year, an average of about 7,000 Singapore registered cars return from Malaysia every day. If, theoretically, each car contains purchases up to $800 (the maximum GST exemption on the assumption that each car carries four adults, including the driver), the potential GST revenue loss per year can be up to $60 million. Even if each person buys only up to half his GST exemption limit, the loss would still be some $30 million. In practice, of course, not every Singaporean is likely to use up his exemption limit and many of the day purchases are in the form of groceries and poultries.

We are constantly reviewing the GST system, including the GST exemption limits, to ensure that the GST system introduced only three years ago in 1994 is working well. We will take measures to safeguard revenue loss arising from the GST exemption limits if the situation necessitates such a move.

Assoc. Prof. Chin Tet Yung (Sembawang): Sir, would it also be necessary to look at the fiscal measures relating to the retail trade in Singapore to see whether Singaporeans can also be positively encouraged to shop more in Singapore than in Johor Baru?

Dr Richard Hu Tsu Tau: I take it that the Member is suggesting tax incentive for domestic consumption. We can consider it, but I doubt it.

Mr Ahmad Mohd Magad (Pasir Ris): Sir, in view of the large amount of potential revenue loss, would the Minister perhaps consider lifting the GST exemption for travellers across the Causeway?

Dr Richard Hu Tsu Tau: When he says "lifting", does he mean increasing it or reducing it? Or does he mean taking it out altogether?

Mr Ahmad Mohd Magad: No exemption limit.

Dr Richard Hu Tsu Tau: That is a possibility. But of course a reasonable amount should be allowed for legitimate travellers particularly tourists. I think taking it out altogether would not be consistent with international practice. So it is really a question of size and we will have to judge this.