CUSTOMS (AMENDMENT NO. 3) - BILL
Mr Speaker, Sir, I am afraid I know very little about politics but when the Hon. the Minister for Commerce and Industry tries to justify this Bill by saying that it is in accordance with the Labour Front's platform, I should hope that such matters as the overall economic benefit to Singapore should be treated as above politics. The Minister said that since his statement on 13th August last year - when he mentioned that in order to protect industry, there were two ways of doing it, one is by quantitative control and the other by tariff - nobody has raised any objection to it. Perhaps I think the Minister had overlooked my speech on the Control of Manufacture Bill during its Second Reading. I then pointed out the dangers of quantitative and tariff controls and how it would affect the entrepot trade of Singapore. I can safely say that nobody is opposing the Minister for introducing measures of protection for industry, because we all know that industry must somehow be encouraged or protected in order to supplement our entrepot trade. We are all agreed that industry should be encouraged and helped, but it is the method of protection which is being introduced that Members here and a lot of people outside are not convinced of. Those who have criticised these measures are not necessarily selfish people or traders. In fact, most of them are manufacturers or are interested in industries. Although I am a businessman, Sir, I myself am interested in the manufacture of products. I am interested in rubber and latex factories. I am also interested in many other manufactures. But the point is that when we talk of these things, we have to have the overall picture of Singapore before us and not just talk of the benefit to one section of industry. It should not be a question of manufacture versus trading, or manufacturers versus the merchants, or the Chambers of Commerce versus the Manufacturers' Association. This should not be so. What we are concerned with is the method of protection that is being introduced and whether that method will, in fact, bring about the result that the Minister envisages in his Bill. Now, first of all, Sir, let us examine what industries we can protect. I have said that I am interested in rubber factories and some of them are going out of business. If I can get protection from the Minister, I will certainly be pestering him, but I realise at once that the rubber milling industry cannot be protected because the raw materials come from elsewhere; it is not produced here. If there are more factories in Indonesia than we have here, then naturally they will mill the rubber themselves and they will not send over their rubber for us to mill. In our coconut oil industry, for instance, we get copra from elsewhere. We do not produce copra here. And if they had coconut oil industries in their own lands, they would certainly like to mill the copra themselves and not send their copra to be milled here. I know that not so long ago copra millers were after the Minister for protection and they were trying to influence him to say that whatever copra imported here should be allocated to the coconut mills, and not be re-exported. I think I must give credit to the Minister who, I think, is cleverer than what these people think. Of course, he refused to introduce such a policy because, if he tried to do that, then no copra at all would be coming into Singapore. The question is simply this: are our industries world competitive or not? If not, then we cannot get even the raw materials. Another thing is this - whatever industries we hope to be able to protect would be very small industries, industries for home consumption; and protection is by tariffs and quantitative controls. As has been pointed out by everybody, including the Lyle Report, our home market is very small. If we shut out all the soap coming in, thus allowing the local soap factories to manufacture purely for local consumption, I wonder whether such a protection could enable the soap factories to survive without any outside competition, if they are wholly dependent on the home market. The important thing is to weigh the advantages the industry derives from these measures and the resultant harm done to the entrepot trade by trying to give this small advantage to the manufacturer. Take cigarettes, for instance. You try to establish a cigarette factory here and shut out all the cigarettes that come in. By doing that - in order to encourage a factory here to employ a few hundred people - not only would you lose your $40 million in revenue, but you would also be penalising a lot of people who are trading in cigarettes - perhaps many thousands - in order to benefit a few hundred. Should not the interests of the majority be considered? In fact, if you have a picture of those people interested in cigarettes - not counting only the wholesalers, retailers, hawkers - how many would you deprive of employment if you were to shut out the import of this item in order to preserve your local cigarette factory? And, as I said, there is no assurance that people will smoke your cigarettes. From what I gather, the dearer type of cigarettes imported have, in fact, a larger market than the cheaper cigarettes. It shows that consumers have got their tastes and their preference. No doubt protection does some good to the small industry, but is it worthwhile? That is why we are not convinced that this is the best way to do it. We have advocated that these industries could be helped in other ways, instead of tampering with the entrepot trade. The position, as I see it, is like this. We liken Singapore to a big family. This family has subsisted on its own business - a big and prosperous business - and the whole family has worked in the business. But now the family grows with the coming of children and grandchildren, and you see that the family business alone cannot offer sufficient employment to all the children and grandchildren. Now, the thing you are trying to do is to open up another business in order to absorb these growing-up children. Well and good. But if, by opening up a new business, you say to the old business, "In order to keep me on my feet, you must sacrifice a few lines for me. You must not buy this; you must not buy that. You must not maintain your own business. You have got to give up a few lines for me, so that my new business can thrive, and I can stand on my feet." Would that be advisable? If we open up another business, it is with the object of absorbing the up-and-coming children. That business must be independent. It must have nothing to do with the old business, which must be maintained at all costs. The old business must not be sacrificed in any way in order to put that new business on its own feet. The new business could be made self-sufficient by providing it with capital, but certainly not by asking the old firm to sacrifice some lines of its business. Just now an hon. Member said that nobody has explained why a free port is important and why it could be hurt if customs duties were levied. I will say this-much of the value of a free port lies in the confidence of traders both inside and outside it; the confidence that they can trade and plan in advance without let or hindrance. And much of this planning is invisible; it is not everything that catches the eye. At one time the Minister said that Singapore is not a free port, because it still levies taxes on liquor, petroleum and cigarettes. A free port is just like a club. I think small places which encourage activities will have some of these