31 May 2007 - 12:30
  • News Code: 106016

It makes sense for corporate bottomlines; it is even critical if Singapore is to remain competitive.

Yet, it would seem, companies here are little interested in managing their energy costs--an effort that could boil down to something as simple as getting staff to turn off the lights after work.

In fact, in a blot on the Republic’s usually conscientious record, Singapore ranked right at the bottom of a list of 32 countries in a recent survey.

Even as oil prices continue their general upward climb and warnings of global warming grow more dire, 7,200 businesses across the world were surveyed on what they had done to date to manage future energy cost pressures--such as putting in place an energy review or investing in alternative fuel.

And companies here scored a dismal 143 out of a possible 600 perfect score, in the survey undertaken by global accounting and consultancy firm Grant Thornton International (GTI).

For example, when it came to investing in energy-saving equipment, Singapore businesses were found to be the least likely to do so, at 14 percent--compared to 44 percent of businesses globally and 66 percent in Brazil.

But one of the survey’s six measures--whether companies relocate to reduce transport costs--may not apply to the island-state since, as Nominated Member of Parliament (NMP) Edwin Khew pointed out, “we are quite small“.

Singapore’s ranking came as a “surprise“ to the survey organizers, since of the top 10 energy-conscious countries, four are from East Asia--“essentially manufacturing dominated economies“ compelled to address high energy costs, said the report.

Environmental activist and former NMP Geh Min believes there is room for “a lot of improvement“, considering Singapore’s resource constraints.

What is intriguing is that just 25 per cent of businesses here felt energy costs had a major impact on their cost pressures. The global average for the survey was 37 percent. Could this be because the lower prices of electricity here have mitigated the impact on companies?

“The liberalisation in the energy market has helped companies in Singapore,“ noted Singapore Business Federation executive director Koh Juan Kiat.

Instead, the bigger worry for companies here is the cost of raw materials.

Sixty per cent of Singapore businesses--the third-highest score on the list, after Spain and Botswana--agreed that the price of raw materials would have a major impact on cost pressures.

According to feedback from some companies, raw material costs have risen significantly--some metals by as much as 50 per cent in the last three years, said Mr Koh.

“Large companies try to delay this (cost pressure) by having downstream suppliers bear this increase for as long as possible. This is not sustainable,“ he added.

Businesses aren’t the only ones affected by worldwide shortages. On May 18, TODAY reported that prices of certain grocery items had been shooting up recently due to raw material cost increases, especially for dairy products.

Alex MacBeath, global leader of privately held business services for GTI, believes there is a clear message from the survey, which covered medium to large sized privately-held businesses.

“Unless environmental factors such as energy and raw material costs become issues that significantly affect a company’s profitability, there is no incentive for it to take action É Companies will continue to focus on other cost pressures such as salaries,“ he said.

Governments should factor in energy and raw material costs, in looking at the long-term competitiveness of their economies. Said MacBeath, “Unless they actively encourage businesses to invest for the future and reduce the impact on the environment, they will ultimately damage their economies.“

In March, the Singapore Government announced a number of programs to promote and monitor the Republic’s performance in energy efficiency.

But what Singapore is doing as “only the tip of the iceberg“, said Khew who wants to see it become “a center for energy efficiency and renewable energy R&D“.

 

PIN/CHANNELNEWSREVIEW.COM

News Code 106016

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