Mr Speaker, Sir, I beg to move, That Parliament approves the financial policy of the Government for the financial year 1st April, 1970 to 31st March, 1971. This being the first Budget Statement of the new decade, it seems appropriate on this occasion to do a review of our economic performance during the past decade. This was the decade which the United Nations christened "The Decade of Development". For us in Singapore, it was a turbulent decade during which momentous changes took place. Singapore entered the 1960s as a British colony with self-governing powers in domestic affairs. We later achieved independence as part of independent Malaysia, only to be expelled from the Federation after two years. On August 9th, 1965, the independent Republic of Singapore was created. I propose to confine my review of the decade to Singapore's economic performance. I was engaged for most of the decade in a Ministry which was charged with the responsibility for economic development and planning in Singapore. It is not altogether possible for me to escape bias, either in treatment or emphasis, in this account of the Republic's economic growth. No doubt some future economic historian will cover the same ground and will probably see events in a somewhat different light. He will also treat the subject more exhaustively than is possible in a Budget address. I propose to conduct this review of Singapore's economic development in the 1960s in two ways. The first is to compare the positions as in 1959 and 1969, taking two snapshot pictures, so to speak, of the main economic terrain. Secondly, I will try to trace developments through the different phases of the decade, in a kind of motion picture presentation, if I may be permitted to extend the analogy. First, the snapshot pictures. Singapore's Gross Domestic Product in 1959 was $1,968 million. The Gross Domestic Product is the value of goods and services produced within the geographical area of the Republic. They include the value of foodstuffs produced by our farmers, the earnings of our traders and shipowners on the entrepot trade, the value added in Singapore in the course of manufacturing operations, the earnings of retail trade, the hotel business, and other services, the value of services provided by the Singapore Government, British military expenditure, and the value of construction of new roads, houses, factories, power-stations and so on. The Gross Domestic Product is a close relative of the G.N.P., or Gross National Product, and differs from it only in that the G.N.P, includes earnings of Singapore citizens from overseas sources and excludes earnings in Singapore accruing to persons and corporations abroad. In this account, I shall use the Gross Domestic Product rather than the Gross National Product since calculation of the latter is subject to greater uncertainty and error. By 1969, the G.D.P. had increased from $1,968. million by nearly 2½ times to $4,833 million. This represents a compound growth rate through the decade of 9.4 per cent a year. We have therefore surpassed the United Nations target for the Decade of Development of 5 per cent annual growth. At the same time, our performance was well below that of some other economies such as those of Japan, South Korea in recent years, and Hong Kong. The doubling of the G.D.P. during the l960s was not due to discoveries of natural resources as these are virtually absent. It was the result of the growth of trade, on the one hand, and the growth of industry, on the other, with tourist development providing a small but welcome increment. In other words, it was largely the result of greater human effort. Associated with growth of the G.D.P. has been a much faster rate of capital investment in the Republic. The accounting aggregate representing capital investment - Gross Domestic Capital Formation in the terminology recommended by statisticians of the United Nations increased from $150 million in 1959 to $919 million in 1969. Total investment increased at more than twice the rate of increase of the domestic product, a compound annual rate of 19.8 per cent during the decade. In 1959, total investment amounted to 7.6 per cent of the G.D.P. and this increased to 19.0 per cent ten years later. Ploughing back an increasing part of our domestic output is essential to sustain our growth momentum and we should continue to increase this percentage. We are still a long way behind Japan which invests more than 30 per cent of its income. Since much of investment was in industrial machinery and equipment, industrial output naturally expanded. Industrial output is sometimes defined as the output of the manufacturing, construction and utilities sectors. Their combined output increased, as one would expect, at a faster rate than the G.D.P. The compound rate of growth for 1959-1969 was 16.2 per cent as against 9.4 per cent, the overall economic growth rate. Manufacturing industries grew at 17.1 per cent a year, construction at 17.9 per cent and public utilities at 