Hansard, 1997-07-11

Order. I have to inform hon. Members that I have on 6th June 1997 communicated to the President the Address agreed to by Resolution of this Parliament on 5th June 1997.

asked the Minister for Home Affairs what is the progress of police investigations into the recent spate of burglaries in the Bukit Timah locality.

Mr Speaker, Sir, to date Police has solved four earlier cases committed in March and April in localities other than Bukit Timah. As for the more recent burglaries, investigations are on-going. Police has set up a Special Task Force comprising officers from various units, including the Gurkhas, the Special Operations Command and the Police Coast Guard, to catch the culprits. The task force is conducting ambushes and other operations as part of its efforts to arrest the robbers. Police has also stepped up patrols in private residential estates. Sir, in addition to more intense operations and patrols, Police has sought assistance from its counterparts in neighbouring countries, and also publicised the $20,000 reward it is offering for information which would help lead to the arrest of the culprits in neighbouring countries. Sir, while enforcement is important and necessary, the importance of crime prevention - both by the police and the public - cannot be over-emphasized. Some of the steps the Police has taken, and will continue to take, include: (1) Sending leaflets to private homes (through the mail or by NPP officers during their rounds) to alert home-owners to the recent robberies and provide them with crime prevention tips to make their homes more secure; (2) Conducting home visits to advise residents on proper crime prevention measures such as installing burglar alarms and strong locks and grilles, illuminating the compound with spotlights and fencing up or mending holes in fences, as applicable. Police has also advised residents to keep their handphones within easy reach in their rooms so that they can still readily contact the Police in case the telephone line in their home is cut. (3) Conducting crime-risk surveys for residents free of charge. The public can contact the nearest police station or post to request for home crime-risk surveys. (4) Encouraging residents in private residential premises to participate in Neighbourhood Watch Scheme (NWS). NPP officers will visit private residential premises and advise residents on various crime prevention measures and help set up Neighbourhood Watch Groups (NWGs). They will encourage the Residents Associations to form such groups. After the recent spate of robberies, Police has helped to set up two NWGs in private residential estates. (5) Placing police boxes at strategic locations in every private residential estate to boost Police presence in the area.

asked the Minister for Trade and Industry if he will give a progress report on the Local Industries Upgrading Programme, especially on (i) how it helps the companies to grow and (ii) how it assists to upgrade the skills of workers involved.

Mr Speaker, Sir, the Local Industry Upgrading Programme (LIUP) is a collaboration programme between MNCs and their local suppliers. Its objective is to help local companies upgrade their capabilities in areas such as operational efficiency, product and process improvements, and manpower development. Under LIUP, MNC partners help their local suppliers by transferring relevant technological, operational and managerial skills and know-how to these local companies. It benefits the MNCs in return as the local suppliers then become better equipped to provide higher quality and more reliable products and services at competitive prices. It is a mutually beneficial programme. We have achieved good progress under the LIUP programme. To date, there are 37 MNC partners from the electronics, petroleum and petrochemical, marine, logistics, information technology and broadcasting sectors. The number of local companies benefiting from the programme has grown from 24 ten years ago, to about 300 today. Local companies under the LIUP programme have generally performed better in sales turnover, profitability and return on investment than their local competitors which are not in the scheme. For example, the sales per establishment for LIUP companies are about 3(r) times higher than non-LIUP companies. The compounded annual growth of sales for LIUP companies is about 18%, as compared to the 5% registered by non-LIUP companies. One important area of emphasis under LIUP is the training of workers. For instance, the LIUP partners in the marine and process industries have jointly embarked on industry-wide training and skills development programmes to upgrade the workers in their supporting industries. The marine group has developed courses to train workers in critical marine skills such as mould lofting. Nine hundred workers were trained in 1996 and 2,000 more will be trained this year. The petroleum and petrochemical group has developed training curricula for 12 core skills, as part of efforts to establish an on-the-job training programme to meet industry manpower needs. One thousand workers have been trained so far. The target is to train 5,000 workers by the year 2000.

asked the Minister for Trade and Industry whether his Ministry will consider giving grants under the Skills Development Fund for the training of foreign workers who are on a 2-year work permit.

