Hansard, 1986-02-27

Under the provisions of clause 2(d) of Article 46 of the Constitution of the Republic of Singapore, the following Member has been granted permission 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 Lim Chee Onn (Bukit Merah) - on 28th February, 1986. YEOH GHIM SENG Speaker Parliament of Singapore

Order read for Resumption of Debate on Question [24th February, 1986], '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.".' - [Dr Aline K. Wong]. Question again proposed.

Mr Speaker, Sir, I just want to clarify a point which came up yesterday. Yesterday morning when I was not present in the Chamber, the Member for Anson again referred to the recent incident when 113 daily-rated employees of the Public Works Department were made redundant by the completion of the Changi Airport and other minor works. He said I had misled the House. Unfortunately he was not present in the House yesterday afternoon when I came in, and he is still not here this morning. Nevertheless, allow me to set the record straight. Of the 113 workers, 106 were eligible for retrenchment benefits. They were asked individually to opt for retrenchment benefits immediately or to be redeployed in new jobs. 97 workers opted for retrenchment benefits. (I said "95 workers" on Tuesday, speaking from memory. The number is actually 97. I stand corrected.) Of the other 16 workers, four have been redeployed by PWD. Another 10 were referred to the Employment Services Department of my Ministry to help them get other jobs with the Ministries or statutory boards. The ESD has managed to place one carpenter in the Primary Production Department. It offered two jobs, driver and gardener with the Police Department, to a second worker but he turned down both jobs. He wanted to be a motor transport driver with the Ministry of Environment. The Ministry, unfortunately, was not recruiting. The 10 workers referred to the ESD wanted equi- valent or similar jobs with at least the same pay. Most of them were overseers and drivers earning $25 to $30 a day. The majority were in their 40s, with one aged 58. Because the job preferences and wage expectations were so specific, the ESD had tremendous difficulty finding new jobs for the remaining nine retrenched workers from PWD. If their expectations were lower, there are quite a number of jobs that we could refer them to. Apart from the 10 workers which PWD referred to the ESD, the other 103 workers have not approached the ESD for help in finding jobs.

Mr Speaker, Sir, before we adjourned yesterday, I was speaking on the subject of the 15% cut in the employer's CPF contribution and the Government's effort to ensure that, in the words of the First Deputy Prime Minister, "No one should have problems with housing loans." These are reassurances that will indeed allay the fears of those who have made housing loan commitments, based on the premise that their total CPF contribution will remain at 50%, that is, 25% each from the employer and employee. Sir, the problem that will arise with rescheduling of loans is that of legal fees, and this can come up to a very hefty sum. I hope that the HDB will choose not to impose any legal fees and that, as far as the private sector is concerned, whatever legal fees are incurred will be considered as part of the loan. I would like now to turn my attention to the question of consumption tax. I make a plea to the First Deputy Prime Minister to delay this tax for as long as is possible. This would give our retail industry a chance to recover. Even today, shopping in Hong Kong is cheaper than in Singapore. If we would like to increase our competitive edge, the application of the consumption tax at this point in time is not appropriate and will have adverse effect on tourism. The new corporate tax. Mr Speaker, Sir, it has been suggested that this new corporate tax will be implemented from FY 87. Rebate from personal income tax has been given for this year and I am sure it will be very much appreciated by everyone. I make a plea that if the Cabinet feels that the new corporate taxes should only be effective from FY 87, why not give a similar rebate to corporate taxes for this year? Sir, proposals have also been made to lower property tax further. This, I think, will do the property market much good. I ask that this reduction of property tax also be extended to residential property. All the reasons that have been given for reduction of property tax to commercial property are equally applicable to that of residential property. The residential property market is facing as much a problem as that of the commercial property market. In closing, Sir, I would like to say that the package as a whole, when considered with what had been announced in the previous year, is satisfactory. The job is now to go on. There will be disagreements, and we can go on disagreeing forever. But the task that lies ahead for us is not to go cherry-picking and keep on at this, but take the next step forward which definitely will entail some hardship and difficulty.

Mr Speaker, Sir, I rise in support of the motion standing in the name of the Member for Changkat. Sir, yesterday the First Deputy Prime Minister stood in this House to make a clarion call to all the people of Singapore to stand as comrade-in-arms in the battle against the current recession. He did not promise us an easy time nor an easy task. Instead, we will have to sacrifice. Our expect ations need to be lower. Our standard of living will probably drop. But in the end, we will come out leaner, stronger and more prepared to face future challenges. In the end when the battle is over, that nation of excellence will be ours. In the past few days we have witnessed in one of our Asean neighbours, the Philippines, the awesome strength of people power. They have shown the world how people with one heart and one mind can perform miracles. Sir, I would like to ask the people of Singapore: Are we any less patriotic than the Filipinos? Are we any less capable? Are we so blind that we cannot see that we need people power to overcome our present recession? Sir, this is our economic Dunkirk and the First Deputy Prime Minister has called upon the nation to take up arms against it. Our weapons shall not be the weapons of war, but shall be the weapons which we call hard work, cooperation, our will to succeed, and our desire to excel. I am confident that the people of Singapore will respond to that call as one nation, one mind and one heart. The Government's policy in the economic field appears to be based on the underlying philosophy that is contained in the Economic Committee's Report. The President has said so, and the First Deputy Prime Minister has confirmed it. Hence, I hope that I will be able to contribute by adding some suggestions, Sir, for improvement to some aspects of the Report. I also echo the call made yesterday by the Member for Alexandra - that the Government will listen to this side of the House, and that it will consider all the suggestions and modifications made by Members of this House when they formulate new policies. But, first, I would like to support the plea from the Member for Fengshan regarding the tax rebate to be given to corporations for the Year of Assessment 1986. Sir, there are a lot of ailing companies that are experiencing cash flow problems. The tax rebate will certainly help them and, I hope, will certainly prevent further retrenchment. We must not forget that tax is based on profit that has been calculated on an accrual basis. Whereas you have to pay tax when it is due, you may not get your income when it is due. By this, I mean that tax is based on company profits that are based on the assumption that your creditors will pay you. It is only, after some period of time, when creditors do not pay you that you are allowed debts to be deducted as bad loans or losses. But in the meanwhile, whether the creditors pay these ailing companies or not, the companies will have to pay tax on that income. The other point, Sir, is that on residential properties. There are those people who have purchased second houses for investment purposes with their CPF from about two years ago. They too are suffering from the present recession and the downfall in property prices, including the very bad rental market. They too need help. And I see no reason why the rebate on property taxes cannot be extended to them. Another aspect I would like to touch, before I go on to the Economic Committee's Report, will be on that of the unemployed. Whatever may be said in this House, Sir, the unemployed are still unemployed. It does not matter whether there are 150,000 to 180,000 work permit holders in Singapore, although this presumes that there are jobs available if the Ministry of Labour will not issue work permits. Sir, we must look also at the human aspect of it. Could it be that it is not just a matter of the unemployed not willing to work hard? Could it be that the pay is simply insufficient to support them and their families? Sir, we all know that these jobs require a lot of physical labour. This means that even if they take such jobs they might be too tired to moonlight on a second job in order to support their family. Sir, more importantly, if you look at it from a national viewpoint, if these unemployed are asked to take on these jobs, they will forever be the unskilled or the semi-skilled workers. And when the next recession comes along, they will be the first to be hit again. Sir, should we ask them to remain forever in this low-paying jobs? Should we not instead help them to improve themselves? By this, Sir, I mean that they are presently unemployed and they presently have free time. Why can't the Government give them full-time training? In this respect, I would like to propose that the Government set up a fund to train these unemployed people on a full-time basis. Perhaps they should also be paid a stipend to help them to support their families in the meanwhile. This stipend could continue as long as they are under training. I am not talking about much, Sir, perhaps about $400-$500 per worker. They can then learn new skills on a full- time basis and can take advantage of the next boom when it comes along. They would then have skills relevant to the future, and not the skills of today because these skills learnt on the job are normally non-transferable and skills learnt in sunset industries. Again, looking at this aspect of unemployment, there is also another large group that we may have to face. Here I am talking about the large group of school leavers. They too have little skills or maybe no skills at all. Although a number will be going for further studies, there will be a number that will need, for some reason or other, such as family background, to enter the employment market. They too will find difficulty in seeking employment. Could the Government not also provide full-time training for these people? And again pay them some wages or some stipend so that they can support themselves. Sir, coming to the Economic Committee's Report itself, I would like to touch on one key issue, ie, the Government's faith and belief that it will be the private sector that will have to act as the engine of growth. In this respect, I would like to bring up two important points. One is the Government's goal of privatizing its companies and its goal of not getting into the private sector unless for national security reasons. Sir, I think the best reaction to this is summed up by a business friend of mine when he said, "Hooray, now I can afford to be successful", When I asked him what he meant by "I can afford to be successful", he said that in the past, he was afraid to be too successful because one statutory board or another would start a company to compete with him. So with the Government's new objective, he thinks that he will not be penalized by the Government for being too successful. Sir, I think this is one of the best moves the Government has made in its qualitative philosophy and policies. But I would like to ask: Why is it that recently we heard that Telecoms is now going into the business of providing PABX systems to private companies? I do not believe that this is one industry or one sector that concerns issues of national security or defence. And I do believe that the market is competitive enough with various companies providing PABX systems. Sir, the other issue I would like to bring up refers to the formation of the Business Enterprise Committee. Here we have a committee chaired by a Minister of State with its members consisting of senior civil servants. These are people who formulated the policies in the first place. These are people whose good intentions and good wishes, with all their power at their command, have formulated the policies from their viewpoint, from the viewpoint of the Government. It is difficult for those in the private sector to understand how these people can now look at policies from the viewpoint of the private sector. Since the stated objective of this Committee is to remove red-tape and bureaucratic road blocks to facilitate business and entrepreneurship, it is indeed strange if this committee has absolutely no private sector representation. Sir, the Government Divestment Committee has as its Chairman a private sector businessman, Mr Michael Fam, who was recently voted Businessman of the Year. I think if the Government can entrust the Divestment Committee to a private sector businessman, the least it could do in its Business Enterprise Committee is to have some private sector representation. Mr Speaker, Sir, I spent some time bringing up these two examples not so much as isolated incidents or cases. These two examples merely illustrate that the formulation of policy as contained in the Economic Committee's Report are mere words. The First Deputy Prime Minister has called for the people of Singapore to implement them. I say, "Good, the people will do so." But similarly, Sir, the public sector must also do its best to implement these policies to make them into flesh. And, in this respect, sometimes I think the civil servants do not know what their political masters want. Sometimes I believe that policies are implemented solely from their viewpoint and not from the viewpoint of the nation. In this respect, Sir, I hope that there will be some Ministry or some body in the Government looking at this and to ensure that implementation of policy be made as expeditiously and as favourably as possible. Sir, I would now like to touch on two policies which have been stated in the Economic Committee's Report that these are policies necessary for future growth. Both refer to taxes. The first one I would like to touch on is the tax deduction for equity investments in venture capital and business expansion. Sir, the Committee has proposed a 50% deductibility for such equity investments. This means that at the new proposed corporate tax of 33%, the tax break for these people is only 16(r)%,. For every dollar of investment they make, they will save 16(r) cents in taxes not paid. Sir, we are aware that these will be the companies that will provide the cutting edge for the long-term growth of Singapore. These will be the companies, hopefully if they grow, will provide employment for us. I purposely said "hopefully" because we all know that the rate of failure of these companies is high. In the US where venture capital is a big industry, people are talking about one in 20 succeeding, or at best one in 10. But if they succeed, they provide the sunrise companies of the future. And in this respect, I do not think that 16(r)% tax savings is a sufficient incentive for investments in venture capital companies. Look at the tax breaks given to plant and machinery investments, including the 100% write-off in the first year for computers, and special rates of 50% investment allowances on some types of plant and machinery if approved by the EDB. They are in fact very much more favourable than those being proposed for investments in venture capital companies. Instead, I would like to propose that the Government consider a 100% deductibility for investments in these companies. It will only give them a tax savings of 33%. Even the odds are still not good but at least it will give them a fighting chance and give them an incentive to invest. Sir, I do not think that this is too much to ask because the approval of these investments still requires the official stamp of the Economic Development Board. As it is, the proposals are for approved venture capital projects, business expansion and venture capital funds. The Government will still have the final say. If this is too much to ask, perhaps they can have a sliding scale from 50% to 100% deductibi- lity. Let the EDB to determine whether a project should have 50% or 100% deductibility, or something in between. My final point, Sir, is in regard to indirect taxation. The Member for Fengshan has already brought up this issue and I would like to support his views. Besides the administrative difficulty, the leakages and the abuse that can arise from such taxes, there are two other points I would like to bring up. These refer to tourism and the fact that this tax is a regressive tax. Sir, tourism is presently one of our major sectors in the economy and it will continue to be a major sector. Unlike other places which have a lot of cultural heritages, sights and other things for tourists, unfortunately, Sir, many tourists come to Singapore because we advertise Singapore as a major shopping centre of the East. Therefore, such a tax will make things very, very difficult for that. There are of course various ways for making things easier. One is that they should have a refund of the sales tax imposed on items that they have purchased. But in order to avoid abuse, these refunds are normally not given at the point of sale since items could be purchased for local friends. Refunds are normally given when the tourists leave the country. Sir, I had an occasion many years ago to purchase something in London and I wanted to claim a refund at the Heathrow Airport. The tussle and the difficulty I went through trying to carry my purchase to the customs officer and waiting for a refund is something that I would not wish on any tourist coming to Singapore. And I am very sure when this happens if we adopt such a system, our tourist trade and our retail trade will be very much affected. The other point, Sir, is that it is known that the lower your income, the greater is the percentage of your income spent on consumption. Unfortunately, as long as you spend, whether you are rich or poor, you will pay the same percentage of sales tax. The First Deputy Prime Minister has said that it will be on some non-essential items. In this respect, while the principle is right, I would like to see what these non-essential items are. But in the meanwhile, taking all things at face value right now, I think that the poor will probably pay a greater percentage of their income in taxes, if we try to shift the burden of tax from a direct income tax to an indirect sales tax, or consumption tax. However, Sir, I do agree with the economic objectives of the consumption tax. Tax should be on spending and not on savings. But unfortunately a consumption tax such as sales tax, has undesirable effects. I would like to propose that the Government seriously consider a certain form of tax known as the expenditure tax. This tax is based on a very simple premise that your income minus savings is equal to expenditure. You take your income for the year, and if you minus your net savings, the residual is assumed to be your expenditure. Net savings means a higher level of savings at the end of the year when compared to the beginning of the year. Then you minus it. But if you save less, ie, if your level of savings, this year is less than the level of savings last year, then you have to add the difference to income. To give a numeric example, Sir, if your income per year is $10,000 and, as at the end of last year, your savings was $1,000, your expenditure would be $9,000. If at the end of this year, your savings is $2,000, one can therefore presume that $1,000 is saved.Tax then, Sir, is imposed on this $9,000 because that is what you spent. Therefore, Sir, it is a substitute for income tax but based on expenditure and this tax can be taxed on a progressive basis. This means that the more you spend the higher the amount of tax you pay because the marginal rate goes up. Sir, this is nothing new. A green paper on this was produced by SDP. Sir, I do not mean the Singapore Democratic Party, but the Social Democratic Party in England. They have produced this green paper as an alternative to the income tax in the UK. I think it will be worth our while to look at this paper to study whether this system could be used in Singapore. With that, Sir, I support the motion.

