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PERMISSION TO MEMBERS TO BE ABSENT Under the provisions of clause 2(d) of Article 46 of the Constitution of the Republic of Singapore, the following Members have been granted permission to be or to remain absent from sittings of Parliament (or any Committee of Parliament to which they have been appointed) for the periods stated:- Maj Fong Sip Chee (Kampong Chai Chee) - from 24th February to 7th March, 1986. Mr Bernard Chen (Clementi) - from 26th to 28th February, 1986. Dr Wan Woon Bee (West Coast) - from 2nd to 8th March, 1986. YEOH GHIM SENG Speaker Parliament of Singapore
PERMISSION TO MEMBERS TO BE ABSENT Order. Introduction of Government Bills (Futures Trading Bill and Securities Industry Bill). Dr Hu.
PERMISSION TO MEMBERS TO BE ABSENT Mr Speaker, Sir, I would like to defer the presentation of the Bills until a later date.
PERMISSION TO MEMBERS TO BE ABSENT All right.
PRESIDENT'S ADDRESS - Debate on the Address - (First Allotted Day) Mr Speaker, Sir, I am greatly honoured to be given this opportunity to move a Motion of Thanks to the President. I beg to move, That the following Address in reply to the Speech of the President be agreed to:- "We, the Parliament of the Republic of Singapore, express our thanks to the President for the Speech which he delivered on behalf of the Government at the Opening of the Second Session of this Parliament.". For the first time since 20 years of continuous and what seemed to be irresistible growth, we are hit by a recession so deep that business confidence is shaken and workers are wondering whether they would be next on the retrenchment list. As a nation, we choose to take the recession head-on. We prefer to tighten our belts and change our economic strategies to cowering under the present difficulties and bemoaning the loss of the "golden age". It is only with determination, self-reliance, a bold forward-looking orientation, that we can emerge from the recession a stronger and healthier nation set on a new path. Future growth will be slower. It is projected at 4-6% per annum over the next 10 years. But if this rate of growth is sustained by will and effort, it will still lead us to rank among the developed nations. It is this long-term target that we must bear in sight. It will give us a sense of direction. Without a sense of direction, we will be lost as a nation. We have responded quickly. First, the series of government measures cutting taxes, the giving of rental and property tax rebates, the lowering of statutory board charges; the unions' ready cooperation with wage restraint; and the appointment of the Economic Committee to examine the full range of problems and long-term prospects of the economy. To those critics who said that the previous government measures were "too little, too late", the recommendations of the Economic Committee are a complete rebuttal. The young leaders have demonstrated that they are not afraid to take bold measures, reversing courses if necessary, and are guided always by what is good for Singapore. Sir, I must admit that I was a little awed by the length and breadth of the Economic Committee's 400-page Report. Even though it has been condensed to some 200 pages in printed form, it is still very impressive. The incisiveness of its diagnosis, the coherent thinking, the measured recommendations, the lucid language and the frank statements; all these, make it a very monumental document. But the greatest joy I felt, as I was reading it page after page, was the realization that its analysis and recommendations reflect so closely the opinions of the people who poured their hearts out to the Government. Of course, not every suggestion of the public could be accepted. It was only natural for some to lobby for sectional interests. The Government must carefully balance their demands. The nation's interests must come first. This is a great documentation of consultation and consensus-building indeed. With eight sub-committees and numerous working groups, the Report has directly involved more than 1,000 private individuals in its consultation process. Added to this are the many forums and dialogue sessions held between Government leaders, MPs, union leaders and the population. Sir, it is as if the whole nation was involved in one big participatory debate. The people saw that the Government was listening, taking note. The people felt they were contributing, and the leaders were delivering their promise to have an open-style government. This open-style must be maintained, even after the crisis is over. The people have tasted of participation, they will hold on to the leaders' promise. If you close the doors to consultation now, once you think the job is done, you would deal a very heavy blow to people's faith and trust. Even now, they are wondering why there is no private representation on the Business Enterprise Committee which is charged with the very important responsibility of looking into the rules and regulations which may inadvertently stifle private initiative. It is not just the existing regulations that must be looked into, but also the new regulations which will come up, because the various schemes have to be implemented. The best-intentioned schemes in the world may still flounder if the guidelines and procedures are too cumbersome or restrictive. The past experience with the Skills Development Fund taught us a very useful lesson. Thus, by requesting representation on the Business Enterprise Committee, the private sector is seeking assurance that the incentives and promotion schemes would become truly effective. The Economic Committee, Sir, has endorsed the Government's plan to reduce the role of the public sector. In the past, Government enterprises have played a key role in our economic development. They were necessary in earlier days when there was a lack of private entrepreneurship or a lack of private capital in certain activities. The circumstances have now changed. The private sector has grown; the Government is ready to divest and deregulate. If these moves are made quickly, they will also put an end to allegations from the private sector of unfair competition from Government-owned enterprises in the past. Whatever