Measures to Help Singaporeans Cope with Rising Inflation and Impact of Government's Fiscal Support for Businesses and Households on Inflation

Ms Foo Mee Har asked the Minister for Finance (a) whether the economic policy involving billions of fiscal support to businesses and households is contributing to higher inflation; and (b) how will the market adjust when the support schemes taper off.

Minister of State Low Yen Ling has just provided an overview of the inflation outlook, including second-round inflation effects which Mr Saktiandi Supaat asked about and the Government's overall approach to managing inflation. I would like in addition to emphasise the following two points.

First, while the inflation rate of 3.8% reported for November 2021 is high, a significant part of that 3.8% is accounted for by accommodation, mainly imputed rentals and private transport costs. However, most Singaporeans live in owner-occupied homes and use public transport. As such, the Monetary Authority of Singapore (MAS) Core Inflation measure, which excludes accommodation and private transport costs, would more accurately reflect the actual inflation experienced by most Singaporeans. MAS Core Inflation was at 1.6% year-on-year in November 2021.

Second, a significant share of the recent rise in core prices is being driven by global factors. Higher energy prices have had an impact on utility bills, while global food prices and supply chain disruptions have affected prices of non-cooked food locally. The sharp rise in global energy and food prices is expected to be temporary and should subside as bottlenecks are resolved and supply improves to better meet demand.

That said, the Government understands the concerns of Singaporeans about these cost increases and empathises with the very real pressures felt by individuals and households. The Government has been working hard to help Singaporeans with these costs in a number of ways.

First, through our economic and fiscal strategies. Minister of State Low Yen Ling has given a comprehensive overview on how the Government keeps our economy competitive, ensures sustainable real wage growth, manages business costs and has allowed the Singapore dollar to strengthen to mitigate inflation. Second, the Government also directly helps Singaporeans with the cost of living.

As mentioned, two key drivers of core inflation are higher global fuel costs and food prices, leading to higher prices for utilities and groceries. The Government has been directly shielding the majority of Singaporeans from the full impact of the cost increases for these items and is continuing to do so.

To help with the cost of utilities, the Government provides quarterly GSTV U-Save rebates to Housing and Development Board (HDB) households as part of the permanent GST Voucher scheme. All eligible HDB households received a tranche of U-Save rebates this month. In Budget 2021, the Government provided an additional 50% of U-Save rebates for all U-Save recipients, which was paid out in April and July 2021.

This additional 50% on top of the permanent U-Save rebate has helped HDB households to substantially defray the cost of their utility bills. HDB 1- to 2-room households received $595 in U-Save rebates in FY2021, equivalent to about 4.5 to six months of their utility bills on average, even after the increase in the electricity tariff this month. HDB 3- and 4-room households received $535 and $475 in U-Save rebates, equivalent to three months and 1.5 months of their utility bills in FY2021 respectively.

To help households with daily expenses, especially food, the Government has given $100 in Community Development Council (CDC) Vouchers to every Singaporean household in December 2021. In addition, Singaporeans living in HDB 1- to 2-room flats would also have received $100 in Grocery Vouchers in October 2021. These would help with the increased spending during the year-end and the New Year festive period. We have also begun distributing 600,000 Public Transport Vouchers of $30 each to help lower-income households amid the public transport fare adjustment. These payouts are over and above the regular GST Voucher – Cash payouts of up to $300, Service and Conservancy Charges (S&CC) rebates of between 1.5 and 3.5 months, Silver Support of between $720 and $3,600 per year for seniors who had low incomes in their working years and Workfare Income Supplement of up to $4,000 per year in cash and CPF top-ups for lower-wage workers.

Mr Liang Eng Hwa asked whether we have the fiscal resources to help Singaporeans with the cost of living. I would like to assure Mr Liang that we will give priority in our fiscal plans to help Singaporeans manage. As we prepare for Budget 2022, we are assessing the situation carefully and reviewing the scope of household support measures.