( In Mandarin): Mr Speaker, Sir, in his address the President pointed out that in these trying times of an economic recession the entire people of Singapore should collectively and cohesively assist the Government in overcoming our difficulties. I believe that all duty-conscious Singaporeans will accordingly respond to the call by the President. The First Deputy Prime Minister announced yesterday that the Government accepted many policy recommendations of the Economic Committee. These recommendations will be implemented soon. I feel at this moment that political solidarity is very important. It is only when we are united that we will be able to concentrate our efforts on carrying out the necessary measures to revitalize our economy. The overthrow of President Marcos shows very great courage in the Filipinos. However, if by some misfortune Singapore is thrown into a political turmoil like the Philippines, and there should be disunity in Singapore, then the vitality of the country will be seriously affected. Economic recovery in such circumstances will then be just castles in the air. The economic crisis that we are facing is a political test of our people. Those who are subject to this test are the new generation of Singaporeans and the new generation of political leaders, ie, the younger Singaporeans. Will this younger generation be able to manifest their concerted effort and ability to survive together in unity in times of crisis and trial? What will be the outcome of this test? The answers to these questions will determine the long term future of Singapore: Whether the future would be bright, stable and predictable or grim, unstable and unforeseeable? If we cannot stand united and put together all our effort to bring the economy onto the right track, then we will be faced with social instability and the future will be much less foreseeable. The present situation is like a little boat fully laden and tossing in the high seas. Right now the urgent task is to ensure the safety of all the people in this boat. We must all recognize that everyone in the boat shares the same fate. If the boat sinks, then everyone is in danger of losing his life. Therefore, we must do our best to lighten the burden on this boat. We must throw away things or try to jettison from the boat to lighten the burden of the boat, ie, to make some sacrifices. So the cut in the CPF, in corporate tax and income tax are measures similar to jettisoning the things from the boat in a storm to ensure and enhance our safety. Undeniably it is the wage earners who are bearing the brunt of the impact because they are in the majority. The cut in CPF and the removal of the mid-year incentive payment, wage restraint, etc. are all sacrifices and sufferings to them which they have to bear. However, this is a bitter but effective medicine that the people have to take for our economic recovery. We must convince the wage-earners to accept this suffering, this bitter pill which will cure our economic ills. So this is a very important and difficult task. It is a task that we must succeed and must not fail. To convince our workers to swallow the bitter pill, there are three things to do: (1) everybody should be made aware that whether or not the workers are able to make this temporary sacrifice is the key to success or failure in ensuring our economic recovery. (2) We must increase our vigilance and guard against people who use fallacious arguments or make misleading speeches to instigate our workers and to fan their feelings of dissatisfaction. (3) We must find all possible means to lighten the suffering to be borne by the workers, especially the lower income group. I feel that apart from Government leaders and trade union leaders who have to patiently and carefully explain all the circumstances to the workers, leaders in the business community, the community leaders, local leaders and the mass media, including SBC, newspapers, etc. should also have an active role to play in explaining the new economic policies to the people of Singapore. Mr Speaker, Sir, I have mentioned three points. I feel that the third point I have raised is especially important. The Government has announced the cut in the employer's CPF. It has also announced measures to help the people in keeping up with their housing loan repayments from CPF. These are very reassuring measures. But I feel that the Government has to go one step further to show the people that it has the interest of the people at heart. The Report of the Economic Committee has stated that the Government should continue to reduce other costs within its control. The statutory bodies may have reduced their charges but they must also continue to pass on to the public any further savings resulting from higher efficiency or lower fuel prices. I feel that this is very important. To implement this the Ministers in charge of the various Ministries must issue an immediate directive to all their Permanent Secretaries and chief executives of the statutory boards to make an overall review of the measures and charges that have an effect on the livelihood of the people. They must be told to do their best to minimize the pressure on the standard of living of the people. All kinds of charges, taxes and levies, like the PUB charges, rentals, bus fares, petrol tax, parking charges for lorries, etc, must be reduced as far as possible without hesitation. Do not wait for the public to make repeated calls before the changes are made or even not made. In the past when our economy was good the statutory boards had very efficiently made an upward revision of charges and fees. Now the economy is in a bad shape. They must show equal efficiency in making downward adjustments of their charges and fees. Talking about efficiency, it is also my hope that the Government will be able to maintain the morale of the thousands of civil servants. It has already been mentioned that the civil servants will suffer a cut in their CPF and forgo the half-month incentive pay. I want to know whether the Government has any plan to ensure that the efficiency of the civil servants will not drop with the cut in CPF and the loss of incentive payment. Personally I feel that employment in the civil service has the greatest security and the remuneration is quite good. So although they suffer some sacrifice, they should work harder and should not be demoralized. On the whole, Sir, we have all understood the whys and wherefores of the economic recession. We have also charter out the course and planned the measures for solution. It is now time for the whole populace together to take action and change the adverse course. Mr Speaker, Sir, I have every confidence that we are capable of making a recovery in our economy. If we cannot do that, then our future will be at stake and we will also lose our face in the whole world. In the present circumstances, we appear quite united and confident and courageous. I believe that we will be able to overcome the present difficulties. At least in the present circumstances we are able to loan out Dr Goh Keng Swee to be an Economic Adviser to China, a country of one billion people. If we cannot solve our economic problems, it will be a laughing stock. 11.45 am

Mr Speaker, Sir, I rise in support of the motion moved by the Member for Changkat. Sir, the current economic recession is indeed an event of great historical significance. Its significance lies in the revolutionary recommendations of the Economic Committee and the Government's response to it as spelt out by the First Deputy Prime Minister in this House yesterday that will reshape the lives of all Singaporeans and determine our nation's destiny in the next 10 to 15 years. We have no alternative but to look ahead, now that the golden age of economic growth for Singapore is over. We are now thrust into a future which has become increasingly turbulent and unpredictable. Sir, the measures announced by the First Deputy Prime Minister are more than ample proof of the deep concern and interest the Government has for our nation and for our people. The forthcoming injection of $2.8 billion into the economy should be a welcome relief to the business community. It cannot be otherwise as it incorporates the major recommendations of the Economic Committee. Sir, permit me to touch on the bold decision to cut employer's CPF contribution by 15% points. No one can deny that this move is painful but necessary as it means cutting workers' salaries and savings. If I may suggest, besides the unions, employers must take the lead to show conscious efforts to patiently explain to our workers and make them fully understand this far-reaching implication. We also expect employers to act positively and responsibly to assure the workers that whatever savings that are derived are for the viability of the long-term security of the firms and its employees. This CPF cut together with the voluntary wage restraint is a big sacrifice on the part of the workers which must be equitably matched by the management staff. When effected from 1st April, 1986, I would like to propose that a systematic monitoring be done by the Government to prevent any potential abuse with a view to gradually restoring the CPF rate in keeping with our national objective of a high savings rate. Sir, the next point I would like to touch upon is on the rescheduling of housing loans. Indeed, it is reassuring to hear of the relaxation of CPF rules to assist home owners. It is adequate for the majority of members affected by the 15% reduction. It is fair to assume that some of our worst fears have been dispelled. However, this is just the beginning and how the implementation of this reduction will work remains to be seen. Sir, at this juncture, like the Member for Braddell Heights, I would like to appeal to the HDB and other Government agencies to be extra sensitive in their dealings with members of the public, in particular, those from the lower income group who are the hardest hit by the CPF reduction. In this connection, I applaud the HDB's decision to consider deferring or suspending the instalment payments temporarily. Next, Sir, the personal income tax relief is an occasion for joy also to the lower income workers. I say this because it has come to my attention that some workers have resorted to borrowing money to pay their income tax as they are unable to make ends meet during this current slump. Surely, Sir, we do not want this trend to worsen and this step will definitely alleviate genuine financial hardship. The third point which I would like to touch upon is on education investment. It is noteworthy that, in passing, it was mentioned by the First Deputy Prime Minister that a sum of $3 billion will be spent over the next 10 years or so to upgrade our schools and other institutions of learning. This will open new dimensions to enable us to improve our future competitiveness which is very clearly expressed on page 8 of the President's Address. I quote: 'Our products must be known for their high quality. Excellence must be our way of life. Each one of us must be well trained. Each individual must seek to do his job conscientiously and competently.' As such, Sir, all Singaporeans have to impress upon themselves on the necessity to raise their educational standards. What we have to understand is that this is an unending battle. Students and workers alike must seek and explore every available opportunity. I would like to suggest that the NTUC explore the possibility of working closely with grassroots organizations to reach out to those lower income, primary level educated workers who live from hand to mouth daily and who seem to be cut off from the mainstream of our national life. I am making this suggestion because I believe current efforts aimed at this group may achieve limited success. A more concerted effort is needed in this direction. At the same time, I trust the Government will see to it that there will be sufficient places and facilities to meet our future educational requirements. Sir, it is going be an arduous and difficult task for all of us to get out of this recession. We are indeed in difficult straits and we, as a nation, are undergoing a severe test. It is a test of whether we are a mature society, cohesive, decisive, steadfast, showing care and concern for each other when faced with a crisis situation. I am confident, Sir, being better informed and better educated, the majority of Singaporeans are level-headed, able to rationalize things and able to perceive between what is pragmatic and what is a pipe-dream. Let us all heed the call by our national leaders to join forces to share both joys and sorrows for, as the President said, "It is more vital now than ever that all Singaporeans work together, both with each other and with the Government, to overcome our difficulties." Let us carry on with our job to lay the foundation for our future growth. Now is the time for us to demonstrate to the outside world that we have the capacity to survive and that we are determined to get out of the downturn. Now is the time for all loyal Singaporeans to stand up for Singapore. On this note, Sir, I once again support the motion moved by the Member for Changkat. 11.55 pm

