MCI Response to PQ on Viability of Singapore Post's Domestic Post and Parcel Business

Parliament Sitting on 5 July 2023

QUESTION FOR ORAL ANSWER

11. Mr Seah Kian Peng: To ask the Minister for Communications and Information given the declining traditional letter mail volumes, what measures are being taken to ensure that Singapore Post’s domestic post and parcel business remains viable and there is continuity of postal services for Singaporeans.

Answer:

1. Singapore Post (or ‘SingPost’) is both a public postal licensee with universal service obligations, and a private listed company. As a public postal licensee, SingPost bears primary responsibility for providing Singapore’s postal service, and is allowed to access and operate postal infrastructure such as the national postal code system and physical letterboxes to support this. At the same time, SingPost is constituted as a commercial entity, with obligations to its shareholders. As such, it must be able to maintain a viable business model.

2. Since the COVID-19 pandemic, the speed and scale of digitalisation has led to a sharp decline in domestic letter volumes, from around 490 million letters in Financial Year (FY) 2015, to just 260 million in FY 2022. This trend is expected to persist. Many individuals have gone online, opting for paperless communications for convenience and cost savings. At the same time, most Government agencies have digitalised, communicating with citizens through online channels. Today, businesses account for more than 80% of mail users, and the average consumer sends less than 1 letter per month.

3. With this decline, it will be challenging for SingPost to continue running a viable business with its current operating model, and at the current postage rates. As such, a balance must be struck to allow SingPost to fulfil its responsibilities in a sustainable manner, while ensuring the continuity of postal services for Singaporeans.

4. The Infocomm Media Development Authority (IMDA), as the postal regulator, will work with SingPost to review its costs and operations, including optimising and automating post office services for greater cost effectiveness. IMDA will also review the current postal service obligations to ensure that they remain relevant in today’s highly-digitalised context, especially given the many alternative electronic communication channels available to consumers and businesses.

5. At the same time, IMDA will consider allowing SingPost to introduce postage rate adjustments in future to better reflect the cost of letter mail business going forward. Domestic postage rates have largely been held constant since 2014, apart from a small increase at the start of this year[^1].  The upcoming adjustments will have to be of a sufficient degree to allow SingPost’s business model to remain viable, without requiring direct Government funding.

6. Finally, as SingPost reviews the company’s business transformation strategies to remain relevant, we will work closely with SingPost on a fundamental review of the future of Singapore’s postal service, recognising the larger shifts in the delivery ecosystem and changing needs in our local context, including the rise of logistics and e-commerce players.

[^1]: The following increases were announced in Dec 2022: rates for basic letters at the 20g and 40g weight steps would increase by 2 cents (5-7%), while rates for registered and tracked mail would increase by 5 to 10 cents (2-4%). Both changes would be effected in two steps over 2023-2024.