Mr Speaker, Sir, I would like, first of all, to thank all hon. Members who have spoken on the Budget for their suggestions and comments. Unfortunately, time cannot permit me to address Members' concerns point by point. Matters of detail under the purview of individual Ministries will be dealt with in the Committee of Supply. Instead, I will focus on major issues relating to the Government's financial policy. But before doing so, I would like to deal with some of the sarcastic remarks by Members of the Opposition. Attacks by the Opposition are to be expected. But Mr Ling How Doong and Mr Low Thia Khiang have called the budget give-aways as a small strand of wool and a drop in the ocean. They said that it is small relative to the Government's total revenue, although they amount to nearly 10%. I do not know where Mr Ling and Mr Low learnt their arithmetic. But such a comparison is totally invalid since the great bulk of the Government's total revenue is spent on providing services to the public. For example, in FY96 budget, the total estimated revenue is $26 billion of which nearly $19 billion is to provide services for the public and there is a balance of $7 billion as budget surpluses. So if any comparison is to be made, it is in relation to the give-aways to the budget surplus, and not to the original total revenue. By making such a comparison, about $2.5 billion worth of give-aways are proposed and this amounts to one-third of the budget surplus, not a small drop, a big drop indeed. Mr Chiam and Mr Cheo have also suggested that the Government's budget is an "election budget". I would like to point out to both of them that the Government does not need to resort to election gimmicks. Since it was returned to power in August 1991, it has more than fulfilled all its election promises. Over the past four years, the Government has provided full employment and real GDP growth has averaged just below 9% per annum with the cost of living index averaging only 2.4% per annum. Over the same period, we have obtained substantial budget surpluses in every year. But this has been accompanied by a strong 16% compounded annual growth in non-oil domestic exports between 1992 and 1995. The budget surpluses have allowed the Government to cut taxes, give rebates and fund large HDB upgrading programmes without creating a drag on the economy. With this track record, I do not see why the Government needs election gimmicks. I will now move on to clarify the broad policy issues raised by Members over the last two days. Mr Speaker, Sir, several Members have indicated that it is now timely for the Government to conduct a review of its tax policies. Let me assure the House that Government constantly reviews its tax policies. The tax changes I have announced in this year's budget reflect the Government's underlying philosophy of taxing the factors of production as lightly as possible and investing in Singapore's long-term needs and in human capital. This will keep our fiscal environment attractive for business and individuals. It will also position Singapore to achieve the vision contained in its strategic economic plan to become a developed country in the First League. Other Members have also commented that our tax structure has consistently generated large budget surpluses and asked if this should be reviewed. As I have explained to the House on several occasions, the surpluses are not due to high taxes as our tax rates are extremely competitive. Rather, they are the result of unexpectedly strong economic growth made possible by sound economic policies, prudent fiscal management, taking advantage of strong growth in the regional economies and the world economies over the last four years. Nonetheless, the Government recognises that there are non-tax burdens, such as COEs and foreign workers levy, but these are necessary mechanisms to allocate scarce resources. Our surpluses have allowed us to proactively adjust our tax rates to minimise the overall tax burden on the economy and on individuals. On the expenditure side, our philosophy has been to contain the growth of the public sector, focusing our expenditures on basic public services and in areas that will support and sustain non-inflationary economic growth. Welfarism and expenditures that could undermine incentives for self-reliance and industry are avoided. The provision of subsidy has thus been selective and confined mainly to education, health care and housing. Even then co-payment and other mechanisms are put in place to avoid over-consumption and to guard against a dependent mentality. Mr Speaker, Sir, I am clarifying these broad policy issues because it is necessary to constantly reiterate these fundamentals. The Government has been consistent in its fiscal policies. The tax cuts are to strengthen our long-term competitiveness. It is also timely to implement these changes now as the economy is expected to moderate after successive years of strong growth. The rebates and top-ups should not be seen as handouts but as rewards for the good economic performance. They are the ways for Government to return some of the budget surpluses to the economy and will only be given if the economy continues to do well. Dr Soin has suggested a framework for managing the surpluses. I would like to thank the Member for her suggestion but I do not believe that we should manage