By Jessica Lim

PRICES of items commonly found in kitchen larders have generally gone up by 4.3 per cent since last April.

That is more than twice the 2 percentage point increase in the goods and services tax which kicked in last July, a survey by the Singapore Chinese Chamber of Commerce and Industry (SCCCI) has revealed.

The 4.3 per cent figure, however, belies the range of price increases – and decreases.

A 330ml can of Pokka carrot juice, for example, now costs 92 cents, up from 60 cents last April – a 53 per cent jump.

Other canned beverages like Coca-Cola and Jia Jia herbal tea now cost about 30 per cent more – or about 20 cents more per can.

The price checks were initiated by the SCCCI as part of its annual pre-Budget survey of 84 products, the prices of which were logged on April 9 last year and last month, on Jan 22.

The items, from NTUC FairPrice supermarkets, included rice, milk, condiments and snacks.

About half the items – 43 – showed price increases of under 10 per cent.

These included the canned soft drink, Sprite and Khong Guan assorted biscuits.

Another 12 items went up by between 10 and 20 per cent.Five were up by 20 to 30 per cent, while three went up by more than 30 per cent.

Industry players attribute the rise in prices to spiralling raw material prices. Globally, prices of items like wheat and milk are at historic peaks.

Suppliers The Straits Times spoke to said droughts in Australia, crop failures in the US, reduced milk production and higher cost of tin cans are all contributing factors.

A spokesman for Tai Hua Food Industries, which brings in an estimated 10,000 tonnes of sugar each year, said it is now paying about $650 to import a tonne of sugar, compared to about $450 two years ago.

Mr Thomas Pek, its managing director, said: ‘We are forced to increase our prices, then manufacturers have to increase theirs too. It is a never-ending cycle. It is a bad time for us.’

Singapore Food Manufacturers’ Association president Allan Tan said the costs of raw materials have risen between 30 and 100 per cent across the board.

The most drastic jump is in the cost of soya beans, which are now going for about $1,200 per tonne, up from about half the price a year ago.

‘These price increases have to be passed on to consumers. The only way a company can keep prices the same is to absorb it. Still, few companies will be able to absorb such drastic increases,’ he said.

Coffee beans, for instance, has gone up in price by 30 per cent over the past year, said the Foochow Coffee Restaurant and Bar Merchants Association. So, for example, customers are now paying more for the 3-in-1 packs of coffee mix.

Amid these rises, the prices of eight items have stayed unchanged. They include a Carlsberg six-pack of beer, Myojo instant noodles and Maggi chilli sauce. Another 13 items dipped in price during the same period.

The largest drop: about 15 per cent for Nissin cup noodles and a 1.5 litre bottle of F&N soda. Both cost $1.60 last April and their price is $1.35 now.

NUS, NTU, SMU to cushion effect with more financial aid and ‘lock-in’ system

By Jane Ng

TUITION fees at the three local universities will go up by between 4 per cent and 20 per cent for the new batch of undergraduates entering in August.

But to cushion their effect, all the varsities will introduce more financial help schemes, as well as a ‘lock-in’ fee structure first pioneered by the Singapore Management University (SMU), where students pay a set fee and will not be affected by future increases.

The fee hikes, announced yesterday, will see students who are taking most of the courses paying $250 more.

However, those reading law and business at the National University of Singapore (NUS) and SMU will see increases of up to $1,200.

The hikes – the first since 2006 – are necessary because of a rise in manpower and operating costs, and will not affect current students, the universities said yesterday. They had planned to raise charges last year, but held back because of the increase in the goods and services tax (GST) from 5 per cent to 7 per cent.

The new fee structure will see SMU leading the pack, with students at its law school paying $10,050 a year, a 12 per cent rise from last year.

Fees for other courses at SMU – which charges more than the other two universities, mainly because it is smaller and does not enjoy economies of scale – will go up by 10 per cent, from $8,300 to $9,130.

Nanyang Technological University (NTU) students will have to pay a flat 4 per cent more, regardless of what course they take. This works out to an annual fee of $6,360, up $250.

At NUS, most students will also pay $6,360, up $250 (4 per cent) from $6,110.

But business course fees will go up by 7 per cent, to $6,540, and fees for the law course will rise by 20 per cent to $7,340.