Mr Speaker, Sir, the Skills Development Fund (SDF) was set up in 1979 to encourage employers to upgrade their workers' skills. Initially, SDF grants were limited to Singaporeans and Permanent Residents. SDF grants were extended to 3-year Work Permit holders in 1987 and to 2-year Work Permit holders in 1989. Preference is still given to training of Singaporeans, Permanent Residents and Work Permit holders who could in time become part of our permanent workforce.

asked the Minister for National Development (a) whether the HDB valuation reports nowadays give a premium for equivalent flats in higher floors and (b) whether purchasers, who paid the same price for flats in the lower levels as those who purchased flats in the higher floors, will lose out, since now the HDB is telling the public that flats in the upper floors have a premium.

Mr Speaker, Sir, the valuation of HDB flats is carried out according to market practice. The valuation takes into consideration various factors. These include the condition of the flat, good view, orientation, storey height and location like proximity to MRT/LRT stations, etc. All factors being equal, higher floor flats generally command higher value. The valuation of a flat reflects the prevailing market price and represents what potential buyers are willing to pay. The premium for flats in the higher floors reflects the market preference today that buyers are willing to pay more for flats in the upper floors of an HDB block. This was not always the case. In the past, owners preferred lower floors. But preferences change over the years. As the lifts become more reliable and owners prefer the view and privacy of higher storey flats, so such flats command a premium. The fixed pricing mechanism in HDB was discontinued in 1987. In the early days, HDB flats were built to fairly standard designs and it was simpler to price flats in a standard manner. Residents were allocated flats by balloting and could not choose their units. Over the years, HDB has a wider range of flat designs and refined its pricing system accordingly. From 1988, HDB has progressively used premium and discount factors in the pricing of new flats for sale under the "Differential Pricing Policy" to account for the individual attributes of each flat, including the storey height. It is incorrect to say that purchasers in the early years who were allocated flats by ballots on lower floors have lost out. All owners of HDB flats who purchased them in the early years have not only enjoyed proper housing, but have also benefited greatly from the substantial capital appreciation of their flats. This appreciation in the value of HDB flats is a result of good Government, strong economic growth, the Government's investment in major infrastructure and the Estates Renewal Programmes.

Sir, would the Minister be willing to compensate those owners who have purchased flats in the lower floors and yet paid the same price by giving them a discount when they buy a newer flat in the upper floors?

Mr Speaker, Sir, the Government is not responsible for changes in the market or for any other trends which may affect the price of the flats. For example, in 1984, somebody who bought a 3-room flat in Potong Pasir would pay $41,500. He could have bought a flat in Bishan for the same price. Today, when that same person in Potong Pasir sells his flat, he would be able to sell it for $187,000. In Bishan, that same flat could be sold for $217,000, a difference of $30,000. An hon. Member: Why?

Many housing agents explained to me that the difference is because of Mr Chiam. So Mr Chiam compensates!

I think it is in bad taste. In fact, the prices of flats at Potong Pasir can match almost any other housing estates. They still fetch a premium. My point is that the purchasers from the same block pay the same price for their flats, whether they are at the lower or upper levels. When these people sell their flats, those at the lower levels will get less than the earlier purchasers of flats at the upper levels. In the early days, the HDB did not take into consideration all the factors mentioned by the Minister. Would the Minister not think that it is only right that these people who were willing to take the lower floors be compensated in some way?

One could argue that those living in the upper floors paid a lower price than those living in the lower floors and therefore, by Mr Chiam's argument, he is suggesting to HDB that when the people in the upper floors buy their second flat they should pay a higher levy.

Sir, if the Minister ever considers the question of compensation, I would also like to add one more. If I had purchased a Singapore Big Sweep ticket and I did not win any prizes through the lucky draw, I would also like to be compensated, as compared to those who had won the first prize, I would be worse off.

Mr Heng, what is your question?

I am coming to it, Sir. I would like to ask the Minister whether the valuation is done by the HDB or the Government valuers or private valuers.

