Hansard, 1988-03-15

PERMISSION TO MEMBERS TO BE ABSENT Under the provisions of clause 2(d) of Article 46 of the Constitution of the Republic of Singapore, the following Members have been granted permission to be or to remain absent from sittings of Parliament (or any Committee of Parliament to which they have been appointed) for the periods stated:- Mr Bernard Chen (Clementi) - from 15th to 24th March, 1988. Mr Lee Kuan Yew (Tanjong Pagar), Prime Minister - from 15th to 21st March, 1988. YEOH GHIM SENG Speaker Parliament of Singapore

MAIN AND DEVELOPMENT ESTIMATES - (Announcement by Mr Speaker) In accordance with the provisions of paragraph (7) of Standing Order 87 and paragraph (5) of Standing Order 88, I have fixed the times for the conclusion of consideration of the heads of expenditure in the Main and Development Estimates of Expenditure for FY 1988/89 in the Committee of Supply. These times have been notified to hon. Members and will appear in the Official Report. (Cols. 777 - 782) Committee of Supply - MAIN AND DEVELOPMENT ESTIMATES OF EXPENDITURE FOR THE FINANCIAL YEAR 1ST APRIL, 1988 TO 31ST MARCH, 1989 (Cols. 777 - 782)

BILL INTRODUCED - CORRUPTION (CONFISCATION OF BENEFITS) BILL "to provide for the confiscation of benefits derived from corruption and for purposes connected therewith", presented by the Second Minister for Law (Prof. S. Jayakumar); read the First time; to be read a Second time on the next available sitting of Parliament, and to be printed.

ANNUAL BUDGET STATEMENT Order read for Resumption of Debate on Question [4th March, 1988] [2nd Allotted Day], 'That Parliament approves the financial policy of the Government for the financial year 1st April, 1988 to 31st March, 1989.'. - [Minister for Finance]. Question again proposed.

ANNUAL BUDGET STATEMENT Mr Deputy Speaker, Sir, I rise to join my colleagues in supporting the motion moved by the Minister for Finance. This Budget for fiscal year 1988 is aimed at not only putting Singapore's economy on a full recovery but also to ensure steady growth for the future. Singaporeans are very pleased to note that last year our economy grew by 8.8% and we hope that, as forecasted, we can achieve about 5-6% growth this year. The Minister and his officials at the Finance Ministry must be congratulated for doing a fine job. Sir, for this Budget the ordinary man-in-the-street are hardly affected at all. The tax increase on cigarettes will be felt only by smokers. I believe this is a good way to get more revenue from people who insist on smoking despite the numerous anti-smoking campaigns. They can do without smoking but if they insist on doing it, then I think they should be willing to pay a bit more. Sir, yesterday my colleagues spoke at great length on foreign workers' levy, property tax and other revenue and tax changes. I do not intend to cover the same ground but shall concentrate on one very important matter, that is, upgrading the workforce. Our labour statistics showed that the educational profile of our workforce was such that 52.5% in 1986 has less than a secondary education. This is better than the 58.6% in 1980. However, when compared to the US, Japan and Taiwan, our workforce is less educated. More than half of our workforce, that is 53% in 1984, have primary level education only. This is less favourable compared with 15% in the US, 35% in Japan and 45% in Taiwan. I think the government, employers and unions must look into this matter seriously and take steps to upgrade our workers. No doubt we have many courses for workers like BEST, MOST, WISE, COSEC, etc., but the question is whether these courses are enough to upgrade all our workers. Are our workers given time to attend these courses? We should do more by having more grants for training of workers. If the Americans can spend between $750-800 and the Japanese between $2,000-3,200 on training every year for each employee, I see no reason why we should only spend about $100 per employee. This $100 is based on SDF statistics on formal off-the-job training. So I believe we can do more by having more grants from the SDF for the training of workers. Sir, I am pleased to note that the NPB has made recommendations on initiatives for re-skilling the workforce in May 1987. I believe the Government has accepted the report. May I ask, how far have we gone to implement the recommendations made by the NPB Council? Let me quote two of the eight initiatives mentioned by the NPB report: Initiative No. 1: setting up of a coordinating agency to study, monitor and plan skills requirements and the training required by the Singapore workforce to meet changing economic and work condition; and Initiative No. 8: setting up of a network of skills centres or training information centres to provide on-the-spot information on training programmes and to counsel workers on the alternatives and options open to them. I wish to ask the Minister whether the NPB is being given the task to be the coordinating agency and information centre. Sir, the greater emphasis on training of workers will definitely upgrade the skills and productivity of workers and, thus, the competitiveness of Singapore-made goods in the world market. However, during this Budget, the Minister did not announce the increase in the contribution to the SDF even though we are aware that very soon the disbursement of the SDF will greatly exceed its annual collection. In no time, the SDF will be depleted. Based on our economic growth for 1986 and 1987, I think the Government should compel the employers to contribute more to SDF for the benefit of our workers. I urge the Government to announce the increase of the SDF levy together with the increase of the CPF rate after the first quarter of this year. And I think it is for the benefit of our workers, for their re-training and upgrading. With that, Sir, I support the motion.