In announcing the fee rises, the universities also drew a sharper distinction between what Singaporeans will pay and what their foreign counterparts will have to fork out.

From August, permanent residents will pay 10 per cent more than Singaporeans – there was no difference previously.

Foreigners, meanwhile, will pay 50 per cent more, a big change from the past, where their fee premium was just 10 per cent.

The Government had announced in 2006 that there would be greater differentiation in tuition fees between the three groups because its first responsibility is to Singaporeans.

Yesterday, NUS deputy president (academic affairs) and provost professor Tan Eng Chye explained the need for higher increases in the law and business courses.

He said the university needed to stay ahead of the competition by retaining talent in the face of increasing wages in the industry, and added that teaching staff at the two faculties are highly mobile.

Also in the works are plans for smaller class sizes at NUS, which will translate into the need for more manpower.

In tandem with the fee rises, the universities are working with the Education Ministry to enhance their financial assistance schemes.

They gave the assurance that no deserving student will be deprived of a university education because of financial constraints.

NUS also announced yesterday an increase in hostel fees, from an average of $60 a week for a single room to $75 in August. Further increases will be phased in over three years until it reaches $100 in 2010. The rise is to cover operating and repair costs, said an NUS spokesman.

janeng@sph.com.sg

Main draw isn’t China, but the US and other English- speaking countries

By Clarissa Oon

SINGAPORE is losing about 1,000 capable people every year and the numbers are growing, said Minister Mentor Lee Kuan Yew, sounding the alarm on the severity of the brain drain.

And the main magnet for these talents is not regional powerhouse China, but the United States and other developed English-speaking countries, he told the United Press International (UPI) news agency in an interview earlier this month.

Citing figures of Singaporeans who gave up their citizenship and took out their savings and CPF funds, he said this meant ‘losing about, at the top end, 1,000 a year, which is about – if you take the top 30 per cent of the population – about 4 or 5 per cent’.

Mr Lee believes this exodus can only grow because ‘every year, there are more people going abroad for their first or second degree’.

Some of these Singaporean talents head for China, but return eventually because, at the end of the day, they do not want to compete with the Chinese, he said.

‘You go to China, you’re going to compete against 1,300 million very bright fellows, hardworking, starving.

‘Do you stand a chance to be on top of that pole? No. But if you go there as a Singaporean with a different base, speaking English which they can’t, with connections to the world, then you’ve got a different platform.’

In comparison, the pull of the US is difficult to reverse, he said, noting that American firms recruited bright Singaporean students straight out of universities there.

After acclimatising to life and work in the US, ‘if they decide to take the green card and settle in America, then I think we’ve lost them’, he said. Singaporeans who do not want the stiff competition in the US go to Australia and Canada.

The brain drain has been a regular issue addressed by Mr Lee. To stem this loss of talent, Singapore has wooed many top professionals from China and India here, he said.

The draw for the Chinese is that their children can learn both English and Chinese, while the Indians like Singapore because it is close to home, yet a step up in terms of First World infrastructure.

‘The trouble is many of the Chinese then use us as a stepping stone to go to America, where the grass is greener.

‘But even if we only keep 30 to 40 per cent and lose 60 to 70 per cent, we’re a net gainer,’ he said.

Mr Lee said, however, that the Chinese would cease to come in 20 to 30 years’ time, when China’s living standards rise to match Singapore’s.

Supermarkets seeing more sales of frozen foods but some people still reluctant to switch

By Jermyn Chow & Jessica Lim

CHOOSE frozen over chilled pork and lop off about half your marketing bill. Ditto when you go for frozen over fresh chicken wings.

Here are the numbers: Chilled pork fillets cost $16 per kg at the market, but frozen ones cost $8; chilled chicken wings go at $7 per kg, but just $4.60 frozen. Price- conscious as Singaporeans are, they have seemed slow to see the math.

Amid globally rising food prices, Prime Minister Lee Hsien Loong pointed out last week that buying frozen food was a good way to cope.

Mr Jack Koh, head of the Meat Traders’ Association, confirmed that frozen meats are up to 15 per cent cheaper to import as they are cheaper to produce and package; and since they are frozen, there is less of a rush to ship them.

