Big Read: Singapore’s households and businesses are not immune from a global inflation storm as a GST increase looms

Big Read: Singapore’s households and businesses are not immune from a global inflation storm as a GST increase looms

Corporate “snowy” profit margins

It’s not just families who are upset.

Many business owners said they felt rising cost pressures in several aspects – manpower, logistics, raw materials, and electricity.

With many retailers forced to go online as a result of COVID-19, digital marketing costs have also skyrocketed.

Ms. Ling noted that these increased costs are occurring against a backdrop of eroding financial support from the government, such as the Jobs Support Scheme, which provides wage subsidies to businesses, and rent waivers.

Each cost component has gone up two or three times on average, and costs have gone up 12 to 15 percent across the board, said Terence Yu, managing director of shoe retailer Enviably Me.

He said that while the economy is recovering from its worst during the height of the pandemic, revenues are still low between 30 and 40 percent.

“Those (companies) that have survived so far… I think we’re just trying to adapt to every wave that comes… What can we do about shipping charges, labor costs, and GST?,” said Yu, who is also the CEO of a company. Singapore Tenants United For Fairness, which represents more than 770 business owners, “The alternative is exit”.

Bernard Tai, managing director of Jinjja Chicken, said operating costs for the Korean fried chicken business increased by 20-30 percent last year, compared to 2020.

Describing food costs as “crazy,” Tay said the price of one can of cooking oil has gone up 40 percent.

It has traditionally relied on workers from Malaysia, and border restrictions have also made it difficult for it to hire workers, so manpower costs have risen to attract them.

“For the first time in my business, I got the quota (to hire foreign workers) but I don’t have workers…You walk into a mall, what food and beverage establishment (F&B) does not give notice of employment? And the salary offered is higher and higher. People can Literally quitting here today, and tomorrow working at the same mall in another outlet next to mine,” he said.

While the return of dining for a maximum of five people has helped improve business, Mr. Tay said the safe distancing requirement means revenue is still below pre-pandemic levels.

“The margin is very thin like ice,” he added.

Another retailer, Keason Lim, director of toy distribution company Being Kids, said his business costs had jumped by a similar amount, by 20 to 30 percent.

In addition to rising shipping costs, he has to contend with a shortage of manpower. Besides the difficulties in hiring foreign workers to replace those who quit in order to return home, Mr. Lim said his traditional reliance on part-time workers has taken a hit, with many of them now working as recruiters or safe distance ambassadors.

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