On Mr Heng Chiang Meng's first non-question, he can refer to the Minister for Finance who is in charge of the Big Sweep. On his second question, the valuation is done by private sector valuers and if the owner is not happy with the valuation, he can request for a second valuation.

asked the Minister for National Development if the Housing and Development Board will provide the latest available statistics on the demand and supply of rental flats in the Transitional Rental Housing Scheme.

Mr Speaker Sir, the Transitional Rental Housing Scheme exercises are conducted on a quarterly basis. Applicants are shortlisted according to the registration numbers assigned under the Registration for Flat System to determine their queue positions. Upgraders are given a lower priority and are queued after the first-timers. For the unsuccessful applicants, HDB will place them on the reserve list and invite them to select the remaining flats not taken up by the shortlisted applicants. HDB offers 500 flats per quarter for selection. In the April 1997 exercise, HDB received 2,850 applicants for the 500 flats offered.

Sir, what is the average waiting time; and secondly, in view of this mis-match, will the Minister consider increasing the supply of flats under the Transitional Rental Housing Scheme?

It is very hard to give an estimate of the waiting time because it depends on the applicants for that quarter. Whenever HDB receives the applications, HDB would then queue them based on their queue positions. So if your queue number is low, you will be called up to select a flat. This is a sensible approach because it means that those who have queued longest in the queue system for the purchased flats will get a chance to get the transitional flats first. So the queue is based on the queue number of the Registration for Flat System. As to the mis-match in the demand and supply, HDB has been studying this problem and HDB will try to increase the supply by the following measures. HDB will buy back more 3-room flats from the open market for the Transitional Rental Housing Scheme. HDB will also buy back 2-room flats to add to the stock. HDB will also offer 1-room flats to the Transitional Rental Housing Scheme applicants. We hope that such applicants will not be choosy and would be prepared to accept the 1-room flats. HDB will also develop a scheme to allow two Transitional Rental Housing Scheme applicants to share a 3-room flat. That means it will be no different than they renting a room in the open market. So, in this case, we will get two applicants or two families to share one flat. HDB will not allow upgraders to join the queue for the Transitional Rental Housing Scheme on the argument that the upgraders already have a flat and they should not join the queue to compete with the first-timers. Through all these measures, HDB hopes to increase the supply. But I think the fundamental reason why there is a mis-match in the demand and supply is because the rent for the Transitional Rental Housing Scheme is very low. Today, HDB charges around $200 for a 2-room flat. This is far below the market rent for 1-room flat if you rent it in the open market. So obviously this situation cannot continue. HDB will have to revise the rents for the Transitional Rental Housing Scheme.

asked the Minister for Finance whether his Ministry will consider giving contractors the option to pay a penalty or be debarred from tendering all lines of business for one year when they withdraw their tenders after the announcement of the tender results.

Mr Speaker, Sir, current guidelines on debarment are provided in Section B of Instruction Manual No. 3. The debarment period for withdrawal of tender after the award is made depends on the difference in the value of the tender withdrawn and the tender accepted subsequently. For example, if the difference is up to $100,000, the debarment period will be one year. The highest debarment period is five years. However, the guidelines also provide that a warning letter will suffice if the tender is withdrawn under special circumstances, due to genuine computational mistakes. For revenue earning tenders, tenderers who withdraw from a tender after award have the option to pay the difference in the value of tender withdrawn and the tender finally accepted. If they pay the difference, they do not face debarment. However, for expenditure tenders, the option to pay the difference is currently not available. Withdrawal of tender after the announcement of the tender results in additional administrative work and delay in a project. My Ministry takes a serious view of such defaults. Hence the current practice to debar offenders. However, compared to other defaults like abandonment of contract or corruption, withdrawal of tender after award is comparatively less serious. Hence we can consider the hon. Member's proposal to allow offenders an option to pay a penalty in lieu of debarment for withdrawal of tender after award is made. My Ministry will study the implications of such a proposal.

asked the Minister for Labour whether his Ministry will consider allowing members to use their savings in the Central Provident Fund to repair, maintain or renovate properties bought with CPF savings.