10.2 per cent. In value terms, the industrial sector's contribution to the G.D.P. rose from $256 million in 1959 to $1,154 million in 1969. Employment in the manufacturing sector as determined in the annual census of manufactures covering establishments employing ten workers or more, increased from 25,199 to 87,128. Of these latter, no less than 35,000 were employed in pioneer industries in 1969. There were, of course, no pioneer industries in 1959. Entrepot trade also seems to have flourished during the decade though, as we shall see later, there were many ups and downs. There was an increase in total cargo handled at the Port of Singapore from 14.2 million freight tons in 1959 to 37.7 million freight tons in 1969. The number of ships increased from 9,584 to 16,531. Passenger arrivals at the beginning of the decade totalled a mere 163,000 and increased to 546,000. Economic growth of these proportions must naturally be reflected in the financial structure of the Republic. There was a substantial expansion during the decade in the commercial bank deposits, from $816 million to no less than $2,745 million. The Central Provident Fund balances standing to the credit of members increased from $120 million to $632 million. Government revenue benefited from expansion, increasing in a decade from a paltry $275 million to $934 million. Despite expansion of output, volume of trade and total investment, as well as money supply, there was a marked absence of inflationary pressure. The consumer price index as at mid-1969 stood at 110.9 with mid-1960 providing the base-mark of 100.
0. In a world where inflation plagues many countries, both rich and poor, an average annual increase of one per cent in consumer prices over a decade is not a common experience. Economic growth has had beneficial effects on social conditions. One of the results of improved standards of living has been a substantial decline in the rate of population growth. Infantile mortality rates also declined. School enrolment and expenditure on education increased substantially. Newspaper circulation nearly trebled. Housing Board flats and shops increased from - 23,019 to 106,418. Happily, increase in crime and violence, a contemporary phenomenon in many cities in both the developed and under-developed world, did not afflict us. Armed robbery and housebreaking cases numbered 3,125 in 1959 compared with a reduced figure of 2,010 in 1969. For the convenience of Members, as well as for the record, I am circulating statistical tables* which set out in compact form the facts, a narrative of which would be long, tedious and possibly incomprehensible. Five of these (* See Appendix, cols. 515-54) Appendix to Annual Budget Statement (col. 472) (Cols 0515-0554) tables relate to matters I raise in this statement. The others cover the field in much greater detail and provide the background of data on which I base my main observations. The first table summarises the points of comparision I have been making. TABLE 1 BASIC ECONOMIC AND SOCIAL STATISTICS, 1959 AND 1969 Unit 1959 1969 National Economic Aggregates Gross Domestic Product $million $ 1,968 $ 4,833 Gross Domestic Capital $million 150 919 Formation Trade and Transportation Total imports and exports $million 7,349 10,984 Cargo handled million 14.2 3737 freight tons No. of ships cleared No. 9,584 16,531 Pasenger arrivals, sea and thousand 163 546 air Industrial Sector Manufacturing, value added $million 170 827 Construction $million 40 208 Utilities $million 46 120 Employment in No. 25,199 87,128 Manufacturing Industry Employment in Pioneer No. Nil 35,000 Industries Labour ministry returns of No. 166,747 239,452 Workmen, Clerks and Shop Assistants Comercial Bank Deposits $million 816 2,745 Central Provident Fund $million 120 632 Official Overseas Assets $million 336 2,445 Consumer Price Index mid-1960 - 110.9 =100.0 Social Statistics Population million 1.58 2.02 at mid-year Annual Births thousand 62.5 44.7 Infantile Motality Rate Per 36.0 21.0 thousand Rate of Annual Population % 4.1% 1.5% Increase School Enrolment thousand 305 511 Expenditure on Education $million 63 175 (including capital expenditure) Daily Newspaper Copies 119,970 311,500 circulation No. of Housing Board flats No. in 23,019 106,418 and shops existence year-end Armed Robbery and cases 3,125 2,010 Housebreaking In the nature of things, statistical information, which deals with social and economic phenomena susceptible to enumeration, does not and cannot describe the qualitative and non-numerical improvements that have taken place in our society. There is greater social cohesion, more social discipline and self-reliance, pride in performance and achievement in the face of adversity. These are the intangible yet supremely important factors for progress of any society. By our common endeavours and achievements, we are slowly acquiring an identity of purpose and in this way building up a sense of belonging and nationhood. The rootless, migrant and parvenu values, where each is