Mr Louis Chua and Mr Ang Wei Neng asked about mitigating or delaying increases on fees charged by Ministries and Statutory Boards. The Government will do its best to keep costs and in turn, fees as low as possible, to provide the best value to the public. We froze fee increases in 2020 on account of the sudden COVID-19 crisis, but we cannot do so indefinitely. As fees are raised, we will continue to provide support to those who need it most. Our approach of running cost-efficient services and providing targeted help allows us to keep our total burden on businesses and households low.

Ms Foo Mee Har asked if our fiscal support contributed to higher inflation. The answer is no. The size of our fiscal injections in 2020 to 2021 were correctly sized to cushion the sharp fall in output during this crisis period. Much of our support over the last two years has been to relieve costs, through schemes such as the Jobs Support and Rental Support Schemes. These not only helped save jobs and incomes but also had less impact to inflation. As businesses and households adapted to living with COVID-19 and stabilised their revenues and incomes, we were able to taper off our fiscal support and shift the emphasis towards restructuring, transformation and growth.

On Mr Saktiandi Supaat and Ms Foo Mee Har's questions about the fiscal response going forward: we will continue to monitor economic conditions closely to ensure that businesses are adequately supported, especially in more adversely affected sectors and balance tapering off of relief with support for transformation and restructuring.

Mr Liang Eng Hwa asked if the proposed GST increase remains part of our strategy for fiscal sustainability; and if so, what can be done to mitigate the impact of the GST increase on Singaporeans, especially lower-income households and retirees. We need sound fiscal foundations, not just to provide support to households and businesses when needed, but also to meet our collective aspirations – affordable healthcare, quality education, and a safe and secure home – in a responsible and sustainable way. The GST together with our income and wealth taxes are important parts of a sound revenue structure that will enable us to provide care, support and a strong social compact. Even as we keep our finances on a sound and stable footing, we will ensure that our overall system of taxes and transfers remains a fair and progressive one.

We will also significantly mitigate the impact of the GST rate increase on Singaporeans through the Assurance Package. We have already set aside $6 billion for this Package to provide direct cash and other support to Singaporeans. Such support will effectively delay the impact of the GST rate increase by at least five years for the majority of Singaporean households. This means that for most households, the actual impact of the GST increase will only be felt five years after implementation. Lower-income households will receive more support under the Assurance Package and for this group, the impact of the GST rate increase will be pushed back by about 10 years.

To sum up: while global inflationary pressures have been a significant driver of the recent rise in core inflation, the Government has shielded and continues to shield Singaporean households from much of these price pressures. We will continue to review and improve ways to support Singaporeans, particularly lower-income households, seniors and those with greater needs.

Sir, my question is for Second Minister for Finance. Yes, we know that it is never a good time to raise taxes. Indeed, the Government has been helping Singaporeans to mitigate the cost of living with the various support measures. But given the series of cost increases that we have seen in recent months, with perhaps more to come and that we are still in this pandemic fighting mode, would the Government consider delaying the GST increases so as to avoid adding on to inflationary pressures?

I thank Mr Liang for his question, which is, I think, a question on the minds of many Singaporeans. There are actually two distinct aspects of that question. One is, can we delay the date that GST takes effect? But the second and the much more important question is, can we delay the impact of that increase on Singaporeans?

For the first one, we had announced in Budget 2018 that we plan to raise the GST by two percentage points from 7% to 9%. And we said then that it would be some time from 2021 to 2025. We said the exact timing would depend on the state of the economy and how much our expenditures grow and how buoyant our existing taxes are. And we said all that before COVID-19. Then the pandemic came along. So, we then said in 2020, that the GST rate increase would not take place in 2021 and that was in direct recognition of the hardship that was felt by people because of the pandemic.

It is not something we can put off forever, but the exact timing is something that we have to think about. In deciding the timing for the GST hike, we are carefully considering the overall economic conditions. The economy is recovering steadily and barring fresh disruptions, it should grow in step with global economic recovery, and we expect GDP to grow by 3% to 5% in 2022.