Those savings can be passed on to the consumer, he said.

It was also ironical, PM Lee noted, that shoppers insist on buying chilled pork enough to last several days, only to freeze the lot since they do not go grocery shopping every day.

‘So why not buy it pre-frozen, at half the price?’ he exclaimed.

Doing just that has saved housewife Madam Chen Ah Kee a bundle.

The 60-year-old who cooks for her family of five buys frozen chicken and fish. She spends about $10 during each of her twice-weekly trips to the NTUC FairPrice in Ang Mo Kio, half of which goes to frozen fish fillets and chicken parts.

‘I have eaten frozen food for 20 years and I don’t see a difference in freshness or nutritional value,’ she said, proudly waving her bill of $8.85 for meats.

Shoppers like accountant Iris Ho are unconvinced.

The 30-year-old, who also feeds a family of five, shops at an Ang Mo Kio wet market twice a week but shuns frozen fish because she believes frozen fish does not taste ‘as good and sweet’.

But she pays the price: her grocery bill for the catch of the day and her other fresh buys hits $100 a week.

Taste aside, other shoppers shun frozen meat because they believe freezing leaches the nutritional value from foods, say supermarkets, wet markets and meat wholesalers.

Housewife Lim Ah Kim, 58, is uncomfortable about the difference in colour of thawed meat.

Dietitians say, however, that frozen meat is fine.

‘Freezing the meat ‘locks in’ the minerals and nutrients, so it is as fresh as it was before it was frozen,’ said Alexandra Hospital’s chief dietitian Gladys Wong.

Frozen meats also keep longer. Beef, for instance, can be kept frozen for up to 12 months without spoiling.

Some people are already beginning to buy into that. Supermarkets are seeing growth in sales of frozen foods.

Main supermarket chains Giant, Cold Storage, NTUC FairPrice, Sheng Siong and Carrefour all logged at least 10 per cent more in sales last year.

Supermarkets are cashing in on the heightened interest by widening their frozen ranges to create more choice.

The problem though, is that wet markets, mostly in the heartland and generally favoured by the less well off, are still playing catch-up.

An ST check found not as wide an array of frozen foods there.

Tekka Market fish-monger Alex Lee said he brings in frozen fish only when fresh stocks cannot be found, and not many of his customers ask for frozen anyway.

But where demand is, supply will follow. Market stall-holders say they are prepared to switch if their customers do.

Poultry seller Mary Ong, 50, said: ‘If people start asking for frozen chicken, we will definitely bring it in. After all, it’s much cheaper for not just them, but for us too.’

jermync@sph.com.sg

limjess@sph.com.sg

By Bryan Lee, Economics Correspondent

THANKS to a booming economy and rising salaries, the average family in Singapore saw its household income rise by 9.6 per cent last year, the biggest increase in at least a decade.

But the rich again got richer in 2007. Higher-income households generally enjoyed bigger pay hikes than lower-income ones, widening the income gap between the rich and poor.

Data published yesterday by the Department of Statistics (DOS) showed that average monthly household income from work last year rose to $6,280, up from $5,730 the previous year.

Much of this was due to strong economic growth and a tight labour market, which drove up just about all salaries last year.

The data comes on the heels of a set of rosy numbers for Singapore’s workers. The unemployment rate is at a 10-year low, while average bonuses paid out are at their highest since 1990.

Even after accounting for inflation, income still grew 7.4 per cent, beating a previous high of 6.2 per cent in 2001 at the height of the dot.com boom.

Citigroup economist Chua Hak Bin said: ‘It’s very encouraging that workers are finally seeing big gains from the economic boom of the past few years.

‘The earlier part of the recovery from Sars in 2003 had benefited companies more, with wage gains being relatively modest in previous years.’

But yesterday’s figures from the DOS also showed that the wages boom was clearly skewed in favour of richer families.

Income per family member in the top 10 per cent income bracket surged 11.1 per cent.

This is compared to 3.3 per cent for the lowest 10 per cent income bracket.

The result is that the Gini coefficient, a widely used measure of income inequality in a country, has gone up to 0.485 from 0.472 – one of the biggest increases in the past seven years.