vices. For instance, at one time there was a monopoly on opium and there was a tax on opium. Such places thrive on the nature of their business. Monte Carlo and Las Vegas cannot scrap gambling. Without gambling there would be no activity. They would not attract, because they have nothing else to attract. In our case, I think, petroleum, liquor and cigarettes are in the category where people have to pay tax. One point is that these imports could be very conveniently kept in bonded warehouses and taxed where it is for local consumption. There is no room where you can delineate as a free port area. You do not have enough godowns, or storage space. To go beyond these three needs, the goods have to be put on show before they could be sold. They could not just be conveniently kept in the bonded warehouses and all you say is, "I want so many '555' cigarettes," and the people are supposed to know what they are. There are things, Sir, which a free port does - things which we cannot understand. It is only the man on the job who knows what is going on. I would like to quote some of the activities here, the significance of which will quite mystify hon. Members. Sometime ago Saigon bought a certain amount of pepper from Singapore and it was shipped from Singapore to Saigon. We know that Saigon does not consume pepper to that extent and we were quite right - because, after it went to Saigon, it went to Marseilles, France - and that manner of trade continued. And then we got orders from Hongkong for pepper and Singapore shipped it to Hongkong. Hongkong then sent that pepper to Saigon, and Saigon in turn sent that pepper to Marseilles! What is going on? Why should we not be sending pepper to Marseilles direct? It is not possible because the French had committed themselves to buying their colonial produce, and there was the duty to be paid for others. Before the war there was a stock of pepper in Vietnam, so the French claimed that pepper, which was exported by us, as Vietnam pepper and it went to France, duty free. Similarly, there are a lot of American cigarettes in which Singapore dealers have been dealing, and no Singaporean knows the brands, because it goes to Borneo where it is bartered for Philippine produce. The trade then was only done by small craft, but as soon as it became profitable both ways, bigger craft were engaged. The trade expanded. Now that the surplus to the Philippines is bigger the money does not just go back to the Philippines. It goes to Hongkong, or to Singapore, and thence to Hongkong, and then back again to Manila, because by that process, they gain more Manila dollars than if they were just to remit that from Borneo to Manila at the official rate. Of course, there are the official and the unofficial rates of exchange. It is surprising to see that there are so many things happening which we do not know about in a free port. A free port gives confidence to the traders. They know they can do anything without let or hindrance. This confidence encourages a lot of activity, and these activities are all for the good of Singapore. I do not say that this protection does not do any good to industries, but the point is whether that good will outweigh this good. In fact, to my mind, it is just like trying to remove a mountain to release a mouse! It outweighs the advantage likely to be gained. The advantage is, in fact, very small compared with the harm that I can see. Now, hon. Members have dwelt on Hongkong manufactures. Of course, that is a different thing. Hongkong prospers not because of its home market, but because it is able to export and compete with the outside world. In fact, they have competed so well that there have been complaints from Lancashire and the United States and they are now trying to limit Hongkong exports to their place, because U.K. textiles cannot compete in their own market with Hong-Kong, and American textiles cannot compete with Hongkong in the United States also. It is the outside bigger market that builds a worthwhile industry. Industries thrive not because of their home market. I should say that even the Hongkong home market would be too small for some of their industries, except perhaps a small industry. That is why I will say this: since the reading of Mr Lyle's report about joint industrial development, I say that the only sensible thing to do, if only because it does not make one work against the other, is to have the two territories with a population which can constitute a joint economic unit for something to be done. The tyre factory, for instance, which was quoted. We should go to the Federation and reason out that this is the sensible policy to follow. In fact, even if we are not politically merged, we can be economically merged. Then we would be in this position: that after we have introduced a customs tax - take an article like soap, for instance - soap coming from the Federation would then be taxed when passing the Causeway into Singapore, because the Federation is taxing our soap. We have got to tax their soap in order to protect our industry. That would make us equal. But still the Federation market is a bigger market. It has a population of seven million against our one and a half million. Industries that go to the Federation are not necessarily attracted because of this or that protection, but because of their bigger market. So if we go on like this, we are bound to get retaliation when the Federation resent our imposing tax on their soap. They might say, for instance, "All right, let no pineapples go to Singapore to feed the Singapore factories. All the pineapples must go to the Federation factories. They cannot go to Singapore." Then where do we stand? It is not just retaliation on one item. When that happens, then it breeds ill-feeling, and politically - as I read the phrase in Mr Lyle's Report - we may come to the point of no return. You retaliate and counter retaliate. That is no good at all. To my mind, the only sensible thing would be to reason out with the Federation Government and have a Pan Malayan economic policy. For instance, there was talk of the City and its hinterland. If Singapore is in a chaotic condition, it can do no good to the Federation at all. If conditions in Singapore were rotten, it would automatically affect the Federation. If Singapore has thriving industries, it could in fact benefit the Federation because, on balance, we still have a few thousand people coming down here from the Federation every year to seek employment. If industries are thriving in the Federation, it could only do good, and there would be no harm done to Singapore. We should not be competing with each other, because our people also can go to the Federation, as a last resort, and find employment there. The hon. Member for Changi has always harped on the point of a Pan Malayan economic policy. He has always tried to induce the Hon. Minister for Commerce and Industry to look into that point. I really support him in that direction. If the Federation are still not ready to do that, the only thing to do is to continue to urge them to accept this view arid let them see the sense in this policy, instead of trying to fight back, in which case the advantage to be gained will be outweighed by the harm that could be caused. As I have said, I have tried my best to see the Minister's viewpoint and I quite agree with him that industries should be encouraged and helped as much as possible. But I would really counsel him to see whether there are ways of doing so other than this quantitative and tariff control. 3.56 p.m. Mr J. M. Jumabhoy rose-