our surplus based on a rigid formula, especially in the face of a fast changing environment. Fixed allocations of budgets lead to inflexibility and often to waste because it means that, whether a project has a specific need or a suitable programme, we would be obliged to spend them. The Member for Leng Kee has asked for comments on the art of giving. I would like to assure him that Government is careful not to raise expectations in sharing surpluses with its citizens. First, the sharing is done only when economic growth is healthy and the budget surpluses are actually achieved. Second, there is usually an element of co-payment involved on the part of the individual so that he also contributes to the enhancement of his own assets. The Government would try to be more personal in its surplus sharing wherever possible, of course. But, sometimes, the sheer number of CPF account holders and households makes this a difficult proposition. Mr Chay Wai Chuen has proposed that transfers and grants given under the asset enhancement scheme should be reflected in the CPF statement to show individuals the value of Government's contributions. I would like to thank the Member for his suggestion. I will look into this. Several Members have raised questions on the civil service reforms that were announced in the Budget Statement, principally on the accountability and management of autonomous agencies (AAs) and the nature of the targets that would be set. One of the key objectives of the reform is to deliver better quality service to the public. Under the present civil service structure, decision making is highly rule-based and centralised which makes it difficult for a department to tailor its services to the changing needs of its customers in a speedy, innovative and responsive manner. The reform is intended to change this by pushing the decision process downwards as far as possible within the framework that emphasises results and accountability in return for managerial autonomy. Under the Budgeting For Results (BFR) framework, AAs would be accountable for the quality of service, which is an important performance target in addition to output targets. AAs are therefore also accountable for the quality of service they provide. Examples of quality of service targets to be achieved by AAs include waiting time by the public and percentage of satisfied customers based on surveys. As I have explained in my Budget Statement, for units whose output and services are not easily measured, the nominal GDP growth rate will be used as a proxy for output growth. It is a reasonable proxy since workload and operating costs are expected to grow in tandem with economic growth and inflation. It is therefore financially prudent to allow Government's expenditure to grow only in tandem with the economy as this will ensure that the Government sector does not consume a disproportionate amount of resources in the economy. As for accountability, the targets and the actual performance of AAs would be published and subject to public scrutiny. This will make the Government even more transparent. There has also been concern that the introduction of AAs will lead to an increase in Government fees and charges. I would like to assure the House that this will not be the case. The conversion of Government departments into AA merely changes the operating framework of the organisation. AAs will continue to set their fees and charges based on current cost recovery principles. As before, their fees and charges would be adjusted periodically to take into account increases in operating costs. Through regular reviews, increases will be kept small to minimise the impact on the public. This has been our policy and it will not be affected by the new status of departments as AAs. Some Members have also asked whether there will be a change of tenure for civil servants working in the AAs. As AAs are still part of the civil service, people working in AAs would continue to be civil servants. There is no change in tenure. Still on the subject of civil service reforms, a Member has suggested that the Government consider some form of advisory committee with public representation to serve as a feedback channel. Let me first explain that the Government sees AAs as a form of management. An AA is not an organisation separate and distinct from the civil service, like a statutory board. Under this concept, Ministry Headquarters and departments can be managed as AAs once they have clearly defined output and performance targets. They would be vested with considerable managerial flexibility to achieve these targets. However, their supervision and management will still rest with their respective permanent secretaries working under their Minister's guidance, who will ensure that their performance in terms of efficiency, effectiveness and quality of service lives up to expectations. Any feedback on the performance of AAs can continue to be directed through existing channels, eg, through its supervising Ministry or the Feedback Unit. In addition, the Ministry of Finance will also be scrutinising the performance of AAs during the annual budget exercise. I, therefore, do not think it is necessary, at this stage, to set up advisory committees to receive feedback on AAs. A few Members have asked about the policy and effectiveness of the Government's corporatisation and privatisation