The DOS acknowledged this yesterday, saying that it reflected ‘higher wage increases for skilled and knowledge workers’.

Economists agreed, positing that the unusually large jump could be due to more top global business executives relocating here.

But they also noted yesterday that a widening income gap is to be expected in a globalised economy. This is because low-skilled workers may not have as much bargaining power even in a tight labour market as companies can easily turn to cheaper foreign labour.

This means the Government will have to help poorer families more as the spoils of globalisation are not equally distributed, they added.

Indeed, economists said that with economic conditions turning south, more help should be announced at tomorrow’s Budget statement as lower-income, lower-skilled workers may be more vulnerable.

Said DBS Bank economist Irvin Seah: ‘I would not be surprised to see many measures at this Budget to alleviate the lower-income families from the escalating costs of living.’

In this vein, the DOS noted yesterday that Government benefits targeting the lower-income, such as the Goods and Services Tax offset package offered at last year’s Budget, helped to narrow the income gap.

If those were taken into account, the Gini coefficient would come down to 0.46, it said.

bryanlee@sph.com.sg

TUITION fees for the new intake of National University of Singapore (NUS) and Nanyang Technological University (NTU) students will go up by 4 per cent in the new academic year to meet rising manpower and operating costs.

The increase is much higher for permanent residents and foreign students to reflect greater fee differentiation between local undergraduates and others at both universities.

The last time the universities raised their fees was in 2006 when tuition fees went up by three per cent.

Both NUS and NTU said the cohort-based, and fixed fee increase, which is locked in at the the start of the new academic year and maintained during the entire duration of the students course of study, will help them to better plan their finances.

With the fee increase, new NUS students will have will have to pay annual tuition fee of $6,360 – from $6,110 last year.

Foreign students on tuition grant bond will pay 50 per cent more, or $9,540, while Singapore PR will pay 10 per cent more, or $7,000. Foreign students and PRs not on a tuition grant bond will pay $23,320 a year.

At NUS, tuition fees for business and law students will go up by more. Business students will pay seven per cent more, or $6,540, and law students, 20 per cent more, or $7,340. Currently, only students in medicine and music pay more.

NTU said the increase was due to higher ‘manpower and operating costs’.

It said it is adopting a cohort-based approach to setting undergraduate tuition fees so that ‘the new fees will be maintained at the same level during the course of the students’ study’.

This is aimed at facilitating ‘better financial planning for students by setting out a predictable fee schedule for the duration of their education at NTU, it explained.

Fees for the current students remain unchanged. Similarly, returning National Servicemen will continue to pay tuition fees based on the year they were offered a place at the university.

NTU gave the assurance that no admitted student ‘will be deprived of a quality university education because of financial constraints’.

Needy students can apply for a wide range of financial assistance schemes, which include bursaries, loans and work-study programmes.

NUS said the new fee system is aimed at helping students plan for the financing of their undergraduate studies.

‘This is in response to feedback gathered through a series of dialogues between NUS Management and Student Leaders, where students had indicated a preference for greater predictability in fees,’ it said in a statement on Wednesday.

‘NUS has been successful in providing quality education that is internationally well recognised and yet affordable. This quality education has given our graduates the distinctive competitive edge needed to succeed in the globalised world, making them well sought after by prospective employers.’

Added Professor Tan Eng Chye, NUS Provost and Deputy President: ‘To ensure that we continue to provide a quality education that is on par or even better than the other world class universities, teaching staff to student ratios must be improved.

‘NUS also needs to attract and retain top academic talent through internationally competitive salaries. Over the last few years, despite active measures to keep costs down, NUS’ costs associated with teaching and related activities have been steadily rising.’

NUS said as it gears itself to be one of the world’s leading universities, it remains strongly committed to delivering quality education and undertaking high impact research.

‘To address the rise in manpower and operating costs needed to sustain quality and excellence, NUS has reviewed tuition fees and will be making adjustments to tuition fees for undergraduate programmes,’ it explained..

‘After extensive deliberation and consultation with students, faculty members, senior management, industry and the Ministry of Education, we arrived at a revised fee schedule that will help defray part of the operating costs of providing a quality education.

‘The Ministry of Education will continue to subsidise the larger part of the University’s operating and capital costs.’

