Mr Speaker, Sir, I support the motion standing in the name of the Minister for Finance. His Budget is truly a sensible one for the transition to a consumption-based tax system, as well as one which will ensure the continuation of our low inflationary economic growth of recent years. The Minister has gone to great pains to compare our public expenditure with many countries, including Hong Kong, where he took greater pains to explain why our taxes are much higher than Hong Kong's. Unfortunately, Sir, it is a cruel cold world outside there. Out there, nobody cares a damn why our taxes are higher. The captains of industry in the capital cities of the world look only at the bottom line. Is it worth while to be in Singapore or is it worth while to be in Hong Kong? We are being compared constantly. It is not strange because we are very much like Hong Kong, city states with a foreign hinterland, no natural resources except for a well educated population, hardworking and productive, first class infrastructural facilities, and so on and so forth. Their decision to invest in Hong Kong or Singapore will be based on the bottom line - how competitive we are to Hong Kong. They will consider factors such as corporate tax, personal income tax, labour cost, land cost, utilities cost, government bureaucracy, labour productivity and so forth, not why our taxes are higher than Hong Kong's. So how competitive are we compared to Hong Kong? That, Sir, is the key factor. The Minister is fully aware of that. He knows that comparison will be made by those who matter, including those who decide whether to use Singapore or Hong Kong as the base to invest in other parts of Asia. Yes, there are many areas in which Hong Kong and Singapore are complementary. But in many others, we will always be in competition. To truly succeed, we must be, overall, more competitive than Hong Kong. It is not enough for the Minister to brush aside the competition posed by Hong Kong with a statement that it is impossible for Singapore to emulate Hong Kong's example. We must try! Benchmarking is a strategy adopted by many successful companies to push ahead. We should also use benchmarks to progress. Just as there are other countries using us as a benchmark in some areas, we must be prepared to use Hong Kong as a benchmark in others, not least their low tax regime. It is difficult, Sir, but then nobody has ever said that being the Minister for Finance is an easy job. Sir, on promotion of an external economy, do not get me wrong about Hong Kong. There are many areas in which we can learn from Hong Kong. Similarly, there are also many areas from which we should distance ourselves. And the suggestion to dismantle our so-called safety nets to create a Hong Kong-like environment in order to produce entrepreneurs is certainly one suggestion to ignore. It is a very seductive argument but I would like to urge the Government not to be lured into the thinking that the only way to succeed is to create the adverse conditions to separate the wheat from the chaff. The safety nets are our strengths, not our weaknesses. History has had many successful men advocating that, because they have succeeded despite the odds, perhaps even because of the odds, their way is the only way. Let the cream rise, they say. It is also the ugly side of capitalism. We must never fall into the trap. While we advocate the principles of free market enterprise and the pursuit of individual excellence, we must never get carried away by our own rhetoric. This Government is not stupid. This Government has built up Singapore based on caring for the weak, compassion for the less fortunate and support for the poor with many opportunities for those who want to rise above their original stations in life. To create more entrepreneurs, it is not necessary to give up our safety nets, because they are more than safety nets. They are the bedrock foundations of our society, the Singaporean society. In a short space of time of only slightly over 30 years, we have created a Singaporean nation out of a motley group of immigrants. This came about because of our bedrock foundations, because they give us a base to go forward, a base to plan our future and our children's future. They give us stability, certainty and a sense of permanence upon which we can plan. Remove these edifices, we remove the foundations of our nationhood. We have taken a different route from Japan, Hong Kong, South Korea and Taiwan to where we are today. MNCs have helped to make us economically successful. If the result of this is that Singapore has insufficient entrepreneurs willing to take risks outside Singapore, I disagree. Sir, if I may, I would like to ask the Clerk of Parliament to distribute some Tables to hon. Members. [Copies of Tables distributed to hon. Members.] In fact, if we look at Tables 1 and 2, in a recent study by the Department of Statistics, the Tables, show that: `Factor income earned from abroad by Singapore residents and companies in Singapore increased from $125 million in 1960 to $12.9 billion in 1992. Compared to GDP, ie, the income generated in the domestic economy, income generated from overseas had grown at a faster rate. While GDP had grown at an average annual rate of 12% between 1960 and 1992, income earned overseas had grown by an annual rate of 16% during the same period.' Of course, the reason why our GNP is marginally larger than our GDP is not because income earned abroad is small. At 17% of GNP in 1992, it cannot be considered small. But that factor income paid to non-residents is also large as shown in Table 2. It is due to our policy of promoting foreign investments in Singapore leading to non-residents taking up an increasing proportion of the income generated in Singapore's domestic economy. Sir, even so, as the Minister has said, it is not enough. We must encourage more overseas investments, especially when the pickings in our region are so bountiful. I agree, but it is too