Mr Speaker, Sir, I support the motion moved by the Member for Changkat. Sir, yesterday the First Deputy Prime Minister ended the speculation of many Singaporeans with his announcement of the Government's package to help entrepreneurs cut costs and restrain wages. I would think most, if not all, entrepreneurs should be satisfied with the concessions the Government gave. On the other hand, many employees are rather disappointed, disappointed because the Government did not consider at all a cut in CPF contribution for them. Of course, the First Deputy Prime Minister has assured us that, with the changes in CPF contribution regulation and the bridging loans that would be available, most home owners do not have much difficulty in meeting housing instalments. The First Deputy Prime Minister has also promised that HDB will allow hardship cases to defer housing instalments. But, Sir, what are these hardship cases? I believe HDB will need to come out quickly with some clear guidelines on how they define "hardship cases". Sir, while the Government can help to cut costs to entrepreneurs and help to restrain wages, the main battle to stay in business has to be fought by the entrepreneurs themselves. Our First Deputy Prime Minister has called upon our entrepreneurs to carve a niche for themselves in the world economy. While the entrepreneurs must be able to identify the market niche in which they can try to capture, the entrepreneurs themselves must also learn to recognize changes in market trends and react fast enough to exploit the changes in market trends. Sir, the Economic Committee has helped by identifying information technology as a new growth industry. Information technology is a comparatively new concept to many people in Singapore. When the Government started its computerization programme in 1980, there was a need for computer awareness and literacy among the population. There will be a similar need now to bring information technology awareness to the people to prepare them for the emerging information society. People need to be educated on information technology - what it is, what can it do, how can we use it and how can we use it to make money? Information technology is a very clever use of both computer hardware and software systems in all aspects of information flow. Without the software to drive the hardware, we do not get information technology but we get a lot of junk around. The software required is sophisticated and for the time being it will need to be imported. There is much technology transfer needed. But Singapore today suffers from a bad reputation as a software copy centre and reputable software houses overseas are hesitating to export their products to us. There is therefore an urgent need for the Government to speed up its copyright laws so that developers of information technology software will feel safe to export or invest here. With good copyright laws enforced, local software writers will also be encouraged to embark on developing software for information technology. Sir, with the development and mass exploitation of information technology there will be sharing of data base. This data base will contain much information of individual people. Computer security and privacy laws will need to be introduced to control the right of access to the information, to prevent the abuse of information and to protect the privacy of individuals. Here I would like to add a word of caution to the entrepreneurs. Information technology has also been identified as a future new growth industry by the NICs. Taiwan has embarked on it and is slightly ahead of us. South Korea is not far behind. China is quietly catching up very fast. To be able to give our competitors the run for their money, we must continue to have an honest, efficient and stable Government besides a good investment climate. Sir, yesterday when the Government announced the measures to help the industry, the Government also announced a major shift in its policies. I hope the Government will give the people an assurance that these changes are not temporary measures and the policies will not be reverted in two years' time as the impact of the policy changes will need time to take effect. The low cost in doing business must be maintained even when the recession is over if we want to stay competitive.

(In Mandarin) Mr Speaker, Sir, the First Deputy Prime Minister announced yesterday that the Government accepted the various recommendations of the Economic Committee on Taxation. Today, the Straits Times headlined this news. The big companies in Singapore will gain big benefits. Small companies will get small benefits. On the face of it, all companies whether foreign or local will benefit from this announcement. But, it is the big companies that will derive the greatest benefits, because it is the big companies, with thousands of employees, which will save millions of dollars annually under the tax reduction. As pointed out by the Member for Paya Lebar, among the 70,000 local companies, there are about 62,000 with employees of less than 10. So these small companies will not benefit much or save much, by virtue of tax reduction. These small companies are mostly occupying rented premises from HDB. So the question is whether the rentals from HDB are too high, and whether these small companies are doing good business every year is a matter that many MPs know quite well. I hope that the Minister concerned will understand the plight of these small local companies and petty traders and for their benefit reduce the shops rentals so that these small traders and businessmen may be able to continue to do business during this difficult period. When we call on the workers to tighten their belts and we allow employers to cut their CPF contributions so as to preserve jobs, Mr Speaker, Sir, we must also at the same time pay attention to the cost of living such as the prices daily necessities, food and services, especially those in hawker centres which have a direct impact on the livelihood of the lower-income workers. Mr Speaker, Sir, the Government has announced a cut in the various taxes. The Government has also announced its intention to introduce consumption tax. That is like giving out something with the right hand and collect something back with the left hand. As pointed out by the Member for Alexandra, it is like cutting a piece of flesh from the thigh to patch up a wound on the chest. Such a measure will seriously affect businesses connected with the tourist trade and departmental stores. On one hand, the Government calls upon the people not to expect wage increases and a higher standard of living during this recession; on the other hand, why should the Government be in a hurry to collect consumption tax which will increase the burden of the people during the two years of recession? Mr Speaker, Sir, during the recession, it is right for the Government to carry out public development projects so as to stimulate local economy and to create more jobs. But we must also ask ourselves whether these public projects will benefit local construction business, for example, the MRT which was started a few years ago. This is supposed to be a great civil engineering project of high technology. Many foreign firms have succeeded in getting the contracts for these projects. Because the high technology civil engineering projects requires more sophisticated equipment and machinery, I believe that the cost of the machinery and equipment would account for about 20-30% of the total cost. These machinery and equipment are imported from overseas, but whether they are imported old or new is another matter. Importing the equipment and machinery means an outflow of foreign exchange from Singapore. And there is a great possibility that we have been importing second-hand equipment and machinery. Sir, I hope that the Government when implementing more and more public projects would take into account the plight and position of local construction businessmen. We should consider whether we can divide the big projects into smaller projects so as to enable local contractors to have an opportunity to tender for such projects. Even if the tender prices offered by the local contractors are higher by 5% to 10%, the Government should consider awarding the jobs to them because the profit will be ploughed back to our own economy, and this is good for the country. Sir, on the import of foreign labour, the Government has been collecting a $200 levy per worker per month. We are collecting about $220 million a year in levies. On the 1st and the 15th of every month, when you go to the bank you can see these foreign workers queueing up to remit all their earnings to their hometown. When you see such a phenomenon, then you will realize that our calculation is wrong because we are paying much more for foreign labour; thus we lose much of our foreign exchange. Mr Speaker, Sir, we must also do our very best to encourage local contractors and construction workers to develop outside Singapore. The Government must, through the banks and financial institutions, give them financial aid as in the case of Japan and Korea. These two countries actively encourage their contractors and workers to develop overseas. They are given financial assistance and tax incentives. So we must also encourage our professionals and companies to expand overseas and serve outside Singapore. We must impose a minimum tax on their earnings from overseas. Only then will we be able to encourage our professionals and companies to expand their services and business overseas. Sir, let me now touch on the small and medium-sized companies and the Small Enterprises Bureau set up by the Government. The Economic Committee realizes the plight of these small and medium-sized companies in the recession. The Government decided to assist them by allotting $100-$200 million to help them tide over their financial difficulties so that they can survive during the recession. This is a proper and correct action. In the present economic recession, medium-sized and small-sized enterprises are in deep trouble. It is already quite difficult to maintain their position, let alone modernize. So the Government's financial aid to these small firms in their modernization effort will have a very good stimulating effect and help raise their productivity and competitiveness. The EDB, the MTI, SISIR, the Small Enterprises Bureau and the other Government departments concerned must try to understand the structure and modus operandi of the small and medium-sized companies. They must analyze the various difficulties faced by these companies and make the necessary adjustments. The Government should set up different kinds of organizations to provide consultative and advisory services. It should simplify the procedure for application for financial loans, simplify the procedure for the application for assistance in improving production method, in upgrading packaging design and international marketing strategy. There must be a comprehensive scheme with professional assistance and management made available to local industries to improve the standard of production. Local small and medium-sized enterprises should be encouraged to avail themselves of the various assistance provided so that they can improve their methods of business and production during the economic recession. Thus, they should be able to survive and increase their competitiveness so that they will be able to have better growth when the economy recovers. Sir, the cut in taxes, in rentals, and even CPF will not solve the current economic recession. For example, with automation, mechanization and even computerization of companies, if there is no proper management and no progressive and hardworking workers in a factory, productivity will not increase and the company's profit will not rise. It is only through a reorganization of the old industry, increase in productivity and the search for new markets, coupled with cooperation between good management and hardworking workers with factories working round the clock, then our products will be cheap and of good quality. Only then can we find ourselves a place in the international market and earn more foreign exchange and improve our economy. Sir, according to statistics in the Economic Report, from 1981 to 1984, local capital committed in manufacturing industries were about $648 million, $599 million, $509 million and $493 million respectively. And these accounted for about 34.4%, 34.8%, 28.6% and 27.3% of the total industrial investments. In the first three months of 1985, local capital invested in industries is about $63 million, about 32.9% of the total industrial investment. These figures are very encouraging. These substantial amounts of local capital ploughed back into local industries will definitely have a beneficial effect on our economy, because local capital hopes to take root and grow in local soil to provide shade for posterity. Unlike foreign capital, which moves from country to country according to the profit they can make. The EDB must pay attention to this and ensure that local industrialists are given the necessary encouragement and assistance, when the Government is promoting high technology development, they should be encouraged to make use of the services of the EDB and other Government departments, including venture capital scheme, so that they can venture into new products and enter into new markets. Mr Speaker, Sir, from the figures given on the local capital invested in local industries, we know that there is quite a lot of local capital which can be ploughed into industrial development. The problem here is that in the face of high competition and serious economic recession, local capitalists do not know which industry to invest in. So the EDB and the Ministry of Trade and Industry must identify suitable types of industry among such prospective new fields as the information technology, bio-technology, micro-computers, software production, special chemicals, etc. They should also identify similar types of industries abroad and help local industries and entrepreneurs to go into joint ventures with them. The Government can also take part in such joint ventures to enhance the confidence of local entrepreneurs. In this way, local entrepreneurs and industrialists will be able to absorb new industrial technology and production management. When these local companies and local professionals can take charge of the production and management, then the Government can back out and then go into similar joint ventures, in new fields. In this way more local capital will be ploughed into new industrial production and there will be more local professionals to join in the production and management of our local industries. Mr Speaker, Sir, in times of poor capital liquidity in an economic recession, the Government should consider allowing members of CPF to use their CPF to buy and pay for industrial and commercial properties so that the pressure on our local industrialists can be eased. Banks and financial institutions should not emphasize too much on the financial losses during the economic recession and tighten their credit facilities. This is like withdrawing their umbrella in rainy days. On the contrary, they should base their dealings on the track record and credit worthiness of the local enterprises in the earlier years so as to help them reschedule their credit facilities to tide over the current recession so that they will not collapse or taken over by the MNCs. Mr Speaker, Sir, for the long-term future of the country and our next generation, we must ensure the continuing economic development of Singapore by creating favourable conditions to induce and attract more foreign investors and create more jobs. The various measures recommended by the Economic Committee should be comprehensively and properly implemented. With all these measures, I am sure the people of Singapore will be able to survive the economic crisis and forge forward to a better futures. The people of Singapore must understand that our political stability enables the Government to create and plan favourable economic conditions. But more importantly, all Singaporeans must have the confidence, the courage, and the will to overcome these difficulties. We must work together in unison in the present recession and march towards a common goal. We should make our own adjustments in times of economic difficulties, look for new directions and new development. In this way, we will be able to survive and grow. Mr Speaker, Sir, I support the motion of the Member for Changkat. 12.21 pm

Mr Speaker, Sir, for many of us, 1985 is a year we would like to forget. What with all the gloomy economic forecasts and the talks about the year of the fiery tiger and the Haley's Comet, 1986 does not promise to be a good one either. But we must not lose heart. This is not the end of the world. We have seen worse times. We have been through worse situations. When times are hard, we must work harder to overcome the obstacles in front of us. This is not a time to grumble, to complain or to apportion blame. This is a time to work and take action. Remember, our Party's name is still the People's Action Party. The people are behind us and they expect us to take action and we must stimulate the people to take action.

Point of order, Sir. Mr Jek Yuen Thong remained standing.

He is not giving way.

Sir, this is Parliament. He is talking about his own Party, rallying his own Party to a cry.

What is wrong with that?

What is wrong?

There is nothing wrong.