the grounds for these allegations, we must now look forward. This is a far more positive approach. Henceforth, the Government would play a role mainly in providing a conducive business environment and creating investment opportunities. It will be left to the private sector to exploit these opportunities. With the Government proposing to take a backseat, the question now is: who in the private sector should take the lead? Foreign firms or local firms? Big firms or small firms? What lines of business should grow and what lines of business should be allowed to die a natural death? Since most of the proposals to provide a conducive business environment and create investment opportunities are across-the-board fiscal policies, theoretically both foreign and local firms will benefit; small business and big business will also benefit. In practice, some will benefit more than others. It is only logical that the local firms, many of which are small, should be given more assistance than the big firms and the MNCs. Sir, the role of local businesses has been debated at length in this House, on a motion on the State of the Economy moved by the Member for Leng Kee, on 30 August last year. In the past, we have placed a great deal of emphasis on attracting foreign investors to Singapore. And the MNCs have helped us grow. They brought in capital, technology, management expertise and markets, and they provided well-paying jobs to our workers. They will still play an important role in our future development. But we must not neglect the local firms, which are our very own people and the source of our own strength. There are over 70,000 of them; they contribute 30% to our exports. And they are committed to Singapore. Indeed, as the Economic Committee points out, it would not be wise for us to depend totally on foreign investors and overseas entrepreneurs. Just think how much persuasion can we have over the buyers of our export services, if our local businesses have little track record of their own in their own country? Just think how much pride can we truly derive, when we point to our children in the future, that this is such and such a building, such and such a bridge, such and such a stadium, that foreigners have helped us build? Does this mean that we should adopt protectionist policies? Of course not. We must abide by our faith in free trade and free competition, not only because these are the most efficient ways to allocate resources but also because we have been imploring the world not to go into protectionism against the developing countries. But I understand, and I was told, that even the words "free trade" and "free competition" have different shades of meaning, and that in fact it might be possible to help the local firms to carve out a niche in our domestic market. But in the end, our local enteprises must learn to stand on their own feet and they can be helped to stand up sooner. Then, we will become more self-reliant. Local businesses feel they have been neglected in the past. Every assistance must be given to help them to become more competitive. There are two types of strategies proposed: one is broad-based assistance through the investment allowance, expansion of the Small Industries Financing Scheme and establishment of a second-tier stock market. The other type is special assistance to those companies with the best potential for growth. Sir, I feel uneasy about the second type of assistance. Who is to determine which companies have the best potential for growth? If a company fails to obtain long-term financing from a private bank which does not think it has the growth potential, it can still try another bank. But the story is different when it comes to a government agency such as the Small Enterprises Bureau. There simply is no other SEB a company can approach! Should the Government not content itself with providing up-to-date statistics, identifying growth areas, give broad-based assistance and let private companies prove themselves in the market? Are you not stifling private initiative if you were to concentrate programme assistance on specific target groups? In the same way, I am uneasy about the identification by Government agencies of specific growth industries in high-technology, research and development, international services and the like. At the very least, there should be careful consultation with private firms, professional associations and academics who are specialists in these areas. But this is detracting from my point about the local and small enterprises. Suffice it to say that the petrochemicals project is still fresh in people's memory. Let me then come back to the small businesses. Sir, when I think of the small local businesses, I cannot help but see the plight of the retail shops and the small industrial workshops in HDB estates. There are thousands of them. Many are struggling or dying. In the past, we have always argued that the Government should not be subsidizing uneconomic enterprises. Fair enough. Small businesses must learn to improve their overall business efficiency through investment in equipment and machinery, worker training, modern management and export expansion. With the cuts in wage costs, cuts in corporate tax and personal income taxes, their viability should improve. But what about rentals? These small shops and factories are still paying the high rentals which the tender system in the boom years have bestowed on them. Since overall business efficiency cannot be improved overnight, the high rentals can kill them immediately. Before the latest revision in the HDB's tendering rules, there were two courses open to them. One was to close shop and lay off their workers. The other was to surrender the premises back by clearing out every fixture, every equipment they have invested in, and re-submit a new tender for a lower rental. If they succeed, they may get back their shop or factory even in the same location, with the same clientele. Some have done this and succeeded. But now, even with the relaxation of this rule, many still dare not risk everything they have invested. Why has it taken the HDB this recession to realize that this kind of rule has been causing hardship to these cases? Some hon. Members: Hear, hear!