ANNUAL BUDGET STATEMENT Mr Deputy Speaker, Sir, the Budget Statement delivered by the Minister on the 4th March has been described by various Members of this House as cautious, undramatic and unexciting. The remarkable thing is that he did not do a number of things that he could have done, such as the introduction of additional taxes, which is surely good news for taxpayers. The Budget has been designed and calculated to instil prudence and flexibility - qualities which have served us well in the past - which will be of increasing importance in the years to come which will be characterized by increasing competitiveness and protectionism in the world markets. Most of the sectors in our economy did very well in 1987. But in the face of a possible slowdown in the world economy this year, our cost-effectiveness must be monitored even more carefully. Sir, the total investment commitments in 1987 rose by 21% and reached the target of $1.7 billion, a significant portion of which came from the electronics and supporting industries. These industries were boosted by buoyant demand in many countries. However, it is well to remember that such demand has fluctuated cyclically every few years. Rapid obsolescence in the electronics industries means that production facilities need to be upgraded regularly and perhaps shifted to other locations from time to time. In some instances, the cost advantage of a plant in Singapore may be more than offset by other considerations such as proximity of markets and consumer preference. For example, it was reported in the press that Apple Computers may shift its overseas production facilities away from Singapore to Europe despite a very recent announcement by its Chairman that Singapore would be their production centre outside the United States of America. It is, therefore, important to remain agile and adaptable. Changes in circumstances may come about sooner than expected. The Minister emphasized the importance of adequate investment in training. And he pointed out that in the case of Singapore, only 1% of our national payroll is spent on training as compared with 2-4% in the more advanced countries. By 1989, investment in training will increase to 2% and by 1992, to 3%. It is, of course, crucial to upgrade the skills and improve the knowledge of our workers. Even in the United States, it has been pointed out that between 1929 and 1957, about half the economic growth was attributable to training and technology. And for the years in the 1990s, the role of knowledge-intensive industries could be even more pronounced. The benefits of greater and more effective training can only be seen in the long run. The availability of funds for training is a necessary but not a sufficient condition for better training. The selection of relevant training courses, the standard of the instructors and the quality of the training materials are equally, if not more, important. The training of the trainers must be given greater attention to ensure that we have a competent and committed pool of trainers in Singapore. Foreign trainers, of course, must be used. But we cannot depend on them for all kinds of training courses for an indefinite period of time. Among the significant aspects of the Budget Statement is the absence of additional taxes on motor vehicles. This is surely good news for the motorists! If road tax is to be used to regulate the number of vehicles on the roads to reduce congestion, then car ownership per se is not an equitable basis for any tax increase. The additional tax should be borne by those who contribute to peak hour traffic. Sir, from Year of Assessement 1988, unit trusts and investment holding companies can elect to have their gains on disposal from investments taxed on a sliding scale of zero to 33%, depending on the period of time during which investments have been held. For investments held for less than six months, they will be taxed in full, that is 33%, whilst those held for more than 18 months will not be taxed at all. In the case of investment holding company, the tax measure is acceptable as it has removed a long-standing uncertainty about the liability of investment gains. However, the extension of the proposal to unit trusts has not been well received. It is believed that the tax proposal instead of promoting the industry will retard its growth for the following reasons. Currently, individual investors on their own can buy and sell shares in the market and are not taxed on the gains derived. The proposed tax therefore acts as a disincentive to potential unit trust investors. Secondly, unlike investment holding companies, unit trusts may be forced to sell their investments to meet the redemption of units by unit holders even though the intention may have been to hold the investments for over 18 months. Unit holders redeeming their units may have to suffer tax that is eventually not payable if the investments are held for 18 months or more and the gain is therefore not taxable. The tax burden is therefore not equitable. From an operational viewpoint, considerable difficulties will be encountered in building the tax into the daily unit pricing. Moreover, it is specifically provided that CPF account holders are tax exempt on gains if their funds are invested in approved unit trusts. Complicated procedures are stumbling blocks to efficiency and precious time and energy may be spent elsewhere. The problems mentioned are not insignificant and I hope the Minister will review the proposal in respect of unit trusts and see how these difficulties can be resolved or at least minimized. If the primary objective is to promote fund management in Singapore, then I am afraid the tax proposal for unit trusts is not likely to contribute towards it.

