How Vietnamese Businesses will be impacted by Singapore's GST hike to 9%?

DNHN - According to the Trade Office of Vietnam in Singapore, Singaporeans' consumption habits may tighten, and businesses will seek suppliers with reasonable prices.

The Trade Office of Vietnam in Singapore has learned that on the morning of December 18, the Inland Revenue Authority of Singapore announced the raising of GST to 9% effective January 1, 2024, and also produced a handbook on GST for enterprises in 2024. The goal of this choice is to guarantee a steady and sustainable stream of funding for public services, medical expenses, the fight against climate change, transportation expenses, and social assistance programmes.

Despite having a long history of steady expansion, Singapore has seen adverse effects from both the COVID-19 pandemic and the worldwide economic slump. One way to deal with the rising costs of social services, healthcare, and climate change is to raise the GST from 7% to 9%.

Experts have cautioned that a decrease in consumer expenditure may result from the GST increase. The tax rise would result in higher total costs for goods and services, which will have a detrimental effect on consumer spending, particularly on luxury goods. This can cause consumers to shop differently; they might spend less or hunt for less expensive options.

Furthermore, small and medium-sized businesses (SMEs) in Singapore are under increased financial strain as a result of the decision to raise the GST. This could have an impact on their profitability as companies struggle with growing labour, energy, and logistical expenses. Companies might also feel pressured to raise the price of their products or look for partners and suppliers who charge less.

The Trade Office of Vietnam in Singapore forecasts that firms would look for suppliers with competitive prices in light of the current circumstances, and that spending tendencies among Singaporeans may tighten. Vietnam can thus emerge as one of the essential partners for Singaporean businesses, and to promote and showcase Vietnamese products in the Singaporean market and encourage trade delegations, the Trade Office of Vietnam in Singapore suggests doing just that. The import-export turnover between Vietnam and Singapore in the first ten months of 2023 was above SGD 24 billion, with a notable increase in several Vietnamese industries.

PV