PRESIDENT'S ADDRESS - Debate on the Address - (First Allotted Day) Now private property prices and commercial rentals have gone down significantly. Just three years back in 1983, the HDB had raised shop rentals on the ground that the previous low rentals based on tenders made a long time ago did not reflect the market during the boom years. What is the reason then for HDB not to revise rentals now, since the high rentals no longer reflect the prevailing market rate? And then, many of these shops and factories have been relocated because of public housing development and urban renewal schemes. No doubt they have chosen to remain in their lines of business after relocation. This is the best way they know of to make an honest living. In spite of the odds against business success in a much more competitive environment, they hang on to the hope that they can survive. Are we to tell them that if they do not have the business acumen, they have no business to be in business in the first place? To these people who have sacrificed and cooperated with our clearance and resettlement programmes, we owe them a moral obligation, not an economics lesson indeed. The five-year rental concession for resettled cases is one form of appreciation. They should realize this. And they should also realize that change is inevitable. They too must adjust. Sir, many of these provision shops, coffee shops, kway teow and mee factories depend on family labour. Very often, it is the case that the old man wants his sons and daughters to continue working for him. But given the changed circumstnces, the young men and women should change with the times and take up new occupations. If they do not have the skills, they can learn. They can still contribute financially to their parents. So the older generation must accept the change and let go. There is no question that the local businesses must adapt and modernize. If there is a will, there is a way. After all, there are all these textbooks and precepts that one can read and follow. But ultimately you need entrepreneurs. The spirit of capitalism is not born out of black print! Otherwise, why is it that more degree holders did not give us more entrepreneurs? Entrepreneurs are visionaries of new horizons. They may even be "rebels" and school dropouts. Do we understand the full implications of encouraging creativity for our educational system and for the society as a whole? Creativity cannot be compartmentalized into creativity for business, creativity for technical innovation, creativity for this and that. Creativity is of the whole person! If you are creative, you will tinker and experiment with whatever you do, a term borrowed from the Economic Committee Report. You may fall and stumble, but you try again. That is the essence of entrepreneurship too. Sir, when I began to read in between the lines of the Report, I began to see a very intriguing subject unfolding. How to plan educational resources for manpower training, yet at the same time allow students to fail and try again? How to produce more scientists and engineers, while a broad-based education is the very foundation of a well-rounded person? Where have the humanities gone from our education? How to encourage creativity and all the questioning attitudes this entails, while we are still searching for a way to handle social criticisms comfortably? Sir, the challenge for the Ministry of Education is very great indeed, and I would beg them to think thoroughly about the interconnections of these things. Lest I get carried away, let me come back to the economic recession. The construction slump has been identified as one of the major causes of the recession. As the Economic Committee points out, the problems are not just a matter of over-supply. This will be sorted out by the market in due course; meanwhile, the Government is holding back further land sales. More serious is the contraction of aggregate domestic demand due to the lower tempo of construction activities. Here, there is also a limit to what the Government can do by way of pump-priming the economy through more infrastructural projects. Most of the important projects have already been or are being completed. So we must look towards the world as our market. It is good that the HDB continues to build more flats: more homes for the people, more jobs for the local contractors. This would help to stimulate domestic demand. What about the long-term future? If we aim to provide public housing ultimately to 90-95% of the population, it follows that private housing construction will only cater to 5-10% of the population, unless we have a sizable influx of foreign residents again. The present glut in the property market is unlikely to disappear before the end of the decade. By 1990, the HDB would have built another 160,000 units of flats. Beyond 1990, the population would still continue to grow, of course, and additional demand for housing will be generated by the splitting of families when married children move out on their own. But we should not forget that our population growth rate has been declining faster than we expected. In fact, we have been below replacement level since 1975. Unless you can maintain the two-child family, the rate of household replacement will go down too. We must pay close attention to these long-term trends, not just population growth rate, but more importantly, the rate of household formation which is more significant for determining the future demand for new homes. There is also a limit to how many more resettled cases that can be added to demand. Between 1980 and 1984-85, the pace of resettlement