programmes. Others have expressed concern over the corporatisation of statutory boards and that privatisation might result in price increase and inflation. There were also specific points raised on the tariff of Singapore Power. The objectives of the Government's privatisation programme are to reduce its participation in the economy, to enlarge and deepen the stock market, as well as to enhance the assets of Singaporeans by offering them stocks of blue-chip companies at a discount. The privatisation of Singapore Telecom (ST) was a huge success, both in terms of increasing the volume of shares listed on the Exchange and helping Singaporeans to own shares in ST which are now worth more than twice their purchase price. We expect Singaporeans to find the second offer of ST shares to be a good and attractive investment opportunity, just like the first offer. Some Members have expressed concern over price increases as a result of corporatisation and privatisation. I think it is most unfortunate that these two matters have been linked in people's minds. As I have explained at length in the Budget Statement, we need to price our factors of production correctly to remove any hidden costs and subsidies. Otherwise, we risk misallocating our resources which will result in waste and economic inefficiency. If the price is not set right, we need to correct it. In the case of Singapore Power, the tariffs have to be raised whether or not it is privatised. Some Members have asked why the Government is prepared to subsidise land and infrastructure costs of schools, hospitals and the MRTC, and not Singapore Power. The simple answer is that the Government has made a conscious decision to subsidise education, health and public transport, but not electricity. Although electricity is an important factor of production, it is also a consumption item, the use of which is discretionary, so that it must be priced correctly to avoid waste of a product which is made almost entirely from imported materials. I should also point out that in Singapore, domestic customers consume only 18% of total electricity generated, the rest (82%) being consumed by non-domestic customers. To encourage energy conservation in the latter, we have introduced incentives to encourage the installation of energy efficient equipment and systems. Domestic customers can also do much to save on electricity consumption. Because of the large number of other questions raised in connection with the raising of electricity tariffs and the privatisation of Singapore Power, many of which deal with matters of detail, the Minister for Trade and Industry has said that he will address them in the Committee of Supply. I would also like to assure the House that the tariffs of corporatised entities like Singapore Telecom and Singapore Power which provide basic public services are subject to price regulatory frameworks imposed by their respective regulators, namely, TAS and PUB. Each regulator has its own system of price control based on its own operating environment. The objective of such controls is to protect consumers from monopolistic or oligopolistic pricing by the providers. In the area of telecommunications, the price control framework also serves to ensure Singapore's position as a telecommunications hub, by making sure that our rates are internationally competitive. In deciding on the appropriate tariffs, the regulators would have to balance the interests of the consumers and the providers, both in terms of affordability and service standards. Dr Lee Tsao Yuan has asked for a review of the effectiveness of corporatisation and for the review to be made public for greater accountability. In the case of Singapore Telecom, privatisation has resulted in both higher productivity and profitability. Turnover per employee, for example, has increased from about $230,000 per employee in FY91 to $316,000 per employee in FY94. Operating profit has also increased from $1.1 billion to over $1.7 billion over the same period. These statistics are published in Singapore Telecom's Annual Report. Singapore Telecom has also been able to return some of its productivity gains by lowering its rates to the public. For example, ST had three rounds of IDD rate cuts in 1994. This resulted in customers' savings of over $200 million annually. ST has recently announced that it will further reduce IDD rates to 43 destinations on 1st April 1996, passing back to customers another $50-$60 million on an annual basis. I wish to assure the House that the Government closely monitors the performance of corporatised entities to ensure that they are run efficiently. Those which are subsequently privatised will also be subject to the scrutiny of shareholders. Whether a corporatised entity is privatised or not, the Government will always ensure that the interests of the public are safeguarded. Mr Lew Syn Pau has asked whether all assets are revalued before privatisation. When we corporatise a statutory board, we take the opportunity to revalue the assets, as this is good accounting practice. It ensures that the full economic cost of providing the service is reflected. However, it does not mean that the revalued assets will always be recovered from fees and tariffs in every instance. Dr Lee Tsao Yuan has also commented on the Government's principle of accounting for full costs in pricing