POSTAL SERVICE AUTOMATION (Cost savings)

[Mr Speaker in the Chair]

Mr Tay Beng Chuan asked the Minister for Communications and Information Technology (a) what will be the cost savings in postal operations as a result of automated mailing processing and whether such savings will be passed on to the public and business community in the form of lower postage rates as a real incentive to encourage automation; and (b) whether his Ministry will provide a comparison of postage rates in Singapore, Malaysia and Brunei as well as a detailed explanation on the recent increases in international postage rates despite the cost savings through automation.

The Minister of State for Communications and Information Technology (Mr Lim Swee Say) (for the Minister for Communications and Information Technology): Mr Speaker, Sir, postal rates were revised on 1st November this year, five years after the last revision in 1995. During this period, the cost of mail processing and delivery has continued to rise due to increases in wage costs and administration costs. However, with automation and computerisation, SingPost is able to increase labour productivity and offset some of these cost increases.

In the recent revision, it has kept the rates for domestic standard mail, which accounts for more than 90% of domestic total volume, largely unchanged. The postage rate was raised only for standard mails in the 40-50 grams weight step, which comprises less than 0.5% of all standard mails.

Mr Tay asked for comparison for postage rates in Singapore, Malaysia and Brunei. Sir, for the basic 20 grams standard size mail, our rate is 0.22 cents. This is higher than 0.14 cents in Brunei and 0.22 cents in Malaysia, due to higher wage structure in Singapore. If we were to compare our rates with economies of similar wage structure, SingPost's rate of 0.22 cents is lower than 0.29 cents in Hong Kong and 0.28 cents in Taiwan. So on balance, IDA's price control framework does ensure that our postal rates are competitive.

Mr Tay also asked about international mail rates. The two major cost components are operating costs and payment to destination countries. I wish to point out that operating costs account for only 38% of the total cost. The remaining 62% are payments to destination countries. The rates of payment are determined by an International Accounting System established by the Universal Postal Union, and the payments are beyond the control of SingPost. The recent hike in international postal rates is to allow SingPost to recover part of the increase in the rates of payment to destination countries.

Mr Tay Beng Chuan (Nominated Member): Sir, is the Minister aware that the abolition of second-class postage for printed materials by SingPost has resulted in a substantial increase in the postal cost for business magazines and newsletters alike, which can no longer be posted at a cheaper second-class mail? The increase of such postal rates could be as high as 67% for local mail and over 100% for overseas mail. This is definitely not a pro-business approach and I wonder whether the Minister could explain this.

Mr Lim Swee Say: Mr Speaker, Sir, as I mentioned earlier, in terms of international mail, more than 60% of the costs are really beyond the control of SingPost. So the increase in international mail rates is really a cost increase that we have no choice but to bear. As far as domestic mail is concerned, the priority is to encourage automation. For example, if companies or individuals, in particular companies, are able to take advantage of the incentive schemes offered by SingPost, such as the domestic mail bulk scheme, ie, they lodge their letters in a machineable bar-coded and pre-sorted manner, they can enjoy a substantial discount from SingPost. So my suggestion is for companies, big and small, to take full advantage of the efficiency that can be achieved through automation. In this way, we can have a win-win situation between SingPost and the users.

Mr J. B. Jeyaretnam (Non-Constituency Member): Is the Minister aware that, despite the high rates that Singapore charges, in this age today, it sometimes takes four or five days for letters to reach the addressee in Singapore itself?

Mr Lim Swee Say: Sir, for the ordinary letters mailed in Singapore, IDA does not just control the rates. It also imposes performance indicators on SingPost. For example, a certain percentage of the mail would have to be delivered within the same day and a certain percentage will have to be delivered by the next day. In the example cited by the Member regarding the delay of four to five days, if I could have the information, I would be happy to look into it. To the best of our knowledge, almost 100% of mails are either delivered on the same day or by the next day. But, as I said, I would be happy to have the information so that we can look into this particular incident and see how we can get SingPost to improve on its performance.

Mr Jeyaretnam: Is the Minister saying that I should send to him every letter that I have received three or four days after its posting? If he wants me to do that, I will flood him with them.

Mr Lim Swee Say: No, Sir. This is not what I meant. What I meant is that we are not aware that there are many letters, as mentioned by the Member, being delayed in the mail for three to four days. That is why I am asking for the feedback. If it is indeed true that most of the letters sent to you ---

Mr Jeyaretnam: I will flood you with them!

Mr Lim Swee Say: I would be happy to look into that.