As long as the economy remains vibrant, Singapore will not be a cheap place for doing business, said Deputy Prime Minister Tharman Shanmugaratnam in Parliament on Wednesday.
Demand for resources - especially labour and space - are strong, and costs will continue to pick up, he said in his speech closing the Budget debate.
Weakening the economy and becoming less vibrant is the wrong strategy to address this, and "that's not what our business community and Singaporeans want", said Mr Tharman, who is also the Finance Minister.
"(We) don't want to just leave it to the market, but neither can we fix rents and keep prices low."
Instead, the Government has endeavoured to mitigate these costs by dampening the impact of economic cycles.
For instance, the supply of multiple user factory space for the next three years is expected to be twice that of demand, which should have a moderating influence on industrial rentals, said the minister.
There is also expected to be a substantial increase in supply in retail shop space.
Industry clusters like the JTC Food Hub and Tuas Biomedical Hub also help companies save costs through the sharing of services.
"We don't have perfect foresight, but we can try to help mitigate costs," Mr Tharman said.
The permanent and fundamental solution to address rising business costs is to raise productivity, he stressed.
"As long as we remain vibrant as an economy, our costs will be similar to an advanced country. The only way for businesses to survive is to have advanced country capabilities."