production factors. I am happy to note that Dr Lee supports the Government in this respect. Indeed, all land sites are cost at full market prices and when they are alienated for housing developments under the HDB or industrial developments undertaken by JTC. The Member for Bukit Gombak has commented on the lack of competition in the bus services industry. The Government's policy is to encourage competition and let market forces prevail where possible. However, this is not always possible. The bus industry is one example where the Government has used market forces to create as competitive an environment as possible and one customised to suit our circumstances. With our small domestic market and limited resources, we cannot afford the luxury of fragmenting the market as this will deprive the operators of reaping the economies of scale and the necessary resources to invest in service improvements. We have therefore opted to create territorial monopolies for bus operations on condition that the bus operators provide all residents within their territory reasonable standards of service, running prescribed services at regulated frequencies. As a result, basic public transport services are available to all at affordable prices. Further, the bus companies also face competition from alternative transport modes like the MRT and the future LRT, and high-end bus transport like the Bus-Plus. The Members for Bukit Gombak and Potong Pasir have asked how the Government's reserves are invested and what are the returns obtained. If they will take the trouble to read the Budget book, they will find most of the information they need in the book. The bulk of our reserves are invested overseas through portfolio investments and direct equities. A part of it is invested locally, mainly through our shareholding in Government-linked companies. Our portfolio investments are spread over several asset classes, namely, bonds, stocks, real estate, venture funds and are diversified in currencies. We also invest our reserves through direct equity and joint ventures with companies that have good operating track records. Our investment objective is to achieve good long-term returns on a sustainable basis. I would like to assure the House that our investments have been earning good returns. A few Members have suggested easing the current controls on the hiring of foreign workers. The Member for Bukit Gombak has also asked for a reduction of the foreign maid levy. I believe it is not desirable to ease existing control measures or to reduce the foreign maid levy to create more demand for foreign workers as they already account for over 20% of our total workforce. In addition, we must be mindful of the attendant economic, social and political implications of this large number of foreign workers in Singapore. The levy is the main control mechanism in the regulation of foreign workers, including foreign domestic workers (FDWs). It prevents foreign workers who are willing to work for lower wages from depressing local wages. The alternative to imposing a levy on foreign workers would be to use quota controls. While overall caps can be set to limit the actual number of foreign workers allowed, we will still face the problem of distribution of foreign workers among sectors, and for foreign maids among households. A tendering system like the COE could be implemented, but a tendering system will have the same effect of raising cost of employment as a levy, if not more, as companies and households are now competing for a limited pool of foreign workers. Considering all factors, the levy remains the most feasible and acceptable control mechanism as it creates minimal market distortion and allows companies or households access to foreign workers according to ability to pay. Employing more foreign workers is only a stop-gap measure. It cannot be a long-term solution. Employers should instead look for ways to optimise the use of our local workforce, eg, by re-engineering their processes to raise productivity or to engage more of our retired workforce. They could also persuade more women to rejoin the workforce by way of flexible and part-time work arrangements which are better suited to the needs of this untapped workforce. Mr Ling How Doong has made several suggestions on the CPF Minimum Sum Scheme. I should point out that CPF savings are meant to provide for retirement needs. If a member is allowed to pledge his property for the full minimum sum, he may not have cash income for retirement. He may have to sell his property and live on the proceeds. The revised Minimum Sum Scheme thus helps to ensure that he has some cash for his retirement without having to resort to selling his home. Some Members have raised concerns over the discrepancy in our budgeted, revised and actual budget surplus figures. Mr Chew Heng Ching, as Chairman of the Estimates Committee, has scrutinised and studied the reasons for this, and he has spoken on this issue. But I just like to repeat what we have said in the past. The variance in the surplus position over the period FY90 to FY94 was due to the fact that actual operating revenue was 19% higher on the average and expenditure was 13.3% lower than budgeted. In recent years, revenue collection had been much higher than projected because of exceptionally buoyant high economic growth. Revenues have also been boosted by