I am proud of my Party. Aren't you? Why can you not talk about your own Party? I am proud of my own. Are you not proud of yours? People just refuse to learn! This is the time for our people to show their true colours. This is a time to prove either we are, a hard working and pragmatic people like other people say we are, or that we were just lucky all these years. In an adverse situation, we must be brave and prepared to take bold decisions. If it is decided that we should take the medicine in order to get well, then take it we must, no matter how bitter the medicine is. Have you heard of the saying, good medicine is bitter to the mouth but it cures the disease. So if it is decided that we must tighten our belt for 18 months or two years or even more, then tighten it we must, for the alternative is joblessness and starvation. The Member for Anson talked about unemployment. Does he know the true meaning of that word? Has he ever faced a crowd of unemployed, frustrated, and really miserable people? He talked about the 100-odd retrenched workers in the PWD. Well, what is 100-odd retrenched workers compared with a massive unemployment in the '50s and the '60s when the unemployment figures reached 12%. Sir, when I was in the Labour Ministry more than 20 years ago, every morning I virtually had to wade through a human sea of unemployed people before I could get through to my office. At least those who have registered with the Labour Ministry now have a choice. But in those days, there was no choice. They just had to wait and we could not tell them how long they had to wait. That is the true meaning of unemployment. But do we have to bring back all those unpleasant days in order to score points? Do we have to bring back the riotous, violent and disorderly days in order to teach the younger generation a lesson? For those of you who have not personally experienced what it means to live under siege of a rioting crowd, or how it feels to move about in a city of empty streets where a curfew has been imposed, all you have to do is to see what is happening in Manila for the last two or three months and transpose the situation there to Singapore and you will get some idea of what it is like. Well, the Filipinos may sing and they may cheer now but very soon they will have to pick up the pieces and they will find that it is more difficult to organize the economy and make it running again than to organize mass rallies and demonstrations. The Filipinos are behind us by more than 20 years. They have wasted 20 years. We have seen and experienced it more than 20 years ago what they are now going through. We wish them luck. But certainly we will not want to see what has happened there to happen again in Singapore. It would be over my dead body! The Member for Anson talked about unemployment benefits. Is it a solution? I said just now that we are prepared to take medicine. But this suggestion by the Member for Anson is not even a medicine. It is a poison. It is opium, trying to numb the reflexes of our people. In the past two weeks after the Economic Committee's Report was published, I was often asked by people whether after implementing all the recommendations of the Committee, there is any guarantee that things would be back to normal and we would return to the good old days in two years' time. Well, I told them there is no guarantee. The Government leaders, though smart and clever people they are, are no miracle workers. If there is anyone there who says he has a formula which guarantees to put us back to our economic health, I will be the first to support his pay rise, no matter whether it is two times or 10 times. Because we have $25 billion in our reserves. What is wrong in giving $1 or $2 million in order to bring us back to the good old days? So the Economic Committee's Report is only a bundle of paper. If the people are not prepared to make their sacrifice, its recommendations, no matter how good they are, and there are one or two bad ones unfortunately, will remain recommendations if we do not take positive action to implement them. It used to be said: ( ) mou shi zai ren, cheng shi zai tian (man proposes, heaven disposes). If we want something to happen, we must set ourselves the goal and actively pursue it. We cannot just simply sit down and wait for something good to happen. It will never happen. The Report tells us nothing new which we do not know. All the unhappy signs and defects of our economy are there for us to see. But no one is blinder than he who refuses to see. We do not need a 200-page report to tell us that we are choked with unwanted office space, empty hotel rooms and vacant shopping centres. They are all there. It is a sad story of wrong priorities and policy makers not coordinating. Perhaps they were intoxicated by the superficial success from the boom created by them out of the construction industry. The developers, the estate agents and the stockbrokers and the rest have never had it so good in the years 1980 to 1983. Property prices and share prices were on the rise all the time and our greatest mistake was to believe that this could carry on forever. Because land fetched good prices and gave high returns on Government revenue, so more was acquired, prepared and thrown in for auction. There was a competition to see who put up what first. So in the process many soft jobs with unduly high rewards had been created and the other industries had been denied talents who came out of our university and polytechnics. After all who wants to sit in a laboratory and spend long hours trying to invent something or doing R & D, if one can make thousands of dollars in a few days by simply buying and reselling a piece of land? Who wants to go to Saudi Arabia, or even Latin America, to look for new markets if one can just sit in an air-conditioned office in Singapore, make a few phone calls, manipulating the stock market, doing some wheeling and dealings and make a lot of money, and after that take one's constant companion to lunch? One does not have to run a business or a factory to be an employer to feel the pinch of the high CPF contribution rate. If you employ a servant at home, you are already considered an employer, and it hurts you, as it did to me, to find that you have to pay 25% over and above the wage of the servant to the CPF Board every month. Of course, I am not paying it now but I am not contravening the CPF rules. It is simply because it is too costly to find a local maid, and I have to resort to a Filipino maid, as it does not incur any CPF contribution. But it hurts as well because I have to pay $120 levy a month which, I think again, is unfair and painful because now with these changes in the CPF rules I would rather pay my maid the CPF so that she would be happy and I would be happy. So one does not have to be an economist to know that our economy is in a bad shape and that our industries are not competitive. In any case, the economists are having conflicting views themselves and their words are not to be believed, as the Prime Minister has pointed out in his Chinese New Year Message, though not in so many words. Then somebody, notably the eminent Member for Whampoa, has suggested that we should engage even more economists, preferably from different schools to give different views and interpretations. Sir, have you heard of the saying: Too many cooks spoil the soup? My fear is that too many economists may land us in hot soup. We do not have to go into all sorts of economic theories and analyses to look for the signs of uncompetitiveness in our industries. All you have to do is simply to walk into any super market and buy, as I did in 1984 when I came back from England, a can of soft drink, be it Coca Cola, Pepsi Cola or Seven Up. On the can you will find, more often than not, the printed words: "Bottled and prepared in Amsterdam, Holland". Sir, the Member for Clementi is running a modern factory which has the local franchise to bottle Coca Cola and other similar brands of soft drinks and it has an efficient distribution network all over Singapore. Yet container after container of similar soft drinks are being imported from countries thousands of miles away, like Holland, Australia, Hong Kong and Germany. Why? The answer is that every imported can is selling at 5 to 10 cents below the price of that supplied by F&N. This small can of soft drink, and very often it has Arabic words printed on the surface, in a very simple way, demonstrates the dilemma, difficulties and defects of our economic development which can be summed up as follows: 1. High overhead and labour cost. As has been pointed out by the Committee, the high CPF contribution rate is one of the culprits. 2. The size of our economic scale. The Dutch factory is producing the soft drink for a much bigger market than ours. They are supplying to the whole of the EEC with 300 million people and the Member for Clementi is only supplying a population of 2(r) million. 3. The import duty on such commodity as sugar which makes the cost of production higher for our manufacturers. Fortunately, this has been rectified last year. 4. The strong Singapore currency makes it cheaper for us to buy the soft drink shipped from the factory in Amsterdam than from the one in River Valley Road. 5. The Dutch salesmen are more aggressive than the Singapore specie. They are prepared to go to Saudi Arabia, hence the Arabic words on the cans, to sell a can of Coca Cola whereas the Singaporeans are contented with selling it just outside their shops on the five-foot way. Sir, making soft drink is comparatively a simple job. You put in the formula syrup, add water, and Voila! you get the drink. Now, if our manufacturers cannot compete with others in such an unsophisticated product as soft drink in our own market, then how can we expect them to compete with others in more sophisticated products in other people's market? I can list out many more reasons than those I have mentioned to explain why we are not competitive but I will be wasting the time of this House, and many other reasons have already been covered by my colleagues in this House. But it is important that the Economic Committee should recognize them and recognize them they did, and have accordingly made recommendations to rectify them. What remains for us to be done is to put words into action. Most of the recommendations of the Committee are good and timely and worthy of our support. However, there is one which I think the Government should tread very, very carefully. In this, I would like to join my other colleagues, notably the Member for Boon Lay, in making reservation on this other tax, ie, the indirect tax. The Committee has proposed to switch from direct taxation to indirect taxation. In this respect, I think the Committee seems to be contradictory in its approach. On the one hand they advocate the scrapping of "the existing small number of import duties and tariffs on non-revenue generating items" in order to promote Singa- pore's free trade city image, but on the other hand they call for the introduction of indirect taxes soon. This would have the effect of putting taxes back on the very same goods item for which tariffs, import duties, taxes, or whatever name you want to call them, have been removed in the first instance. The Committee thinks that personal income tax tends to be inequitable. I feel that indirect taxation is even more inequitable because it spreads out across the board and applies to every one without regard to whether or not the individual can afford to pay. What would happen is that a small group of people who are now above the 40% bracket will pay less tax, but a great number of people who hitherto pay very little or no tax will have to pay more in the form of consumption tax. I think it is socially unjust and politically unwise. That is why I am rather disappointed to hear that the Government has decided to accept this form of taxation and it is going ahead to set up the necessary infrastructure for its collection. Sir, this is not the first time we have come across indirect tax. The last time we heard about it was 22 years ago when we were in Malaysia. For those of us who are too young to know and for those who are too old that their memories are fading, it may be beneficial to recall that in 1964 when we were in Malaysia, the then Malaysian Finance Minister, Mr Tan Siew Sin, tried to ram two indirect taxes down our throats. One was the turnover tax and the other was the crown cork tax. The turnover tax was actually a sales tax. For every item of goods purchased and for every service rendered, (r)% tax was levied, and this had a snowballing effect as it passed down from manufacturers to wholesalers, to retailers, and finally, to consumers. The crown cork tax - do you know what is a crown cork? I am sure many of those who are young might not have seen a crown cork because it has been replaced with plastic cork. It is the inner lining of the bottle cap, In the old days it used to be made of cork, but now I think a lot of them have been replaced with plastic, and even more bottles have been replaced with cans. The crown cork tax was even more ridiculous. For every bottle of soft drink which used a crown cork as a cover, a tax of five cents was levied. We called it repressive and regressive. Mind you, those were not my words. Those were the words of the PAP. We called it repressive and regressive because it hit the poor more than it did the rich. The labourers who worked in the hot sun consumed more soft drinks than those who did not have to work, and hence the workers who sweated more paid more tax than the rich on this very essential commodity, which is water. Such is the absurdity of it all. If it is indirect taxation that you want, that is what you will get - absurdity. We fought Tan Siew Sin, tooth and nail, and finally, when we got out of Malaysia, one of the first things we did was to repeal those two taxes, to the cheers of everyone. It is an irony that today we are doing what Mr Tan Siew Sin had failed to do 20 years ago, ie, to impose an indirect tax on ourselves. Sir, other developed countries have indirect taxation too. In the UK, it is called the value-added tax or VAT. In the United States, it is called the sales tax. We may want to call it the retail tax or the consumption tax. But indirect tax, by any other name, smells as foul. The trouble with this kind of tax is that it has the tendency to go up rather than down. In UK, it started off at 8% and now ends up at 15%. In the US, it varies from state to state and in the case of New York, as the Singapore Retail Merchants' Association has pointed out, it began at 2% and now stands at 7%. Another problem is that we do not know what percentage to peg the tax at. What is the threshold of pain? Would it be 8%, 10% or 15%? And on what kinds of goods and services? If we fix the rate too low, we may not be able to recoup the lost revenue or get back the money we spent to set up the infrastructure for their collection. If we fix it too high, the ordinary people may not be able to afford it, and it may have an inflationary effect on our cost of living and the people may refrain from spending, thereby causing another recession. Sir, it was in 1964 when we strongly condemned indirect taxation. We were fighting for a more just and a more equal society. We were angry at Tan Siew Sin's tax policy which favoured the haves against the have-nots. Since then, a lot of things happened. At least, we are older by 22 years. There are more wrinkles on our faces, more white hair on our heads and, hopefully, more wisdom under it. Many ideas and beliefs which we cherished have been abandoned and cast overboard, not to mention the number of sacred cows which have been slaughtered on the way. But what I am interested to know is whether our past arguments against the tax are still valid and relevant in today's context. If it is, then I urge the Government to refrain from introducing it. Even if it is not, we must still think twice before adopting it because it has very far-reaching consequences. It is true that we must find ways to recoup the revenue lost as a result of tax concessions elsewhere. Otherwise, we would not have enough funds for defence, education and other social services. Perhaps the reduction of the personal income tax to 35%, and not 33% as announced, might help. To me, I would prefer to pay a little bit more in income tax in exchange for not paying anything at all in retail tax, or sales tax, or consumption tax. I may end up paying more tax if the personal income tax is maintained at the 35% level, but I think this is fairer to my fellow citizens who have less income. Sir, the years ahead of us are no doubt difficult but there are also full of opportunities. China is already opening up and so will the Soviet Union eventually under its new leadership. Both these countries offer vast markets for our goods and services. The other NICs are already gearing themselves up for such an occasion. We should not be found lagging behind. These are the facts of life. We ignore them at our own peril. 12.53 pm

( In Mandarin): Mr Speaker, Sir, I support the motion by the Member for Changkat. First of all, I would like to congratulate the Member for Queenstown for his inter- esting speech. I am not trying to give him a lesson on economics because people of old age cannot be cultivated any more. But what I would like to point out to him is that value-added tax is different from sales tax. However, Sir, if there are more Members like the Member for Queenstown in our Parliament, then our Parliament today will be more interesting and entertaining. However, I agree with his observation on consumption tax in certain respects, and I will touch upon it later. Mr Speaker, Sir, last year, our economy has suffered a kind of cold fever and indigestion and various kinds of complex illnesses. The Economic Committee, after some 10 months' study, has prescribed a medicine of about 234 pages to cure the symptoms of this illness in the short term and in the long term to heal the disease basically. After its announcement the Report receives the support of the commercial and industrial circles and also the general support of the people. As the Member for Queenstown has said, the pills are bitter but good in healing the illness. But there is a lack of a piece of plum, that is, the employee CPF contribution is not cut. Though I understand that this piece of sweet plum may not have great medicinal effect, but many people feel that the plum will help them to swallow the bitter medicine. Yesterday, the First Deputy Prime Minister announced that there would be no sweet plum. But he was very kind and generous to announce that there will be 25% personal income tax rebate; he gives sour plum ( )instead.The people welcome the income tax rebate because it increases the take-home pay, and not just a transfer from his own savings. But income tax rebate is more favourable to middle and higher income groups. The recommendations of the Economic Committee are mainly in three areas: First, to ask the workers to make some sacrifices - to cut CPF and to accept wage restraint for some time so as to reduce the production cost. Second, to reduce company tax and to give property tax rebate so as to stimulate economic activities. Third, the Government to increase expenditure on infrastructure and on education and training in order to stimulate investment and increase our productive capacity. These measures remind me the situation we faced in 1968. History provides us with lessons. On 6th May 1968, the President in his address to Parliament, said (the British had not withdrawn then) "This is a Parliament which is faced with problems of more than usual magnitude. It is not only because Britain will be withdrawing her forces by 1971. The whole security and political situation in South and Southeast Asia is in the process of change." In 1966, statistics showed that the total expenditure of the British armed forces in Singapore reached $550 million. That was equivalent to 16.3% of our GDP. Also, the armed forces of Britain employed about 42,000 of local people directly or indirectly. So the British military withdrawal would be very heavy economic burden on our country. At the same time, we had to build up our own defence. The then Minister for Finance, Dr Goh Keng Swee, implemented several measures to remedy the situation.

