SINGAPORE - The Singapore economy will benefit from lower oil prices since it is a net importer of oil, said Minister for Trade and Industry Lim Hng Kiang in Parliament on Monday.
Although the petrochemical sector will benefit overall due to cheaper raw materials, its net gain will be limited because the prices of petrochemical products have also fallen in tandem with crude oil prices, he added.
Mr Lim said that a drop in oil prices will translate to lower electricity tariffs and fuel costs.
This will directly benefit businesses since their operating costs will fall. Consumers will also benefit since they will need to spend less on electricity and other oil-related items such as petrol, he added.
These cheaper prices could also increase consumers' purchasing power, thereby stimulating consumption and further boosting the economy, Mr Lim said.
He also said that the petrochemical sector will benefit from lower oil prices due to reduced input costs, but the "upside of lower input costs may be limited, as prices of key petrochemical products have also fallen in tandem with oil prices".
This means that their revenue will be lower. "Margins remain very tight," he said.
The offshore and marine sector's prospects remain "okay for the immediate future" but may be affected if oil prices continue to stay low for the long term, Mr Lim added.
Separately, Mr Lim also said that the recent rise in the United States dollar and fall in the euro against the Singapore dollar "are not expected to have a significant impact on Singapore's economy".
He noted that the Monetary Authority of Singapore manages the Singapore dollar exchange rate against a trade-weighted basket of currencies within a prescribed range, and does not focus on the Sing dollar's value against any specific currency.