out for himself, attitudes so prevalent at the beginning of the last decade, are giving way to more positive group values of a self-reliant people, determined to build an enduring future for themselves in this part of the world. In the final analysis, it is on the firm framework of these values rather than on steel and concrete structures that economic progress is to be achieved and sustained. Max Weber was the first, but he will not be the last, to detect in particular societies the close interaction between ethical systems and the modernising processes which enables economic transformation. I will now trace in outline the development of the economy during the decade. Singapore's economic development can be conveniently grouped in three periods - pre-Malaysia, during Malaysia, and post-Malaysia. Since the most relevant economic statistics are given in terms of calendar years, the three phases of Singapore's economic development may be considered in the calendar year periods as follows: (i) 1959-63 (ii) 1964-65 (iii) 1966-69 It should be remembered, however, that economic trends sometimes transcend two or more periods. This results from anticipation of future development, as for instance, in the years 1962 to 1963, when several industrial projects were started in Singapore in anticipation of a Common Market in Malaysia. Further, the lead time needed to see a project off the ground - the interval between the moment a decision is taken and the completion of the project - often occupies a period of several years for large scale projects. Economic Development, 1959-63 The pre-Malaysia period was dominated by political events. Several of the more discerning observers knew in 1959 when the general election was won by the People's Action Party that behind the anti-colonial solidarity, was a deep ideological division between a Democratic Socialist faction and a pro-Communist faction. It was a matter of time before the two groups were forced to bring their differences into the open as they contended for political supremacy. The policy of the Government, which consisted of democratic socialists, was determined at that time more by the immediate political necessities than by long-term needs of economic development. The pro-Communists broke off from the P.A.P. and their United Front forces fought the P.A.P. in the Anson by-election in July of 1961. They joined issue on the Government's policy to negotiate a merger with Malaya to form Malaysia. All this is familiar history. But events of such traumatic impact inevitably leave their mark on the economy, as I shall shortly demonstrate. Meanwhile, despite the political preoccupation of the Government, the Economic Development Board was established in August 1961. It was charged with the duty of promoting the growth of industries in Singapore. At the same time, the former Singapore Improvement Trust was absorbed in a more effective agency named the Housing and Development Board. While the creation of new industries, by its nature requiring a substantial lead time, could not show quick results, Government action in improving the social services produced swift and tangible benefits in the pre-Malaysia period. Immediate action was taken to extend and improve the education system. School enrolment both at primary and secondary stages increased rapidly. Primary school enrolment increased from 266,625 to 336,163 between 1959 and 1963; secondary school enrolment increased from 48,723 to 84,425. The Housing and Development Board suffered some initial troubles under the former mayor of Singapore. After his replacement, the Board soon got into stride and showed dramatic progress. The number of flats and shops built each year was as follows: 1959 -- 1,611 1960 -- 1,682 1961 -- 7,320 1962 -- 12,230 1963 -- 10,085 Because industries took a long time in getting started and because there was little expansion in entrepot trade earnings during this period - the growth rate was a mere 4.5 per cent per year - the substantial housing programme launched by the Housing Board undoubtedly helped to sustain economic expansion during this period. The finance to pay for this had to be obtained by civil service pay cuts and tax increases, measures which did not increase the Government's popularity rating. During this period, the Gross Domestic Product increased from $1,968 million to $2,684 million. This represented a compound growth rate of 8.1 per cent a year. As a result of the Housing Board building programme, the construction industry prospered in the second half of the period, generating the following net output: 1959 -- $40.0 million 1960 -- $41.9 million 1961 -- $56.0 million 1962 -- $70.0 million 1963 -- $94.7 million The construction industry during this period increased at 24.0 per cent a year. The impetus came mainly from Government expenditure in the housing field. Increase of public sector investment during this period was at a compound rate of 27.5 per cent. The present rate, between 1965-69, has been 10.5 per