Govt not profiteering from higher granite stockpile price, says Khaw

SINGAPORE — The Government is not profiteering from its recent move to raise the granite stockpile price from S$30 to S$50 a tonne, as it did not set up the national stockpile as a business.

Rather, the move is to incentivise importers to buy from other sources and to ensure that construction projects here can continue without a hitch, said National Development Minister Khaw Boon Wan in a blog post yesterday.

Member of Parliament Lee Bee Wah had, during yesterday’s debate on the Budget Statement, pointed to profiteering by coffee shops as they raised beer prices well above the increased excise duty — “a fair point”, wrote Mr Khaw.

“However, she wandered off by asking if the Government was also profiteering when it raised the granite stockpile price from $30 to $50 per tonne. Of course, not!” he wrote.

“The Government did not set up the granite stockpile as a business. The issue of profit is not a relevant consideration because the motive in setting up such a stockpile is to help the industry cope with sudden shortages in granite.”

The Government had released granite from the national stockpile last month to help ease a temporary shortage that has led to delays in some construction projects here.

In January, the Indonesian government imposed a global ban on a wide range of mineral exports.

At about the same time, the country stopped shipping granite aggregate here — a sudden, but “hopefully temporary”, disruption in supply, Mr Khaw said.

As it is not clear if the disruption was temporary or permanent, Mr Khaw said the Government had urged the industry to ramp up supply from sources further afield.

“As these sources would be more costly, we served notice to the industry in early February by indicating that the stockpile price would be raised after one month,” he added.

“In this way, we ensured continuous operation for the industry for one month with pricing stability at S$30 per tonne, while they start to make arrangements to ramp up supply from other sources.”

Mr Khaw said the consideration in setting the stockpile price was not about profit margins, but about ensuring the industry is incentivised to actively source for alternative supply sources.

“If the stockpile price is set too low, there will be no reason for importers to go for other (more costly) sources.

“And if they do not do so, we will rapidly deplete our stockpile and there will be no buffer to help the industry should a similar disruption of another supply source occur,” he added.

Mr Khaw said the release of the stockpile is a contingency measure to help the industry cope, while it contracts and imports from alternative sources of supply.

“The stockpile cannot be a convenient permanent alternative source of supply for the industry,” the minister said.

“The new stockpile price is not (meant for) profiteering, but to incentivise importers to procure and buy from distant sources, to ensure our construction industry can continue seamlessly despite the Indonesian disruption.”