ANNUAL BUDGET STATEMENT ( In Mandarin): Mr Deputy Speaker, Sir, just like what the Member for Tanah Merah has said too many MPs have talked a lot about taxation, so I would not like to deal with it any more. However, in the Budget Statement of the Finance Minister there is one characteristic which, although it is a small point yet it has a major significance, ie, the financial management has shifted from central control in the high-ranking officials of the Ministry of Finance to the other Ministries. This is a decentralization and delegation of management and control of finance from the Ministry of Finance to other Ministries. Henceforth, senior Finance officials can no longer monopolize the power but delegated to various Permanent Secretaries of other Ministries. On page 8 of the second section of his Budget statement, it gives the policy statement. It says that subject to a maximum of $10 million for development, any expenditure on any project lower than $500,000 need not seek the approval of the Ministry of Finance. Sir, this change is a major change in policy and it is good. It will have great effects. Henceforth senior officers of the various Ministries need not pass the buck round to the Ministry of Finance, eventually landing on the Minister for Finance and blaming him for everything for nothing. I feel that from now on the various Permanent Secretaries will be enboldened to do on their own discretion the necessary tasks that behove their action without passing the buck. In the past two years there has been a strange phenomenon. When the Government's policy is quite right, however, when it comes to the higher officers of various Ministries for implementation they could not implement correctly according to the policies laid down. They would deviate from the policy lines, thus causing the people to complain and blame the Government. Let me give two examples. Recently, the People's Association has decided that for the new type community centres the time of opening hours would be advanced from 2.30 p.m. to 8.30 in the morning. This is a correct measure, as it is beneficial to the people. The P.A. requested Finance Ministry to supply the money in order to engage more staff. However the officials of the Ministry of Finance rejected their request, saying that the Government now is trying to cut down the number of staff to economize, yet you want more money to increase your staff! I won't give you. What can you do? So now the few staff in such new type community centres will have to work overtime everyday, being seriously short staffed. I asked them what happened. They won't dare to say there is no money forthcoming from the Ministry of Finance. They won't dare to offend the high-ups. How dare you! Let me give you another example. There were some poor people trying to apply for stalls in school tuckshops. They have the right to do so. When they approached MPs for help, they in turn wrote to the Ministry of Education. All MPs know what would happen. Even when MPs of substance including the Ministers sought their help, their reply would always be the same, saying that they could only convey the message to the persons concerned. Whether or not the outcome is successful, it has got nothing to do with them. You can ask those persons concerned. So that is the most they could do. This reminds me of what the Prime Minister said last Saturday the 12th March when he officiated the opening of MRT. It was reported that before MRT construction work started he asked the officer in charge whether the MRT construction could be sped up. The officer after careful consideration replied that it could be done. I would like to stress this phrase, "after careful consideration" which expresses sense of responsibility, I appreciate very much this responsible manner of dealing with a matter and service attitude. He dared to take up the responsibility on his own and could give a definite answer. Sir, now the officers of various Ministries being in charge of certain duties and delegated with discretionary power could not pass the buck to Finance Ministry or blame it. This is very good. They should try to help the Government implement the new financial policy which is introduced just in time to realize the Government's vision of 1999. Whoever one is, whether an MP, a senior officer of the Government or a Minister of the Government or anybody else, I hope all will take up their responsibility to serve the people well and not let them down in order to help realize our future vision. Thank you.