cent growth rate in the public sector, a more moderate pace. The political in-fighting between the Communist United Front (C.U.F.) and the P.A.P. resulted in a large number of strikes called by the C.U.F. as part of its attempt to coerce the Government. The number of man-days lost in strikes was as follows: 1960 -- 152,005 1961 -- 410,891 1962 -- 164,936 1963 -- 388,219 The defeat of the Communist United Front in the Referendum of August 1962, followed by subsequent security action against them, restored a measure of industrial peace. In 1964, strikes accounted for loss of only 35,908 man-days. In 1969, the figure was 8,512. During a period when unemployment was heavy, trade union irresponsibility on such a massive scale was hardly conducive to industrial investment. The following figures of employment in the manufacturing industries as recorded in the annual census of manufactures show that the manufacturing sector was virtually stagnant between 1959 and 1962 and registered only a small increase in 1963. The employment figures are as follows: 1960 - 26,697 1961 - 26,837 1962 - 27,924 1963 - 35,256 Employment in pioneer industries, the first of which went into production in 1961, increased from 241 workers to 2,654 at the end of 1963. It was not easy to get started. The domestic market was small, as it still is today. Wages were then high compared to other Asian countries such as Hong Kong, Taiwan and South Korea. On top of all this, a near-endemic situation of management-labour conflict arose out of the show-down between the democratic and pro-Communist forces. Despite these handicaps, the Government proceeded with its development plans with a confidence few believed justified. In September 1961 earth-moving operations commenced when the first bulldozer moved into Jurong. By the end of 1962, 1,100 acres of prepared land had been levelled by cutting down hills and filling swamps. By the end of 1963, 1,800 acres had been prepared. Twenty-four million cubic yards had been moved in the process. Jurong, as of December 1963, had only two factories in production to show for this mountain of labour. They were the National Iron and Steel Mills and Pelican Textiles. Between then, they employed 90 workers. Economic Development, 1963-65 Singapore's entry into the Federation of Malaysia in September, 1963 was preceded by many months of negotiations. While the political arrangements in the new Federation were agreed to without difficulty, negotiations on financial arrangement and over the structure of the Common Market proved unexpectedly long and difficult, in the end, a compromise solution was found, literally at the eleventh hour in London. Our membership of the Malaysian Federation proved to be shortlived. The reasons for the sudden separation of Singapore from Malaysia are now past history, as are the events which led to it. So far as Singapore's economic development is concerned, hopes for a Malaysian Common Market had led to some anticipatory investment in 1963. However, the proclamation of the new Federation was greeted by unexpectedly strong reaction from the Soekarno regime of Indonesia. Confrontation was declared, and with it the curtailment of our entrepot trade with Indonesia. The national economic aggregates show the results of the factors I mentioned - Indonesian confrontation, the abortive Common Market with Malaysia, the financial arrangement between the States and Federal Government. Of the three periods of the last decade, the years we spent in Malaysia showed the lowest growth rates of Gross Domestic Product, a mere 6.5 per cent annual growth. This was due to the substantial decline of our entrepot trade by some 16.8 per cent as trade relations with Indonesia were severed. As a result, earnings on the entrepot trade declined from $441 million in 1963 to $306 million in 1965. Further, agriculture and fishing, never noted for rapid growth, showed a decline of 2.5 per cent. This was the result of night curfews imposed in Singapore waters for security reasons, which adversely affected the livelihood of fishermen. On the other hand, there was a very large increase in the value of British military expenditure, as one would expect. British military expenditure increased by 27.7 per cent in 1964 and again by 25.9 per cent in 1965. In absolute terms, this meant an increase from $323 million in 1963 to $519 million in 1965. This was, sufficient to make good entrepot trade losses, taking the two years together. But the year 1964 was a particularly bad year; the decline in entrepot earnings was much greater than the increase in British military expenditure. Accordingly, the Gross Domestic Product for that year showed the least increase of the decade, a mere 0.5 per cent. But for increased British military expenditure, there would have been a substantial decline. The Gross Domestic Product for the two years we were in Malaysia were: 1964 ... $2,700 million 1965 ... $3,043 million Despite Indonesian confrontation, total investments continued