What has attracted little attention is the increase in application and issuance/ renewal 18. fees for foreign worker permits, to take effect from 1 April. This will further increase the cost of hiring and retaining foreign workers, at a time when the unemployment rate is already very low at 1.9%, adding further pressure on business costs.
Moreover, “We expect the MAS to keep to its gradual, modest SGD NEER appreciation policy in the April policy review.” the Strategists add. Although our economists have revised down their 2013 headline CPI inflation forecast from 4.0% y/y to 3.4%, the risk is that sustained pressure in wages and transport costs will continue to feed, directly and indirectly, into core inflation. While maintaining the current policy stance is supportive of the SGD, the policy will keep the Singapore economy lagging behind growth for the rest of Asia.