Crossing Link to Singapore May Cost You $20 More Thanks to Spat

Singapore and Malaysia are engaged

in a tit-for-tat over fees they charge vehicles crossing a vital

link between the two nations. People like Paul Lim expect to pay

the price.

It began with a decision by Singapore to raise the levy on

foreign-registered vehicles visiting the island starting this

month, which prompted Malaysia to boost toll charges on the

Causeway linking the neighbors. The city-state has said it plans
to match the toll-fare increase in the coming weeks, without

specifying the amount, a move that could bring the total

additional cost to as much as about S$25.60 ($20) for a one-day

round trip in a Malaysian car.

“The public transport coming in, the private buses,

they’re likely to raise their rate for the Malaysians riding

in,” said Lim, chief executive officer of security firm Soverus

Pte., where 100 Malaysian security guards account for 25 percent

of his staff. “That’s going to increase the cost to my

Malaysian workers. We’re going to increase the salaries.”

The transport oneupmanship marks a bump in relations

between the two Southeast Asian nations, which had improved in

recent years after Prime Ministers Najib Razak and Lee Hsien Loong resolved a decades-old dispute over railway land. For

Singapore, it could mean higher business costs and the

exacerbation of a labor crunch that’s already made companies

more reliant on the thousands of Malaysian workers crossing the

border every day, according to DBS Group Holdings Ltd.

Economic Impact

“We’re just shooting ourselves in the foot by matching

Malaysia’s policy move,” said Irvin Seah, a Singapore-based

economist at DBS who used to work at the Ministry of Trade and

Industry. “We don’t need the additional revenue. It will have

an impact on the economy,” especially on small and medium-sized

enterprises, he said.

Malaysians account for more than 15 million crossings over

the border to work in Singapore every year, according to an

estimate from Wai Ho Leong, a Singapore-based economist at

Barclays Plc. Singapore is Malaysia’s biggest export market.

About 13,000 foreign-registered cars enter Singapore daily

and 8,000 foreign goods vehicles enter the country every month,

according to government data. Together with buses and

motorcycles, they bring in workers, students, tourists as well

as food and other supplies.

In addition to cars, the Singapore entry levy was increased

for goods vehicles, while the Malaysian toll fees were raised

for taxis, buses and lorries. The vehicle entry permit for

foreign-registered cars was raised to S$35 a day from S$20 by

Singapore.

Toll Increase

Malaysia’s toll increase this month involved a jump to 9.70

ringgit ($3) from 2.90 ringgit in the charge for cars entering

Johor state from Singapore, the Straits Times reported, citing

the Malaysian Highway Authority. It also introduced a new fare

of 6.80 ringgit for cars going the other way on the Causeway. If

Singapore, which currently only imposes a toll for leaving the

island, matches both moves, Malaysian cars would pay about

S$47.90 for a round trip including the foreign vehicle levy,

from S$22.30 previously.

The cost could spiral further, with Malaysia saying it will

introduce its own levy on foreign vehicles entering Johor, the

Star newspaper reported July 16, citing Najib.

For 38-year-old Mohammed Nafis, a systems management

officer at ST Electronics Pte., lighter traffic since the fare

increases has cut his two-hour commute to work in Singapore from

Johor in half.

“People who find it costly to travel to work from Johor,

these people will eventually decide to leave their jobs in

Singapore, and also the Johoreans who no longer find it feasible

to travel via bus because the number of commuters will probably

just increase,” he said. “I feel for them.”

Traffic Jam

On Aug. 1, Channel NewsAsia reported bus drivers protesting
the new toll rates that day caused a traffic jam that forced

workers and students to cross the border on foot. Soverus’s Lim

estimates the disruption probably cost him as much as S$4,000

after dozens of his security guards were late or missed their

shifts.

On top of increasing wages, which Lim estimates will cost

him about S$20 per worker per month, he also plans to accelerate

a “share-a-bike” program for employees.

“After that day when I had probably 20 workers taking a

very healthy walk across the Causeway and I’ve got clients

screaming away, being very frustrated that their security

workers don’t get there on time, I thought this is a good timing

to try to get this going,” he said.

To contact the reporter on this story:

Sharon Chen in Singapore at

schen462@bloomberg.net

To contact the editors responsible for this story:

Stephanie Phang at

sphang@bloomberg.net

Nerys Avery

Crossing Link to Singapore May Cost You $20 More Thanks to Spat