COEs and stamp duties which are subject to the vagaries of car owners' bidding behaviour and fluctuations in stock and property markets. And they are therefore very difficult to predict accurately. Members will recall the height which COEs were raised during the boom and the volumes of stock market transactions until the more recent retracing of the stock market. We will however continue to review our methodology and systems to achieve greater accuracy in our revenue estimates. The main reason for the under expenditure was the underspending of the development budget caused by delays in development projects. As a consequence, the Central Block Vote provision for funding urgent development proposals was largely unutilized since Ministries have sufficient savings for this purpose. To reduce over-provision for the development expenditures, we have abolished the Central Block Vote and Ministries will be required to find savings or to seek supplementary funds for urgent initial expenditures on new projects. In addition, from fiscal year 1995, Ministries' annual budgetary requirements have been moderated in accordance with their fund utilisation rate over the previous preceding three years. The Government will continue to monitor the progress of major projects to ensure satisfactory progress in the spending of budgeted provisions. The revised fiscal year 1995 budgeted and revised estimates are now satisfactory. Operating revenue is under-estimated by only 0.8% while total expenditure is over-estimated by only 1.6% resulting in a surplus being revised upwards by 8.6%. Some Members have asked whether more funds can be channelled to charitable organisations and volunteer groups so that they can spend more time doing charity work instead of raising funds. Currently, the Government funds voluntary welfare organisations on a cost-sharing basis. The cost-sharing formula is that Government funds 50% and 80% of operating expenditure and capital expenditure respectively. Cost-sharing is the cornerstone of Government's policy to involve both the community at large and the Government in assisting the less fortunate in our society. However, I agree that there should be a balance between fund raising efforts and participation in charitable activities by volunteers. Government will review the cost sharing formula ratios regularly and adjust them, if necessary, to achieve a better balance. Mr Kenneth Chen has suggested that cash grants be given to those who are destitute, disabled or on welfare. I think there are already many schemes set up to assist the less privileged such as the Small Families Improvement Scheme and MediFund. Financial assistance under these schemes is regularly reviewed by Government to ensure that they meet the basic needs of the less privileged without undermining the work ethos. Some Members have asked for more spending on education and training. I would like to inform the House that the Government will be spending more on education and the training of young people by increasing the operating budget of the Ministry of Education by nearly 10% to $3 billion in fiscal year 1996. This is higher than the overall increase of 7.9% for the whole Government. The Edusave Endowment Fund will also be increased by another $500 million to $4.5 billion or just short of the targetted $5 billion total sum. For sports facilities, the grant to the Singapore Sports Council will be increased by 8.4% in fiscal year 1996. Sufficient funds have been set aside for Overseas Scholarships. The problem here is not one of funds but the low take-up rates, since PSC scholarships have to compete with a host of other equally attractive scholarships offered by statutory boards, banks and multinationals to attract bright "A" level students. The problem generally is not a lack of funds or Government's unwillingness to spend but often it is due to the unavailability of good programmes. Another Member has expressed disappointment over the budgets of MITA and the Ministry of Community Development. I would like to point out that the figures cited are for the total budgets of these Ministries, ie, they include development expenditure. As development expenditure depends on the nature of the Ministry's development plans which could vary from year to year, it would be more appropriate to use the increase in operating expenditure as a yardstick for the Government's spending on arts and community development. For MITA and MCD, the operating expenditure increases are 22% and 13% respectively, higher than the average of 7.9% for the Government as a whole. Some Members have asked for more funding to encourage parenthood, family values and other areas related to a gracious society. The Singapore Family Values Fund was launched in 1994 to encourage and sponsor projects initiated by the private sector in promoting family values. In addition, another $2.2 million would be spent in FY96 to promote and publicise various family education programmes like parenting. I can assure the House that the Government is committed to preserving family values and the family unit in Singapore and that funds would be made available for all worthwhile programmes. On helping Singaporeans to be more gracious, I would like to point out that graciousness is not something that can be bought or achieved overnight. It takes time to cultivate graciousness in the