On the adjustments to tuition fees for business and law courses, Prof Tan said: ‘To maintain our position as a leader in business and legal education in Singapore and beyond, we have to compete with top universities around the world as well as the industry to attract and retain top business and legal talent.

‘It is also essential for us to further improve teaching staff-to-student ratio so that our students benefit from more small-class teaching, which offers personalised attention and increased interactivity.’

Graduates of the NUS Business School and the Faculty of Law have done well in the employment market. In 2006, 70 per cent of NUS Business School graduates had secured jobs before graduation. On the legal front, 100 per cent of NUS’ 2006 law graduates secured jobs before their graduation with more than half receiving multiple job offers.

NUS also assured all deserving students that they will not be denied the opportunity of a university education at NUS because of financial difficulties.

HONG KONG — Two senior Goldman Sachs Group Inc. bankers are teaming up to run a new $2 billion private-equity fund aimed at landing big deals in China.

Richard Ong, Goldman’s co-head of investment banking in Asia excluding Japan, who is leaving the Wall Street firm in March, plans to work with Goldman’s China partner, Fang Fenglei, on the new venture, called the Hopu Fund, according to people familiar with the situation. Both bankers are keeping close ties to Goldman, and the investment bank is planning to put around $300 million of its own money into the fund.

The birth of a cluster of competitive private-equity firms run by China deal makers highlights the optimism about private equity’s prospects in China. Those firms, including Mr. Fang’s, hope to compete with the likes of Carlyle Group and TPG, which have dominated private equity in China. These deal makers smell new opportunities in China to pair up with Chinese companies going abroad and to forge deals at home as Beijing builds a framework for a domestic private-equity industry.

Reflecting the optimism over China opportunities, the Hopu Fund is attracting attention from investors and has received interest from limited partners far exceeding its planned size of just over $2 billion, according to people familiar with the situation. Singapore state-owned investment company Temasek Holdings Pte. Ltd. is anchoring the fund with a commitment of around $1 billion.

Mr. Ong, who grew up in Malaysia, spent 15 years at Goldman Sachs and led the Wall Street firm’s Singapore office before moving to Beijing in October 2006. Mr. Ong will hold an advisory role with Goldman once he leaves the firm.

Mr. Ong’s brother, Charles Ong, has also risen to prominence in financial circles, working as an investment banker in the U.S. before becoming senior managing director and chief strategist at Temasek.

Mr. Fang earned his reputation by arranging pioneering initial public offerings by Chinese state-owned firms at China International Capital Corp., a joint-venture investment bank formed by China Construction Bank Corp. and Morgan Stanley in the 1990s. He left that venture and worked for other joint-venture investment banks in China. In late 2004, he helped Goldman Sachs pull off a coup by joining with the firm to set up a domestic joint-venture securities firm in China. Mr. Fang remains chairman of that joint venture and retains a stake in it. He has stepped back from day-to-day work at the venture.

The 42-year-old Mr. Ong is the latest deal maker to leave a top Asian operation to strike out on his own. Frank Tang, a former senior managing director for China investments at Temasek, left last year to create his own private-equity fund.

Mr. Ong won’t be involved in a separate domestic yuan-denominated fund Mr. Fang is setting up in the eastern Chinese city of Suzhou. That fund, to be called the China-Singapore High-Tech Industrial Investment Fund, is initially raising five billion yuan, or about $700 million, and will be 50%-owned by an entity controlled by Mr. Fang and 50%-owned by Suzhou Ventures Group.

In Western markets, private-equity companies raise money from big investors and use the cash to take over, change and resell companies. In China and many other parts of Asia, governments limit global private-equity firms to minority stakes, expecting them to add expertise without having control.

Write to Rick Carew at rick.carew@dowjones.com

TOKYO, Feb 3 (Reuters) – The Government of Singapore Investment Corp (GIC) is set to buy a luxury hotel in Tokyo from Morgan Stanley (MS.N: Quote, Profile, Research) for around 77 billion yen ($723 million), the Nikkei financial daily said on Sunday.

In a deal likely to be completed late this month, Singapore’s largest sovereign wealth fund will buy both the land and the building of the Westin Tokyo, located in the city’s central Ebisu district, the newspaper said.