Order. It is 1.00 pm now. This Sitting is suspended until 2.30 pm. Sitting accordingly suspended at 1.00 pm until 2.30 pm Sitting resumed at 2.30 pm

Debate resumed.

(In Mandarin) Mr Speaker, Sir, earlier on I have mentioned that in 1968 the Minister for Finance at that time proposed several measures to deal with the impact of the British military withdrawal: (1) Between 1967 and 1971, the Government would spend $1,000 million, one-third of which to be spent on build-up of our national defence force. (2) Through tax concessions and other incentives to attract foreign investments. Our industrialization strategy also changed from import substitution to one based on export promotion. (3) Through Employment Act and Industrial Relations (Amendment) Act to curb the power of the unions to improve the industrial relation between employers and employees so as to make the atmosphere conducive to foreign investments. Since the implementation of these measures after 1968, there was influx of foreign investments, more jobs were created. Because of the sacrifices made by workers, the economy became prosperous and the living standard was raised. Even the 1973 and 1979 oil crises could not stop our economic development. In that year, when the Prime Minister thanked the President for his address, he enumerated three valuable resources: (1) human resources; (2) geographic location; (3) accumulation of many years of infrastructure and the experiences in managing these infrastructure. We have made use of our advantageous geographic location and develop our port into one of the world's largest port. As for the other resources, our present position was much better compared with that 18 years ago. In addition, we have accumulated $25 billion of reserves and crisis management experience, we are in a much better position than 18 years ago to deal with crisis. We must have more confidence in that if we can make short-term sacrifices and to make the necessary adjustments, we should be able to overcome economic difficulties facing us now. During the economic recession, there bound to have people criticizing each other, putting the blame on the others. The Member for Anson said that the Government has misled the people, the Government should be responsible for the present economic problem and unemployment situation. The Member for Alexandra also blamed the glut in property market on the URA. To certain extent, what Member for Alexandra said, may be true. But we must know that if the URA has to shoulder the responsibility, then what about the developers themselves? If the cow is not willing, how are you going to pull the cow and force it to drink. Now is not the time to put the blame on anybody. Even if now we off the head of the Minister for National Development, there is no remedy at all. The empty hotel rooms and the offices and other properties will still be empty. Now the Government has done what need to be done, private enterprise should make positive measures to overcome our difficulties. During the economic recession, there are also many so-called pundits and quacks who utter various kinds of misleading sophistries, trying to divide the employee from the employer and to create mistrust between them, and between the people and the Government. Their ulterior motives could be clearly seen by people. ( ). The Member for Potong Pasir yesterday had mentioned that the prosperity of our country in 1960s was because of the Vietnam War. But let me tell him that at that time, our trade with Vietnam mainly consisted of oil, and plus some maintenance services, which together, occupied only 1.5% of our GDP at that time. This figure compared with what I mentioned about the loss of 16.3% in our GDP following the British military withdrawal, there is a very great difference. Can the Member for Potong Pasir make a calculation of that? The Member for Anson on 31st August last year and again in this sitting moved amendment motions expressing his so-called "regret." I regret even more about his regret. He suggested to provide unemployment benefit to unemployed, trying to show himself to be a philanthropist. I say that it will be better for the unemployed to try to find alternative job or employment. I know the unemployed has to lower his expectations and make other adjustments. If the unemployed is to be given employment, at least he is providing his own means of living on earned income through his own effort and need not beg others for alms. We must respect the self-respect of the unemployed. Not everyone is willing to receive alms from others. In fact, the whole Economic Committee Report is to promote our economic revival through reduction of taxes, increase in investments to create more employment opportunity. This is the most positive and correct approach. On the measures proposed by the Economic Committee, I would like to make several points. First, about employers' CPF cut. CPF is not a sacred cow nor a trojan horse. Last year, I did not agree to the cut in CPF contribution. Even now I am not entirely convinced about this as being the most effective measure because CPF contribution is part of the income of employees and to cut it, it will also affect many people in their ability to buy flat and property. Yesterday, the First Deputy Prime Minister announced a few measures to help these people who use CPF to buy property. Moreover, if we do not make a 15% cut, it may lead to collapse of more companies. It is a last resort, and it has to be done. Not that I am very willing in conceding to this measure but this is a passive view of looking at CPF cut. The more positive view is that, coupled with reduction of taxes and other measures, more investments will be induced and more employment opportunities created. Then in the long term, the CPF cut and other measures would be very effective and good. The Unions' attitude towards the cut in CPF is praiseworthy. But the CPF cut is a very blunt instrument. Regardless whether the company is making or losing, whether the company is efficient or inefficient, every company will save 12% in labour cost. As regards those companies which are about to close, the CPF cut may give them some breathing space, hoping to be able to recover during the short space of time. As to companies are still making money, I hope that they will make use of the money saved through this way on training of their workers or investment in machinery and equipment. This will be of benefit to both the employer and the employee, and this will help improving the relationship between the two parties. The second point is about taxation. The Government has agreed to reduce company tax and personal income tax. These are most welcome to all. However, some people still think that the Government should be more resolute to reduce company tax to 30%. The First Deputy Prime Minister explained that we are different from Hong Kong. We have to spend on national defence because Hong Kong is not a nation. It is true. Just look at Taiwan and South Korea. They have large arm forces to maintain and they have to spend large sums of money on military expenditure. Therefore their company tax rates are also higher than that of Hong Kong. Another reason is that we will have to spend large sums of money on education and on infrastructure. Perhaps one more reason is that Government is trying to avoid too big a deficit in its Budget. The reduction in company tax is from 40% to 33%. It is 3% difference from that suggested by the Economic Committee. This 3% would cost the Treasury to lose another $200 million. The rebate from income tax would cost the coffer another $250 million. The property tax rebate has increased from 30% to 50%, the loss in revenue also increase from $258 million to $430 million, an additional loss of $172 million. The Government has injected $842 million, plus the loss of original property tax rebate of $258 million, the total sum amounted to $1.1 billion. Of course, there are people who hold the view that the Government has saved $400 million as the Ministry of Finance has rejected the 30% investment allowance as proposed by the Economic Committee. Moreover, these people pointed out: let us not forget first, the $1.5 billion of CPF cut being channelled into the private sector, part of the fund will be recovered in the form of company tax on profitable enterprises and secondly, the Government itself is the largest employment, it will save 12% on labour cost. Some critics observed that when it comes to CPF cut, the Government is bold and resolute, one cut amounts to $1.5 billion. But when it comes to tax cut, the Government is very cautious, doing it step by step. Is the Government being prudent, or is it too stingy? Of course, when it comes to tax cut, people can never be satisfied, they always ask for more. The Economic Committee has suggested to spend $400 million on allowance on investment in machinery and equipment. Instead the Government spends $430 million on property tax rebate. This is contradictory to the concern of the Economic Committee too much investment being in properties while too little investment in machinery and equipment. I support in principle the gradual shift from direct taxes to indirect taxes. Many advanced countries have done so. There are certain advantages: first, it would prevent certain professionals and entrepreneurs from taking advantage of the situation. For instance, if a professional's income is paid from his Hong Kong's subsidary, his income tax would be much lower. Secondly, those Singaporeans who have not been paying income tax cannot avoid sales tax or consumption tax. Thirdly, if direct taxes were to be changed to indirect tax, then people will have more options. They can choose to spend, to invest or to save. As the Member for Queenstown has suggested, consumption tax is more disadvantageous to lower income. The First Deputy Prime Minister yesterday mentioned that consumption tax is to be based on more selective items. The essential will be exempted from consumption tax. However, the definition of "essential goods" varies from from person to person. Although I agree to shift the tax on income from production to consumption tax, I hope that in these two years when our economy is not likely to do better, we should not impose this consumption tax because it may affect the retailers and, shopping centres and so on. It is not very suitable. It is not timely. The third point is about savings and investment. The Committee has mentioned that our savings rate is too high whereas investment in property is too much. These two phenomena have caused the fact that since 1968 we have been implementing the home ownership scheme, and there has been yearly increase in CPF contributions from 30% to 50%. High savings ratio is a good thing. The problem is because of the lack or willingness to invest, inadequate opportunity for investment and low return on investment. Therefore, the Government whould try to provide market information and other data to our local people to invest abroad. The Govenment may even take an equity share in the investments and share the risks. However, our professionals, technicians and skilled workers should also be prepared to go abroad with our investment overseas. They must try to adjust to the different living environment, like the South Korean workers. Another point is about wages and productivity. The Economic Committee mentioned that in the coming years, the increase of productivity is expected to be between 3% and 4% per year and I hope that wage increase should also be within 3-4% annually. It should be linked up one with the other. Productivity here refers to total productivity, and not only labour productivity. Moreover, this is applicable to macro level. If a certain company has increased its productivity to 4%, then the workers should also be benefited. The Straits Times on the 20th February had an article entitled "Wages, Productivity and the Loose Link" reporting on the seminar organized by trade union in respect of this subject. I feel that a more proper headline should be "Wages, Productivity and the Missing Link". The missing link is demand. If the investment is in an economic activities where demand is large and increasing, if productivity increases, not only wages can increase, profits can also increase. This is the matter concerning sharing the gain of productivity. From the long-term perspective, the present economic situation is not entirely bad. First, it will help us to see clearly the weaknesses of our economic structure, and that we are easily affected by decline in external demand and other unfavourable external factors. If we cannot adjust to external and internal influences, then we will be the worse for it. As regards extenal influence, we may not be able to do anything. With regard to internal factors, we can restructure our economy, lower our operating costs, and make our wage and tax systems more flexible so that we can meet changes in technology and market conditions. At the same time, if we do so, we will be sending the signal to foreign investors that our people are able to make sacrifices and adjustments when necessary. Secondly, the economic recession will also wake up our people, particularly the younger ones to realize the threat to our survival so that they will have a crisis mentality. All the other three Asian little dragons have this kind of mentality. South Korea is always faced with the confrontation of North Korea. Taiwan is also facing the threat of diplomatic isolation. Hong Kong has the worry of the 1997 deadline. What about us? After 20 years of wage increases and improvements in material lives, our younger people have never had any experience in crisis and difficulties. They take prosperity and high standard of living for granted. So this is the time for many to lower their expectations of material living standard and attune themselves to the new situation. If we have this crisis mentality, it can be translated into a positive force to motivate our people to seek further progress and be able to meet with future crisis and difficulties. Thirdly, those older people have gone through the difficult periods with the first generation political leaders in the past and have gone through the baptism of fire in the process of nation building. They have very intimate bond with the older leadership. But the present younger generation and younger leaders have never gone through such severe test and trial. Therefore, this afford an opportunity for them to go through same kind of experience. If they cooperate with the present leadership to weather through the storm together after the winter is over, our younger political leaders, union leaders and people could be united together and be mutually dependent on trusting each other just like the older general. Our present economic difficulty is only temporary. It will be and can be overcome by us. We should not be blinded by our present adverse situation. We must have a vision to see far, and our people should be concerted in our effort towards a better future, not just overcoming our present difficulties. I do not agree to what the Member for Queenstown has mentioned "man proposes, heaven disposes." I say that it all depends on human efforts and human efforts will prevail ( ). We must make "another great stride towards realizing our mission of a Nation of Excellence" as the President said in the concluding sentence of his address. 2.58 pm

