Hansard, 1973-02-26

Under the provisions of clause 2 (d) of Article 30 of the Constitution of Singapore, I have granted permission to the following Member to be or to remain absent from sittings of Parliament (or any committee of Parliament to which he has been appointed) for the period stated:- Mr Chan Chee Seng (Jalan Besar), Parliamentary Secretary to the Minister for Social Affairs - from 21st to 25th February, 1973. YEOH GHIM SENG Speaker, Parliament of Singapore

asked the Minister for Communications what measures he is taking or proposes to take to minimise serious bus accidents.

Mr Speaker, Sir, during 1972, there was a total number of 3,982 serious and fatal accidents involving motor vehicles. Of this number of accidents, only 348 or 8.74 per cent involved public buses. This figure is not disproportionately high if one were to consider that each public bus plies along the road continuously for almost 18 hours a day. In terms of percentage of the total fleet, the accident rate is less than 2 per cent. Mr Speaker, Sir, I have handed to the Clerk of Parliament, for circulation to Members of Parliament, Annex (See cols. 483-6) A and B giving detailed information of statistics showing the number of the public buses as compared with all other motor vehicles involved in serious and fatal accidents, and statistics showing the number of serious and fatal accidents involving public buses as compared with the total bus fleet, respectively. The Ministry of Communications, however, is not taking a complacent view of this matter and will take steps to further reduce the number of serious accidents involving public buses. The most important step is the training courses conducted by the Public Service Vehicles Training School to raise the standards of our drivers and conductors. To-date 2,106 bus drivers and 1,806 bus conductors had successfully completed their training and were issued vocational licences. A refresher course for bus drivers will be introduced in April 1973. Another measure undertaken was the establishment of an Enforcement Squad within the Registry of Vehicles on 1st April, 1972. The main function of this Squad is to ensure that we get a more disciplined and organised public transport service in the Republic. Annex to Oral Answers on Bus Accidents (cols.440-1) (Cols 0483-0486)

asked the Minister for Law and National Development whether the St. Mark's Hospital site can be reserved as a site for a hospital only and that no residential flats be allowed to be built there.

Mr Speaker, Sir, the St. Mark's Hospital at Joo Chiat Place is on 28,874 square feet of private land presently zoned Clinic and Health Centre in the Master Plan, while the surrounding area is zoned Residential. No change in zoning is required if the site is developed for a hospital or a clinic. However, the existing development surrounding the area is mainly residential. My Ministry will consider any proposal for redeveloping the said land on its merits.

2.35 p.m.

"to amend the Road Vehicles (Special Powers) Act (Chapter 120 of the Revised Edition)", presented by the Minister for Health and Home Affairs (Mr Chua Sian Chin); read the First time, to be read a Second time on the next available sitting of Parliament, and to be printed.

"to amend the Entertainments Duty Act (Chapter 136 of the Revised Edition)", presented by the Minister for Finance (Mr Hon Sui Sen); read the First time, to be read a Second time on the next available sitting of Parliament, and to be printed.

"to provide for the issue from the Consolidated Fund of the sums necessary to meet the estimated expenditure for the public services of Singapore for the financial year 1st April, 1973 to 31st March, 1974", recommendation of President signified; presented by Mr Hon Sui Sen; read the First time, to be read a Second time on the next available sitting of Parliament, and to be printed.

"for making Supplementary Provision for the public services for the financial year 1st April, 1972 to 31st March, 1973". recommendation of President signified; presented by Mr Hon Sui Sen; read the First time, to be read a Second time on the next available sitting of Parliament, and to be printed.

2.38 p.m.

Mr Speaker, Sir, I beg to move the motion* standing in my name, as it appears on the Order Paper. * The motion, standing in the name of the Minister for Law and National Development, reads as follows: That this Parliament, in accordance with section 4 of the Foreshores Act (Chapter 270), approves the reclamation by Government of that portion of the foreshore and seabed at Pasir Panjang containing an area of approximately 102 acres as shown edged in purple on the plan marked "LAND OFFICE RECLAMATION PLAN NO. 3 /73" which is deposited in the Land Office, Singapore. This is the Third Phase of the reclamations planned for Pasir Panjang. Members will recall that, at its sitting on 30th July, 1971, this House approved the reclamation of about 91 acres of the foreshore and seabed at Pasir Panjang as shown edged red on the plan marked "LAND OFFICE RECLAMATION PLAN NO. 3/73", a copy of which is displayed in the Library of this House for the information of Members. Subsequently, on 26th October, 1972, the reclamation of another 25 acres of the area shown edged green on the plan was also approved. Both reclamations are being undertaken by the Port of Singapore Authority as agent of the Government, using surplus earth from the Telok Blangah new town site. Owing to engineering difficulties encountered in the area edged red and the presence of squatters in the area edged green, the Port of Singapore Authority was able to complete the reclamation of only 64 acres (47 acres within the area edged red and 17 acres within the area edged green) out of the total of 116 acres so far approved under the Foreshores Act, leaving about 52 acres yet to he reclaimed. Meanwhile, the Port of Singapore Authority, faced by the need to urgently remove earth from the Housing Board's Telok Blangah new town preparatory site in order not to delay the construction of Housing Board flats the demand for which considerably exceeds the supply, has been forced to dump fill in that part of the foreshore and seabed shown hatched red within the area shown edged purple on the plan. Approval of this House is now sought to regularise the reclamation done so far, as well as to provide for the reclamation of an additional area within the area edged purple. This will give time for the problems (squatters and engineering difficulties) to be overcome when the reclamation of the remaining 52 acres already approved where reclamation works have been held up, can be completed. The area edged purple, when reclaimed, will he developed for recreational purposes in accordance with Singapore's Concept Plan. Mr Speaker, Sir, I beg to move.

Question put, and agreed to. Resolved, That this Parliament, in accordance with section 4 of the Foreshores Act (Chapter 270), approves the reclamation by Government of that portion of the foreshore and seabed at Pasir Panjang containing an area of approximately 102 acres as shown edged in purple on the plan marked "LAND OFFICE RECLAMATION PLAN NO. 3/73" which is deposited in the Land Office, Singapore.

2.41 p.m.

Mr Speaker, Sir, I beg to move, That this Parliament, pursuant to section 7 of the Civil List and Pension Act (Chapter 52), resolves that the Schedule to the said Act be varied by deleting the figures "$48,000". "$508,620", "$108,680" and "523,000" appearing in the second column thereof and substituting therefor the figures "$52,000", "$594,010", "$135,270" and "$91,000" respectively. The provision approved under the Civil List is insufficient to meet increasing expenses, such as the non-pensionable annual allowance for staff, revised wages of daily-rated employees and increasing cost of household requisites. Also, provision has to be made for the purchase of chairs and tables, silver ware and crockery for official use at the Istana. Hiring of such items has proved to be unsatisfactory. It is, therefore, necessary to augment the provision for the Privy Purse from $48,000 to $52,000; the provisions for Salaries to Personal Staff from $508,620 to $594,010; the provision for Expenses of Household from $108,680 to $135,270 and the provision for Special Services from $23,000 to $91,000. Sir, I beg to move.

Question put, and agreed to. Resolved, That this Parliament, pursuant to section 7 of the Civil List and Pension Act (Chapter 52), resolves that the Schedule to the said Act be varied by deleting the figures "$48,000", "$508,620", "$108,680" and "$23,000" appearing in the second column thereof and substituting therefor the figures "$52,000", "$594,010". "$135,270" and "$91,000" respectively.

2.44 p.m.