to expand and at a brisk rate too. Gross capital formation increased at an annual rate of 20.6 per cent, running at $421 million and $476 million in 1964 and 1965 respectively. The manufacturing industry forged ahead in spite of poor trading conditions and deteriorating relations between the Singapore and Malaysian Governments. Manufacturing, construction and utilities showed a combined average of 16.2 per cent annual growth rate during Malaysia as compared with 14.7 per cent in pre-Malaysia. Employment in the manufacturing industry increased moderately, some 14.2 per cent a year. The increase of employment was about 10,000 over the two years, the 1965 census of manufactures giving a total of 46,020 employees for 1965 as against 35,256 two years earlier. The Labour Department work force figures also showed an increase of about the same amount, 188,701 for 1965 as against 178,787 for 1963. It is apparent that the manufacturing industry was providing the main new job opportunities. But these never reached the proportions which would reduce unemployment significantly. The onerous terms of the financial agreement under which we entered Malaysia resulted in a decline in our overseas assets for the only time in the decade. Our overseas assets which stood at $748.4 million at the end of 1963 were reduced to $631.0 million at the end of 1965. Economic Development, 1966-69 I now turn to the last period under review, the years as an independent sovereign state. On the morning of August 9th, 1965, I was in my office in Fullerton Building brooding over the enormous problems facing the country and the Government. The problems of the future loomed in awesome and intimidating proportions. Here we were, an island trading outpost, with its economic hinterland in other countries, a vulnerable arrangement as confrontation had shown. Our token defence forces were manned mostly by citizens of another country. Even the water we drank had to be mostly imported. We had no natural resources other than a diligent and enterprising people. At 10.00 a.m, news of the separation was announced over the Radio. It was greeted by the firing of crackers in Chinatown. I thought this a light-hearted response to a grave situation. Two years later, in my Budget Statement of December 1967, I was able to say, "After two years of independent existence, the Republic of Singapore continues not only to survive but also to flourish, to the surprise of many observers." This account of the final period of the decade will describe how our economy grew in the last four years and will attempt to give some reasons for such growth. In the post-Malaysia period, Singapore's Gross Domestic Product increased at a compound annual rate of 12.3 per cent as compared with 6.5 per cent during Malaysia and 8.1 per cent pre-Malaysia. Trade, industry and tourism provided the main thrust to our economic growth during this period. The result of robust economic expansion on the Government's finances was gratifying. Annual revenue increased from $508 million to $934 million last year with but minor adjustments in taxation rates. The reasons for expansion during this period stemmed from external as well as domestic sources. As regards the first, what undoubtedly helped most was the strong position of the economies of the United States, Europe and Japan. Notwithstanding recurring monetary crises during the last three years of the decade, the 1960s saw what was virtually a long sustained boom among the rich nations. One after another, they reached conditions of full employment and had to depend for further expansion either on imported labour, as happened in the case of Germany and, to a lesser extent, Britain, or they had to move some of their manufacturing operations abroad, as happened particularly with the United States and, to a lesser extent, Japan. We were also assisted by conditions in Hong Kong where, as a result of growth at an extremely fast rate, tight employment conditions became apparent in the last two or three years. Hong Kong, whose wage levels used to be substantially below those of Singapore, ceased to be a provider of labour to foreign investors at cheaper rates than Singapore. Then, of course, the end of confrontation brought about a resumption of Indonesian trade. This gave the first year on our own the main impetus to economic growth. Outside conditions were favourable. But this by itself did not ensure our prosperity if we were unprepared to make the effort required to take advantage of our opportunities. Fortunately, the institutions which were established as early as 1961 had developed in experience and expertise. I am, of course, referring to the Economic Development Board which was the Government's main agency for promoting industrial growth. Industrial estates at Jurong and elsewhere had provided a wide range of industrial sites to meet every conceivable demand of industry. The Development Bank was amply supplied with funds and the E.D.B.'s overseas promotion officers improved in