Mr Speaker, Sir, I rise to join my colleagues in thanking the President for his Address to this House. I think we should also thank the Acting Minister for Trade and Industry for his Economic Committee's Report. Sir, I think it was in 1961 when the United Nations sent a team to Singapore and presented a report on future industrialization in Singapore. That report constituted the blueprint for our development over the last 25 years. Now we have another Report before us and this time a home-grown Report, of a quality, I think, better than the UN report in terms of its economic analyses and sophistication. I believe that this Report that we have before this House will serve as our blueprint for development in the next 25 years. The Report has two parts to it. Firstly, the future growth strategy of Singapore and, secondly, overcoming the current recession. Unfortunately, Sir, not many Members have focussed upon the future growth strategy for Singapore outlined in the Report, perhaps because our recession takes too much of our attention at the moment. But let me go over some of the important points for us to note because, even as we overcome our present difficulties, we ought to bear in mind the longer-term context within which we must operate. And the policies which we are going to adopt to overcome the recession must, at the same time, not be in conflict with what is compatible with our long-term development. The first thing that we need to note about our long-term prospects is that the easy phase of economic development is over. We have gotten over the stage of low technology, labour-intensive industrialization. We have built most of our infrastructure that we need for further development. We already housed 81% or 82% of the people in HDB homes. There is not much more that we can go. We are going to have a lower rate of growth of labour force in the coming two decades. Therefore, there is the need to find new internal sources of growth. At the same time, the Report highlighted a very significant point, ie, although we have achieved a standard of living which some developed countries have achieved, yet in terms of educational levels and skills we are lagging far behind. I believe the biggest challenge to us in the coming decade is this catching-up process, making sure that our education and our skills are appropriate enough to enable us to qualify as a developed country. Otherwise, I believe we shall go backwards. Then, Sir, the international economic environment has changed rather dramatically. We had a good run over the post-war period. We have seen tariffs on goods being reduced, exchange controls being reduced. We have reached a stage now where capital flows easily from country to country, virtually at the touch of a button. What do these trends portend for us? I believe, immense difficulties. Because of the ease with which capital flows from country to country, exchange rates are very volatile. And countries faced with deficits in the balance of payments begin to move to protect their trade in goods and services. The choice is either restrict the capital flows or restrict the flow of goods and services. Since nobody wants to restrict the capital flows, protectionism is the order of the day. At the moment we have a problem that exists between the US and Japan that may spill over to our disadvantage and to the disadvantage of many developing countries. The US has a big trade deficit. Japan has a big trade surplus. And the US is trying to cut down their trade deficit. That trade deficit arises because the US has a shortage of savings. The US has a huge Federal Government deficit and that has induced a lot of capital in flow. In other words, the US has become a net borrower from the world market. But there must be a real counterpart to that borrowing and that is the import deficit of goods and services. So if they try to cut down on their imports, how could they then borrow what they need? So they are going to have to deflate their economy or else print more money, both of which spell trouble for us. At the same time, Sir, the advanced countries are getting more into services in terms of their economy. We also have the international debt problem that could explode at any time. Members may not realize how fragile the international monetary system is at the moment. Falling oil prices is good for us and good for many other countries. It makes things cheaper. But for those countries dependent upon oil revenues, they may not be able to pay their debts and that may trigger a financial crisis leading to a world depression. In the region there are a lot of uncertainties. Falling commodity prices, falling oil prices, have affected our neighbours. So we no longer have the regional economic growth to give us some stimulus. Then trade itself has been reorganized internationally. Counter-trade is the order of the day. That means I trade my rice for your rubber. There is no need to go through the middlemen, no need to go through the banks, no need to use foreign exchange. Eight to 10% of world trade is now counter-trade. We have to rise to these challenges. Then we find the centre of economic gravity shifting from the Atlantic to the Pacific. On the one hand it is good for us because we are situated on the rim of Asia Pacific. On the other, it is bad because the European countries are going to be more protectionistic. What is the outcome? Your guess is as good as mine. So with these difficulties as a backdrop, what can we look forward to. What do we need from the international environment so that we can not only sustain our standard of living but hopefully improve upon it? The Economic Report and other Ministers have used the word "niche" to describe what we need of the international economy, if we can get a new niche. But, Sir, I looked up the definition of the word in the dictionary, and this is what it means: 'A niche is a shallow recess in a wall to contain a statue or a vase, sometimes associated with columbariums.' May I suggest we change our terminology? In terms of population, yes, Sir, we are small. 112 out of 189 countries in the world. I have a couple of Tables. Perhaps they could be distributed now. [Copies of document distributed to Members.] But in terms of GNP per capita, we are number 22 in the world. In terms of size of GNP, that means size of market, size of purchasing power, we are number 50 in the world. In terms of exports, if Members could look at the Table 1, Major World Exporters 1983, you will find that Singapore ranks number 19 in the world, with $21.8 billion worth of exports. It is a little more than 10% of US total exports and the US is an economic superpower. From this Table alone and the other figures which I have mentioned, quite clearly we occupy more than a niche and we need more than a niche if we are going to improve our standard of living. What we want, Sir, is a place in the sun. What we want, Sir, is to qualify in the rich nations' club in the world to one day belong to the OECD. There will be keener competition, the play will be rougher; there is the prospect of our being booted out of the GSP programme. It will be harder to increase our share of the world's economic pie. To prosper, we must monitor world trends of production and trade. We must catch the winds of change of technology and we must learn to ride the storms of world inflation and recession. What we need to have is the cohesion of the people, the adaptability of our enterprises, the flexibility of our policies and institutions, the productivity of our workers, the quality of our goods and services, dependability as suppliers, integrity of entrepreneurs and financial institutions, high savings and investments. And last, but not least, vision from our leaders. Look at our Prime Minister. He has always projected an international image bigger than a Prime Minister of 2.5 million people should. He talks like a Prime Minister of 50 or a 100 million people. Sir, I say this not to praise Caesar but to counsel would-be Caesars that for the sake of Singapore our leaders should have a vision considerably larger than a niche. Now, if I may discuss about our current recession. We need a three-fold strategy. Firstly, we need to prevent further erosion of the economic situation. Secondly, we need to find and to stimulate new growth points in our economy. This, I submit, Sir, is of some urgency. Because I am afraid of what might happen in two years' time. Just as we are about to emerge from the recession in 18 to 24 months' time, we might run into a US recession. So unless we can pick up as soon as possible or at least identify and get certain industries going in the meantime, we are going to be in deep trouble in two years' time. The third part of the strategy is to take the opportunity now to create a more flexible market-oriented economy without adversely affecting the economy now. It is in the light of this three-fold strategy that we must evaluate whatever measures are being put forward, but first let me dismiss those measures which I think are inappropriate, even dangerous, at this moment. Firstly, indirect taxes. My advice is, do not confuse the people. Do not upset people unnecessarily. Government does not need the revenue right now from consumption taxes. Let us not even think about it right now. Let us get the recession over and done first. Some hon. Members: Hear! hear!

Secondly, the proposal by the Economic Committee to remove whatever remaining tariffs that we have. Sir, I believe some firms depend upon these tariffs. If we remove the tariffs, those firms might fail. This is not the time to remove the tariffs. When the recession is over, let us think about it. Thirdly, privatization of government-owned companies. Sir, while I support this as a long-term measure, it is inappropriate now to even consider it and the reasons are as follows: (a) When you sell these companies to the private sector, money is going to be absorbed from the private sector, and will be withdrawn from the economy. (b) The change of ownership and control might destroy some of these companies at this time. Already I have heard some civil servants being very upset over the whole matter. They say, "We spent years building up these companies and now you want to take our babies away." I say, just go slow, not yet. Next, Sir, may I deal with a problem which has been voiced in this House and outside the House - the question of whether there is deficiency in domestic demand and whether we should release some CPF to the workers in order to enable them to spend more. There are a number of aspects that we need to consider. First of all, there is a deficiency in demand created by public sector surpluses, inclusive of CPF, and these surpluses must be reduced, preferably eliminated, for the next two years if we do not want to drag the economy down further. But then, beyond that, if you will turn to my Table 2, you will see the nature of the problem. Table 2 shows the composition of domestic demand for 1984 and 1985. You will see that the total domestic demand did go down by $0.7 billion from 1984 to 1985. But if you look more closely, you will find that it is private investment and construction activities that have been reduced. In other words, total private investment activities have gone down. If you look at private consumption expenditure, there has been no change, $9.3 billion for 1984 and 1985. What is the reason for this? Yes, there were the 90,000 workers who lost their jobs but, do not forget, wages went up by 3% in nominal terms or 2(r)% in real terms. So overall, private consumption stayed the same. So, I submit, there is no case for pumping more money to enable people to spend more on consumption. That is a wrong move to make. Many people think in terms of a Keynesian situation. I know this is economics and some people do not look favourably on economics in this House. But whatever the state of the soup, let me add to it. The typical approach is this. When you have a recession, the way to do things is to get Government to spend more, put more money in workers' pockets and they can spend their way to prosperity. I submit that even in the best of times and situations it is at best a short-term solution. More importantly, it is only applicable to big countries, like the US, where much of the demand is internally generated. But for us here in Singapore, that is a wrong thing to do because two-thirds of our demand come from abroad. Furthermore, you must look at the nature of the excess capacity. It is not excess capacity of consumption goods that can be easily bought up by the people. It is excess capacity in construction, equipment, cranes and tractors. It is excess capacity in hotels, offices, shops, residences. It is excess capacity in shipyards and ship-repairs. It is excess capacity in oil refining. It is excess capacity in electronics and computer peripherals. Yes, there is some excess capacity in whole- saling and retailing. But giving workers more money will not buy up all this or any of this excess capacity. So let us not fool ourselves. Next, Sir, the unemployment situation. I had considered whether I should be realistic or I should mask the problem but because the reaction to the package of measures announced by the First Deputy Prime Minister has been so cynical, so demanding in terms of even more measures, even more tax rebates, let me put the situation clearly and starkly to our people in Singapore. Right now we have 5% unemployment. If we assume zero growth for this year and for next year, we are going to add another 4% to the unemployment rolls, making a total of 9%. If we should get negative growth - and I am going to show that we are going to get negative growth - we are going to add another 5-6% to the unemployment rolls. The situation is serious and it calls for measures that will work. It calls for measures that will produce jobs. So let us not bicker. Let us not look at the measures in terms of how much each of us personally benefit. Let us look at what is good for the economy and I shall return to those measures shortly, using that criteria. We have a number of weak spots in the economy right now. Firstly, the Stock Exchange. A number of brokers might well become bankrupt. The bankers are already nervous over their $1 billion loans to the Stock Exchange. This will shake confidence. This may bring stock prices down. This will affect the wealth of people who own stocks and shares. Secondly, the construction sector is in the agonies of being reduced substantially in size, from 11% of GDP back to 6% or so. Already, $500 million worth of equipment is rusting in the rain. The property sector - I will come back to this later - there is tremendous excess capacity. That could have a dampening effect on this economy. The commerce sector employs 300,000 workers, many of them in retailing and wholesaling, it is due for a big shake-down. Shipyards and oil refining, with excess capacity that must be adjusted. Let us not fool ourselves. We have problems at hand, problems that can only be resolved if Government and people work together. The current excess capacity in the property market is as follows - latest figures, September 1985: Occupancy rate -------------- Shops 84% Offices 83% Residences 80% Hotels 65% Factories 75% Warehouses 71% The question is: will the situation get worse or will it improve? It depends on two factors. First, whether the projects which have been approved but not commenced will be aborted and, secondly, what is the rate of growth of demand for each of these sectors. If we are optimistic and assume that developers make their corrections and we have the same rate of growth of demand for 1981 to 1985, then by the year 1990 only factories and warehouses and hotels will be in trouble. The other sectors will be all right. If we assume half the growth rate of demand, then homes, offices, shops, factories, warehouses, hotels will all be in trouble. If we assume developers continue developing projects which they have not commenced, there will be even bigger trouble. So the question is whether we can turn this economy around as quickly as possible. That is the surest way to help the property sector. Sir, many people do not realize that construction and real estate, together with ancillary services, account for something like 25%-30% of the GDP, employing 120,000 to 150,000 workers and providing some 20% of Government revenue. There are links to the Stock Exchange as well. Property stocks are depressed. Companies which own a lot of property, their shares too are depressed. The amount of loans given for property, is about $9.5 billion outstanding, not to mention other loans that use property as collateral. So we have a very substantial stake in this sector. Something must be done and I would urge the Government to study this problem very carefully and if at all possible withdraw public sector buildings from the market, particularly offices, warehouses, factories and shops. Many people do not realize that the public sector owns 40% of the factories, 44% of the shops, 33% of the offices, 28% of the warehouses. In housing, you know the situation. Next, Sir, may I deal with a problem on exchange rates. There has been much talk about exchange rates. The best way to understand the situation is this. We are living in an age where because of huge capital flows exchange rates are primarily determined in the capital market, not in the goods market. This means that the exchange rate that the market establishes is often inappropriate and does not reflect the economic fundamentals or the comparative advantage of your goods and services. In America, this problem has manifested itself in the last few years, in terms of American industries having to close down because the American dollar has been too strong and belatedly, last September, they recognized this problem. Now the tables are turned and Japan is having a problem with a strong Yen. So I urge the Government to look at this question of exchange rates very carefully. Related to it is the money supply. I am alarmed that in 1984, M1 grew at only 3%. 1985, up to November, 1.9%, negative for some months last year. We are asking for trouble. Interest rates, also related to exchange rates and money supply, are too high in Singapore. Given the virtually zero inflation rate, the real interest rates are too high. So I would urge the Government to look at this problem seriously. Otherwise, all the incentives we are giving to industry right now, the cost-cutting measures, the CPF reduction which on some measurement account for some 7%-8% of total costs can be wiped out overnight by one move of the exchange rate. So I say, watch it, in this area. May I comment on the measures that the First Deputy Prime Minister introduced yesterday. Firstly, let me make the general point that until the actual budget is announced and until the details of the budgets of statutory boards are in, we do not know whether these measures are giving sufficient stimulus to the economy. There is one principle which the Economic Committee has enunciated, and I hope the Government will take seriously. We should consider the public sector as a whole for the purposes of fiscal policy. The company tax - I would prefer 30% or better, 25%, and I would prefer implementation this year rather than next year because we want to put money in the hands of entrepreneurs. I am afraid, Sir, that Ministers for Finance are typically very niggardly. They watch over revenues and if one were to look at historical performance, then naturally you make your computation. If company income taxes were reduced by X%, how much revenue will we lose? I do not know whether they have made another calculation, and that is, how many new enterprises are we going to attract to Singapore,and therefore how much additional revenue are we going to gain? More fundamentally, because of our relatively high corporate tax, many firms have established holding companies in Hong Kong and elsewhere with low taxes, and they have shifted their profit centres there. My hope, my belief, is that, with a lower corporate and income tax here, we will attract these profits back to Singapore, so that the tax base will be larger. Furthermore, between 30% and 33%, lies some $180 million in forgone revenue. So I do not know why 33% instead of 30%. The CPF cut, 15%, is a bold move. But I would prefer a 10% cut plus a 2% Skills Development Fund cut. The Fund now has something like $500 million. And I believe it is enough to tide it over four or five years. So we do not have to worry about that Fund for the time being. The Medisave ceiling, $15,000, I consider too high. For the moment we are tying up funds, freezing funds unnecessarily. I have more to say on Medisave later on. I think we have been too liberal in allowing private hospitals to use these funds. You are going to end up with the American system where hospitals over-charge because there is a sum of money available. The property tax rebate of 50% - welcome. A good move. But why not extend to residential buildings which are rented out as well? Because these are also in trouble. More importantly, it is the basis for valuation that many people have complained about. But hopefully something is forthcoming. The total release of $2.8 billion - I hope the computations are done properly and,as I said, this has to be compared with the overall public sector budget before we conclude whether it is stimulating enough. The 1984 figures, for example, showed that for Government and the seven major statutory boards put together, their surpluses were about 11% of their combined budget. Add to that $3.2 billion retained by CPF net, and you have a big surplus on your hands. So I say to the Government right now: Prudence is good, but prudence taken to extremes is no virtue. Finally, Sir, we need to ask ourselves some hard questions. Have we been too greedy a people, too covetous as stockbrokers, as developers, as contractors, as hoteliers and as retailers? We hear many complaints from foreigners, from tourists of overcharging. Why should a tourist pay $7.50 for a glass of fresh orange juice, $15 for a glass of beer? If we want to attract tourists to Singapore, if we want expatriates to come, if we want people to come and do business with us, be reasonable. Have we become a nation of gamblers, too interested in a quick buck, giving shoddy work, too little interested in acquiring better skills, better management, and investing too little in productive activities? I do not think it is an accident that investment in machinery and equipment was down. The reason is simple. Why bother with productive investments when there are capital gains, speculative gains to be made, tax free, in the stock exchange, in the property market, in the futures market? I think there is something wrong here in terms of relative incentives for investment. Have we become too proud as a nation, taking progress for granted? Sir, allow me to end by paraphrasing the President. There will be dangers ahead but there will also be opportunities provided we have faith in God, set the right course for our country and make the most of any chances that come our way. Thank you. 3.36 pm