Mr Speaker, Sir, I beg to move, That Parliament approves the financial policy of the Government for the financial year 1st April, 1973 to 3lst March, 1974. Sir, the financial policy of the Government cannot be considered except in relation to its economic setting, both international and domestic. It has, therefore, been my practice in previous Budget Statements to begin with a brief survey of the economic scene before proceeding to outline the financial policy for the coming financial year. This year, I thought it might be convenient, to Members as well as to myself, that the Survey should be presented in written form and distributed in advance to Members so that they will have an opportunity to read it at leisure and absorb the mass of statistical detail contained particularly in the tables.* (*See Appendix, Col. 487-522) I should like, however, the House to consider the `survey' to have been delivered as part of my Budget Statement. Appendix to Annual Budget Statement (cols.445-81) (Cols 0485-0522) [Following is the text of the Survey (up to col.460).] Survey of the Economic Scene According to preliminary estimates, Singapore's Gross National Product (GNP) at current prices grew in 1972 by $908.9 million to reach $7,917.5 million. This represents an annual growth of 13 per cent, a creditable performance by international standards, but disappointingly short by 2 per cent of our targeted 15 per cent annual growth rate. One obvious and simple explanation for this shortfall can be given as the loss of earnings from British (now ANZUK) military spending which was $216 million or roughly 3 per cent of the GNP less than last year. We shall, however, need to analyse in some detail the more complex factors, both external and domestic, which prevented gains being made in other sectors of our economy ready and sufficient to offset a loss which had, after all, long been anticipated. First, let us look at the external economic situation in 1972. As an open economy. Singapore is highly vulnerable to adverse external events. 1972 began with some promise. It was hoped then that the co-operative spirit and ingenuity shown by the world's ten leading economic powers in reaching the settlement of the Smithsonian Currency Agreement in December 1971 could be brought similarly to bear upon the problem of the reform of the international monetary system. Meantime, the recently concluded Agreement, with its multi-currency realignment, ended a period of floating currency rates and brought back a relative calm into the troubled currency exchange markets. This calm was short-lived. 1972 turned out to be a year of high monetary instability. Within the first few months, funds started to flow to countries like Japan where revaluation was thought not to have gone far enough, and away from countries like the United Kingdom with currencies considered overvalued. In June, the Pound Sterling went into a crisis which introduced yet another period of international monetary instability. It was eventually forced to float. Other currencies survived the monetary storm only because they adopted or had already adopted a variety of exchange controls, including stiff restrictions on capital movements, or splitting the exchange market into financial and commercial sectors. Towards the latter part of 1972, however, the United States economy appeared to be much improved, and the foreign exchange markets stabilised. However, in the new year when it finally became known that the US trade and payments deficits for 1972 were larger than had been previously expected and might not greatly improve in 1973, the situation again suddenly deteriorated. In recent weeks, the splitting of the Lira and the floating of the Swiss Franc were the first signs that the US Dollar would come once again under severe pressure. In a flight from the Dollar, both the Deutsche Mark and the Yen came under attack, culminating in another Dollar devaluation and consequential adjustments in other currency parities. The basic flaws in the present system have not been resolved and the spectre of protectionist trade measures cannot be altogether exorcised. It was not to be expected that Singapore could remain totally unaffected by the monetary instability and the recurring crises of the past year. With the floating of the Pound Sterling in June last year and restrictions on capital movements within the Sterling area, Singapore decided to change its intervention currency from Sterling to the US Dollar. With less need for the use of Sterling, Singapore further diversified its reserves from Sterling to other currencies. What of the hope which had been kindled for "prompt" monetary reform? It was not until after prolonged argument as to the nature and composition of the forum for discussing such reform that the first step was taken at the IMF meeting in October last year. This was the setting up of the International Monetary Fund (IMF) Committee on International Monetary Reform and Related Issues, better known as the Committee of Twenty. Basically, the representation of countries on this Committee is the same as representation on the IMF (which has 20 executive directors). The level of representation is higher, however, in the Committee of 20 consisting of Ministers, central bank governors or equivalent. Singapore anti other South-east Asian countries are being represented on this Committee, and on this Committee's group of deputies. While the initial deliberations of the Committee point to some convergence of views on broad principles, the deputies of the Committee have met for only the second time, and it would be too optimistic to expect any translation of these broad principles into agreed rules and practice before 1974. Singapore, therefore, will have to learn to live with international monetary instability for quite some time yet. Overshadowed by the monetary problem, other external events in 1972 have had relatively little economic impact as yet upon Singapore. Perhaps the most significant of these for its likely future effect upon Singapore trade was the dc-escalation of the Vietnam War which has now resulted in a cease-fire. In the past, Singapore's trade with South Vietnam has been mainly in petroleum products. With the advent of peace, there has increasingly been less demand for such products and it may be expected to decline further. 1972 was also the last year for preparation by Britain for her entry into the Common Market. For her Commonwealth partners, it meant also the last year before the phasing out of special trading relationships which conferred Commonwealth preferences to Britain and each other. For the non-Asian Commonwealth, such phasing out could be eased by new trading arrangements in associate status in the European Economic Community (EEC) or by special concessions for products like sugar. For her Asian Commonwealth partners, including Singapore, none of these options were offered by the EEC and negotiations for individual trade agreements with the EEC are all that they can expect. Singapore's share of trade with the EEC has all along been in the EEC's favour. The better to investigate possibilities of improving trade links with the enlarged EEC, whether under a negotiated agreement, the Generalised System of Preferences (GSP) Scheme or in any other way, we have in the last year established an Embassy in Brussels accredited to both Belgium and the EEC, and shall be establishing diplomatic representation also in other countries in the near future. We have also been working together with our ASEAN partners under the Special Co-ordinating Committee of ASEAN to seek favourable consideration for our products. However, the task ahead for securing any trade concessions from the EEC would seem to be a long and arduous one, especially as 1973 would be a year of adjustment and consolidation between the old and new members in the enlarged EEC and the Community could therefore be pre-occupied with its own internal problems. However, it is possible that with peace in Indo-China, the EEC will show a more positive interest in the region and to play a more active role in trade and development of an area with which they have had historical links. Finally, among external events relevant to Singapore, the admission of China into the United Nations in 1972, and therefore into the international diplomatic and political arena, may see its involvement increase also in economic affairs in South-east Asia. There should be possibilities of much increased trade. Total trade between Singapore and China in the first nine months of 1972 represented less than 3 per cent of Singapore's total trade, and the trade balance has been overwhelmingly in favour of China. With the better opening up of China to international trade, there is the possibility that Singapore can serve as a base for multi-national firms for manufacture and exports to China. Conversely, China may find Singapore a useful outlet for its products. Review of the Singapore Economy And now, a close look at developments at home. As can well be imagined, international monetary instability had unfavourable effects upon the performance of our local economy, its greatest impact being, first, on trade which grew hardly at all in the first half of the year and only picked up again in the later months of the year, and secondly, on the manufacturing sector, particularly on industries highly vulnerable to adverse international trade factors like the petroleum industry, which grew at no more than 7 per cent in output and 2.6 per cent in value added. Our performance in these two sectors fell short of those for 1970 and 1971 and account in large measure for the lower growth rate of the economy, making up as they do, its two largest sectors. Yet, as the GNP figures already quoted indicate, and the tables will show in greater detail, overall