Why Some Things Are More Expensive Here

[Gee]

SOME? only some?

i thought everything is...

Obviously all these while...

some people some where some how haven' t got the slightest clue as to why... geeez.

 

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Why some things are more expensive here

MAS wants to identify factors that could explain price differentials across countries

by Neo Chai Chin 04:45 AM Nov 19, 2012

 

 

SINGAPORE - If you have always wondered why that chair from IKEA or that pair of jeans from Gap is priced higher in Singapore than some other countries, you are not alone. The Monetary Authority of Singapore (MAS) seems just as keen to find out.

 

Calling a tender to conduct a consumer products price comparison study earlier this month, the MAS said: "Despite these goods being exactly the same in many instances, the law of one price does not appear to hold. Anecdotal evidence suggests that prices of IKEA products and mid-range apparel, including Gap and Abercrombie & Fitch, are higher in Singapore compared to many other countries."

 

Some factors that could explain the price differentials include productivity and wage differences across countries, variation in non-tradable costs like rental and taxes, transport costs and price stickiness when it comes to exchange rate fluctuations, the MAS stated in its tender document.

 

The study's aim is to identify which factors, and their significance.

 

Using case studies of an international mid-range clothing retailer, a consumer electronics retailer and possibly furniture giant IKEA, the MAS also wants to identify the extent of price differentials of the same products between Singapore and at least 10 other countries, the document stated.

 

As Singapore grapples with inflationary pressures stemming from the tight labour market and rise in global food prices, economists told TODAY that the study would help the country's central bank better understand factors driving prices and inflation here.

 

It would in turn help the MAS determine "what targeted policies might be needed to help contain inflation", said Singapore Management University economics don Davin Chor.

 

"It would be useful to know, for example, whether it is operating costs in Singapore that are primarily driving price levels here or whether it is competitive conditions and strategic considerations that are leading firms to mark up their prices in a particular way in the local market," he added.

 

Through the study, the MAS could also understand how much of exchange rate movements are passed on to consumers, and how quickly, said Assistant Professor Chor.

 

Citigroup's Vice-President of Economics and Markets Analysis, Mr Kit Wei Zheng, agreed. "For instance, if for whatever reasons, price mark-ups are kept consistently high, import cost savings from a stronger exchange rate may not be fully passed on to consumers," he said.

 

Singapore's exchange rate is among the instruments used by the Government to manage inflation, and the MAS last month decided to continue its gradual appreciation against a basket of currencies.

 

Inflation this year, excluding imputed household rentals on owner-occupied homes, is expected to be slightly below 4 per cent, said Deputy Prime Minister Tharman Shanmugaratnam last week in response to a Parliamentary question.

 

Previous research on price differentials has been conducted.

 

A 2001 study using prices of 119 IKEA products across 25 countries - including Singapore - concluded that price differentials were not due to differences in exchange rates, local costs, tariffs or taxes, but were largely due to differences in mark-ups as a result of strategic pricing across countries, said the MAS tender document.

 

The tender closes on Nov 27.

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TODAY

[13177]

Some things are more expensive here? I thought everything here are more expensive?!

Edited November 19, 2012 by 13177

[Tjkbeluga]

Willing buyer willing seller. If no one buys, they will close shop sooner or later. So, the fact that they still survive means got sustain group of suckers willing to buy.

 

Yes, Gap is the worse markup in Singapore. I won't even step into the shop. Ikea is not too bad laa.... Smaller items, accessories and food are mostly still cheaper.

[Mustank]

nb lah! i ownself read sa la, i ok or not?!?!?!?!?

Edited November 19, 2012 by Mustank

[Icedbs]

A 2001 study using prices of 119 IKEA products across 25 countries - including Singapore - concluded that price differentials were not due to differences in exchange rates, local costs, tariffs or taxes, but were largely due to differences in mark-ups as a result of strategic pricing across countries, said the MAS tender document.

 

Aren't the mark-ups also depend on the forex, local cost, and taxes??

 

What are the scholars trying to say?

 

 

[Watwheels]

Talk c0ck, wayang only lah. They are only doing it for study, not for the benefit of anyone. As if they will do something to bring down the price. Stop dreaming.

[Jman888]

if other furniture retailer is using Ikea as benchmark, then they can sell even higher price since Ikea is already perceived as 'cheap' <_<

 

like that i kena chopped liao

[Mustank]

Talk c0ck, wayang only lah. They are only doing it for study, not for the benefit of anyone. As if they will do something to bring down the price. Stop dreaming.

 

private firms do private business, never cheat anybody, willing buyer willing seller, why garmen also want to step in?

[Watwheels]

private firms do private business, never cheat anybody, willing buyer willing seller, why garmen also want to step in?

They step in? No lah. They just want to see why some products we have here has so much difference in price as compared to some other country. Full stop.

 

So stop making assumptions of your own.

 

My assumption though is that they are looking at how to increase GST.

[Oblong]

using data from 2001 is a big joke. Is it a misprint (journalist / editor fault) or some very chim reasons (from scholar ministers)?

Last time income gap issue belongs to MCYS. But if involve external stat, will it be MTI?

Strangely MAS picks them up.

 

Any ideas?

[Watwheels]

http://en.wikipedia.org/wiki/Goods_and_Ser...%28Singapore%29

 

Singapore's GST was introduced on April 1, 1994, at 3%. It was increased to 4% on 1 January 2003, and to 5% on 1 January 2004. It was increased to its current rate of 7% on 1 July 2007.

 

You see anot? Last time they conduct this study in 2001, dan in 2003 & 2004 they +1% each to GST. You think they chiak bah so eng do this study for fun?

Edited November 19, 2012 by Watwheels

[Picnic06-Biante15]

Why they never study the impact cause by GST tax, high operations cost with the petrol price increases (high petrol taxes), labour cost, 2nd hand commercial vehicle cost up due to higher COE every bidding .....

 

Gov need to lower the taxes then we can compare with neighbour countries ...

[Vidz]

"but were largely due to differences in mark-ups as a result of strategic pricing across countries"

 

so in short singapore is perceived as a carrot-head

Edited November 19, 2012 by Vidz

[Scoobyclub]

Gov want money! What to do?

[Oblong]

http://blog.idealo.co.uk/worldwide-ikea-pr...rison-1635.html

Is that the source for ikea price comparison?

It was conducted in 2012 though.

And Singapore's PPP is $59,900 per capita (most likely in US$).

 

 

[Picnic06-Biante15]

The tricks lies with the retailers as they advertised at a price higher by 15% plus slightly higher then neighbouring countries. So MAS see it as higher.

 

Then comes the 'SALES', members get 20% off. So peoples will flock to the shops and grab whatever they needs and at times, they don't need. With the 20% discount, almost the same price as neighbours.

 

Some shops here can even offer whole year round sales....

 

 

[Jman888]

The tricks lies with the retailers as they advertised at a price higher by 15% plus slightly higher then neighbouring countries. So MAS see it as higher.

 

Then comes the 'SALES', members get 20% off. So peoples will flock to the shops and grab whatever they needs and at times, they don't need. With the 20% discount, almost the same price as neighbours.

 

Some shops here can even offer whole year round sales....

 

 

or Closing Down Sale for 2 years but yet to close down [laugh]

[Gee]

problem with news nowadays..

we must always always always read the underlying means...

 

What Lies Beneath (2000)

-Harrison Ford, Michelle Pfeffer

 

well, not the same..