was unprecedented, with a total of 67,346 cases having been resettled. There are approximately 35,000 squatters left. A side question is: during this recession, should the resettlement programme continue at its previous rate? Poorer families would do better if they are allowed to stay in the kampungs for a little longer, if they so wish. And the annual resettlement compensation of over $200 million could be put to another use. You may argue that the clearance of squatters is necessary to make way for new development projects which in turn will stimulate economic recovery. But what about your land bank? It is time to draw on your land bank especially since population growth and household formation rates have gone down more rapidly than was previously projected. Young people now are in a hurry to own a flat, not just any flat, but a bigger, better, flat. I do not have the exact figure. But it seems that lots of Singaporeans are not buying flats because they need a roof over their heads. You see the phenomenon of people being allocated flats which are not occupied for up to six months, and even cases where the couple hardly lives in its new flat. The active building programme has greatly reduced average waiting time, and since the minimum eligibility requirement is a couple who need not even be registered to marry at the time of application, our average age of home-ownership must be one of the earliest, if not the earliest in the world! In the eyes of the young Singaporeans who have hardly worked long enough to earn the right to home-ownership, home-ownership has already become a right, not a privilege. This alone has far-reaching social and political implications. Sir, I agree that home-ownership is very important for defence and political stability. However, its other implications have begun to emerge. But let me come back to economics. Interestingly, home-ownership has something to do with entrepreneurship. Because payment for housing, both public and private, is made painless through the CPF, an ordinary person would prefer a well-paying job where the employer contributes to his CPF, to striking out on his own. And because public housing is tied to the use of CPF funds, it has already contributed to the problem of over-saving on the national level. HDB has done a terrific job in providing housing for our people. There is no disputing that. However, having provided for 82% of the population already, it would seem to me that public housing has more or less accomplished its social objectives. Its economic implications must now be carefully examined. Strangely enough, I have not seen analyses of the economics of public housing for a long time until recently. In questioning the economic wisdom of encouraging so many people to sink in so much of their life-long savings into housing consumption, the group of economists at the National University who wrote the Report of the Study Group on the CPF in 1985 may have touched the tip of an iceberg. More research on the economics of housing must now be embarked upon. The Government must release fuller information. Government officials, financial experts and academics must get together and deliberate on this very important issue. It came as a surprise to many people, Mr Speaker, Sir, when they read in the papers that as high as 53% of our present workforce have only primary education or less. With the opening opportunities in education, with reduction in educational wastage, our young people will have little problem. In due course, this high percentage will come down at a faster rate than before. But there is one whole generation in the workforce that we have forgotten about the middle-age group. Sir, in 1984, there were 131,000 men and 53,000 women between 40-49 years old in the workforce. 184,000 of them, or 15% of the workforce. Some 51% of them had primary education or less. This generation was born in the 1930's and the 1940's. They bore children in the 1950's and the 1960's. By now, some of their children have not yet started working and contribute to family expenses. These few years are going to be very tough for them indeed. You tell them, "Go for more training, take BEST classes." You go to the BEST classes and make some observations. Mostly young students in their 20's. The handful who are in the 30's and 40's are struggling with obvious pain on their faces over a language which is foreign to their daily living, over Mathematics which has little to do with what they are doing and will be doing. It is not just age which is against them, but the seeming irrelevance of learning English and Mathematics when they worry about feeding their families. This, even in the best of times. What now? The Government's goal of raising the median educational standard of the workforce to the equivalent of Secondary 4N level by 1990 will never touch them. What can be done to help these age groups? In the past, they worked as semi-skilled or manual workers. The greatest proportion are production and related workers, transport equipment operators and labourers. Now, we are pushing for mechanization, automation and high-technology industries. It is as if we are leaving behind a whole generation who grew up during the war. For these people, what is the solution? Job training and re-training must take a more direct, tangible form for this middle-age group. This recession is going to teach all of us a very good lesson. We have lost much of our flexibility. The good years have given us unrealistic expectations. Our young people no longer want to work with their hands; they prefer soft jobs; they shun the third-shift. But