ANNUAL BUDGET STATEMENT Mr Deputy Speaker, Sir, to me, this Budget Statement is a very special and significant financial statement since the younger leadership led by the First Deputy Prime Minister took charge. It confirms the resolve of the younger leadership in steering the nation out of recession, as we see for ourselves the capability of the leadership in conceiving the corrective measures and the ability to implement them effectively. It took only two years. As a management accountant and having worked in the commercial and industrial sectors for more than 20 years, I cannot find an exact word to describe this phenomenal achievement. I cannot use the word "miracle" because a miracle does not need hard work. So as a reticent Oriental, I humbly and gratefully say, xie, xie. All of us realize that another recession cannot be ruled out in this uncertain world economy. But this Budget Statement has given us the comfort that this younger leadership has proven that they can steer a vulnerable ship through the stormy economic sea. This Budget Statement also revealed very clearly that the younger leadership is farsighted, as evidenced in the relentless drive for foreign investments. Over the last two years, Cabinet Ministers strenuously went on a selling mission overseas and the achievement of S$1.7 billion of foreign investment commitments shows the confidence of the foreigners in the younger leadership. Mr Deputy Speaker, Sir, the S$1.7 billion foreign investment commitment in some ways make up for the absence of a large domestic market. It creates thousands of jobs and provides our local businessmen with opportunities to be supporting industries. However, I am concerned that if our local businessmen continue to be just supporting industries, we will run into serious economic problems if the next recession were to hit us. With a breathing period of substantial foreign investment commitments, the Government should look into ways and means to nurture our local businessmen to be export orientated. The incentives which are presently available for the local businessmen are directed at upgrading so as to serve the multi-nationals better. The incentives are not sufficient for them to compete overseas. The local businessmen not only lack finance but also management and marketing expertise. Incentives like the Product Development Assistance Scheme may be a good start where the local businessman is given a grant based on his proposal to market overseas and for a given period if he makes profits to pay back the grant. A faster way is to encourage existing local businessmen who have the finance, management and marketing expertise to start or increase their business overseas. They can become the pace setters and serve as models for others to follow. I see the Economic Development Board as the most suitable body to spearhead this move. But the incentives package must be generous and flexible. Needless to say, time is the essence and sense of urgency the rule of the day. We certainly wish to look forward to a day when we can have both foreign and our own multi-nationals existing side by side. This is really a challenge for the younger leadership. Mr Deputy Speaker, Sir, I want to move on to another subject. It is a very sound policy that every abled citizen should earn his own keep. However, there is a group of lower income citizens who have to supplement their low income in order to make their ends meet. But there are almost no opportunities for such people. These citizens are usually lower educated, no special skills and earning basic wages. If they cannot supplement their income, I do not think that they can come out of the poverty trap. Let me share with you a case to make my point clearer. Some months ago a middle aged man came to see me at my regular Meet-the-People session. As he entered my room I saw that his eyes were red as though he had been crying. Crying or not, he certainly looked drained, worn out and sad. I could sense his sadness and disappointment with life when he handed me a note and started to relate his problem. He worked in a bakery and earned about $400-$500 a month. With this he has to support two school-going children and, I think, two aged parents, a house and utility bills. He can hardly make his ends meet. His kind employer suggested that he could sell some bread at the void deck to supplement his income. This he did. But little did he realize that this ironically made him poorer. You see, the note he handed me was an HDB notice for illegal hawking. Mr Deputy Speaker, Sir, I want to ask: where and how in Singapore can this man supplement his income without resorting to crime? The answer is a bleak one. Can we help? I believe so. I support the Member for Kebun Baru when he called for the formation of a Council for the lower income. I want to add here also that we should not develop into the undesirable social conditions like that of America and Japan where the countries are rich but the majority of the citizens are poor. I am also grateful to the First Deputy Prime Minister when he said that he needs more time to analyse whether anything can be done before he commits himself. Caution is his virtue and I personally think it is a good virtue for a leader, and I hope the Government will do something about it.

ANNUAL BUDGET STATEMENT I have a clarification for the Member for Paya Lebar. He is appreciative of the Budget and he cannot find an appropriate word to show his appreciation. According to him, he says the most appropriate word is "xie xie". I am sure I also speak on behalf of the Malay MPs here, and I say that the most appropriate words should be terima kaseh.

ANNUAL BUDGET STATEMENT Mr Chiam, can you please resume your seat. I do not understand what you are trying to clarify. You are strictly out of order. Mr Yatiman.