Mr Speaker, Sir, now that the Government has accepted the recommendations of the Economic Committee on wage restraint, reduction in employer's contribution to the CPF by 15% point, and now that the Government has given various tax and other concessions to drive the costs of operating businesses in Singapore to the bare minimum, it is up to the employers and management now to get on with their job. They should improve their management and marketing skills to help turn the current state of the economy around. These measures should enhance our international competitiveness and make Singapore an attractive place to do business. The Trade Development Board should now help our businessmen to market their products and services and the Economic Development Board should vigorously go out to seek and attract new investments. The NTUC and the leaders of the various trade unions have come out to support the various sacrifices which the workers must make. Our main concern is to save jobs, to help develop an environment for job creation which will help our retrenched workers to get employment, so that they can live with dignity and, for the long term, to ensure stability of employment. The various wage cutting measures are indeed painful, especially for the low income workers. They have to tighten their belts, and even accept a lower standard of living. But we realize that it is better for us to suffer this temporary pain than for our workers to lose their jobs. I am indeed glad that the First Deputy Prime Minister and the Acting Minister for Trade and Industry were able to spend so much time with the trade union leaders to carefully and patiently explain our economic problems, how we have lost our international competitiveness, and what must be done to get out of this recession quickly. We understand that they have tried to find less painful solutions for the economic recovery, but came to the conclusion that there is no better solution for quick recovery than the measures recommended. Consultations with the unions were found to be very useful by the union leaders. I must say that at first there were some doubts. I have heard some trade unionists say, "Yes, 1DPM has come to talk to us, to explain our economic problems, to hear our fears, to get our views. But will he listen?" They were concerned whether their views will be accepted. Well, now Government has decided. Government has given its response to the recommendations of the Economic Committee and they can now judge for themselves. For my part, I have no doubts that the First Deputy Prime Minister has listened very carefully, has listened very sympathetically. On wage restraint. I am happy to note that this does not amount to an overall wage freeze. Companies which are doing well and enjoy good profits and there are expectations of profits in the future, should pay their workers pay increases in the form of either annual increases or bonuses. It is indeed inequitable to deny the workers the share of the profits made by the company when it is their productivity, discipline, determination and hard work which has enabled the company to succeed and enjoy these profits. It will be difficult then to motivate them to improve their productivity, and this difficulty will be compounded if the profits are paid as dividends to the shareholders, or in the form of wage increases or large bonuses to executive and management staff. For companies which are making profits but there is doubt as to their future viability, then there is a need to either withhold or moderate the annual increments or bonuses. However, unions and management in these companies should discuss the company's problems and viability, and consider other ways to reward the workers and to acknowledge their contribution. Profits could be ploughed back to acquire new machineries, to be used to educate and re-train the workers so that the jobs, skills, the type of goods which they produce will have high value-added and high skill content. Now the public sector employees have taken the lead in wage restraint. However, the Public Daily-rated Employees' union leaders have appealed for exemption from the non-payment of their half month incentive payment for 1986. The daily-rated employees earn low wages. Most of them barely draw $400 per month, net take-home pay. Some of them have, to some extent, suffered a pay cut due to stringent control on overtime. They require the incentive payment to pay for basic requirements to meet their daily essential needs, to pay for their children's school expenses. They have made sacrifices. They will suffer a big pay cut because of the 15% point reduction in their employer's CPF contribution. Could we make it a little less painful for them? The Ministry of Finance has agreed to look at their case separately. And I appeal on their behalf to the Ministry to consider their request for assistance sympathetically. I would like to say here that the daily-rated employees have made a great contribution to make Singapore a clean and beautiful place to live in. We should not take their contribution for granted. They deserve our heartfelt thanks and we should have sympathetic and special consideration for their welfare. The Government has decided not to reduce the employee's CPF contribution for the time being. In making this decision, we are reminded again that the main concern is to reduce the operating costs of doing business because this is the only way that we can tackle the recession. It is noted that there is hardly any inflation at this present time, no loss in real income. I would like to, however, point out that many workers - I have mentioned the DREs, workers in the shipyards, the electrical and electronic firms - have taken pay cuts because their companies are not doing well. They have to take the pay cuts to enable their companies to survive. Their problems are compounded if they have other members of the family who are retrenched, leading to a drop in the household incomes. Their worries on their financial situation will indeed have an effect on their performance and productivity. For the time being, they will have to tighten their belts. But I would like to urge the Government to review this decision again and if the recession gets worse and if there is inflation, to consider their request for a reduction in their payments to the CPF. I would also like to thank the Government for the great concern they have shown to those who will have difficulties in making their housing loan payments. For the hardship cases, the proposal to defer or suspend HDB instalment payments temporarily will put the minds of these persons at ease. There is also concern for those who will be purchasing houses in the future. The measures to enable first-time home buyers to get loans from the Government through the HDB or banks on the basis of a bridging loan, on the basis as if there is no 15% cut, will indeed put them at ease. I think this shows clearly that the Government has the welfare of the people at heart. Let me now turn to the reform of the wage payment system. We agree that we should consider this reform carefully and quickly so that we can remove rigidities in our wage payment system so that we will continue to be competitive in the long term. These proposals will be considered at the National Wages Council's. But I would like to ask that the Council's recommendations be thoroughly discussed between management and the unions at the company level before they are implemented. There is no need for me to emphasize that there must be adequate consultation and cooperation at the company level to enable the reformed wage system to be implemented smoothly and with minimum pain. I am relieved that the Government did not suspend entirely the SDF contribution. I cannot agree with the Member for Whampoa and also his neighbour, the Member for Alexandra. This will remind management and workers the importance of training and education. For the long term, it is going to be the productivity of the workforce, their ability to produce goods and services of high value-added and skill and content which will make us competitive. In the competition with the NICs, we must win on our ability to produce goods of higher quality. We must win because we are reliable. We cannot go on competing on wages. Management must also increase their productivity and must be able to make decisions wisely and be able to make their marketing and investment decisions decisively and correctly. This is the most important challenge in the final analysis. On education and training, we must also consider carefully how we can help our older workers receive skills and knowledge, and special courses must be worked out for them, both at the company as well as at the training institution level. We must also have training courses for our retrenched workers so that they can become employable. Let me now turn to indirect taxation. Indirect taxation is regressive and it will affect our lower income workers adversely. I note that the proposal is to apply the indirect taxes selectively and that essentials will not be taxed. But in our context, we must be quite clear as to what are essentials and what are non-essentials. We must make sure that we do not create more problems here. Let me now turn to the social aspects of our economic development. As we become a more developed economy, we should begin to think about the type of social problems which may emerge in the future. For example, in order to make Singapore a competitive location for investments, our workers must be prepared to work the third shift. There are also targets for the increase in the female participation rate in the workforce. We have to consider the impact of these proposals on our family life, the relationship in the family between parents and children. Further, as our people become better educated, their expectations would inevitably become higher. Yet, as we want to maintain our competitiveness, we want to have a developed economy, we want our people to forgo certain non-material desires which people in developed economies want, like leisure. This will no doubt create certain problems and I think we should begin to think about these problems and work out appropriate solutions. For example, we can make some changes in the education of our children. Currently, we teach our students religious knowledge only in Secondary 3 and 4. Perhaps we should now start giving them religious knowledge right from the primary level. When we reach the next stage of our economic development, our people must not only be economically competitive and strong, they must also be spiritually strong. They must have good social and moral values. As we develop, we will continue to face ups and downs. But if our people are spiritually strong, they will have the inner strength to face challenges, be prepared for the unexpected and always be able to overcome setbacks. So as we implement the recommendations of the Economic Committee, I think it would also be useful for us to examine the social implications of economic development and to take appropriate solutions as early as possible. Sir, this is a crucial area if we want to continue to have peace and stability. Sir, as the President has said in his Address to this House, the success of the measures proposed depends on the full support of the people, how they are able to cooperate with one another, and with the Government. The support of the people will come only if they understand the reasons for Government's plan of actions and policies, and also the way these policies are being implemented. I am happy to see that the Economic Committee has recommended that "Government decisions should, where possible, be transparent." The public should understand the reasons behind the Government's decisions and the manner in which they are implemented. The Committee has recognized that such transparency would make it more difficult to implement correct but unpopular policies. Even so, it had recommended this course of action. This style of working will help to develop the people's confidence in the Government and this confidence and understanding of what Government is doing will motivate them to support the measures and to help to make them successful. On this note, Sir, I support the motion. 3.55 pm

