MCI Response to PQs on Increase in Postal Rates Despite Profitability Recorded by SingPost
Parliament Sitting on 4 October 2023
QUESTION FOR ORAL ANSWER
1. Mr Yip Hon Weng: To ask the Minister for Communications and Information (a) whether IMDA is aware of SingPost’s projected revenue as a result of the increase in postage rate for standard regular mails announced on 19 September 2023; (b) if so, what is the projected amount; (c) whether SingPost requires IMDA’s approval before postage rates are increased; and (d) whether the recent decision to increase postage rate for standard regular mails could have been considered earlier.
2. Assoc Prof Jamus Jerome Lim: To ask the Minister for Communications and Information whether the Infocomm Media Development Authority will take into account the profit of S$38.8 million registered by Singapore Post in FY2022/23 when working with the company to review its decision to increase postal rates.
Postal scene has changed, SingPost’s core business disrupted.
From 9 October 2023, the postage rate for standard letter mail will increase by 20 cents to 51 cents. The impact will be felt mostly by corporate entities rather than households, as they account for 80% of all letter mail sent in Singapore. In fact, the average consumer sends less than one letter a month. Nonetheless, all households will receive a booklet of 10 stamps of 51-cent each, which is enough to cover the increase in postage fees for the average household for about a year.
This is the first substantive increase in postage since 2014. In the 10 years since, the postal landscape has changed dramatically. For example, letter mail volumes have been reduced by about half.
As a Public Postal Licensee, SingPost has an obligation to deliver letters to every addressable place in Singapore. It is also a publicly listed company that engages in non-regulated businesses, such as logistics services and properties, locally and overseas.
While the overall business of SingPost remains profitable in financial year 2022, more than 90% of these profits were attributable to its logistics business and largely contributed by its overseas investments. SingPost’s core business in Singapore is post and parcel, which incurred operating losses of $16 million. This is due to the global decline in letter mail, as well as intense competition from logistics companies and e-commerce players growing their own parcel delivery capabilities. As a result, per letter delivery costs has risen considerably.
IMDA approved SingPost’s request to raise postage rates to better reflect the cost of delivering letters. After the increase, postage rates in Singapore remain comparable to countries like Japan (S$0.78) and US (S$0.86).
Impact of Increase
- As noted by several analysts, there is no guarantee that the increase in postage rates will improve the financial position of SingPost. The boost to revenues may not compensate for the accelerated decline of letter volumes if customers opt for more e-substitution. As part of the postage rate increase, SingPost is also expected to invest in transforming its domestic post and parcel business so it remains efficient and provide high quality service. Nonetheless, this is a move that could put SingPost on a more sustainable path to fulfil its obligations as a Public Postal Licensee.