the economy of Singapore continued to sustain the trend of rapid growth achieved over the past six years 1966-1971. With a rate of population growth at 1.7 per cent per year in 1972, slightly higher than the 1.69 per cent for 1971, our per capita GNP improved by 11 per cent from $3,321 in 1971 to $3,687 in 1972. But let us examine the components of Singapore's growth. Estimates of the Gross Domestic Expenditure (GDE) in 1972 representing resource use indicate an increase of $927.3 million to $7,643.7 million in 1972. Compared with the $6,716.4 million in 1971, this represented an increase of 13.8 per cent. The growth rate of GDE was lower than that experienced in 1971 of about 16.6 per cent. The increase in GDE was contributed by both consumption and gross domestic capital formation. Consumption expenditure increased by $507.0 million or 10.5 per cent to reach $5,355.8 million. Capital formation increased substantially by $420.3 million or 22.5 per cent to reach a high level of $2,287.9 million. The bulk of the capital formation was in buildings and other construction works which comprised about 48.3 per cent of the total and in machinery and equipment which accounted for 39.7 per cent. A large proportion of the expenditure in the latter category was directed towards the expanding manufacturing sector. Expenditure in the former category increased by $316.3 million or 40.1 per cent as compared to an increase of $118.1 million or only 15 per cent in machinery and equipment. Expenditure in transport equipment dropped slightly by $14.1 million or 4.9 per cent to $274.6 million. The growth in gross domestic capital formation was markedly lower than the 35.8 per cent achieved in 1971 and the 44.2 per cent in 1970 and the average annual growth rate of 30 per cent for the six-year period 1966-72. It is disquieting to note that the growth in 1972 was sustained by the relatively higher growth rate in the expenditure on buildings, especially on dwellings rather than on machinery and equipment for manufacturing. Analysing the capital formation in 1972 in both the public and private sectors, it may also be noted that private sector investments rose by only 12.1 per cent from $1,407.3 million in 1971 to $1,577.6 million, while public sector investments increased by 54.3 per cent to $710.3 million. With a faster rate of growth, the capital expenditure in the public sector, accounted for a larger share of 31 per cent of the total capital formation as compared with only 24.6 per cent in 1971. The corresponding share of the private sector was down to 69 per cent. The increase in investment in the private sector was mainly in machinery and equipment and construction of non-residential buildings, primarily of offices, shopping complexes and factories. There was a slight reduction in expenditure in transport equipment and other construction works. Expenditure on transport equipment in the private sector decreased slightly by $19.2 million from $283.1 million in 1971 to $263.9 million, giving a drop of 6.8 per cent. The increase in capital expenditure in the public sector was largely in respect of public housing, electricity and water services and electric machinery. Expenditure on buildings, other construction and works increased by $225 million or 67.8 per cent from $332 million to $557 million. Consumption With regard to consumption, the public sector registered a faster rate of growth of 17.9 per cent compared with the private sector of 9.1 per cent. The increase in public consumption, which has been expanding rapidly since 1969, exceeded the rate achieved in the previous year of 12.5 per cent. In the private sector, the rate of growth of consumption was slightly below the level of 10.3 per cent achieved in 1971. As a result of these changes the share composition of private consumption expenditure fell from 60.8 per cent in 1971 to 58.3 per cent in 1972, whilst that of government consumption increased from 11.4 per cent to 11.8 per cent. It is interesting to note that the share of consumption expenditure to total expenditure in both the public and private sector which has been falling since 1960 continued to decline in 1972. The share composition fell from 93.4 per cent in 1960 to 72.2 per cent in 1971 and to 70.1 per cent in 1972, while the gross capital formation increased sharply from 6.6 per cent in 1960 to 29.9 per cent in 1972. Every major component of private consumption registered increases, though at varying rates. The fastest rates of increase were in respect of expenditure on housing and transport and communications. Expenditure on housing increased by $92.5 million or 25.1 per cent to $461.6 million whilst expenditure on transport rose by $54.2 million or 9.8 per cent to $608.7 million. Comparatively slower rates of growth were noted in the expenditure on food, which rose by 5.3 per cent to $1,079.2 million, as well as in clothing, which increased by 6.3 per cent to $643.4 million. The outcome of this was the further reduction in the relative share of expenditure on basic necessities, especially food, which fell from 27.2 per cent in 1960 to 15.3 per cent in 1971 and to 14.1 per cent in 1972. This again reflected the improvement in the standards of living of the population. In the case of public consumption, the increase was mainly on account of defence expenditure. Gross Domestic Production by Industrial Origin Prior to an examination of the performance of the major sectors of the economy in 1972, it is pertinent to outline the structural changes which have taken place over the past six years. As a result of rapid industrialisation, the manufacturing and construction sectors enjoyed rapid growth whilst the trade and other services sectors registered a lower rate of growth. This has resulted in the sharp increase in the relative share composition in Gross Domestic Product (GDP) of manufacturing and construction sectors jointly from 18.3 per cent in 1966 to 31 per cent in 1972. On the other hand, the share composition of trade and other services sectors declined from 63.5 per cent in 1966 to 52.3 per cent in 1972. Manufacturing Sector The manufacturing industries contributed a total of $1,716.6 million to GDP in 1972 - an increase of $286.9 million or 20.1 per cent compared with 25 per cent in 1971 and 27.5 per cent in 1970. As a result of this comparatively more modest but still rapid growth, the share composition of the manufacturing sector to total GDP increased from 14.5 per cent in 1966 to 23.5 per cent in 1972. Manufacturing still continues to be the main stimulus to growth. The increase in earnings of the manufacturing sector of $286.9 million accounted for well over a third of the increase of $857.6 million in the GDP. Our manufacturing industries have been oriented towards exports and higher quality products. Overall, some 40 per cent of our domestic manufactures is exported. Among pioneer companies, exports account for just under two-thirds of their output. In 1972, about half of our domestic exports went to developed countries as compared with less than one-fifth six years ago. During the year 1972, increases in output and value added were registered in the major industry groups, such as manufacture of textiles and garments, electrical machinery, apparatus and appliances, and manufacture of transport equipment. Other industries recording favourable growth were the manufacture of other plastic products, and precision equipment and optical goods. The largest individual industry is still petroleum refining which accounted for 30.7 per cent of total output for the manufacturing sector. During 1972, however, as I have already mentioned, the growth in output and value added slackened to 7 per cent and 2.6 per cent respectively. The corresponding growth rates in 1971 were 27.2 per cent and 33.6 per cent, respectively. Although petroleum refining is a major activity in terms of output, in terms of value added the contribution of this industry to total value added is only 17.5 per cent. A marginal decrease of 6.3 per cent in output of the food industries was noted. This was largely on account of the slight drop in the production for export in cooking oil and coffee processing. In terms of value added, the electric machinery industry ranked the highest with 20.6 per cent of total value added, followed closely by the petroleum refining (17.5 per cent) and the transport equipment industry (which included shipbuilding and shiprepairing) with 14.9 per cent of total value added. The more traditional industries, namely food, beverages and tobacco, jointly accounted for another 9.4 per cent. Construction The construction industry has been growing rapidly since 1967. In 1972 the contribution by this sector to GDP increased by 36.4 per cent to $551.9 million as compared with 33.8 per cent in 1971. Its percentage share of GDP was thereby almost doubled from 3.8 per cent in 1966 to 7.5 per cent in 1972. This rapid growth rate was the second highest for the six-year period 1966-72-the highest growth rate was in 1971) when a rate of 47.2 per cent was registered. The industry continued to face the shortage of labour and materials which had a restraining influence on its expansion during 1971. Despite this, the industry managed to achieve a high growth rate which ranked as the highest of all major sectors making up the GDP. The slight acceleration in its growth during 1972 was primarily in respect of non-residential buildings in the private sector comprising mainly of shopping and office complexes which registered an increase of $79.1 million or 25 per cent. In the public sector, the high growth was mainly on account of the construction of public housing which recorded an increase of $133.4 million or 109.6 per cent. Trade The entrepot and domestic trade sector which had been growing at a decreasing rate since 