skill and efficacy in their efforts to attract large corporations to the Republic. Last, but by no means least, the Employment Act passed in August 1968, with the support of the National Trades Union Congress, gave an impressive demonstration of the will of the people to overcome all obstacles to make temporary sacrifices the better to secure the future for themselves. Perhaps more than anything else, the Employment Act projected an image of Singapore among large potential foreign investors, of a disciplined and rational people upon whom they could depend for the success of their enterprises. With these favourable external and internal influences, except for the year 1967, the economy moved ahead briskly. The Gross Domestic Product increased substantially, details of which are set out in Table 2. TABLE 2 Gross Domestic Product at Factor Cost 1966-69 ($ Million) Increase 1966 3,365 10.6% 1967 3,617 7.5% 1968 4,257 17.7% 1969 4,833 13.5% The 1969 figure is based on preliminary estimates and it is likely that the final estimates would show a larger figure. Expansion in 1966 derived its impetus principally from a resumption of trade with Indonesia as well as a general increase in world trade. In absolute terms, the earnings of the entrepot trade increased from $305.6 million to $377.0 million in 1966. The manufacturing industry provided a useful gain of some $72 million in value added, from $414.3 million to $486.8 million. The good start the Republic made in 1966 was not sustained the following year, which registered an increase of only 7.5 per cent. The principal reason for this was a temporary decline in world prosperity. World trade which before that year had been growing annually at between 8.4 per cent and 11.9 per cent in the previous four years, showed a growth of only 5.4 per cent in 1967. Our entrepot earnings in 1967 showed a very small increase, just over one per cent on the previous year. At the same time there was a marked decline in British military expenditure from $549.5 million to $489.9 million. The experience of 1967 is pertinent because the two elements making for the slowing down of our growth - reduced military expenditure at the British bases and levelling off of world trade - are prospects which face us in the next three years. The last two years of the decade were exceptionally good for Singapore. The principal thrust was an unparalleled expansion of our entrepot trade, earnings of which more than doubled. Buoyant world trade conditions during 1968-69 helped sustain our own growth of trade. World trade in these two years increased by 11 per cent and 14 per cent. At the same time, earnings in the manufacturing industry showed substantial increases - 19.2 per cent in 1968 and 22.9 per cent in 1969. The contribution of the manufacturing industries to the Gross Domestic Product reached $827 million in 1969 compared to a mere $170 million a decade ago. The effect of this expansion on employment will be discussed later. Expansion of trade and industry was more than enough to offset the modest reduction in British military expenditure. In 1967 this amounted to $489.9 million and it was reduced to $415.4 million by 1969. We should remember that as from now British military spending will be reduced at a much faster rate. Between 1967 and 1969, quite apart from expansion of manufacturing and trade, even the tourist trade increased sufficiently fast to offset the reduced British military spending, so that increased earnings on trade and industry virtually formed net additions to the domestic product. Earlier I have referred to total investment which increased throughout the decade not only in absolute terms but also as a proportion of the Gross Domestic Product. The increase in total investment was especially marked in the post-Malaysia era. The figures are given in Table 3. TABLE 3 Gross Domestic Capital Formation, 1966-69 Total Investment Percentage of ($ Million) G.D.P. 1966 473.3 14.1% 1967 518.3 14.3% 1968 735.9 17.3% 1969 918.5 19.0% There are certain interesting features about the growth of investment during this period quite apart from its size. The first is that the fastest increase occurred in the private sector. The figures between public sector and private sector investment are given in Table 4. TABLE 4 PUBLIC AND PRIVAE SECTOR INVESTMENT, 1966-69 Public Private Total Sector Sector ($Million) ($Million) ($Million) 1966 239.6 233.7 473.3 1967 224.9 293.4 518.3 1968 300.9 435.0 735.9 1969 322.4 596.1 918.5 The increase during the period in private sector investment from $234 million to $596 million, an increase of 156 per cent, compares with $239 million to $323 million in the public sector, or a mere 35 per cent growth in the public sector over three years. This is as it should be. It reflects the response of private enterprise to the growing social maturity, to the National Trades Union Congress' success in promoting labour responsibility and to the Government's policy on wage stability and industrial incentives. All