Today Online 5 Mar 14;
SINGAPORE — The Government is not profiteering from its recent move to raise the granite stockpile price from S$30 to S$50 a tonne, as it did not set up the national stockpile as a business.
Rather, the move is to incentivise importers to buy from other sources and to ensure that construction projects here can continue without a hitch, said National Development Minister Khaw Boon Wan in a blog post yesterday.
Member of Parliament Lee Bee Wah had, during yesterday’s debate on the Budget Statement, pointed to profiteering by coffee shops as they raised beer prices well above the increased excise duty — “a fair point”, wrote Mr Khaw.
“However, she wandered off by asking if the Government was also profiteering when it raised the granite stockpile price from $30 to $50 per tonne. Of course, not!” he wrote.
“The Government did not set up the granite stockpile as a business. The issue of profit is not a relevant consideration because the motive in setting up such a stockpile is to help the industry cope with sudden shortages in granite.”
The Government had released granite from the national stockpile last month to help ease a temporary shortage that has led to delays in some construction projects here.
In January, the Indonesian government imposed a global ban on a wide range of mineral exports.
At about the same time, the country stopped shipping granite aggregate here — a sudden, but “hopefully temporary”, disruption in supply, Mr Khaw said.
As it is not clear if the disruption was temporary or permanent, Mr Khaw said the Government had urged the industry to ramp up supply from sources further afield.
“As these sources would be more costly, we served notice to the industry in early February by indicating that the stockpile price would be raised after one month,” he added.
“In this way, we ensured continuous operation for the industry for one month with pricing stability at S$30 per tonne, while they start to make arrangements to ramp up supply from other sources.”
Mr Khaw said the consideration in setting the stockpile price was not about profit margins, but about ensuring the industry is incentivised to actively source for alternative supply sources.
“If the stockpile price is set too low, there will be no reason for importers to go for other (more costly) sources.
“And if they do not do so, we will rapidly deplete our stockpile and there will be no buffer to help the industry should a similar disruption of another supply source occur,” he added.
Mr Khaw said the release of the stockpile is a contingency measure to help the industry cope, while it contracts and imports from alternative sources of supply.
“The stockpile cannot be a convenient permanent alternative source of supply for the industry,” the minister said.
“The new stockpile price is not (meant for) profiteering, but to incentivise importers to procure and buy from distant sources, to ensure our construction industry can continue seamlessly despite the Indonesian disruption.”
Granite prices raised to incentivise industry to look for alternative sources: Khaw
Channel NewsAsia 4 Mar 14;
SINGAPORE: The government raised the granite stockpile price from S$30 to S$50 per tonne in March because it wanted to incentivise the construction industry to actively look for alternative supply sources.
National Development Minister Khaw Boon Wan made this point in a blog post, after Member of Parliament for Nee Soon GRC Lee Bee Wah asked in Parliament on Tuesday if the government was profiteering by raising granite stockpile price.
Mr Khaw said the government set up the granite stockpile to help the industry cope with sudden shortages in granite.
The release of the stockpile is a contingency measure to help the industry cope while they contract and import from alternative sources of supply.
He said the stockpile cannot be a convenient permanent alternative source of supply for the industry.
Singapore imports granite mainly from its immediate neighbouring countries, as well as from other regional sources.
Recently, there was a sudden disruption in granite supply from Indonesia. The government then decided to release the stockpile at S$30 per tonne to help industry tide over the disruption.
Mr Khaw said it was not clear if the disruption was temporary or permanent, so the Building and Construction Authority (BCA) urged the industry to ramp up supply from other sources.
As these sources would be more costly, the BCA notified the industry in early February that the stockpile price would be raised in March.
Mr Khaw said this way, there will be continuous operation for the industry for one month with pricing stability at S$30 per tonne, while they start making arrangements to ramp up supply from other sources.
He said in setting the stockpile price, the consideration is not about profit margins but about ensuring the industry is incentivised to actively buy granite from distant sources.
He explained that if the stockpile price is set too low, there will be no reason for importers to go for other more costly sources. And if they do not source for an alternative supply of granite, Singapore will rapidly deplete its stockpile and there will be no buffer to help the industry should a similar disruption of another supply source occur.
Mr Khaw said the industry should fully understand this as the government has made it clear from the outset when the granite stockpile was released to help them in the transition to ramp up supply from distant sources.
- CNA/ac