1968 contributed $1,982.5 million to GDP in 1972. The contribution from this sector increased by only 7.3 per cent or $134.1 million in 1972 which was comparable to the rate in 1971 but slower than the average rate of 14.8 per cent for 1968-70. The causes for this were the pursuit of direct trade policies by neighbours, the general decline until the latter part of the year in produce prices especially rubber, the de-escalation of the Vietnam War and the uncertain trading conditions particularly in the first half of the year because of the recurring international monetary crises. Of the total increase in the trade sector, entrepot trade accounted for a mere $13.5 million while domestic trade accounted for $120.6 million. The entrepot trade component registered a decelerating growth rate from 31.9 per cent in 1968 to a low rate of 2 per cent in 1972. Domestic trade also registered a decelerating growth rate especially after 1970, from 18.1 per cent in 1970 to an all time low rate of 10.3 per cent in 1972. As a result of these decelerating growth rates, the ratio of entrepot trade to total GDP fell from 12.1 per cent in 1970 to 9.5 per cent in 1972 while for domestic trade the ratio fell slightly from the 18 per cent in 1971. Within the trade sector, the shift in emphasis in favour of domestic trade against entrepot trade may be noted. In 1960 entrepot trade constituted a larger share of 18.6 per cent of GDP as compared to a share of 13.2 per cent for domestic trade. However, the relative share of entrepot trade soon decreased to 10.4 per cent in 1966 whilst that for domestic trade increased to 15.7 per cent. By 1972, entrepot trade was further reduced to 9.5 per cent whilst domestic trade advanced to 17.6 per cent. In value terms entrepot trade contributed $694 million to GDP in 1972 compared with $1,288.5 million for domestic trade. The opposite was, however, the case in 1960 when entrepot trade amounted to $381.1 million and domestic trade $269 million. The growing importance of domestic trade has been the result of the rising purchasing power of the population and the increased earnings from the distribution of domestic export which has shown substantial growth during the past few years. As the economy further expands in the future, entrepot trade is expected to decline further in importance and this decline will be offset by the growth in the domestic trade sector. Total External Trade The total external trade expanded to $15,680 million in 1972, an increase of $1,645 million or 11.7 per cent over 1971. The growth rate, however, was lower than the 14.2 per cent achieved in 1971. Exports rose at a faster rate of 14.3 per cent to $6,139 million, imports at a relatively lower rate of 10.1 per cent to $9,541 million in 1972. The corresponding rates in 1971 were 12.9 per cent and 15 per cent respectively. It is interesting to note that for the first time since 1966, the rate of growth of exports surpassed that of imports. This slow-down in the growth of imports was mainly on account of less imports of fixed vegetable oil, textiles, industrial machinery and road motor vehicles. Domestic exports, which rose by 29.7 per cent to $3,078 million in 1972, was again the primary cause of the increase in total exports. The comparable figure was $2,373 million in 1971. With the continued expansion in the local manufacturing industries and the efforts being made to open new markets overseas, this upward trend is expected to be maintained. On the other hand, re-exports or entrepot exports increased only marginally by 2.1 per cent from $2,998 million in 1971 to $3,061 million in 1972. Re-exports are expected to further decline in the future. Trade and Payments Balance In 1972, the recorded trade deficit amounted to $3,402 million, larger than the deficit of $3,293 million for 1971. The widening gap particularly in recent years has been aggravated by higher prices for imported goods. Singapore has run a persistent trade deficit which has been largely financed by earnings from `invisible' items and large capital inflows. Whilst there may be some concern for the consequences of our growing trade deficit on the balance of payments, there is basically no cause for alarm. Since 1966 our overall balance of payments has been registering surpluses every year. From 1967 to 1971 the overall surpluses have been averaging about $500 million a year. In 1972, our preliminary estimates indicate a surplus of about $566 million which compares closely with the surplus of $578 million in 1971. Net earnings from services declined further to $624 million in 1972 from $660 million in 1971 and $738 million in 1970. The decline was attributable to the increase in payments for freight and insurance on merchandise, travel and other transportation and other services as well as to the reduction in receipts from government transactions as a result of the British military pullout. With the expansion of the tourist industry, receipts from travel and other transportation have been rising steadily. It increased by $237 million to reach $1,161 million in 1972. This has more than compensated for the adverse effect of the reduction of British military expenditure. Net non-monetary capital especially private long-term capital inflow has increased considerably by $111 million to $580 million in 1972. Government Services and Public Utilities In 1972, government services contributed $482 million to GDP, an increase of 12.8 per cent over $427.3 million for 1971. This rate of growth was slightly higher than the previous year's rate of 9.6 per cent. It is close to the average annual growth rate of 13.4 per cent for the past 12 years. The share of government services to GDP was maintained at 6.6 per cent for 1972, about the level maintained during the past decade. The main increases were in respect of expenditure on defence, education and health. Public Utilities had a steady growth rate of 15.2 per cent higher than the 9.8 per cent increase for 1971. The contribution of this sector was $175 million in 1972 and its share to GDP was maintained at 2.4 per cent. Ownership of Dwellings The value added by ownership of dwellings to GDP increased substantially during the past two years. In 1971 the value stood at $275.6 million, an increase of 35 per cent. In 1972, the value increased to $362.3 million, a growth rate of 31.5 per cent. As a result, its share composition rose to about 5 per cent of GDP. Tourism The tourist industry continues to enjoy rapid growth. In 1972 an estimated total of about 780,000 tourists visited Singapore compared with 632,000 in 1971 and 522,000 in 1970. The rate of growth for 1972 was 23.4 per cent, as compared with 21.1 per cent in 1971. Earnings from tourism continued to increase to S 397.7 million in 1972, an increase of 21.4 per cent over $327.5 million for 1971. This resulted in a marginal increase in the share composition of tourism to GDP from 5.1 per cent in 1971 to 5.4 per cent in 1972. The average number of days the visitors spent in Singapore remained at about 3.9 days during 1970-72. Foreign Military Expenditure The withdrawal of the British military services in 1972 resulted in a dramatic reduction by 51.4 per cent in the preliminary estimates for foreign military expenditure to $204 million. The expenditure in 1971 was $420 million, which was the same level as in 1970. However, owing to the rapid growth in the other services sector, especially in banking and financial services, and transport sector, the dampening effect on domestic demand and employment had been partly compensated. Banking and insurance Banking and insurance services continued their increasing trends. By 1972 its contribution to GDP rose by 26.6 per cent to $152.3 million, as compared to 22.9 per cent in 1971. This high growth rate was attributable mainly to the high level of banking activity, a feature of which was the inflow of funds from abroad. Total deposits showed an unprecedented increase of 26.5 per cent from $3,745.8 million in 1971 to $4,736.7 million in 1972. Bank loans and advances increased faster by 36.3 per cent from $2,615 million to $3,565.2 million in 1972. Total assets and liabilities of the Asian Currency Unit (ACU) rose steeply by 180 per cent to reach $8.4 billion at the end of December 1972. Hitherto, funds from the Asian Dollar Market were used mainly for short-term financing. A new phase of development occurred in December 1971 when the Development Bank of Singapore Limited (DBS) floated a 10-year Asian Dollar Bond for US$10 million. This was followed by an Asian Dollar loan of US$27.5 million to the Brunei LNG Company Limited. In October, the Singapore Government itself floated a 15-year US$20 million Asian Dollar Bond. The Institutional framework for operations of an active money market in Singapore was further strengthened last year. Three reputable London money broking firms were given approval to set up operations in Singapore. In November, three Discount Houses were also established, comprising joint ventures between local and foreign interest with majority participation by local banks, including the Post Office Savings Bank. Two new foreign banks were admitted into Singapore, broadening international connections of the banking system. Singapore banks also organised themselves for the more competitive banking environment ahead by merging into bigger groups. From the external and domestic economic situation in 1972 outlined in the Survey, what conclusions can we draw as to the possibilities for 1973? A number of symptoms call for particular attention. Inflation The first is that of increasing inflation. With its relatively strong currency, Singapore has had inflows of speculative funds which increased domestic liquidity beyond desirable limits. Domestic money supply increased by $76 million in the first quarter of 1972. Another $98 million was added to the money stock in the second quarter. The rate of monetary expansion for the year ending June 1972 was 24 per cent, which was unusually high as growth in money supply in previous years had been less than 20 per cent. In the third quarter, there was again a large increase of $115 million, bringing the total money supply to $2.1 billion in September. By the end of the fourth quarter in December 1972, total money supply had increased to $2.4 billion. While some expansion of money supply in Singapore must be expected and indeed would be required to meet the expanding needs of a fast growing country, it was necessary that measures be taken to prevent overheating of the economy. The Monetary Authority of Singapore (MAS) therefore tried in August 1972 to curb excessive liquidity by raising the minimum reserves requirement of banks from 3 1/2 per cent to 5 per cent. In December 1972, the MAS had to impose a 5 per cent special deposit requirement on the net foreign liabilities of banks. On 13th February this year, the reserves requirement has had to be raised again from 5 per cent to 9 per cent of their deposit liabilities. The Special Deposit - which banks have to place with the MAS against their net foreign liabilities was similarly increased from 5 per cent to 9 per cent. These measures will freeze about $250 million in the financial system and increase the cost of credit; they will also circumscribe the banks' capacity for credit creation. We have tried to organise our banking and money sector into external (Asian Currency Unit) and domestic operations, but it has not been possible to isolate Singapore entirely from the international money and price inflation which has such deleterious social and economic effects upon our people. The will to work hard and to save a large part of one's earnings can be sapped by a continual lowering of the purchasing power of hard-earned money, coupled with the belief that the ways of the speculator and the spiv with his get-rich-quick gimmicks bring easy returns. The increase in the money supply has partly contributed to the increase towards the end of the year of food and other commodity prices. But the main causes were more the vagaries of the weather and the sharp increases in costs of imports. But internal liquidity certainly has been responsible for the boom in land and property prices and the very unhealthy speculation in shares on our Stock Exchange. While public confidence in the performance and progress of the economy was an underlying factor, the steep climb in share prices in recent months was fuelled largely by strong speculative demand which was stimulated in part by the international currency problems. Some speculative interest can contribute to the growth of a healthy market. But excessive speculation will lead to disruption of the development of the Stock Exchange as an institution for funnelling private savings into productive investments. The Stock Exchange shows all the signs of an overheated market. While the Government has no desire to cause a precipitous fall of the market, I wish to outline certain measures which could lead to an abatement of the feverish tempo. These measures are expected to have a speedy, effective and persistent impact on the market. One measure concerns credit facilities provided by banks and other financial institutions to operators in the stock market against the collateral of scrip. It is the practice of banks to offer credit limited to a certain percentage, varying with the philosophy of each bank, of the prevailing market price of scrip offered as collateral. Needless to say as the market spirals upwards, shareholders enjoy the use of additional funds to propel the market forward even faster. I am therefore asking the Monetary Authority of Singapore to draw up guidelines to ensure that prudent lending limits are observed. There will, of course, be consultations with banks and finance companies to consider lending criteria that are more realistically based and applied by prudent bankers and financiers. Obvious risks arise if unrestricted loans are made on the basis of inflated share prices in an overheated market. Should this measure be implemented, a large volume of funds available to operators will be immobilized. A feature of the current bull market, not only in Singapore and Malaysia but in nearby territories as well, is the spate of take-overs and mergers involving the exchange of paper. Not surprisingly, this paper merry-go-round is uncritically accepted when the market roars along. When the market is depressed, corn-panics practise the old-fashioned virtue of offering hard cash for acquisitions. I am asking the Securities Industry Council (SIC) to give the most careful scrutiny to all proposals for take-overs and mergers, particularly those where settlement is partly or wholly by an exchange of scrip. The SIC jurisdiction will cover public listed companies incorporated in Singapore as well as non-listed subsidiaries of these companies. In addition to these two specific measures, as Members are aware, on 16th February 1973, I introduced a Bill in Parliament designed to give the Government more effective control over the securities industry. The new Bill will replace the Securities Industry Act passed in 1970 but never brought into force. The Bill was drafted in consultation with the Malaysian Government and contains several improvements over the 1970 Act. The new Act will give the Government wide powers to investigate manipulations and other abuses in the market, which at present go unchecked, and to punish the offenders appropriately. Trade and Manufacturing A further distressing symptom is the unevenness in development of the economy. While almost all sectors grew satisfactorily, the development in the two largest, trade and manufacturing, has not been large enough for their effect upon total growth to have been most pronounced. Trade First, trade earnings now constitute 27.1 per cent of our GDP. It grew by only 7.3 per cent as against 7.2 per cent for 1971 when world monetary conditions were equally troubled. But the average growth under more settled conditions from 1966-1970 was 17.5 per cent. An extra 10 per cent growth in trade, which represents the difference between the 1972 growth rate and the 1966-1970 average growth rate, would have added some 2.7 per cent to our GDP growth rate. Continued stagnation, if not decline, is likely in the entrepot trade. But some improvement in the prospects for international trade in 1973 should not be impossible. What are these prospects? Before the recent currency crisis, the economic outlook for the major industrialised countries for 1973 appeared bright. A forecast made by the Organisation for Economic Co-operation and Development (OECD) indicated that Japan should lead the group of industrialised countries with a real growth rate for 1973 of nearly 11 per cent, followed by the United States with 6.25 per cent, France and Canada 6 per cent, Germany 5.2 per cent, and Italy and the United Kingdom 5 per cent. These are high rates of growth compared with previous years. The recessionary tendencies which plagued economic conditions in early 1972 were therefore absent for 1973 and international trade seemed due for a correspondingly vigorous revival. Confirmation that 1973 would be unlike 1972 appeared in the form of high commodity prices for sugar, wheat, and other cereals, and also in a smaller but more important way for South East Asia, in rubber, rice and tropical products. While the prospects have now become dimmer because of possible disruption from parity changes and floats in world trading currencies, it is not unlikely that the international trading community has learnt how to live with such monetary disturbances. Trade will be much less affected than with the first unfamiliar realignment of currencies. For example, trading firms in Japan had for some time before the recent float been accustomed in their trading commitments to discount a 10 per cent revaluation of the Yen. They should adjust without difficulty to any higher rate. As regards Singapore trade, it may be of some interest to note the very mixed effects last year's currency realignment had on Singapore's external trade during the year. The revaluation of the Yen affected the size of Singapore's imports from Japan because these became dearer. On the other hand, the Yen revaluation did not lead to any increase in Singapore's exports to Japan. In fact, exports of petroleum products and rubber declined. The reason may be due partly to a dock strike in Japan which affected trade between Singapore and Japan adversely. The uncertainty of the Pound Sterling resulting in its eventual floating retarded Singapore's trade with Britain. The revaluation of the Mark led to a moderate increase in trade between Singapore and West Germany. The devaluation of the US Dollar resulted in an appreciable increase in trade between Singapore and the USA. Total trade for the first 11 months of 1972 increased by 28.3 per cent to $2,069.2 million. Imports from the USA increased by 20.7 per cent while our exports to the United States rose by 41.5 per cent due mainly to the export of semi-finished products back to the United States by subsidiaries of American companies in Singapore. Multi-national companies with their assured markets can surmount tariff and currency and other difficulties. Manufacturing Secondly, earnings from manufacturing which now constitute some 23.5 per cent of our economy, as measured by GDP figures, grew by only 20.1 per cent as against 25 per cent in 1971 and 27.5 per cent in 1970. The decline gives cause for some concern as to whether it evidences an adverse trend. Manufacturing investment commitments certainly fell from $716 million in 1971 to $252 million last year. This is due