Mr Speaker, Sir, this matter has been raised in this House on several occasions previously. I have explained that allowing CPF savings to be used for home repair, maintenance and renovation would be contrary to the objective of building up savings to meet old age needs. Allowing such use of CPF savings would lead to depletion of the old age savings of CPF members. At the current 40% contribution rate, CPF savings can only provide a retired member 20% to 40% of his last drawn pay, which is by no means excessive. Any new ways to help a CPF member to use his CPF savings before the withdrawal age will mean that his retirement income would be even less than expected. Hence, my Ministry has decided not to allow the use of CPF savings for home renovation, whether it is private properties or HDB flats. Although some renovations may enhance the value of property, it is extremely difficult to ascertain which renovation work will lead to permanent enhancement and which are consumption to keep up with changing tastes. It would also be difficult to decide what is upgrading work and what is just part of cyclical repair and refurbishment. There is also no limit to the amount and frequency of home renovation which can easily lead to premature consumption of old age savings. I would like to urge CPF members not to see their CPF savings as a goose providing them with an unending stream of golden eggs. CPF savings are your hard-earned savings put aside for the future when you retire. CPF members should think of prudent ways to invest CPF savings so that when you retire, you have a bigger nest egg, not ways of using up precious savings long before retirement. Some Members of this House may say that we have already allowed CPF savings for the HDB Upgrading Programme, so why not allow CPF savings for renovation too. I wish to point out that the HDB Upgrading Programme is a national asset enhancement programme. The programme involves improvements in the entire block and its surroundings, not just renovation in the flats. Government also grants a large subsidy to meet the total upgrading cost. There is less risk that the home-owner will not be able to recover his share of the upgrading costs. Hence, we have allowed CPF savings to be used for the home owner's share. However, if a HDB flat owner wishes to renovate his HDB flat, he cannot use his CPF for the renovation.

asked the Minister for Labour whether his Ministry will consider waiving the foreign worker levy for contractors who employ direct skilled foreign workers for a minimum period of 5 years.

Mr Speaker, Sir, currently, my Ministry allows contractors to pay a lower levy of $200 per month for each foreign worker certified skilled by the Construction Industry Development Board (CIDB). This is a significant saving compared to the levy of $440 for unskilled workers. This policy is aimed at encouraging contractors to employ more skilled workers. The levy savings take effect immediately once the worker is certified skilled. There is no need for a qualifying period. Furthermore, foreign workers that are certified skilled can work here longer for up to 10 years, unlike unskilled workers who can only stay a maximum of four years. Contractors should also encourage their foreign workers with five years' work experience in Singapore to further upgrade their skills by obtaining NTC certification so as to qualify for the 3-year Work Permits and be exempted completely from foreign worker levy. My Ministry has therefore provided ample avenues for contractors to employ skilled workers on lower foreign worker levy or even be exempted completely.

asked the Minister for the Environment what percentage of premises checked for various types of mosquitoes were found to be breeding Aedes mosquitoes from 1995 up to the latest available date and what action is being taken by his Ministry.

