Asian crisis puts damper on annual sale in Singapore

Asian Economic News, July 6, 1998

SINGAPORE, July 3 Kyodo

Retail stores in Singapore, including many owned by Japanese, are struggling to attract Singaporeans and tourists during the country's biggest discount sale of the year as the Asian economic crisis continues to cast its gloom over the region.

"The economic difficulties that Asian countries are currently facing are expected to have a significant impact on the sale," said a spokeswoman for the Singapore Tourism Board.

"Neighboring countries, which have traditionally posted strong arrivals to Singapore for the Great Singapore Sale, may not do the same this year," she said.

The small city-state launched its nationwide "Great Singapore Sale" on June 19 with a carnival-like celebration. The sale continues until July 26.

About 3,000 retailers in Singapore are taking part in the discount sale, which has been an annual event for the last four years, offering discounts of 50% to as much as 80%.

But Singaporeans generally have become cautious due to fears of an economic slowdown this year and after news reports that more than 7,000 people have lost their jobs so far this year.

In addition, tourist arrivals in Singapore have declined by 17% to 2.56 million in the first five months of this year from 3.08 million in the same period last year.

In particular, the number of tourists from Japan, which is one of Singapore's largest source of overseas visitors, has fallen sharply by 31% to 324,171 in the first five months of this year from 467,558 a year earlier. The drop in Japanese tourists has forced Singapore Airlines to decide to terminate service to Sendai in northeastern Japan beginning in September.

The weakening of the yen in recent weeks has aggravated concerns in Singapore's tourism and retail industries.

"A continuing weakening of the yen would lead to a further decline in Japanese arrivals and aggravate the slowdown in retail, restaurant and hotel industries," Finance Minister Richard Hu said in parliament recently.

The Singapore Tourism Board has been marketing the big discount sale in neighboring Southeast Asian countries and also to India, China, Taiwan and Japan.

Retailers contacted said that cash registers have not been ringing as often as hoped despite the big sale. Japanese retailers participating in the sale include Takashimaya, Seiyu, Daimaru, Isetan and Sogo.

Yuichi Morikawa, deputy general manager at Takashimaya department store in Singapore said business also has been slow at his store, which depends on Singaporeans for 80% of its business, and on tourists -- mainly Japanese and Chinese-Indonesians -- for the other 20%.

He said most people are only "window-shopping" and generally staying away from luxury goods. Morikawa said his worries have increased in recent days because the monthlong school holiday in June has just ended and the Orchard Road shopping district is even quieter now.

While participating stores reported last year's big event brought in sales 20% higher than the previous year, a Singapore Retailers Association spokeswoman said, "It's not going to be easy this year."

Singapore's image as a shoppers' paradise has already been hurt in the last few years by the strong Singapore dollar and Singaporeans' tendency to shop overseas during the holidays.

A local chain of small discount stores has closed down recently amid the soft retail market.

Although Singapore has not been as seriously affected as other Southeast Asian countries, it has begun to feel the bite due to economic ties with neighboring countries.

The government announced a few days ago that growth in gross domestic product (GDP) slowed to 1.9% in the second quarter of this year from a year earlier, based on a preliminary estimate, after growing 5.9% in the first quarter.

Singapore Senior Minister Lee Kuan Yee last month urged Singaporeans "not to become overly pessimistic and drastically reduce spending as this would cause the domestic economy to contract even more."

"Our consumers should not become over-pessimistic and over-save, as in Japan, otherwise we will have a recession through our pessimism," Lee said.

The Singapore Tourism Board is not disheartened by the impact of the regional crisis on its efforts to attract tourists for the big sale.

"Asians are still traveling and coming to Singapore," the spokeswoman said. "As such, we still market the Great Singapore Sale to regional markets since they will contribute significantly to arrivals compared with any other international long haul market despite the crisis."