partly to the pause in the investment commitments of the petroleum refining industry which amounted to $285 million in 1971. Investment commitments on shipbuilding and repairing yards also dropped sharply from $142.2 million in 1971 to $66.9 million last year. Electrical and electronic products, however, appear to be growth industries of the future, accounting for nearly 40 per cent of the new investment commitments made last year. Investment commitments in low technology industries dropped because no incentives are now being offered to such industries as a result of our more selective policies. Investments obviously require to be further stimulated but we would expect that so far as the petroleum and transport industries are concerned, we can be relatively confident that the decline is only temporary. Our projections based on the industries' own figures are for increase in investment in the former, to produce 1,000,000 barrels a day by 1974 or 1975, and in the latter, to produce by 1975 over $600 million in value of output. For these two industries our locational advantage will continue to favour maximum development. The future of Singapore is correlated to its being considered an ideal offshore manufacturing base for multi-nationals and their subsidiaries. In our overseas investment promotion, the Economic Development Board (EDB) will not overlook the smaller but no less important manufacturing firms. To encourage them to diversify their activities to Singapore, my Ministry will be prepared to invest equity up to 50 per cent, with the option for them to buy back a substantial portion later. The criterion will largely be whether these firms are able to make in Singapore, technology products which have not been made here before. The EDB will identify these firms and the Development Bank of Singapore Limited (DBS) will manage our investments. A fund of $100 million will be provided for this purpose to serve as a catalyst to use to best advantage our vast expenditure on training. Unfortunately, the still inadequate supply of skilled labour slows down the setting up of higher technology industries. In the interim, highly skilled foreign workers are, therefore, being admitted under our liberal immigration scheme and granted permanent residence for the economic benefit they are likely to bring to Singapore. The Government will continue to allocate a large part of its resources to technical education. Since 1962, and more actively in recent years, the Government through the Economic Development Board has been engaged in a multiple-programme approach to develop industrial training in modern manufacturing skills. Besides the Industrial Development Scholarship Scheme, we now have the Overseas Training Programme, the Joint Training Programme, the Apprenticeship Training Scheme and the Training Subsidy Scheme for sophisticated industries. The essence of all these schemes is that the Government is prepared not only to meet fully or partly the training costs of workers required by industries but also to create a poo1 of skilled workers available for future high technology industries setting up in Singapore. I am glad to report that at least two large multi-national firms, which have recently set up substantial operations in Singapore, have taken advantage of the joint training programme to train over 1,000 skilled machinists and toolmakers over a period of five years. This number is in excess of their own immediate requirements. In addition, negotiation is in progress with several multi-national firms to train jointly an even larger number of skilled workers. The Government on its part has earmarked $8.7 million for industrial training for the next financial year. These various training programmes, where necessary, would be streamlined further and modified to take account of changing needs from year to year. Our target is to reduce our present dependence on foreign workers for growth to more modest and manageable proportions by 1977. In a situation of nearly full employment, a goal of economic policy must be to upgrade the quality of the work in our enterprises by modernisation and expansion with higher investment per worker. Industries which do not carry out investment of more capital per worker, change production to higher quality products and improve their organisation, must expect to lose their workers to industries which do. Such industries will not be able to meet their wage increases every year which will be recommended by the National Wages Council because of their low productivity. Our National Wages Council must estimate the effects of their guidelines for last year's wage increase, and consider the increase appropriate this year inter alia, to achieve this objective and to induce a structural transformation in our industrial and other sectors. Too high an increase in wages, taking productivity into account, will cause unemployment. Too low an increase will increase the tightness of our labour market, and starve the flow o workers into the higher technology industries we want either by upgrading of present firms with lower technology, or by new firms from abroad being established. Though there is no need to amend existing legislation on tax incentives because these by and large are adequate, I intend to apply existing legislation to give optimal advantage to industries which can introduce new technology to Singapore and are willing to train our workers in the skills demanded. Training costs may be regarded as investment in the same way as fixed assets for purposes of tax exemption periods for pioneer companies. For industries with high capital Costs and long gestation periods, the Government would apply the provision of the existing legislation with some flexibility in order to enable the companies to reap fully the benefit of the pioneer status granted to them. Together with the better performance I expect in 1973 from 1972's major growth sectors, i.e. construction, tourism, banking and port activity, the measures I have outlined should be sufficient to offset any uncertainties caused by the new international currency realignment, and to restore the rapid growth rate of Singapore in 1973 to its 15 per cent level. Budget And now we come to the Budget for the financial year 1973-74 which I shall hereafter for brevity call FY 1973. There are certain changes in the presentation of this Budget which I should like to explain. In my last Budget Statement I emphasised that the changing needs of the economy in the 1970s called for occasional reappraisal of the policies and priorities of allocation of funds, as well as a review of the administrative machinery including the present system of government budgetting and financial control. To facilitate the appraisal, action has been taken to modify the format of the Estimates so that the recurrent and development expenditures of various Ministries and departments can be examined in a coherent way. As a first step, I am presenting the FY 1973 Main and Development Estimates as a unified whole in one document. A common set of Heads of Expenditure is used for both types of Estimates. Further, the grants and contributions in the Main Estimates which were previously grouped under one Head of Expenditure such as Contributions and Charitable Allowances are now distributed to their respective Heads. I hope that with these rearrangements Honourable Members will have a clearer and more complete picture of the provisions under each Head of Expenditure. I should add that for the FY 1974 Estimates, my officials are exploring the possibility of restructuring subheads with the aim of streamlining and rationalising their presentation. At the last sitting of this House, I made a statement on revision of salaries and terms and conditions of service in respect of the upper echelons of particularly the administrative and professional officers in the public service. These changes are part of the overall effort to keep men of quality and integrity in the administrative machine so that it will be in trim and able to respond to the increasingly complex demands on the business of Government. Higher rewards, either monetary or otherwise, can only be justified for high performance and efficiency. The over-riding principle of award in the service will remain that of merit. I am confident that the civil service will continue to maintain its high degree of devotion and integrity and increase its level of performance, with more of the talented officers remaining in the Service. The revised terms and conditions announced for the administrative and professional officers have not been incorporated in the Budget because they were finalised too late for entry, but Members should bear them in mind when considering the Budget. Mechanisation and improvement in work methods The increase in the volume, quality and scope of services provided by the Government sector requires an additional 2,154 posts for FY 1973. However, the search for manpower-saving methods of work has not been in vain. For example, the use of mechanical road sweepers made it possible to reduce the daily-rated work force in the Sanitation Services by 198. Similarly, through a change in work methods at offstreet car parks, it was possible to abolish all the 211 vacancies of car park attendant in the Car Parks Division. In addition, requests involving 1,038 positions, mostly of the clerical and daily-rated grades, were turned down. The departments which made those requests were either asked to redeploy their existing establishment through improved work methods or given provision to purchase labour-saving equipment. Estimates of Expenditure, FY 1973 The Memorandum* (* Paper Misc. 1 of 1973) on the Main and Development Estimates gives the detailed breakdowns of expenditure. I would like to underline briefly the major areas of Government