these created a favourable general investment climate. There was an interesting development in 1968 and 1969 which calls for attention. The statistics on capital formation give separate figures in respect of expenditure on machinery and equipment. transport equipment, that is, ships, aircraft and vehicles mainly, and on buildings and works. The figures for the period under review are given in Table 5. TABLE 5 COMPONENTS OF GROSS CAPITAL FORMATION, 1966-69 Machinery Transport Buildings Total and Equipment and Equipment Works ($ Million) ($ Million) ($ Million) ($ Million) 1966 204.2 20.7 248.4 473.3 1967 208.7 23.4 286.2 518.3 1968 283.6 106.4 345.9 735.9 1969 400.7 116.6 401.2 918.5 A striking feature about the table is the sharp increase in 1968 in expenditure on transport equipment. The explanation lies in the substantial purchases of ships and aircraft in these two years. Purchases of ships in 1968 amounted to $30.2 million and in 1969 to $56.5 million. This development fits into the general picture of sharp increases in entrepot trade during these two years against the background of burgeoning world trade. In 1969, purchases of ships included the four ships bought by the Republic's newly-established national shipping line, the Neptune Orient Lines. The ships accounted for in these figures did not include, as far as could be ascertained, ships registered under the flag-of-convenience terms provided for in the revised Merchant Shipping Ordinance passed in Parliament towards the end of last year. Future calculations of Gross Capital Formation would have to draw a distinction between Singapore-registered ships whose beneficial owners are residents in the Republic and those registered for flag-of-convenience purposes. This distinction is by no means easy to make in all cases. As regards aircraft purchases, the Malaysia-Singapore Airline's aircraft renewal and expansion programmes commenced in 1968, when deliveries of the new Boeings took place. New aircraft delivered in 1968 and placed in the Singapore Registry were valued at $59.4 million. In 1969, $37.7 million worth of new aircraft were delivered. Half of the new M.S.A. fleet carry Malaysian registration and these are not included in the above figures. The other noteworthy feature of the investment process in these four years was the large but regular increases in expenditure on buildings and works. As against this, expenditure on machinery and equipment remained level during 1966 and 1967 and took two large steps in 1968 and 1969. This reflects the recent increase in the pace of industrialisation with which most of us are familiar. This increase is also reflected in employment figures, to which I now turn. In the Budget Address of 5th December, 1967, after quoting figures of employment as reported in the annual census of manufactures, I made the following observations [Vol. 26, No. 8, col. 453]: 'It is a sobering thought that with the prodigious efforts we put in and the vast amounts of money and resources which the Government had been channelling towards increasing the growth of the manufacturing industries, all that had been achieved is a net increase of some 5,000 jobs each year in these industries. Clearly this rate of increase is inadequate to meet our future needs.' Happily, performance since then has improved and I give the following employment figures in the manufacturing industries from 1966 to 1969: 1966 - 51,272 1967 - 56,762 1968 - 72,603 1969 - 87,128 In the last two years employment in the manufacturing industries has been increasing at an annual rate of around 15,000. This is more in keeping with what we need. In fact, taking into account that the stepped-up employment in industry coincided with the intake of national servicemen into the Armed Forces, the result had been a tight labour market, more especially in the professional and skilled grades, where shortages in certain lines were acute. Finally, I want to deal with the very rapid increases in our official overseas assets which grew from $631 million in 1965 to $2,445 million at the end of 1969. An increase of this proportion, about four times in four years, is not a common occurrence in the monetary history of nations. This growth in our overseas assets was not due to financial wizardry. It was firstly the result of institutional changes in note issue arrangements after independence; secondly, the consequence of the financial policies we followed as an independent Republic; and thirdly, the reflection of the rapid economic growth I have just described. There are three components to the increase of our overseas assets. The first is the establishment of our own currency and the transfer of assets from the old Malayan Currency Board to our own Currency Board when the old notes were exchanged for new. The assets of the Currency Board at the end of 1969 amounted to $645.37 million. The second element arose out of a large increase in commercial bank deposits. As a result of economic expansion, favourable trade