Sir, landed properties, flats, vacant premises and school compounds have all registered an increase over the last two years in the number of occasions when Aedes mosquitoes were found breeding. For the six months of this year, my Ministry staff checked almost 95,000 homes. Of these, 1,150 or 1.2% were found breeding Aedes, compared to 0.7% in 1995 and 1% last year. Although the overall incidence of 1.2% appears low, the percentage of homes found breeding Aedes has gone up to as high as 8% in certain neighbourhoods. The threshold for residential premises beyond which an epidemic is likely is 5%. Out of the 196 schools checked this year, 53 or 27% were found to be breeding Aedes, compared to 19.9% in 1995, and 20.5% last year. Breedings detected in construction sites also remain high. Out of the 5,320 sites checked this year, 440 or 8.3% had breedings detected, compared to 9% in 1995 and 8.2% last year. Another major source of Aedes breeding is litter, for example, discarded drink cans and bottles. In the first four months of this year, Aedes mosquitoes were found breeding inside about 1,300 discarded receptacles. The increased breeding of Aedes mosquitoes in Singapore has led to an increase in the number of dengue cases. In the last six months, we have seen an average of 283 cases per month, compared to 260 cases per month last year, and 167 cases per month in 1995. Since eradication of the Aedes mosquito is the key to solving the dengue problem, my Ministry has conducted a number of surveys over the past few years to test public awareness. The surveys showed that the public generally understands the danger of dengue fever and also knows what causes it. They also know about the Aedes mosquito and the measures to take to prevent it from breeding. Unfortunately, there are still many who do not make the effort to check their work sites, premises or homes and take the necessary corrective measures. My Ministry will continue to take enforcement action against those who breed the Aedes mosquito in their homes or premises under their charge. This year alone, my Ministry has issued stop-work orders to 100 work sites for them to spruce up the work sites and eliminate all potential mosquito breeding grounds. With effect from June this year, contractors who persist in flouting environmental laws and requirements run the risk of being debarred from tendering for any Government construction projects. My Ministry will also consider tougher penalties against households and other premises, if necessary. We will also continue with efforts to educate the public, and to remind Singaporeans of the need to translate their high level of awareness into individual responsibility and action. So long as the Aedes mosquito can find places to breed, the threat of dengue will always remain. We will need the support of every Singaporean to stamp out the Aedes problem. We must take dengue fever seriously and collectively act against it.

I wonder why the percentage of the schools found breeding Aedes is very high, at 27%. It is also high in construction sites. The reason given by the Minister just now was because of the litter. But why is Aedes breeding in the schools very high, compared to other premises?

Sir, in the school grounds, breeding takes place in the drains and in various receptacles, sometimes even in the hollows of the trees. The schools have pesticide contractors to maintain the school grounds. And we have reminded the school principals that whilst they have the contractors, it is still their responsibility to conduct inspections of their school grounds and ensure that their school grounds are free of breeding sites.

It seems, Mr Minister, that our children are at risk of contracting dengue fever.

Sir, that is why we have been working with the principals. In fact, we have been issuing summonses to principals whose schools are found to be breeding mosquitoes, and we will continue to conduct regular inspections of schools, especially since there are many school children who are susceptible to dengue fever.

Sir, I did not realise that this is such a serious problem. What has the Ministry done by way of publicity on this issue, besides taking enforcement action?

Sir, the Ministry has been regularly carrying out various programmes of public education. For example, we use the mass media, ie, the newspapers and TV. We do have campaigns conducted periodically through the TV as well. The key really is to make sure that we reach out to the households and we do it through the schools as well. The Ministry produces quite a large number of different pamphlets and these are distributed to school children for them to bring home to show their parents. The pamphlets would normally describe the dangers of dengue fever, what causes it and what the households should be doing to prevent the breeding of mosquitoes. And for those neighbourhoods where there is a high incidence of Aedes mosquitoes, my Ministry staff actually do a house-to-house delivery of leaflets to inform the people living in the neighbourhood that there has been a high incidence of Aedes mosquitoes and dengue fever and to encourage them to play their individual part in checking their homes, their grounds and roof gutters. For example, many of the homes in the landed property districts have roof gutters which, because of old age, are sagging and therefore could lead to ponding or they could be clogged up by leaves. So we carry out all these public education programmes very regularly.

Sir, I would like to ask the Minister what are the enforcement programmes against households that are not occupied, especially newly allocated households in HDB flats. The reason why I ask this is that, in my constituency, there are a lot of new HDB households and mosquitoes are breeding in the toilet bowls. But these flats are locked up and so nobody can carry out any action against them.

Sir, unfortunately, we do not have the powers to break down the door and inspect the premises if they are locked up. But what we try to do is to make sure that the contractors are also educated. When they finish work in the new homes, they should cover the toilet bowls as well as the gully traps so that they can help to prevent mosquitoes from breeding there.

What happens in the interim period before the contractors were given permission to start on the renovations? In other words, when the home owners have got their flats but before anyone has access to the flat, mosquitoes are breeding inside the flats and the neighbours who have already moved in are suffering from mosquito infestation.