endeavour, in providing a framework within which the individual provisions under each Head of Expenditure may be discussed later. The total outlay for the FY 1973, excluding the transfer from the Consolidated Fund to the Development Fund, is $2,773.6 million. Of this amount $820.6 million or 29.6 per cent is earmarked as loans to statutory authorities and industrial and commercial enterprises in which Government has a stake. The needs of economic development have therefore been fully taken care of. Of the remaining $1,953.0 million, Statutory Expenditure takes up $307.4 million. Defence and Internal Security take up another $632.1 million. This is 9.4 per cent less than the provision for FY 1972 reflecting the consolidation in the Singapore Armed Forces after the rapid build-up in recent years. Housing One key area of development is, of course, low-cost housing for the people. Despite the rapid rate of construction of low-cost apartments there is a long waiting list for such accommodation. The Housing and Development Board is stepping up its Third Five-Year Building Programme (1970-1975) to 30,000 units, a year. To finance this programme, substantial loan funds are required and have been provided in the Estimates for the next financial year. Of the total provision of $820.6 million of loan funds to statutory bodies and commercial and industrial enterprises, 5349 million or 42.5 per cent goes to the HDB. The development of low-cost housing estates also entails the provision of other basic facilities such as sewerage, schools and post offices. A number of sewerage schemes for which provision is made in the FY 1973 Development Estimates are specifically to meet the requirements of public housing estates. These include the Bedok Sewerage Scheme, Telok Blangah Sewerage Scheme, Kallang Basin Sewerage Scheme and the Woodlands Sewerage Scheme. With an increasing proportion of our population residing in large public housing estates, it becomes necessary to relocate schools so that our young students residing in such estates will not have to travel long distances between home and school. This accounts for the substantial increase in provision for the building of new schools in the next financial year. Education and industrial training The construction of schools is only one aspect of the Government's investment in education. Last year I mentioned the revision of the terms and conditions of employment of various services including the Education Service. Following this revision, a major promotion exercise for school principals and teachers was launched and is nearing completion. It is hoped that this will give a welcome boost to the morale of the efficient officers and improve the quality of teaching. However, the shortage of manpower in schools persists. To alleviate the situation, the Ministry of Education has started a scheme whereby teaching cadets are recruited to study at the proposed Institute of Education and, in between, take on a teaching load in schools as a means of acquiring practical experience. Eventually, it should be possible to cut down on the use of relief teachers and achieve a more uniform level of competence amongst teachers. Substantial sums are provided for the development of new campuses for the University of Singapore and the Singapore Polytechnic. For works and buildings in FY 1973 it is estimated that the University campus at Kent Ridge will require $12 million and the Polytechnic Campus at Dover Road $2.5 million. As I said earlier, an increasing supply of skilled industrial workers is required to sustain and accelerate industrial growth. The Industrial Training Board will play a major role in this area. Not only will training at vocational institutions need to be expanded and upgraded but proper apprenticeship and trade-testing programmes will have to be planned and implemented. A substantial grant is provided to start the Board on a sound basis. At the same time, as I have mentioned elsewhere, Government will participate in joint-training schemes with well-established industries which have the know-how. A total of $8.7 million is provided in the Estimates for the recurrent and capital costs of such schemes. Environment Unfortunately, industrialisation and urbanisation can affect our environment adversely. Experience in some industrially-advanced countries shows that unless parallel action is taken to safeguard the quality of the environment even as industrialisation and urbanisation take place, anti-pollution action will be an uphill task. In the case of Singapore, the smallness of our land area makes avoidance of this problem all the more urgent. With the establishment of the Ministry of the Environment, greater attention can be directed towards this problem and measures to combat it can be better co-ordinated. One major anti-pollution programme undertaken by the Ministry of the Environment is the resiting of hawkers from backlanes and side streets to proper markets and hawkers centres so that proper health standards and cleanliness of hawkers can be enforced. This accounts for the substantial allocation for the construction of market/hawker centres and the traditional number of enforcement personnel for the Ministry. The limited land area in Singapore is again evident when we think of the great volume of refuse that has to be disposed of each day, using the existing method of dumping. The construction of an incinerator and a compaction plant will no doubt help alleviate this problem. For these, it is estimated that $1.20 million will be required in FY 1973. Health Whilst we may expect preventive measures against all sorts of pollution to result generally in a healthier people, we know that there will always be patients requiring diagnostic and treatment facilities. In FY 1973, additional provision has been made to strengthen and improve such facilities on two fronts. First, the medical specialities, namely, Nephrology, Plastic and Reconstructive Surgery, Neuro-Surgery and Cardio-Thoracic Surgery will continue to be developed. Some 130 new posts are provided for these. Secondly, hospital facilities will be extended. A small hospital will be opened at Changi, whilst the Alexandra and Sembawang Hospitals which were taken over from the British Armed Forces will be developed further. For FY 1973, the total outlay for the Ministry of Health including the Hospitals Division is 12.4 per cent of the total allocation for the Social Services sector. Revenue Estimates How is the Government expenditure to be financed? Details of the Revenue Estimates are given in the supplementary Memorandum* (*Paper Misc. 1 of 1973) to the Estimates. I need to give only a brief overall picture. For FY 1973, revenue is estimated at $1,874.9 million. This represents an increase of $199.7 million or 11.9 per cent over the revised estimates of $1,675.2 million for FY 1972. If the residual of $45.8 million from the former Currency Board's assets is excluded from the revenue for FY 1972, the revenue estimates for FY 1973 show a growth rate of 15.1 per cent. In FY 1973, income tax and payroll tax are expected to yield $554.0 million which is $110 million or 24.8 per cent more than the revised estimates of $444.0 million for FY 1972. The healthy performance of income and payroll taxes reflects the growth in the economy with nearly full employment, with most individuals earning more and with most companies maintaining their profit margins. Revenue from property tax is expected to be $190 million during FY 1973 as against the revised revenue of $166 million. The high growth of this item reflects the robust growth of the construction sector and higher rentals. Revenue from indirect taxes and taxes on outlay in FY 1973 is expected to yield $545.0 million which represents an increase of $71.0 million or 15.0 per cent over revised estimates for FY 1972. This substantial increase is partly due to normal growth and partly due to the tax revisions introduced in October last year. The main increases are expected from customs duties on liquors, tobacco and petroleum products, other import duties and taxes on motor vehicles. Non-tax items are an important source of revenue; collectively, they contribute $570.7 million or 30.4 per cent of the total estimated revenue for FY 1973. Included under this category are the revenues from sales of goods and services of Government departments, land sales, investment of Government assets and currency surplus and other administrative fees. The main increases would be from land sales and sales of urban renewal sites, which together are expected to yield $102.0 million, due to more land being leased to the Housing and Development Board, the Jurong Town Corporation and the private sector for development purposes. The Special Aid of �50.0 million from United Kingdom will be fully disbursed by the end of 1973. The decline in revenue from Special Aid will, however, be compensated by anticipated increase in earnings from Government financial investments. Tax Policy and Changes Now I come to the tax measures I propose for this Budget. I have stated in the past that so long as the economy continues its robust rate of growth, it will be unnecessary to impose major or painful increases in tax rates although changes in such rates and additional taxation may from time to time be necessary or desirable to effect social or economic policies. Members, who are aware of this principle and who have looked at the balance of revenue and expenditure in the Main Estimates and noted the modest surplus of over $20 million which has been planned, will no doubt have already come to the conclusion that to provide sufficient funds to meet the current as well as part of development needs of Government there is little or no need for additional taxation. I am happy to be able to confirm them in this conclusion. In