The hotel is expected to carry on its operations as GIC, which invests Singapore’s foreign exchange reserves, tries to boost its value as a long-term investment, the paper added.

A GIC spokeswoman contacted by Reuters could not immediately comment on the report.

Singapore government funds have been acquiring stakes in Western financial institutions, taking advantage of the fallout from the subprime mortgage crisis in the United States.

GIC, which manages well over $100 billion, bought in January $6.88 billion worth of Citigroup (C.N: Quote, Profile, Research) convertible stock or around a 4 percent stake, just one month after it injected nearly $9.75 billion in UBS (UBSN.VX: Quote, Profile, Research) to purchase a 9 percent stake.

A real estate fund managed by Morgan Stanley bought the Westin Tokyo from a Japanese beer company in 2004 for about 50 billion yen, the Nikkei said. ($1=106.51 Yen)

(Reporting by Chisa Fujioka, additional reporting by Koh Gui Qing; editing by Jacqueline Wong)

MINISTER Mentor Lee Kuan Yew ‘has not quite been sold’ on the idea of a 6.5 million population size in Singapore.Instead, he projects for Singapore an optimum population size of five to 5.5 million for Singapore.

He said on Friday: ‘I have not quite been sold on the idea that we should have 6.5 million.’

‘I think there’s an optimum size for the land that we have, to preserve the open spaces and the sense of comfort.’

MM Lee was speaking at think-tank Institute of Policy Studies’s conference ‘Scenerios for the Next Generation’, which seeks to gaze into the crystal ball and discuss what Singapore will look like come 2030.

Speakers, including Cabinet ministers, academics and journalists, held forth on subjects such as how the economy should evolve, cultural trends, and the Singapore identity.

Over an hour-long dialogue with some 900 participants, MM Lee touched on issues ranging from whether Singapore has the talent pool to sustain a two-party political system, to the widening income divide.

One question, posed by the moderator, diplomat Tommy Koh, was whether Singapore is guilty of overbuilding.

A year ago, the Government had announced that it is making plans to accommodate a population of 6.5 million people – up from the current 4.5 million – in the next 40 to 50 years.

This sparked off worries about overcrowding.

PRUDENCE again underlies the latest tweak to health financing. Higher MediShield premiums Health Minister Khaw Boon Wan announced last week may be untimely when prices of almost everything are rising. But it is better to act before affordability starts to erode.

Patients having to pay only 20 per cent instead of 40 per cent of a $10,000-plus hospital bill are unlikely to quibble over $10 extra a month. Health costs continue to go up. They rose 6.2 per cent last year, escalating from the 2.4 per cent annual average increase in the previous five.

More expensive oil, higher health workers’ wages and the 2 per cent GST increase last July contributed to the hike, along with more expensive traditional Chinese medicines. There is no guarantee health-care costs will not continue to hover above the inflation rate projected at between 5 and 6 per cent this year.

To blunt the impact, Mr Khaw has singled out two items for which he would raise MediShield claim limits – daily treatment care and implants such as those in orthopaedic therapy. The first has become a burden for subsidised B2 and C class patients against which the current $500 claim cap is an inadequate offset.

The other takes into account more costly but beneficial procedures requiring advanced technology and prosthetics that could cost as much as $18,000. It seems a fair trade for a premium increase that is within the affordability indicated in public consultations three years ago, when MediShield was last overhauled.

Similarly, extension soon of Medisave coverage to cancer scans and outpatient asthma care will help defray costs that have risen or will rise with the newest medical advances. Obstructive lung disease soon may also join the list, which already includes other chronic illnesses such as hypertension, high cholesterol levels, diabetes and stroke.

As Mr Khaw seeks to keep quality of health care high and costs moderate, however, Singaporeans must also play their part. Some 60 per cent of the 2.8 million MediShield subscribers have enrolled in enhanced coverage for more expensive wards.

Soon, with hospital means testing setting a cap on government subsidy according to income levels, those who can afford higher coverage than basic MediShield should take Mr Khaw’s advice and increase their protection.

This will leave the Government with more funds to help low-income patients who might need hospitalisation most but can afford it least. Large and small, changes to medical financing are building up to a prudent way to contain costs as expectations rise.