Economic Impact from Increase in Causeway Tolls

Mr Ong Teng Koon asked the Minister for Trade and Industry if he will provide an assessment of the impact on economic activity arising from Johor's decision to impose Causeway tolls, especially on SMEs which depend on goods and services rendered from across the Causeway.

Mdm Speaker, the impact of the Causeway toll hikes on economic activity in Singapore is likely to be small. This is because land transport cost constitutes only around 3% and 1% of the total business cost of firms in the manufacturing and services sectors, respectively.

Nonetheless, we recognise that some firms could be more affected than others by the higher toll charges. In particular, SMEs in sectors, such as the food and wholesale sectors, that frequently transport materials and goods across the Causeway would likely see a larger increase in land transport costs. Logistics firms offering trucking services via the Causeway may also pass on the increase in toll charges to SMEs.

This increase in cost could in turn affect the profit margins of SMEs. There could also be some pass-through impact on inflation. In particular, as some of our food imports and lifestyle and furniture products are transported via the Causeway, the higher land transport cost may be passed on to consumers. However, the impact is expected to be small, as the majority of our food imports and lifestyle and furniture products are still transported by sea or air.

On the whole, while some SMEs may be adversely affected by the hike in toll charges, we have also received ground feedback that others have found ways to cope with the higher

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charges. This includes improving trip scheduling or consolidating their transport schedules so that fewer trips across the Causeway are needed.

We will continue to monitor the situation. So far, the toll hike has just been implemented. We will work with the trade associations as well, to look at whether SMEs will be greatly impacted by these toll charges.

I thank the Minister of State for the reply. Does the Minister of State envisage that higher toll charges will exacerbate the tight labour conditions that SMEs face, because workers might find it more difficult to come across the Causeway during peak hours? Secondly, will the Minister of State assure the House that the Ministry will do all that it can to help SMEs who are facing problems from the toll charges?

So far, from the general feedback about transportation of the workers coming into Singapore and whether it affects the operations of the companies, we have not received feedback of major issues regarding whether workers have been greatly affected. Operations still go on as per normal but of course, the cost in some way has already been impacted. The cost is higher. That is something to be managed. But as far as operations are concerned, so far, there is no feedback. We will monitor over a period of time to see whether that has adversely affected the on-going operations. We have to work with the associations. Some of the associations have members from SMEs and micro enterprises that do their business in transporting goods across the Causeway. We have to monitor that sector and get some feedback from them over a period of time to see how that can be affected and whether measures are needed to help them.