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XI - Letter to Prime Minister Lee Hsien Loong calling for cross-subsidization as control measure on inflation, 9 February 2008

from Appendices

Published online by Cambridge University Press:  21 October 2015

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Summary

Prime Minister Lee Hsien Loong

Prime Minister's Office

Orchard Road

Istana

Singapore 238823

Dear Mr Lee,

May I begin this letter by wishing you and your family a Happy and Successful Lunar New Year.

In the midst of the so-called OPEC war in the mid-seventies when the price of oil escalated and inflation went wild, NTUC Welcome Consumer Co-operative, now known as NTUC FairPrice was set up to combat inflation in our country.

The late Mr Lim Kim San was Chairman Board of Trustees and I was Chairman Board of Directors as well as CEO.

Through a system of cross-subsidy by progressively reducing the prices of about a dozen essential items that had direct bearing on the cost of living of the workers and subsidized by profit margin from the rest of the other items, we were able not only to contain inflation but managed to get it reduced when inflation was rising elsewhere. Gradually, those essential items became loss leaders and because of competition, the other supermarkets and provision shops were compelled to adopt the same strategy. The attached article from the Straits Times of September 11, 1978 showing the inflation rate of Singapore and selected countries would give you an insight into the success of the system.

If you consider the system worth pursuing, I will be delighted to brief you further on the matter.

Yours respectively,

BAEY LIAN PECK

Encl. Straits Times article, 11 September 1978 [see APPENDIX VII]

c.c. Minister Mentor Lee Kuan Yew.

Type
Chapter
Information
Serving a New Nation
Baey Lian Peck's Singapore Story
, pp. 137 - 138
Publisher: ISEAS–Yusof Ishak Institute
Print publication year: 2013

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