But this brings me to the second question, which is the more important one, which is: irrespective of whatever date we may say that GST takes effect, can we delay the impact on Singaporeans? And the answer is that we have designed it such that, yes, we can delay the impact on Singaporeans through the Assurance Package. For the majority of Singaporeans, we will delay the impact on them effectively by five years and for the lower income, the impact on them will be delayed effectively for 10 years.

So, essentially, whatever the increase to the expenditure as a result of GST, the Assurance Package is designed to buffer them for that increase. The Government is directly supplementing them, so that they would not feel the impact. So, I just hope that Members will bear this in mind. The date that it takes effect and the date that the impact is felt are two separate things and we will continue to look out for the lower-income households and the majority of the middle-income households.

Thank you, Mr Speaker. I have two supplementary questions. The first question is for Minister of State Low Yen Ling. What are the causes of the supply chain disruptions that affect Singapore particularly? Something that happens in the rest of the world may not affect us. Because she said that these disruptions may be temporary, does she foresee that these disruptions will ease in maybe the next one to three months, or will it be longer than three months?

The second question is, we note that some cost increases are those that we have to have, or for some of the services provided by the Government. But will the Ministry of Trade and Industry (MTI) work with the Ministries to coordinate some of the increases which are within the control of the Government? For example, like revising the annual values of HDB flats which will actually lead to increase in property tax and also electricity prices which would affect the majority of people; even the coffeeshops are now using that as an excuse to increase prices for the drinks and more.

I want to thank the Member Mr Ang Wei Neng for his two supplementary questions. Let me respond to the first one on supply chain. I thank him for the concern that he raised about the impact of global supply chain disruptions on our small and medium enterprises (SMEs) and businesses, and thereby, affecting households and consumers. We certainly understand that these disruptions have made it harder for businesses, households and consumers. We all wish for things to get back to normal. However, earlier on in my speech, I also outlined the contributing factors. Lockdowns, labour shortages and transport bottlenecks around the world, because of the pandemic, have caused the disruption of production and also the delivery of goods. This has been exacerbated by the recent rebounding of the demand for goods as the COVID-19 situation is improving in many countries.

In response to his first supplementary question, there are some signs that the global supply bottlenecks are abating, with pressure on input prices easing and we are observing that the delivery delays are shortening. But we are cognisant that some of the supply chain issues such as the lack of production capacity for semi-conductor chips and port congestions are expected to take some time to be resolved. As such, it is likely that the supply chain disruptions will persist in the near term.

Having said that, I want to assure the Member Mr Ang and everyone in the House that for essential supplies including food and healthcare items, we have adopted a multi-pronged approach. First, import diversification. Second, beefing up our local production. Third, stockpiling. These supply chain resilient efforts are also supported by Singapore's strong air and sea connectivity, as well as supply chain management and logistic capabilities which will help to facilitate the efficient movement of goods.

For businesses, for industrial supplies, we have been working with our companies, SMEs, trade associations and industry associations to strengthen their Business Continuity Plans (BCPs) to better cope with possible supply chain disruptions. To this end, MTI, ESG and EDB stand committed to support our SMEs and local companies. If they are facing cashflow issues arising from supply chain challenges, ESG will continue to work with participating financial institutions to support them through the Enterprise Financing Scheme.

To turn to the next question, he asked about charges and so on, and then he also asked a question about annual value. I believe the Second Minister has responded to another Member about the statutory fees and charges. I will respond to his second supplementary question where he was alluding to profiteering. Let me assure him that MTI and the Competition and Consumer Commission of Singapore (CCCS) take a tough stance against profiteering. We keep a very close watch on prices. Specifically, MTI monitors general price movements through the Department of Statistics (DOS), the CPI Survey and where necessary, MTI also monitors the prices of specific goods.

If you recall, about 20 months ago between January and May 2020, there was a surge and very, very high demand for masks. During that period, MTI and CCCS swung into action, monitored the prices of the masks on a weekly basis. We took proactive actions and sought price information from e-commerce platforms. That certainly helped to shape the necessary behaviour by retailers and organisations.

