Pro-Teach: 1st profiteering case uncovered

Reading the headline of the Jul 29th, 2007 Sunday Times regarding the first profiteering case uncovered for the GST hike make me extremely unhappy about the respond of the chairman of Committee Against Profiteering (CAP).

In the headline news, it is reported that "Minister of State for Trade and Industry Lee Yi Shyan, who chairs the committee, yesterday told reporters that a student care centre had been reprimanded for excessive fee increases. The centre, which Mr Lee declined to name, had announced to parents in its newsletter last month that, due to the GST hike from 5 to 7 per cent, it would be raising its fees from $270 to $280 'across our branches'."

It is further reported that "Mr Lee said he had written a letter to the centre, prompting the company to reverse its decision on the fees.

'We warned them severely...I signed the letter and issued it to them. We want to stop that kind of practice because clearly it's misleading,' he said."

I have been working with CAP since mid June on this case.

In the first email reply after I sent evident for the profiteering in the name of GST hike by Pro-Teach, CAP Secretariat in their email said that "We have referred your case to Inland Revenue Authority of Singapore (IRAS). In response, IRAS has issued a warning letter to Pro-Teach Before and After School Care & Tuition Centre to not use GST increase as a reason for the increase in fees."

After Pro-Teach went ahead to collect the increased fee, I wrote an email on 3^rd July to the CAP in respond: “Thanks you very much for your action. However, it does not seem that Pro-Teach cared much about the warning letter from IRAS. In the July Newsletter, Pro-Teach did not mention anything regarding the fee increase or clarify on its position on fee increased due to GST hike mentioned in the June Newsletter. They just collect the increased fee. Now for July, I am paying S$290 vs S$280 for my child's monthly fee. An increased of 3.57%. Thanks to our Government's 2% increase in GST.

The vice principal just told me verbally that due to the increase of GST, we are collecting $10 more each month from July.”

I have yet to receive feedback from CAP.

First, my unhappiness with the first action of CAP is clear. The warning letter from IRAS to Pro-Teach could be read between lines to mean: Stupid, don’t create trouble for the government. Use other reasons to increase your fee by all means – but not GST hike!

Now, by not disclosing the offender’s company name, the Minister of State, Mr Lee is sending a message to potential offenders: Don’t worry; I will not disclose your name to shame you or to make you look bad. If you ignore the warning letter from IRAS, I will send you my autograph. Hope you like it.

I would like to question the role of CAP. Are they protecting the consumer or are they acting as PR agency for business owners (by teaching owners how to properly package their price increase so as not to create complaints from customers)?

First of all, I would like to state that I have nothing against Pro-Teach otherwise I would not have continued to send my kid to them. This is to prevent speculation or misunderstanding.

Second, this is a very clear case of profiteering in the name of GST hike.

Profiteering is not easy to proof. However, for this case, it is crystal clear.

You could see from the news report that CAP has received 80 complaints but could only uncover 1 case up to now. Most business owners are very clever in packaging their price increase to other than GST hike.

My intention to bring out this case is to highlight to the government that: to the end consumer, the cost increase will be more than 2% although the GST only increased 2%. Imaging each supplier in the whole chain of supply increases 2% each, the end product will be a compound of many 2% increases. This I guess is what the government know fully but do not want the citizen to be told.

After School Care centre is not like a typical hawker stall where if you do not like the price increase, you could just walk off to other stall.

Firstly, the child has already built up bond with the teachers and classmates. New teachers will need time to understand the students learning habits.

Secondly, you pay registration fee and other fees (such as tuition materials that they collected for full half year and may not be refundable).

Hence, the parents are being locked in by the centre.

I look at this case especially since the centre is situated in the heartland where any increase in fee will affect the parents greatly. Most of the parents are not from well off families but need to send their kids to the centre since both parents are working.

I firmly believe that business owners should have social responsibilities. While making money for themselves, they should also take care of the society. Hence by increasing fee above the increase in GST is profiteering and irresponsible.