society. Government will continue to encourage Singaporeans to be more gracious and to set aside appropriate funds for this purpose. However, it is ultimately up to the individual to decide whether he wants to behave more graciously and set an example for his children and those of the younger generation to emulate. On the suggestion that more be done to upgrade the common areas in private estates to match the rebates and upgrading projects enjoyed by HDB dwellers, an inter-agency committee chaired by the Senior Parliamentary Secretary of the Ministry of National Development is looking into this issue. There are, however, significant differences between HDB estates and private residential estates. Government would have to consider carefully to what extent funds or rebates should be given to private residential estates. The recommendations of the Committee are presently being studied and details would be released by the Ministry of National Development in due course. Mr Ling How Doong has asked the Government to build more homes for the aged and to provide more subsidies for medical treatment. The Government currently operates three Homes for the Aged, namely, the Pelangi Home, Woody Lodge and the Woodlands Home for the Aged. The Government is building four new homes to replace the Woodlands Home for the Aged. In addition, the Government has also funded up to 80% of the capital cost for the building of three Homes for the Aged operated by other voluntary welfare organisations. On medical subsidies, subsidised patients seeking treatments at polyclinics and restructured hospitals are subsidised based on real costs, and not market prices, as the Member for Bukit Gombak has suggested. The Member has asked the Government to waive the co-payment for SOTUS III for housewives and children. The SOTUS scheme, being an asset enhancement scheme, requires co-payment as the individual should contribute to the enhancement of his personal asset. This co-payment principle also applies to other asset enhancement schemes such as the upgrading of HDB flats. It is therefore not tenable to exempt housewives with children or any other special group like retirees who might have no income as they can get their husbands or children to contribute on their behalf. This would help to build up strong family ties. Housewives with children and retirees can benefit directly from both the CPF and Medisave Top-Up schemes instead. I shall now turn to specific tax issues raised. Dr Arthur Beng has commented that the tax savings announced in the Budget are not sufficient to offset the higher non-tax burdens such as the foreign maid levy borne by the middle income group. The foreign workers levy was introduced as a control mechanism to reduce dependence on foreign workers. Over time, the levy has developed into a significant source of revenue and this has to some extent allowed the Government to lower direct taxes on individuals so as to encourage savings and investment. As I have explained in my Budget Statement, the Government recognises that the middle income group bears a higher non-tax burden. For this reason, the new tax structure has been designed to specifically lighten the tax burden of this group. If the fiscal position allows, Government will continue to lower direct taxes as a means of lowering and reducing the overall tax burden. Some Members have suggested that certain reliefs, such as those for the wife and other dependants, should be increased. Others have suggested that medical expenses be given as tax reliefs. There has also been a specific call to allow orphans maintaining siblings to claim tax reliefs. The House should note that with the implementation of GST related personal income tax changes, about 71% of taxpayers no longer pay income tax. Increasing tax reliefs will hence not benefit the majority who do not pay income tax. The Government has instead chosen to grant rebates on S&C charges, rentals and utilities to assist the lower income group which falls outside the tax net. On the expenditure side, the Government will continue to subsidise basic services such as education and health care. Some Members have proposed giving rebates and imposing tax based on the family as a single unit as a means to promote family cohesiveness. Currently, our tax system already provides tax reliefs and rebates which are based on family relations. Examples are child relief, aged parent relief and wife relief. Dr Ow Chin Hock has requested information on the tax savings for those staying in HDB flats. I have asked that the information be made available to Members in the form of Annex 1 (Cols. 1049 - 1050), which I believe has been distributed. The table shows that the average savings for households in 1- to 5-room HDB flats as a result of the tax changes in this year's budget, including the rebates for S&C charges, rentals and utilities. As shown, the savings on average ranged from $195 to $874. For comparison, the net benefits arising from the GST offset package introduced in 1994 are presented in Annex 2 (Cols. 1049 - 1050). Annex 1 & 2 - SAVINGS FROM FY 96 BUDGET, NET BENEFITS FOR DIFFERENT TYPES OF FLATS (Cols. 1049 - 1050) Mr Zulkifli bin Mohammed has asked whether Government could, in view of the good Budget surplus, consider giving higher S&C rebates for the 1- and 2-room HDB flats to alleviate their financial burden. He