Singapore’s rising inflation seen as boon for Johor businesses

 

High prices will encourage Singaporeans to cross the Causeway for cheaper services in restaurants, hotels and retail outlets in Johor, says tourist guides association chairman Jimmy Leong. (Bernama pic)

PETALING JAYA: Singapore’s rising inflation is good news for businesses in Johor, according to an economist.

Bait Al-Amanah research director Benedict Weerasena said Singaporeans would cross the Causeway for cheaper goods and services and that this would benefit Johor’s retail, hospitality and tourism sectors.

“This is especially so with the Singapore dollar growing stronger,” he told FMT in a comment on Singapore’s headline hitting inflation rate. The rate reached a 14-year high in July, surging to 7% from 6.7% the month before.

Singapore Prime Minister Lee Hsien Loong has warned that inflation and interest rates in the country could remain high.

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Weerasana also said higher bank interest rates in Singapore were expected to dampen property demand there, especially if they rose above the 3% mark.

“This might result in an increased appetite for properties in Johor,” he said.

“However, this also depends on factors such as Malaysian interest rates, foreign home ownership policies in Malaysia and enhanced connectivity with the upcoming Rapid Transit System (RTS) Link.”

Jimmy Leong, who chairs the Johor Tourist Guides Association, also said inflation in Singapore was good for local businesses.

“This will mean better business for restaurants, spas, budget hotels and retail outlets in Johor,” he told FMT.

However, he also said Johoreans might feel the pinch if traders chose to raise prices and cash in on the stronger Singapore dollar.

“But, overall, the inflation there is good for us. If we look at the big picture, drawing more Singaporeans to spend their money here helps the economy grow and creates jobs.”

He also said more Singaporeans were now travelling further up north and this was benefiting the economies of Kuala Lumpur and states such as Melaka and Perak.

Economist Geoffrey Williams of the Malaysia University of Science and Technology said the rising cost of living in Singapore could, on paper, be an incentive for people to move to Johor and commute to work.

However, he said this was unlikely given the restrictions on the types of properties foreigners could buy in Malaysia.

He said migration, even across the Causeway, would be driven more by long-term considerations than short-term reasons like inflation. - FMT