So, I want to assure the Member that the Government is committed to ensuring that Singapore has a conducive and competitive business environment for companies to thrive and at the same time, a wide range of choices for our consumers. By equipping consumers with the Price Kaki app, consumers will be able to make an informed choice with regard to their purchase of goods and services.

Earlier, I mentioned our multi-pronged approach of import diversification, local production and stockpiling. This is critical because import diversification will ensure that Singapore enjoys a continuous supply of goods at competitive prices, even if any one of the sources is being disrupted. So, through this multi-pronged approach, this will help us to mitigate any supply shock-induced price fluctuations. We will continue to work very closely with trade associations and local companies to strengthen their Business Continuity Plans to better cope with possible supply chain disruptions.

Thank you, Mr Speaker. My supplementary question is for the Minister of State Low Yen Ling. As we talk about rising costs, businesses are facing those rising costs which then translates to rising costs for the consumer. So, what is MTI doing to assist with the rising costs of businesses?

Mr Speaker, Sir, I want to thank the Member Ms Jessica Tan for her very important question and want to assure her and everyone in the House that MTI, the Government and the various agencies monitor business costs closely. And I want to assure everyone in the House that support is at hand to support our businesses to mitigate cost pressures when needed.

First, in the area of cashflow, which is very critical now, the Government supports our businesses in need of additional loans to support their cashflow. Businesses can make use of the Temporary Bridging Loan (TBL) which provides additional working capital support of up to S$3 million for enterprises. TBL is available for our businesses at 70% Government risk share. From April to December 2021, more than 6,000 enterprises have benefited from the TBL. This amounted to S$1.8 billion worth of loans being catalysed. In addition, businesses that need funds for purposes like working capital, fixed assets, trade, projects, merger and acquisitions (M&As) can look to ESG's Enterprise Financing Scheme for assistance.

Second, the Government also provides support to businesses in cost components especially in the last two years, such as manpower costs and rental. For instance, the Jobs Support Scheme (JSS), the Wage Credit Scheme, the Jobs Growth Incentive Scheme and the Rental Support Scheme all helped our businesses, our SMEs, with their cashflow challenges during the pandemic.

To date, more than S$28 billion of JSS support has been disbursed since the scheme was introduced in February 2020.

Third, the Government will also continue to defray investment expenditure to help our SMEs to pivot and strengthen their capabilities. These include the enhanced financial support for capability development and productivity upgrading through grants such as the Enterprise Development Grant (EDG) and also the Productivity Solutions Grant (PSG). These grants will go some way to help our businesses transform and turn the current challenges into long-term opportunities.

Over the longer term, certain trends like climate change, and these are trends that may cause our companies to think about their strategies and their cost structure, businesses can look to the S$180 million Enterprise Sustainability Programme (ESP) recently launched by Minister Gan Kim Yong on 1 October. This ESP is designed to help our local SMEs build capability in sustainability, not just company-centric but also sectoral-centric. We will support the trade associations and chambers (TACs) to bring on board or to adopt sustainability standards across the sub-sectors or the whole sector. We will also take an ecosystem-wide approach in terms of financing – we launched the Green Financing shortly after the launch of ESP – as well as training and certification. All these are done to better position our local companies to help them to build capabilities in sustainability and seize new opportunities in the green economy.

The Government certainly strives to moderate business cost increases by managing domestic supply side constraints. For example, the Government ensures an adequate supply of industrial and commercial space to meet rising demand which will then help to relieve rental and price cost pressures that are faced by SMEs and businesses.

Members may recall the Rental Support Scheme announced by Minister Lawrence Wong. The Rental Support Scheme payouts in 2021 have also provided more than S$900 million of support benefiting over 40,000 tenants and owner occupiers.

So, I want to assure Ms Jessica Tan and the House that the Government will spare no effort to support our enterprises, especially our local SMEs. We continue to stand by our local SMEs, our businesses, to support them and help them emerge stronger than before.

Thank you, Mr Speaker. I have one supplementary question for the Second Minister for Finance. Sir, I acknowledge that there are wide-ranging Government assistance schemes, such as the CDC vouchers and transport vouchers that were mentioned, to help with the cost of living. But I would like to ask if the Government can put in place structural measures to provide long-term support to help with cost of living, instead of giving these one-off benefits every year.