suggested six and five months of S&C rebates for the 1- and 2-room HDB households respectively. Let me remind the House that the rebates are not intended to be financial aid. Rather, they are given in recognition of the contribution of this group of people who could not benefit from income tax rebates and tax cuts. The Member may wish to note that this year's rebates for S&C and rental charges are already higher than in past years. However, I would still like to point out that there is a need for Government to ensure that the relief given in this form is not too excessive and does not eventually lead to welfare dependency, otherwise Singaporeans will come to expect bigger increases of such rebates year after year. The Member for Bukit Gombak has raised the same issue last year that hospital charges should be exempted from GST. Let me assure the Member again that the Government has increased its grants to Government and restructured hospitals and clinics to cover the cost of GST on subsidised services. The reason for not exempting medical service from GST is for efficient tax administration purposes. Mr Lau Ping Sum has asked why GST is imposed on utilities tax. I would explain that the GST is a tax on the final value of goods and services consumed locally, which includes any indirect taxes or levies imposed in the cost of supply. Utilities tax, which is an indirect tax, is thus included as part of the final value of the supply consumed for the computation of GST payable. The same practice is adopted in other countries with value-added taxes. Mr Stephen Lee has suggested on-the-spot GST refunds to help retailers. The matter has been explored by the relevant bodies which include the Singapore Retailers' Association. They have decided not to introduce refund at the point of sale but to continue with the existing system. The Member may wish to note that this proposal would involve retailers running the risk of having to bear GST should the tourist fail to notify the relevant authorities subsequently. He has also asked for a clearer demonstration that GST implementation has been revenue-negative. As I pointed out in the Budget Statement, the GST offset package amounted to $1.8 billion in fiscal year 1995 against $1.6 billion of GST collected. Should the Member require a further breakdown of the offset package, I would be happy to provide him with the information. The rental market for industrial and commercial premises is relatively price-sensitive over the medium to long term. If owners seek to retain the tax savings indefinitely, the improved rate of return will induce new supply leading to lower rents. Data also show that about 70% of businesses in industrial and commercial premises are either owner-occupied or are tenants of Government through the HDB or JTC. To take the lead, therefore, Government agencies owning properties would be asked to pass on most of their tax savings to their tenants, and I strongly urge other private landlords to do likewise. Mr Lau Ping Sum has asked that instead of raising property threshold levels, the stamp duty rates on property transfers should be lowered. Mr Lau has also asked that different stamp duty rates be imposed for genuine home buyers and speculators. Raising the property thresholds has the same effect as lowering the stamp duty rates. In fact, almost all buyers of up to 4- and 5-room HDB flats would benefit from the higher property thresholds with a significantly reduced stamp duty payable. Also, in practice, it will be difficult to differentiate between genuine home buyers and speculators. I would like to assure the Member that we will continue to monitor the situation and review stamp duty rates regularly, if necessary. The Member for Bukit Gombak has also made some comments on the various taxes and measures used to curb car ownership in Singapore. As stated in the White Paper on a World Class Land Transport System, the Government will rationalise the current vehicle tax structure with the introduction of the Electronic Road Pricing system. When the Government started the Vehicle Quota System, it lowered the Additional Registration Fee (ARF) from 175% to 160% of open market value on 1st November 1990, and further to 150% on 1st February 1991. But then COE prices increased to offset the lower ARF rate. This is not entirely surprising as the prices of cars will reflect the forces of supply and demand, either in the form of higher COE prices or other costs. On his suggestion to do away with COE for taxis, the principle has always been to subject all vehicles to demand management measures, as exempting one type of vehicle would only mean greater restraint on other types of vehicles. Since they too occupy the road space and generate unnecessary congestion due to empty cruising, they have to be subject to the same measure as other vehicles. Some Members have expressed concern over difficulties faced by our local small and medium enterprises. They have asked whether the Development and Expansion Incentive will take into account their difficulties and limitations. Another Member suggested that to encourage entrepreneurship, Government should exempt the profits of newly formed companies from tax for the first three years. I would like to assure the House that all companies, including SMEs, which meet the eligibility criteria recently disseminated by EDB, can