MR LIM BOON HENG, on how he panicked - when property prices soared in the 1970s - and rushed to buy a flat when he was home on leave from an overseas posting ON HOME leave from an overseas posting in Denmark in the early 1970s, a young Mr Lim Boon Heng flew right smack into soaring inflation in Singapore.
Inflation hit 19.6 per cent in 1973, and 22.3 per cent in 1974, as oil prices quadrupled.
Then a young employee with shipping firm Neptune Orient Lines (NOL), Mr Lim panicked when he saw the way property prices were skyrocketing.
His pay of $1,500 a month meant he was just over the income ceiling for an HDB flat. So he rushed to buy a private apartment while he was back here on leave - and lived to regret it.
He later realised he had bought his pad when prices were at a peak.
Replying to Insight via e-mail, Mr Lim recalls: 'Mr Goh Chok Tong, then one of my superiors in NOL, had asked me whether I needed to buy then because he believed the prices would drop. I should have heeded his advice!'
His experience illustrates the drastic effect that an inflation rate in the double digits can have on decisions by consumers and companies.
Inflation is high in Singapore now, but still, nowhere near the levels in the early 1970s.
The rate of current oil-price increases is much lower than that of 1973 when the price of crude oil quadrupled within a year.
The 'oil shock' was due to a decision by members of the Organisation of Petroleum Exporting Countries (Opec) to stop shipping oil to Israel's supporters, namely the United States, Western Europe and Japan.
During those years, Singaporeans also had to bear with sharp hikes in food prices. These were due to poor harvests, higher world prices and unscrupulous local rice importers who formed cartels to jack up prices.
In 1971, then-prime minister Lee Kuan Yew proposed the setting up of cooperative supermarkets to counter such market manipulation.
'The NTUC can help organise this,' he said then. Thus was born NTUC FairPrice.
From 1975 to 1979, the inflation rate remained below 5 per cent as oil prices eased after Opec ended its embargo.
In 1980, it rose again, to 8.5 per cent, and 8.2 per cent in 1981, in the wake of a second round of oil shocks from the fallout of the 1979 revolution in Iran.
The second oil shock coincided with the years of Singapore's high-wage policy, a conscious attempt by the Government to raise wages so as to compel companies to find ways to raise workers' productivity.
Mr Lim, who joined the NTUC in 1981 and rose to become secretary-general before stepping down two years ago, recalls the difficulties in putting the brakes on wage increases when prices as a whole were heading up.
The high-wage policy was meant to last three years but went on for longer. Wages went up at an unsustainable rate of around 20 per cent a year, resulting in a wage spiral that eventually plunged Singapore into recession in 1985.
That experience holds important lessons for the country today, he says.
'With high inflation, there will be many who think that wages should go up. If we allow that to happen, we will be compounding our problems.'
His advice: Wage increases this year should lag behind productivity growth. 'Companies that are doing well can pay more in bonuses.'