SINGAPORE — The government raised the granite stockpile price from S$30 to S$50 per tonne this month because it wanted to incentivise the construction industry to actively look for alternative supply sources.
National Development Minister Khaw Boon Wan made this point in a blog post, after Member of Parliament for Nee Soon GRC Lee Bee Wah asked in Parliament today (March 4) if the government was profiteering by raising granite stockpile price.
Mr Khaw said the government set up the granite stockpile to help the industry cope with sudden shortages in granite.
The release of the stockpile is a contingency measure to help the industry cope while they contract and import from alternative sources of supply.
He said the stockpile cannot be a convenient permanent alternative source of supply for the industry.
Singapore imports granite mainly from its immediate neighbouring countries, as well as from other regional sources.
Recently, there was a sudden disruption in granite supply from Indonesia. The government then decided to release the stockpile at S$30 per tonne to help industry tide over the disruption.
Mr Khaw said it was not clear if the disruption was temporary or permanent, so the Building and Construction Authority (BCA) urged the industry to ramp up supply from other sources.
As these sources would be more costly, the BCA notified the industry in early February that the stockpile price would be raised in March.
Mr Khaw said this way, there will be continuous operation for the industry for one month with pricing stability at S$30 per tonne, while they start making arrangements to ramp up supply from other sources.
He said in setting the stockpile price, the consideration is not about profit margins but about ensuring the industry is incentivised to actively buy granite from distant sources.
He explained that 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 source for an alternative supply of granite, Singapore will rapidly deplete its stockpile and there will be no buffer to help the industry should a similar disruption of another supply source occur.
Mr Khaw said the industry should fully understand this as the government has made it clear from the outset when the granite stockpile was released to help them in the transition to ramp up supply from distant sources.