apply for the Development and Expansion Incentive (DEI). On tax exemption, since most small companies are unlikely to make reasonable profits in their first few years, they will not be able to benefit from any such scheme. There are other forms of assistance that are available for local SMEs. The Local Enterprise Financing Scheme provides low cost loans to help local companies to upgrade their operations and to expand their capacity. In 1995, a total of over $512 million worth of loans has been extended under this scheme to help fund about 1,600 projects. The Local Enterprise Technical Assistance Scheme provides grants to help SMEs to modernise, upgrade and improve their management and business operations. In 1995, a total of $9.5 million was given to 800 cases. Currently, these schemes are provided by an extensive multi-agency network. To derive maximum synergy, the Local Enterprise Upgrading Centre, under the soon to be formed Singapore Productivity and Standards Board, will provide an integrated package of services to assist local companies to upgrade and grow. For SMEs planning to go regional, an International Business Institute (IBI) will soon be set up. The IBI will provide information and knowledge on how to conduct business in the region. It will also conduct programmes to prepare executives, managers and their families for overseas attachments. The IBI is expected to be in operation by the second quarter of this year. A Member has asked specifically for the amount of venture funds disbursed to SMEs. The total pool of venture capital funds under management in Singapore at the beginning of 1995 was $5.3 billion. As at end December 1995, some 190 local companies, of which 80% are SMEs, have received venture capital funding. Of these SMEs, a total of 27 have gone public with a market capitalization exceeding $5 billion. The Minister for Trade and Industry has said that he will elaborate on SMEs during the Committee of Supply. Members have asked for measures to encourage regionalisation. Currently we have a number of measures to encourage people to regionalise. Apart from incentives aimed at companies, tax rates used to compute non-tax resident tax reliefs under the Income Tax Act have also been reduced. In addition, there is also tax exemption of CPF contributions in respect of overseas posted employees. These were announced in the 1994 Budget. Furthermore, unilateral tax credits for overseas employment income and directors' fees are provided as a further incentive for those who venture overseas. According to the Department of Statistics, Singapore's direct investments abroad reached $37 billion in 1994, of which $21 billion or 57% was in this region. There has been some concern that the Government is not doing enough to encourage companies to train and re-train their workers, especially in the case of SMEs. The Government recognises the importance of encouraging companies to train and upgrade the skills of their employees to meet the changing needs of our economy and keep our workforce employable and competitive. At present, employers are allowed a tax deduction for expenses incurred in training their employees. In addition, grants are available from the Skills Development Fund and Economic Development Assistance Scheme. In 1995, the Skills Development Fund allocated $67.7 million to employers to defray their cost of training. Funds were used to support the training of 500,000 workers, about one-third of the workforce. A number of schemes have also been put in place by the National Productivity Board and Institute of Technical Education to assist companies in training their employees. These include schemes to help companies implement flexible and cost-effective on-the-job training as well as other programmes to upgrade workers with lower education levels. Despite the assistance available, not all SMEs are making use of it to train their employees. The challenge is how to encourage them to do so. Although employers on the whole invest about 3.4% of their payroll in training, companies with less than 25 employees are spending less on training, averaging only 1.4% of payroll. Employers must recognise that they are the ones who ultimately reap the benefits of training their employees. We understand that some employers fear that an employee might leave them after being trained. Others face shortages of manpower which restrict their ability to release their employees for training. In view of these concerns, tax route may not be the single best solution in encouraging more employers to train their employees. The National Productivity Board is now exploring other ways to further encourage the training and upgrading of employees. The Minister for Trade and Industry has also agreed that he will elaborate on this issue in the Committee of Supply. Finally, Mr Speaker, Sir, allow me to sum up. Singapore has come a long way. We have put in place sound fiscal economic policies. These will put us in good stead to face the challenges of the future. Nevertheless, we should remain vigilant in the face of increasing competition and uncertain environment. But I am confident that we will succeed. With our solid foundation and spirit, character and the quality of our people, we shall stay ahead. Let us proceed to ride on the momentum of our success to secure a brighter future for Singapore. [Applause.]