Mr Speaker, I thank the Member for her question. Actually, we already do that. We do not just give out one-off benefits. We have a lot in terms of structural support and let me explain our approach to it. The first thing is directed at incomes and earning a living. The second thing is essential areas. And then third, providing essential support for the low-income and elderly.

On the first one, the most sustainable way that we can help Singaporeans with the cost of living is to help them have good incomes. And how we help them to have good incomes is to ensure that they have good opportunities and good jobs. We have often heard that it is said, "Oh, you must not pursue growth for growth's sake". This Government does not pursue growth for growth's sake. This Government pursues growth because we want good jobs for people and we want them to have good incomes, and that will help them to manage not just the increase in cost of living but to be able to attain all the other things and aspirations that they want to achieve in life. So, we pay a lot of attention to growing the economy. And that is structural.

The second thing we do is we have structural schemes to uplift and supplement their incomes. This includes the Progressive Wage Model, as well as the Workfare Income Supplement Scheme.

In addition, we have broad-based structural support measures to help Singaporeans in essential areas, like education, healthcare and housing. Education, as we know, is heavily subsidised. Every Singaporean child could receive about $180,000 in education subsidies by the time he or she turns 16, including preschool subsidies, with more for those who come from less well-off backgrounds. And for healthcare, we have many schemes, such as CHAS, the Pioneer Generation Package and the Merdeka Generation Package. We also provide housing subsidies to keep HDB flats affordable, so eligible first-timer households buying a resale flat could enjoy up to about $160,000 in housing grants and around 80% of new HDB flat buyers have little or no cash outlay on their mortgage payments.

Then, in addition, we have other permanent schemes, like the GST Voucher, or the GST-V Scheme, Silver Support Scheme and ComCare. And then, on top of all of these permanent structural schemes, we do provide the one-off support, or schemes for a specific period to help people where there are specific hardships or problems which may continue for a few months, but after that they are able to manage on their own.

I thank the Minister of State and the Second Minister for their response. I just have one supplementary question. I do recognise that inflation is a concern for everyone and it is something that is reflected in the lived experiences of all our residents.

If you look at what MAS has done from a monetary policy standpoint, they have tightened for the first time in the last three years. From a fiscal standpoint, I also note that back in 2006, the Government has put in place a freeze in fee increases for one year after the GST increase. This time round, if there were to be a GST increase, whether or not the Government will consider a similar freeze in the fee increase, which is similar to my original Parliamentary Question (PQ), as well as that asked by the Member Mr Ang?

Mr Speaker, the answer is as I had indicated in my original answer, which is that we will do our best, but we cannot defer fee increases forever. If and when we do have to have fee increases, we will do our best to ensure that Singaporeans are supported and buffered against such increases.

Mr Speaker, I wish to challenge the notion of Minister of State Low and Minister Indranee that inflation pressures are actually transitory and benign. Both of them cited how the latest 2021 November all items inflation rate was 3.8% and that is true when measured on a year-on-year basis. But if you look at all items analysed from the month-on-month basis, it is actually 6.2% and even if we use the average from the past three months, it is even higher at 7%.

If you measure other elements, where they have spoken about being more benign, actually if you net out accommodation, and this is for a year-on-year basis, you have a higher inflation rate at 4.1% or 4.2%, depending on how one measures such housing inflation. Transportation cost, which is the third largest component of household expenditure after food and housing, is actually 14.2% year-on-year in the latest data. And even if you look at food, the second largest component of household expenditures, while it is true that it is relatively lower at 1.9%, over the past three months, they have actually increased 2.8% on an annualised basis and 3.7% over the past month.

So, again, my point is not to throw out additional figures per se, but both of them mentioned one of the levers for controlling price inflation was the idea of real exchange rate appreciation. I will note that measures of our own trade-weighted real exchange rate show that the Singapore dollar has actually been depreciating since 2013 and at least in the latest data for 2020, this continued to be the case. So, I wonder whether there is going to be a more concerted effort at allowing real exchange rate appreciation as a broad-based approach to contain inflation pressures imported from aboard?