soon to elaborate much in this area. We should wait for Commodore Teo Chee Hean's report. Whilst doing so, I would like to offer my thoughts on three areas to the Minister of State: (1) The Government, the public sector, must change its mindset. In today's world where economic progress is the name of the game, it must be fully prepared to play its role as a business partner of the private sector. The vestiges of the civil service as a mandarinate, inherited from the British and reinforced by Chinese traditional values, must be banished. Too often, the prevailing thinking in the service is "entrepreneurs equal businessmen equal crooks." Hence, if a businessman comes up with a suggestion, look for the hidden benefits for him. Reject the suggestion if you can find any. If you don't, reject it anyway, since any suggestion from him must be for his own good and therefore at the expense of the general public. Sir, I am not asking for a lowering of standards, but rather a fair chance for business to be listened to and respected, not only at the political level but at every level where it has to interact with the public sector. Japan has shown the way that when business and the government cooperate in the form of Japan Inc., it can conquer the world. Singapore has done it another way - by the Government taking over the business. Sir, my second point is businessmen do not need much incentive to venture overseas, not if there are profits to be made. If they do, they would more likely than not lose, not profit. More importantly for them is that they be allowed to enjoy the fruits of their ventures, especially enjoying them, ie, the fruits, in Singapore, their homeland. Making money in Singapore and giving the Singapore Government a 30% cut of their profits is, I suppose, considered acceptable. The Singapore Government has earned its share by its excellent governance of Singapore. But giving it 30% of the profits, or later on, 27% of the profits, remitted from overseas where the risks are much higher and the Singapore Government's contribution lesser, that is another question altogether. The Government is aware of this. But it is only prepared to give exemption to those who applied, on a case-by-case basis. This is not good enough, Sir. Nobody, Sir, if he can help it, wants to see the taxman with lots of information. So, in addition to whatever scheme already in place, why not simply reduce tax on remitted income to 10% across the board? Also, the Minister should consider allowing the combining of all sources of businesses in a company regardless of whether or not a particular source has started producing income. Sir, let me give you an example on this. Assume that a company has two sources of business, say, A and B. If A is profitable and B is still new and not profitable, the losses accruing from B cannot be offsett against the profits from A. There are, of course, many variations in each and every case, but what I have just stated is the basic principle adopted by IRAS. If the Government wants to encourage entrepreneurs to venture into new areas, including overseas, obviously allowing this offset is one of them. Sir, the third area is one of non-financial assistance. The Government should use its resources to establish an information and research centre on overseas economies, markets, opportunities, etc. The Japanese, through MITI, is reputed to have the best dossier on world markets. The Australians are now also in the game, having announced a package to penetrate into Asia, the centre piece of which is an Asia Economic Centre to provide analysis of Asian economies to Australian firms. Sir, the assistance by the Government in this area should also involve all our foreign missions where each and every mission becomes a Singaporean business centre overseas, helping to arrange meetings with Government officials and businessmen of the host countries, providing information and the like. Appropriate business-minded officers prepared to help even the smallest businessman from Singapore should also be made permanent members of every foreign mission. GST. In the past in this Chamber, I have argued against the imposition of a consumption tax. It is not that I am against a tax levied on consumption, but I am against the regressive nature of a simple consumption tax. Hence, I have urged for an expenditure tax which basically retains the progressive concept in the taxing of consumption. I am aware that a consumption tax such as the GST will increase our tax base and permit the lowering of taxes on income, thereby making us more competitive. Unfortunately, while economic success, especially in the brave new world order, demands the law of the jungle, the survival of the fittest, how we will be judged by history as a civilised society will be on how we take care of our poor, our downtrodden, our less fortunate and our underprivileged. In this respect, Sir, I must say that my fears of the unfair and regressive nature of the GST have been more than amply answered by the Minister for Finance in his current budget package. The Minister has gone overboard to ensure that nobody suffers during the next five years in the transition to a GST based system of taxation. If anybody is missed out, Sir, it is certainly not by intent. Even the Opposition's cry that the budget discriminates against the middle-class is put to rest by the set of tax savings figures by Arthur Andersen. Sir, I refer to Table 3 in my set of tables sent out. Looking at the figures, a middle income earner with an annual income of $30,000 has a tax saving of $826 per annum. This translates at a GST of 3% into an annual expenditure of $27,533 or 92% of his annual income. It is unlikely that he would spend such a high percentage of his gross income. If he spends less, he is better-off under the new system. For the $70,000 per annum earner, his tax savings of $1,066 translates into an annual expenditure of $35,533 or about $3,000 per month. Would