balance and, possibly, some inflow of 'hot money', bank deposits more than doubled since 1965, increasing from $1,222.0 million to $2,745.3 million in 1969. The Government sold Treasury bills to commercial banks and the holding of such bills at the end of 1969 was $500.13 million compared with $23.07 million at the end of 1965. As the proceeds of Treasury bills were invested abroad, this had the effect of neutralising a good part of the increase in bank deposits and in this way, helped to avert possible inflationary pressure. The remainder, some $696 million, represented the accumulation of annual Government surpluses since 1965 as well as those of the statutory authorities to the extent that they were invested in Government securities. In ordinary circumstances, it is not necessary to hold such large assets overseas, which is really tantamount to investing our money abroad instead of investing it in the Republic itself. However, for reasons which I shall go into later, these assets may come in useful when possible economic trends in the next three years may require us to run down these assets from their present rather high levels. This seems to be the right note on which to end this narrative of the decade. We started it with a grave and persisting problem of unemployment fueled each year by successive floods of post-war babies coming of age. Our difficulties were compounded by irresponsible actions of trade unions manipulated for political ends. We sought a solution in a Common Market in Malaysia that proved a dead end. Throughout the decade there was a persistent search for practical solutions, a patient building of institutions and infra-structure, a generous allocation of funds, an accumulated collection of talented staff. In the end, it paid off. It is imperative that we should never, either through extravagance or carelessness, fritter away all that we had so laboriously built up. We must build on the foundation of the accumulated experience of the decade and ensure that progress and prosperity will continue to higher levels of consolidation. Before I turn to suggest some policies that could help to achieve this, I wish to turn to the more mundane and immediate task of the budget. Estimates of Revenue and Expenditure, 1970-71 I first turn to the Estimates of Revenue and Expenditure for the financial year 1970-71. Following the practice introduced last year, I have presented to Parliament two Treasury papers*, one on the Ordinary Estimates and the other on the Development Estimates. These explain the reasons for increased expenditure, and forecast revenue yields in the forthcoming financial year. The Treasury papers also deal with revenue and expenditure performances in 1969. It is not necessary for me to enter into great detail of itemised allocations of money to heads, subheads and items of expenditure, nor need I go through the yield forecast of different classes and items of revenue. (* Papers Parl. Misc. 1 and 2 of 1970.) It is only necessary for me to set out in broad outline the policy adopted by the Government in framing the budget for the forthcoming financial year and to draw attention to some of the more significant expenditure items both in the Ordinary and the Development Estimates. The policy this year follows the same lines as those laid down at the last Budget. The needs of defence are taken as given datum. What remains of anticipated revenue yields is distributed to the other sectors of the Government services. As was the case last year, care had to be taken in limiting expenditure on the social services to the most essential functions. Consequently, the increase of expenditure on the social services is the smallest of the four main functional divisions. There is a 9.3 per cent increase from $292.0 million in 1969 to $319.2 million. The economic services that are essential to the maintenance of the momentum of growth were provided with adequate funds. Taken as a group, the money voted for this division increased by no less than 25.1 per cent from $87.1 million for 1969 to $109.0 million in the next financial year. Actually, the real increase is far less than this, as certain expenditures that used to be financed out of the Development Estimates are, in the coming financial year, charged to the Ordinary Estimates. Defence and internal security take the largest portion of the budgetary cake, no less than 31.7 per cent. The money to be supplied to Defence has long been pre-determined by the revised Defence Plan which I described in detail in last year's Budget. The defence plans had to be revised when the British Government advanced the date of the closure of their bases to 31st December, 1971. There is a substantial increase of $52.1 million in respect of statutory expenditure. This is due principally to additional provisions for interest payments and sinking fund contributions. An increase of $1.5 million results from pension increases due to the salaries consolidation exercise carried out last year. 4.36 p.m.