the hard fact of life is that no one owes us a living. Over the next couple of years, unemployment may still rise. We all have to tighten our belts and adjust. We have to lower our expectations and adapt to a lower standard of living. There is no other choice. Sir, I was talking to a young man on one of my rounds in the constituency. He was retrenched six months ago. He told me he was earning a four-figure salary as a technician. He has had some job offers since retrenchment, but he said they were offering him $500-600 only. He did not think the offers were fair; so he is still unemployed after six months. I asked him, "Is his wife working?" The answer was, "Yes, she earns about $400." They have no children yet. So it is not a question of his not being able to accept the job offers because they would still not enable him to feed his family. It is a matter of his being used to a high standard of living. Did he use this period to upgrade his skills, so that when the recession ends as it must, he would stand a much better chance of finding a good job again? No, he did not; and he is sitting at home. Were the job offers given to this young man fair? How can we be sure that employers are not taking this opportunity to exploit the workers? In what ways can workers be assured that employers would be fair to them? A peaceful industrial climate we must preserve, but employers should not take the workers' sacrifice for granted. Meanwhile, there is bound to be a lowering of the standard of living for almost everyone. According to the 1982-83 household expenditure survey, food constitutes the highest expenditure item for the average household, some 38% of the average monthly expenditure. Out of this, 16% goes to cooked food. Another item is miscellaneous, 21%, which includes recreation, health and medical expenses, beverages and tobacco. A lower standard of living would mean less eating out, less designer jeans, less beer or soft drinks, less cigarettes. Our average workers have got used to these luxuries. But such habits must go or be greatly restrained, and perhaps all the better for our health and nutrition. But we should be worried if the poorer families start cutting down on food and other essentials. They would cut down on food because they cannot cut down on housing. Nor on clothing, which is a very small item in any case. And they cannot cut down on transport. People must work. Children must go to school. The poor cannot cut down on public transport expenses. Transport takes up 10% or slightly more of the household expenses for the lower expenditure groups. It is the most non-variable item until you come to the higher groups above $1,500 per month. Sir, this worry will still continue to haunt them even after the recession is over, and MRT is coming in 1988. Our land transport problem must be solved. There is no easy answer. But people are asking questions. Would the falling oil prices give the low income families some ground for hope? So, what is the workers' side of the bargain? Sir, the hottest topic in the coffee shops and the hawker centres is not entrepreneurship or creativity, education or training. Nor is it over a future standard of living matching the OECD countries! The hottest topic in town is the CPF cut! The Economic Committee's recommendations are pro-business; and rightly so, because economic recovery is at stake. But to the workers, the CPF cut is a cut in wages. Their most pressing concern is over ability to pay for housing. As reported in the Straits Times on the 18th February, 1986, the Member for Anson accused the Government for not doing anything to make it easier for workers to meet the instalment payments. He has conveniently forgotten that HDB housing loans are being re-scheduled over a longer repayment period. Retrenched workers having difficulty in paying instalments are allowed deferment; and with the drop in CPF interest rate, the interest rate on HDB loans has also come down. The Member for Potong Pasir has called for a 15% reduction in the employees' CPF contribution. Has he done any proper calculations as to how this, together with the 15% cut in employers' contribution, would affect workers' ability to pay for housing, medical expenses, as well as for old age? The way the Government is proposing to deal with the whole CPF question is to ensure that the worker can keep both his job and his home and having enough for Medisave and old age. Again, the Member for Potong Pasir asked for a lowering of the prices of HDB flats. Does he not realize that HDB flats are already very cheap as compared to private flats? And what about those years when private property prices were rocketing, and our workers' flats also rose in property value? Still, there is a case for the Government to consider the workers' plea for a cut of their side of the CPF contribution. The Government is concerned over how the workers would spend the extra cash. For the low-income families they need this for food and transport. All the more so if more become unemployed. People have to eat and children have to go to school. It would be most ironical indeed if people were driven to desperate acts because their own savings are locked up in CPF funds! Sir, I have taken up much of your time. In the ensuing debate, more issues are bound to be brought up. We thank the President for laying down the directions for the next few years and the long-term future. We must strive to become an international business centre and a nation of excellence. Once business confidence is restored, we will move forward again. Sir, I beg to move. Question proposed. 11.41 am