he spend so much? If not, again, he is better-off under the new system. Sir, I will not go into details as there will be ample time to air them when the GST Bill comes up for its Second Reading. At this juncture, I would just want to say that the fear of profiteering by the general public is real. Experience of what happened in the past when prices went up on the slightest pretext, with much Government inaction, has much to do with the present state of affairs. So I think the Government must do more than just giving assurances. Encouraging Singaporeans to own shares. It is said that once you teach a person how to be smart, you cannot, later on, teach him how to be stupid. In other words, Sir, while I subscribe to the idea of encouraging Singaporeans to invest in our soon to be privatised blue chip Government companies, the Government must be prepared to accept that sooner or later these same Singaporeans are also going to invest in other companies listed on the Stock Exchange. And when one invests in shares, he can also lose. There is no guarantee of profits. The Government must, therefore, start educating the people on these basic truths. Otherwise, when people lose their hard earned money in the stock exchange, we may have a repeat of what happened several years ago in Kuwait and, more recently, in Taiwan. Then, when the stock markets collapsed, there was great clamour from the man-in-the-street investors to have their governments compensate them for their losses. In the stock market crashes of 1973, 1985 and 1989 in Singapore, investors were then fewer and more sophisticated. They knew that such were the risks of stock investments. Should this happen again in future, with many more man-in-the-street investors, would investors then be so knowledgeable and understanding? Profits from share investments, of course, include capital gains as well as dividends. Obviously, when more investors are attracted to a market, the likelihood of higher prices for the shares listed in that market also increases. This usually attracts more companies to be listed which, in turn, attracts more investors. This is a common phenomenon of a growing market place. Supply and demand feed on themselves. It is good for investors. My question is: Is the Stock Exchange of Singapore good for investors? Sir, once we were the second largest market in Asia outside Japan; behind Hong Kong, and depending on which measures you use, we were even ahead of Hong Kong. Now, we are fourth after Hong Kong, Kuala Lumpur and Thailand. Sir, I refer to Table 4. Our place in the sun in this field appears to be getting shadier and shadier. What has led to this decline? I am afraid it is not a single dimensional problem and there are many answers. But when institutional investors shun our market for others in Asia, when local investors buy foreign instead of local shares of our own companies, when companies go to overseas exchanges for its public listing after being told informally that they were not good enough for the Singapore main board, when good local companies do not wish to be listed because in the words of a successful local entrepreneur, "I do not mind being a fish in a gold fish bowl, but what I do mind is being told how to swim", then I say, Sir, that something is not quite right in the state of Denmark. Cap on Deduction for medical expenses. I agree that we should tackle the problem while it is still not pressing. Besides this fiscal measure, the Government has and will continue to put in place many programmes to encourage healthy living, emphasise primary health care and reduce health costs. However, I think as a fiscal measure, the proposed cap is inadequate. It puts the initiative on employers when very often medical expenditure is beyond their control. Very often, besides health care givers, the employees are the ones in charge. They are the ones to fall ill and the ones to decide when they would visit the doctor. I would therefore urge the Government to consider the following: (a) Allow companies to set up a trust fund called "Medical Benefits Fund". Contributions from companies up to 2% of total employees' remuneration should be tax deductible as proposed. (b) Employees are not required to contribute to the Fund, but if the Fund runs short, employees and employers should contribute to the Fund. Tax deductibility will still be capped at 2% for employers' contributions, while employees' contributions should be made tax deductible. (c) The Fund could be jointly managed by employers and employees. All income accruing to the Fund should be made tax free. (d) The Fund would be used for medical expenses of employees, including the purchase of health insurance schemes for employees. In order to encourage all to take care of their health, a system of cash rebates could be given to those employees incurring little or no medical expenditure. Such cash rebates should be tax free. Sir, I apologise for the complexity of my proposal. But we now live in a more affluent society with more varied needs. In order to cater to such a variety of needs, often a simplistic approach may not be adequate. My proposal has the advantage of putting the issue squarely on the shoulders of those in control of their health. It also does not reduce the level of medical benefits currently enjoyed by the workers. Separate Assesments for Married Women Sir, on separate assessment for married women on all income, I am afraid that in the light of GST and going abroad, this is a much overlooked item. But I must say that I welcome this proposal as it finally treats a woman as an economic person in her own right. I am glad that the Finance Minister has taken this first step. I would like to ask when he would take the second step, ie, recognising women employees in the Civil Service as economic persons in their own rights - that they be not discriminated in medical benefits for their spouses and their children. Sir, with that, I support the motion.