Mr Speaker, I thank the Member for his supplementary question. I think that the short answer really is this. Neither Ms Low nor I suggested that everything is temporary. I think there is recognition that there are real cost pressures and there have been increases. So, some of it may be temporary, but whatever it is, we know that households are facing pressures and therefore this Government will do whatever it can to alleviate those pressures and the full impact of such cost increases on households and for individuals.

Thank you, Mr Speaker. Sir, I just have two supplementary questions for Minister of State Ms Low Yen Ling. I think the core inflation rate is an average and inflation of course affects different demographic groups differently. So, I am wondering if MTI is studying and will publish CPI indicators for different demographic groups. For example, parents with young children will have expenditures on diapers and milk powder, which other demographic groups will not. Elderly people living alone, empty nesters will have certain healthcare expenditures and other groups will not. Is this being looked at because the inflation could be felt very differently, based on different demographic groups? I had an exchange with the then-Minister for MTI in 2018 in this House and the indication given was that MTI was looking at publishing these kinds of indicators, so I wanted an update on that.

The second question is, if I heard the Minister of State Ms Low correctly, she said that the Government's outlook is that inflation will pick up in the first half of 2022 this year and then it will ameliorate or go down a bit, in the second half. Is this outlook assuming that there is GST increase in the middle of the year, or it is assuming there is no GST increase? I just wanted to understand the assumption behind that expectation of that forecast.

Mr Speaker, Sir, I want to thank the Member Mr Leon Perera for the two questions. On the first question, we monitor the CPI all items inflation based on different household income groups. That will allow us to also work with MOF to design the necessary targeted assistance for the relevant segments, based on household income. If I could use this opportunity to share with the House, in Q3 2021, the CPI all items inflation came in at 1.9% year-on-year for the lowest 20%; and 2.2% year-on-year for the middle 60%; and 3.0% year-on-year for the highest 20% income group.

This leads me to my next point. This shows that the households in the lowest 20% income group experienced lower inflation compared to the other income groups. And earlier on in my speech, I shared about the importance of monitoring indicators like the real wage growth, that is after accounting for inflation. And I also took the opportunity to specify that for the lower-income, they saw higher real wage growth last year, while we were still in the thick of COVID-19. In fact, I think Minister Lawrence and Minister Gan will say that we are still in the thick of the COVID-19 pandemic. And for the lower income, the real wage growth was, I cited, 4.6% for the year 2021.

His second question about the MAS core inflation, I may have read it very quickly, allow me to slowly read it out now. I cited the various factors driving global inflations and what are some of the contributing factors for domestic inflation. And I talked about the CPI all items inflation and then I cited the MAS core inflation. So, let me repeat: MAS core inflation is expected to increase in the first half of 2022, before easing in the later part of the year.

But having said that, we know that we are still in the thick of the COVID-19 pandemic, the situation is very fluid, is very volatile. We are a small and open economy, and we are exposed to a lot of developments in other parts of the world, including the key food producing countries. For the full year MAS Core Inflation, it could average within the upper half of the official forecast range of 1% to 2%.

Thank you, Mr Speaker. Just two questions for the Minister of State Ms Low Yen Ling. I do thank her for her reply, which essentially was almost in pari materia vis-à-vis the measures to mitigate increasing cost of living with Minister Chan Chun Sing's 2018 Parliamentary reply.

My two questions pertain to two points of departure, arising from the supplementary questions that came up just now. One was a point that was made about anti-profiteering and Minister of State suggested that the Government looked very closely, for example, at the price of masks that were going up. Minister Chan, a few years ago, took a different approach, although it was with regard to a different item. It was with regard to coffee, coffee in the coffee shops. The approach then was relying on crowdsourcing platforms to address price increases, taking a step away from anti-profiteering-type committees. In view of the situation today, given the answer that Minister of State has shared, is the Government veering towards the formation of anti-profiteering committees as a way to track prices and how they affect our people on the ground?