fact, the only changes I propose to make are in connection with the grant of the following tax exemptions or tax reliefs: (a) Tax Relief for Taxpayers who support Dependent Parents and Grandparents Last year, many Members suggested that reliefs should be given for the maintenance of aged parents and handicapped children on the grounds that the Eastern concept of filial piety requires, among other things, that children should look after their parents in old age. I recognise that with greater urbanisation and more limited living space, the Asian family unit is threatened with disintegration and that aged parents may be left on their own when they most need care and attention. I am therefore prepared to give some tax relief as an encouragement to taxpayers who look after their parents and grandparents where they are without work or income. With effect from 1-1-74 a taxpayer may claim a tax deduction from his income of $300 per dependent parent or grandparent. A taxpayer may claim up to a maximum of two dependent parents or grandparents, who are over 55 years of age, are supported by the taxpayer and are staying in the same household. If a parent is below 55 years but handicapped physically or mentally, he will also qualify for tax relief. (b) Tax Relief for Taxpayers who support Handicapped Children At present, the deductions allowed from assessable income in respect of children cease for those over 16 years old. This is so even when they are physically or mentally handicapped children who do not earn any income and who continue to depend on their parents. As it is fair that taxpayers should get some tax relief for supporting such children, I propose to provide that with effect from 1-1-74 taxpayers can claim allowance for handicapped children although they are over 16 years. (c) Income Tax Relief for Provident Fund Contributions and Premium on Life insurance Policies Under the Income Tax Act, an individual is allowed to deduct from assessable income contributions to approved provident funds and premiums on life insurance subject to a maximum of one-sixth of assessable income or $4,000, whichever is the less. With the increase in compulsory CPF contributions, it has been found that the one-sixth of assessable income limit has become restrictive, particularly for the lower middle income group. With the compulsory CPF contribution rate at 12 per cent, there would be left for deduction from assessable income only 4.67 per cent of his income from the amount paid for other approved private provident fund contributions and life insurance premiums. I propose therefore to remove the limit of one-sixth of assessable income with effect from 1-1-73. The limit of $4,000 will remain. This measure should encourage the public to save more either in private approved provident funds or in life insurance policies, in line with the Government's policy of encouraging savings. (d) Reduction of Stamp Duty on Marine Hull Insurance Policies At present, sea insurance policies are subject to stamp duty at a flat rate of 50 cents per policy except for hull insurance policies which are subject to ad valorem rates of 20 cents per $1,000 insured if the insurance is for less than three months; 30 cents per $1,000 if the policy is between three to six months and 50 cents per $1,000 if the policy is between six to 12 months. Hull insurance on a fleet of any substance will run into large sums and an ad valorem stamp duty can be very substantial. Singapore insurance companies are handicapped by the high rate of stamp duty here in competition against London insurance companies which do not have to pay stamp duties on sea insurance policies. To promote Singapore's development as a maritime centre able to provide essential facilities and services including sea insurance at reasonable cost, I propose to replace the ad valorem stamp duty by a flat rate stamp duty of $1 per policy for all sea insurance policies. This new rate of stamp duty will be implemented with immediate effect. (e) Exemption from Stamp Duty of Promissory Notes issued by Customers to Banks In my last Budget Statement, I announced the abolition of stamp duty on Negotiable Certificates of Deposits (NCDs), bills of exchange and promissory notes transacted from or through banks to promote money market activities. It is now proposed to extend this exemption from stamp duty also to promissory notes issued by customers in favour of banks. This is to increase the variety and availability of money instruments and to promote greater sophistication of our money market. This exemption will come into effect immediately. (f) Non-collection of Withholding Tax on Negotiable Certificates of Deposit in Local Currency This does not, strictly, represent a tax concession, but I have included it here for completeness. If withholding tax on interest were collected at source, the introduction of the Negotiable Certificates of Deposit (NCDs) in local currency would not be possible as the marketability of this instrument would be affected. The NCDs could play an important role in the development of the money market and would be welcomed by both the financial sector and corporate investors. By purchasing NCDs, investors would be able to maintain liquidity and, at the same time, earn income. The NCDs will therefore be attractive for discount house business. The Monetary Authority of Singapore will allow financial institutions to issue NCDs in the local currency, with effect from 1-4-73, on the following conditions: (1) The issuing banks and discount houses will keep records of purchasers and sellers of NCDs. (2) The taxable income will be taken as the difference between the sale and purchase price of the NCDs. (3) The NCDs will have to be deposited with an authorised depository. (4) The issue of NCDs will be subject to Exchange Control Regulations. (g) Exemption of income Tax to Crew employed on Singapore Registered Ships In January 1969, the Singapore Registry of Ships was opened to foreign vessels. In order to attract such vessels, the initial registration fee was lowered to $2.50 per net ton and the annual tonnage fee was reduced to 20 cents per net ton. An undertaking was also given that these fees could not be increased for a period of 20 years from the date of the initial registration of the ships. Further, when a ship is sold to another person without a change of flag of the ship, the initial registration fee would be further reduced to 50 per cent of the fee subject to a minimum of $1,250 and a maximum of $6,000. A refund of 50 per cent of the annual tonnage fee would be granted if at least 25 per cent of the crew are Singapore citizens. Shipowners, who wish to transfer the ships to the Singapore flag, need not have them resurveyed if the ships possess valid certificates. In addition, income tax has been exempted on the profits derived by a Singapore registered ship with effect from 1-1-69. These incentives have been successful in attracting foreign ships to Singapore. In January 1969, there were 357 ships with a total of 252,940 gross tons. Now the number of ships is 782 with a total gross tonnage of 1.75 million gross tons. To enhance Singapore's status as one of the busiest ports in the world, it is felt that further impetus must be given to the registration of more ships. Apart from direct employment, the registration of more ships in Singapore is likely to bring other benefits such as from bunkering and repairs. Therefore, it is proposed to give exemption from income tax to crew working on Singapore registered ships with effect from 1-1-74 (based on 1973 earnings). The loss of revenue resulting from all these tax exemptions is estimated at approximately $2 million. Mr Speaker, Sir, the financial policy which I have outlined in this Budget Statement has necessarily laid stress upon public sector programmes and expenditures. But I am very conscious that the success of any policy in maintaining and furthering progress in Singapore will depend also upon the private sector, upon not only the response but also the effective co-operation of both workers and employers in such sector. It is important that we seek to maintain the present very healthy climate in industrial relations in Singapore. Harmony between unions, employers and the Government has been clearly evident in many fields of coordinated activity, for example, in improving labour productivity or in maintaining the highest quality in our products. In the National Wages Council also, it has been heartening that despite strongly competing interests, our unions and employers could so readily come to agreement last year upon how much of the growth of wealth in the Singapore economy should be distributed in the form of percentage wage increases, and how much accordingly retained for further growth in business. It is not unreasonable to expect that for 1973, recommendations for another equitable sharing of rise in national income will again be agreed. With an effective development plan, and assured collaboration from management and workers, I think that we may face 1973 with some confidence in achieving a very rapid growth rate, perhaps at our targeted figure of 15 per cent per annum. Mr Speaker, Sir, I beg to move.

The Question is, "That Parliament approves the financial policy of the Government for the financial year 1st April, 1973 to 31st March, 1974." In accordance with paragraph (1) of Standing Order No. 84, the debate now stands adjourned. Mr Hon, debate to be resumed on what day?

On 8th March, 1973.

So be it.

Resolved, "That Parliament do now adjourn to Wednesday, 7th March, 1973."- [Mr E. W. Barker]. Adjourned accordingly at Eighteen minutes to Four o'clock p.m. to Wednesday, 7th March, 1973. Annex to Oral Answers on Bus Accidents (cols.440-1) (Cols 0483-0486) Appendix to Annual Budget Statement (cols.445-81) (Cols 0485-0522)