Impact of Causeway toll hikes on local economic activity likely to be small

Teo Ser Luck, Minister of State for Trade and Industry, believes the higher causeway tolls - which kicked in last Wednesday - will have a small impact on local economic activity. Mr. Teo explained the cost of land transport makes up just 3 percent of business costs for manufacturers, while the same expenses cover a measly 1 percent for businesses in the services sector, reported The Straits Times.

Regardless, certain businesses - in particular, small and medium-sized enterprises (SMEs) in sectors such as wholesale and food that often transport goods across the Causeway - are likely to feel the burn from the sharp increase in the tolls, cited Mr. Teo, in his response to Mr. Ong Teng Koon (Sembawang GRC) in Parliament yesterday.

Since the start of the month, a round-trip via the Causeway can cost $13.10, an increase of more than five times. This follows higher charges imposed by Singapore to match the increased rates Malaysia had introduced on the 1^st of August.

Mr. Teo also added that SMEs could have reduced profits if logistics companies offering trucking services pass the higher charges to them while there could be some impact on inflation. Although Mr. Teo cited some food imports as well as lifestyle and furniture products are moved via the Causeway - and the higher toll may be passed on to consumers - he foresees minimal impact as most of these items arrive to the city-state by air or sea.

Mr. Teo also revealed his ministry has received feedback that companies have found ways to cope with the new charges, including scheduling their trips more efficiently so that they did fewer trips.

As for the flow of workers into Singapore during peak hours, Mr. Teo said his ministry has yet to receive "major feedback" of any impact on business operations.