The second question again is a pick-up from what Minister Chan shared as a way to combat inflation and this is in the case of businesses. This involved looking at meaningful ways and effective ways to lower regulatory costs, which include improving regulatory efficiencies, simplifying processes and removing unnecessary licences. I was listening to Minister of State's reply from the supplementary question asked by Member Ms Jessica Tan. In that regard, what has been the Government's progress on lowering regulatory costs for businesses as a way for combating inflation?

Mr Speaker, Sir, I want to thank the Leader of the Opposition Mr Singh for his two questions. And I do not think there has been a departure between what I have cited and what Minister Chan had shared. I want to thank him and I want to also use this platform to reiterate again, the Government understands and shares Singaporeans' concerns about rising prices and inflation.

I also want to use this opportunity to assure everyone in the House that MTI, the Ministry of Finance (MOF) and all agencies will spare no effort in supporting Singaporeans and also households and businesses as we face this global specter of inflation. MTI and all economic agencies are also working very closely with MOF to mitigate the effects of inflation on businesses, households and also consumers.

On his first question, I cited a six-pronged approach, a multi-pronged approach because this will allow us to take a very comprehensive stance and engage with our SMEs, our trade associations and of course, at the same time, leveraging on our extensive network of FTAs to provide market access for companies. I cited the first strategy, which is working hard to keep our economy competitive, working hard to create good paying jobs that generate real wage growth for our Singaporeans. So, really, it is about providing conditions for our companies, especially our local SMEs to create good jobs with sustained income growth that outpaces inflation.

Because when companies raise their productivity, real wage growth will follow. When workers can attain real wage growth, they also have new skills to take on new jobs. This is where MTI schemes like the PSG and the EDG come in. And really, this is the whole notion of ITM 2.0 that Deputy Prime Minister Heng Swee Keat has talked about: refreshing, strengthening our 23 Industry Transformation Maps to raise the innovation capacity of our SMEs across the 23 sectors, raising productivity and designing good jobs that are not just good jobs for today, but also jobs and skills for tomorrow; at the same time, supporting our local companies to expand their international footprint.

I had cited the mask example. This is just an example of how, when necessary, we will intervene in terms of monitoring prices. We are also making sure that we promote market competition. In addition to promoting market competition, it is also about lowering barriers to entry where possible, so that we can help Singaporeans enjoy competitive prices. Furthermore, I cited how we need to focus on diversifying our sources of supply, expanding our sources of food supply to more than 170 countries and regions across the world.

The Member also asked about Ms Jessica Tan's question. I want to use this platform to reiterate again that MTI and all our economic agencies are working very hard, in particular, in the last two years, to keep a lid on business cost increases and we do so by carefully managing our domestic supply side constraints.

And in terms of prices, coming back to it, we will continue to monitor prices and inflation very closely and we are prepared to adjust policies where necessary. We understand the concerns of businesses and Singaporeans and we will do whatever we can to mitigate the cost pressures that are being felt and the effects of inflation.

Mr Speaker, I would like to thank the Minister of State and also Minister Indranee Rajah for explaining that inflation will be assessed not to be persistent and that lots have been done through fiscal and monetary support so far. I have two supplementary questions.

The first is whether the Government can assure Singaporeans that we can continue to monitor the situation and design targeted measures to help specific groups. That is my first supplementary question.

Second, we have been talking a lot about prices of essential items. An issue that I am very concerned about is interest rates, which would trickle down and cascade into prices eventually. Singapore is a price taker. We know that. We take in a lot of imported goods from abroad. But we are also a price taker for interest rates. In particular, with interest rates expected to rise in 2022 and beyond, what will be its impact, especially when we are also trying to emerge out in an endemic scenario, whether there will be any ramifications of rates going forward, especially in accommodation and so on?

Mr Speaker, on the question of whether we will continue to design targeted measures, the answer is yes, we are working hard on that for Budget 2022. We have been taking feedback. We are looking to see what we can do to support households and that is something that Members can look towards in Budget 2022.