Parliament: Impact of Causeway toll hikes on economic activity here likely to be small

The impact of the Causeway toll hikes on economic activity in Singapore is likely to be small, as land transport takes up a small portion of business costs, Minister of State (Trade and Industry) Teo Ser Luck said on Tuesday. -- PHOTO: ST FILE
The impact of the Causeway toll hikes on economic activity in Singapore is likely to be small, as land transport takes up a small portion of business costs, Minister of State (Trade and Industry) Teo Ser Luck said on Tuesday. -- PHOTO: ST FILE

SINGAPORE - The impact of the Causeway toll hikes on economic activity in Singapore is likely to be small, as land transport takes up a small portion of business costs, Minister of State (Trade and Industry) Teo Ser Luck said on Tuesday.

Responding to a question from Mr Ong Teng Koon (Sembawang GRC), he told the House that land transport costs constitute only around 3 per cent and 1 per cent of the total business cost of firms in the manufacturing and services sectors respectively.

In August, Malaysia raised the toll rates for vehicles entering Johor from Singapore and implemented a new toll for Singapore-bound vehicles.

The Land Transport Authority (LTA) announced it would match these rates shortly after the changes were made.

Since then, business chambers representing companies in Malaysia and Singapore have voiced concerns that the toll hikes will have a negative economic impact.

On Oct 1, toll charges were raised by Singapore from $1.20 to $3.80 for cars leaving the country. And while it was previously free to enter Singapore, it now costs $2.70. In combination with tolls levied by Malaysia on Aug 1, a two-way trip by car via the Causeway now costs around $13.

Nonetheless, some firms could be more affected than others by the higher toll charges, said Mr Teo, pointing to small and medium enterprises (SMEs) in sectors like food and wholesale.

Such firms, which frequently transport materials and goods across the Causeway, are most likely to see a larger increase in land transport costs, he said.

Logistics firms offering trucking services via the Causeway could 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," he said.

"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," he added.

Mr Teo said while SMEs may be adversely affected by the toll hikes, "we have also received feedback that others have found ways to cope with the higher charges".

These include better trip scheduling, such that fewer trips across the Causeway are needed.

In response to a supplementary question from Mr Ong about whether tolls would affect workers coming in to Singapore especially during peak hours, Mr Teo said the tolls have led to higher costs but his ministry has not received "major feedback" about any impact on businesses' operations yet.

The Government will continue to monitor the impact of the toll hikes closely and work with trade associations, he said.

rachelay@sph.com.sg