Mr Speaker, Sir, we are entering a new and very important phase of our history. Why do I say this? To put it briefly, at a time of our political history when the leadership is about to change, the new leaders are being faced with new economic challenges and they are meeting the challenge by forging a new social contract between the Government and the people. Will they succeed? Sir, in future, when historians look back to this period which we are witnessing, I am sure that they will point to certain significant events. These significant events include the emergence of a new and dynamic leadership. It will include the formulation of a new economic policy for the country. The new political leaders and the achievement of the new economic policy will set new foundations for the future economic growth of the country. And it is the long-term goal, I am sure, that the new economic strategy will build up the defences of our economy so that in future economic crises, resulting from both external and internal factors, we will not be as adversely affected as we are by the present economic recession. More importantly, Mr Speaker, Sir, the new economic policy will set the nation towards greater achievements, not only in the economic sector but also in the social and cultural fields. As I said, the new leaders are forging a social contract between the Government and the people. This is a new partnership, a partnership which the new political leaders cannot fail to succeed. The President's Speech, the Report of the Economic Committee and the adoption of the recommendations by the First Deputy Prime Minister, all reflect two main elements of this social contract. The Government leaders are committed to achieve economic recovery by 1988 or 1989. The people are committed to abide by the wage restraint. Together through joint efforts, both the Government and the people are tackling the problems resulting from the economic recession. It is a contract which the young leaders must succeed. They must deliver their side of the bargain. Because if they succeed, they will strengthen their credibility, they will increase the support from the people and the people are watching closely how they proceed with the implementation of the new economic policy. But if theyfail to achieve the economic recovery, I am afraid it will undermine their political position and they will be faced with greater opposition to their leadership. Mr Speaker, Sir, based on past experiences and on the calibre of our new leaders, I am confident they will not disappoint the people. Sir, the President's speech mentioned that the focus of the new economic policy will be to tackle the problems associated with the economic recession. However, he did point out that the social and cultural goals will not be neglected. I hope that in the process of implementing the new economic policy, the social and cultural projects meant to uplift the standard of living of our people will continue. They must not be neglected. Certainly this project may have to be slowed down or postponed but attention must be paid to the social and cultural goals as well. As a general point, Mr Speaker, Sir, I hope that the achievements of the new economic policy will lead to a more general and equitable distribution of wealth, that it will not lead to a greater divide between the wealthy and the rest of the population. The goal must be to improve the standard of living of all, better wages, better education, better homes and so on. It must be one aimed at achieving a better society for all Singaporeans. Mr Speaker, Sir, the task of achieving the goals of the new economic policy must be shared by all. It is a matter of burden-sharing, a burden which falls on the shoulders of all - Government, managers and workers, so that together in partnership we can tackle the problems. Mr Speaker, Sir, as many of my colleagues have already mentioned, when we face a national crisis it is expected that all the people support the Government towards the implementation of the new economic policy. This is certainly recognized by the Government, by the PAP Backbenchers and by the people at large. However, unfortunately, there is a minority of people who either do not comprehend the gravity of our economic situation or are blind to the reality of our economic difficulties. Unfortunately, the two Opposition Members, who have been absent for most of the debate today, belong to this small category of those who are either ignorant of our problems or who are blind to the economic reality. In their case, I suspect they do not comprehend and are not aware of our economic predicament. Sir, they are intelligent people. But unfortunately they are obsessed by what the Member for Potong Pasir has called "their adversary role", that is to say, be the enemy of the Government at all times. Even as the Government is faced with a national problem which affects all the people, the Opposition Members continue to oppose. Is this what the role of the Opposition in Parliament should be? Where is their concern for the welfare of the people? Where is the responsibility which we expect from Opposition Members during a period of national crisis? Sir, maybe their sterile tactics and antics are just a cover-up for their inability to come out with solutions to deal with our economic problems. On the Opposition side, Mr Speaker, Sir, they seem to think that to deal with our economic crisis a simple economic strategy should be adopted. What the Member for Potong Pasir has called "rule of thumb" economics. In essence, in my view, they are prone to plunder the reserves which we have in order to solve the economic problem. Are they not aware that our reserves as well as our manpower are our only resources? Both these must be strengthened and should not be weakened or depleted. If we accept their economic strategy, "rule of thumb" economics, whatever that may mean, then I am afraid that is the way the economy will go - the reserves will be plundered and manpower will be undermined. Sir, what is at stake at this moment of our political history? It is not just a question of our economic recovery. In my view, it is an issue which affects the fundamental political system which we have adopted. A strong economy is vital for a viable and functioning democracy. I am confident that with the achievement of the goals of the new economic policy, we can provide our people with a higher standard of living, better education, better housing and so on, and thereby strengthen our democratic institutions. 4.08 pm

Mr Speaker, Sir, I rise to join my fellow colleagues in thanking the President for his address. I am heartened that the Government has accepted virtually all the main recommendations of the Economic Committee and will implement the key measures quickly to turn the economy around. The Economic Committee Report is a well thought-out document. It not only attempts to recommend measures to steer us out of the present recession but it is also a comprehensive blueprint to chart the direction of our economic development in the next decade. However, the most significant point about the Report is the manner in which the recommendations were reached. The Report represents the consensus and opinions after long, open and comprehensive consultations between the Government, private sector and, of course, the NTUC. To me, Sir, it is a document of the opinions of the people. Now that consensus has been reached, the most important task at hand is to translate these recommendations into action. Mr Speaker, Sir, as the President has pointed out, implementing the recommendations require all Singaporeans to work together, both with each other and with the Government. Some of the remedies, like the cut in CPF contributions to regain our competitiveness, will be painful but unavoidable. They are necessary short-term sacrifices we have to make for our long-term survival. In some cases, the adjustment may mean a change in the life-style we are used to. For instance, the Sub-Committee on Manufacturing pointed out that the major strategy to regain our competitiveness is to reduce costs. The measure that is likely to have the largest impact on total cost reduction is the promotion of three-shift or round-the-clock operations. The Sub-Committee noted that as manufacturing operations become increasingly automated, there are fewer incentives for the developed countries to locate their plant here. One way of overcoming this problem is for us to go on three-shift operation to make it attractive for firms to locate their capital-intensive project in Singapore. The Sub-Committee estimates that typically a company which goes from one-shift operation to three-shift operation could save approximately 15%-20% company's local cost. Of course, this is dependent on the industry and capital-intensity. However, implementing the three-shift operation to give us this comparative advantage will need adjustments by the workers. Workers will have to re-order their social lives, their family lives, to fit their new working hours. Mr Speaker, Sir, on the part of the Government, the Government should provide the infrastructure necessary to support three-shift work, such as extended transportation hours, TV and radio services, etc. It will mean adjustments for all. However, the potential cost-saving is very significant. I therefore urge that these recommendations be seriously considered, studied and implemented. We need every additional comparative advantage to regain our competitiveness. Mr Speaker, Sir, the future is no more the simple continuity of today. It is the direct consequence of today. In the 1960's Government intervention was considered necessary for the economic growth of a young, newly independent nation of Singapore. But now, more than two decades later, conditions have changed. Government does not create wealth. It is a job for the private sector. And with the wealth of experience, the Government could be the catalyst of wealth generation. The move to let the private sector take the lead is a "direct consequence of today." The change, I presume, is deliberate. It must be the guiding principle of our approach in dealing with our economic well-being that has put us in good shape for the past 25 years. Mr Speaker, Sir, we are living in an inter-dependent world and the reality of interdependence means that no country can recover from the world recession on her own. For instance, the strong dependence of NICs' economies, including ourselves, is unlikely to change. And as a nation, led by the Government and the politicians, it is our duty to confront reality, whether it is uncomfortable or not. It is important for us to have a proper perspective of the present economic recession. We are fully aware that the world recession that originated from the second oil crisis worsened in 1982. The workers were aware, not just the Government. There were measures taken by nations affected at that particular juncture in 1982. They knew the severe unemployment situation in the industrialized countries have forced the traditionally large and militant European and American labour unions to consider seriously and finally accept wage settlements they have never before dreamt of accepting. Why? Simply because they were being rational, practical, objective and realistic. They sacrificed short-term gains for long-term benefits and survival. Let me go through how several companies faced this reality in 1982. Take a company like Sunstrand. It is a high-tech company manufacturing aircraft components. It provided a 45-month job guarantee for its workers in return for a wage freeze for its skilled employees, a 20% cut for their semi-skilled workers and a 30% wage reduction for their unskilled workers. The powerful Teamsters Union for Transport Workers, in the US again, settled for a no-wage increase for 37 months, about three years. This was in March 1982. So keep your fingers crossed. By March that year there may be some increment for them. And there are other measures. Some cut their pay between 9% and 11%. Sunday pay dropped from 1(r) times to 1� times. Vacation leave was reduced. In a country like Belgium there was an overall across-the-board cut of about 15%. And not forgetting Britain's dramatic reduction of work stoppages. Mind you, Scargill started the mining strike from March - when I was there - until nearly the end of the year. A dramatic reduction of work stoppages over cuts in tea-break time or changes in work rule. And never forget, there was a firm with 200 vacancies which was stormed with not less than 20,000 applicants. Mr Speaker, Sir, this reminds me of what the Acting Minister for Trade and Industry once said in this very august Chamber and, that is, the best charity is to give a person a job. There is every element of truth in that one short sentence. The NTUC and the workers knew about this. That was the gravity of the situation. Why? Let us reflect and see the figures at that particular juncture. While the ASEAN countries registered a GDP growth of between 2.6% and 6.3%, Hong Kong, Korea and Taiwan registered between 4% and 6%. The industrialized countries were not making that much. For instance, the OECD countries suffered -0.5%. The so-called engine of growth, Germany, -1�% and US, -1.8%. We were -1.7%. Our recommendation, accepted yesterday, is "only" 15% of the CPF cut. I think the Opposition should appreciate why there is a delay of three years. We were prepared in 1982. The unions were told in early 1983. Why the delay? Among other things, because of the political stability in Singapore and the region. Because of the strong tripartite relationship between Government, labour and employers. Because we had prepared our children, our students, and the efforts made by the Government as early as 1970, if not earlier, for the age of technology. Of course, we also never forget about the BEST programme and, mind you, the objective of the BEST class, to me, is not only to create a skilful person. I am quite sure those over 40 years will find a new world for them when they know how to read a foreign language. I have several of my friends who never knew how to speak English. They only know their mother tongue. They feel envious whenever they see people carrying thicker and thicker books. There is a whole new world in front of them. They slogged. They studied. They succeeded. I told the BEST Committee, "Please create and design textbooks for such a particular group." One day they may go to our National Library and, who knows, our Parliament Library. Mr Speaker, Sir, I agree that the 15% cut in CPF is very painful. As usual, we are being truthful. We never ask Singaporeans to come into the PAP garden. The roses are blooming. The sun is shining. No, we never placed blind confidence in our own ability to handle the economy. We are not drunk with our confidence. We are being realistic. We are being factual. To me, our garden is still beautiful. What we need is some pruning with caring hands by all in the family. I am quite sure there will be one or two in the family who happen to be painters. Only they happen to be myopic painters who will just paint our garden city black. Sir, the rich colours of the garden city cannot be reduced to black and white only. We have to work together. Society exists because of the aggregate of the individual, the organized system and, of course, the esprit de corps. I would like to quote two Malay sayings. One is: Hidup sandar menyandar Seperti aur dengan tebing. You live like the river bank and the shrub. You need each other. If you don't, you will be swept by the current. Another saying is what they term as the Adat Berbilangan Perpatih which is still being practised in Minangkabau or Negri Sembilan. They say:

Berakit-rakit kehulu Berenang-renang ketepian Bersakit-sakit dahulu Bersenang-senang kemudian.

Feel the pain now and enjoy prosperity later. I just said we are in difficult times. I do not know whether we are in a crisis, but if we are, there is a Chinese word for "crisis" - weiji. I was told this word combines the element of danger and opportunity. Maybe the danger is in front of us, face it, and opportunity will be there. For my Muslim colleagues, it is stated in the Al-Quran. God said: "So verily, that for every difficulty there is relief." God said twice to make sure you doubly understand it, doubly digest it and, that is, besides the unhappiness and bad things, there is good thing after that. Mr Speaker, Sir, I support the motion. 4.30 pm

Very good timing, Encik Sidek. Moment of interruption. Debate to be resumed what day, Dr Wong?

Tomorrow, Sir.

So be it.

Resolved, "That Parliament do now adjourn." - [Mr S. Dhanabalan]. Adjourned accordingly at Half past Four o'clock pm.