Political upheaval and the Malaysian plane’s disappearance are only partly responsible for a major downturn in Singapore’s economy.
Singapore’s steady source of tourism, the Chinese visitor, has endured Thailand’s strife and their own government’s issues, including the squandering of public funds, Singapore is unsure of the immediate future.
According to a report by Bloomberg, Singapore’s retailer’s association treasurer, Kesri Singh Kapur, said the situation “is that grim.”
“Both the sides of consumption, which are the domestic customers and tourists, are not spending. I anticipate that at least for the next 12 months, the market will be sluggish,” Kapur said.
Indeed, Bloomberg reported Metro Holdings, Ltd., lost ground in the stock market and is now at its lowest level in almost three months. In addition, Isetan Ltd., and The Straits Times Index fell 0.4 percent and 0.8 percent, respectively. Metro fell 0.5 percent.
Shoppers may not be spending because Singapore’s prices and sales tax are higher than Hong Kong’s. Sales tax for goods and services is 7 percent and retail prices are 10 percent higher. The recent “Great Singapore Sale” was not a success with 4 percent lost in sales.
Zhu Liang from China told Bloomberg trading Singapore dollars for Hong Kong dollars would be like having more money.
“With Singapore dollar, you just feel like it is little money,” Liang said. He had visited the sale with his family. Liang bought nothing.
Ten percent of retail sales in Singapore are from Chinese shoppers and ten percent are from Indonesian and Indian tourists, Kapur said. In the first quarter of 2014, Chinese tourists spent the equivalent of $640 million, but declined in visits to Singapore by 27 percent from 2013. Singapore has shown an average growth of one percent in the past two years while Hong Kong was at 6.9 percent.
Retailers have branched out in China, Indonesia and Malaysia, further dampening Singapore’s appeal.
“Singapore had this aura and advantage of being slightly different from its neighbors five or 10 years back,” Kapur said. “Yes, we have a great Orchard Road, we have a great environment where people can walk and shop, but availability of brands has come at parity now.”
Stores like Shana and Vince Camuto in Singapore are now closed, however, tourists in the first quarter spent 19 percent more than last year at the casinos, on entertainment and in sightseeing. Gaming revenue on Sentosa Island was up 29 percent. Meanwhile, Singapore’s hotels are more expensive than its competitors.
“It all adds up to a fairly bearish picture for the retail sector,” Oversea-Chinese Banking Corp. Economist Selena Ling said. “It’s hard to see immediate light at the end of the tunnel.”