That is why I said, Sir, because of the problem of mosquito breeding in construction sites, we actually have a very active programme of educating construction company staff and workers on how to prevent the breeding of mosquitoes, ie, watching out for receptacles that are collecting water and making sure that the sites are kept debris-free as far as possible. And this includes the premises which have been completed but before they are handed over. They should make sure that all the receptacles are closed up and the gully traps are covered.

Mr Speaker, Sir, as I understand from the Minister, in schools the task of controlling breeding of Aedes mosquitoes or other mosquitoes is left to the schools. May I ask why is his Ministry not undertaking this task?

Sir, the maintenance of schools comes under the Ministry of Education and PWD and they decide on how they want to maintain the schools, eg, looking after the sports facilities, the field and all the other assets of the school. Pest control is not just for mosquitoes. There are other insects that need to be controlled and they are all normally undertaken by pest control companies. So the PWD and MOE have decided, quite wisely, that this is a fairly specialised job which should be contracted out to specialists, ie, pest control companies.

Mr Speaker, Sir, I would like to appeal to the Minister to reconsider imposing a debarment on contractors who breach the rules on mosquito breeding. Presently, enforcement action has been taken against contractors. Many worksites have been receiving summonses and I think that has increased the cost of construction ---

Dr Teo, we have already finished this question. Why are you asking it again? I am sorry you are out of order.

asked the Minister for Health whether his Ministry has detected any case of Coxsackie in Singapore to date.

The Coxsackie virus is present throughout the world, including Singapore. The Coxsackie A virus is the most common cause of hand, foot and mouth disease. It affects mainly children and is characterised by rapid onset of fever, sore throat, superficial ulcers in the mouth and rash on the hands and feet. The Coxsackie B virus sometimes causes inflammation of the heart muscle or myocarditis. So far this year, the Coxsackie B virus had been isolated from four patients in Singapore. None of these cases had myocarditis. Last year, the virus was isolated from 23 patients and only one of these patients had myocarditis. He recovered fully. The Ministry of Health is working closely with the Ministry of the Environment to monitor the incidence of the Coxsackie B virus in Singapore.

asked the Minister for Health why Tan Tock Seng Hospital was chosen as the home for the proposed Neuroscience Centre in preference to Singapore General Hospital.

Sir, Tan Tock Seng Hospital (TTSH) was the first hospital in Singapore to develop clinical expertise in managing patients with neurological and neurosurgical conditions. It started a Department of Neurosurgery and Neurology in 1972, and established a separate Department of Neurology in 1978. Over the years, TTSH has built up a solid reputation in managing patients with neurological problems. SGH started its neurosurgical service in 1990, and developed separate Departments of Neurology and Neurosurgery in 1993. The well-established expertise, capabilities and track record of TTSH in the neurosciences make it the most appropriate location for the new Neuroscience Institute. Thus when my Ministry approved the redevelopment of TTSH in 1990, provisions were made to incorporate the Neuroscience Institute in the new hospital. It is also in line with my Ministry's intention to let each regional hospital, like TTSH and the New Changi Hospital, develop and be known for two or three specialty areas. Members may also be interested to note that the Neuroscience Institute, although located at TTSH, will be the national centre to coordinate all clinical service, teaching and research programmes. It will be opened to all well qualified and experienced neuroscience clinicians and scientists from the public and private sectors and university. They will hold joint appointments to the NSI and be able to participate actively in its programmes and help to establish the Neuroscience Institute as the top regional referral centre for neuroscience.

May I ask the Minister, Mr Speaker, Sir, whether the Singapore General Hospital has expended monies in buying equipment for the Centre before it was decided to house it at Tan Tock Seng Hospital?

Sir, the SGH Departments of Neurology and Neurosurgery have been developing since 1990 and, in the course of development, they have been purchasing equipment. Whether or not those equipment could be used at the new NSI is another matter. But they have been purchasing equipment which are relevant to their needs of today and where the equipment have enough capacity to cater to patients from the other hospitals, they have indeed been sharing these equipment with them.

Is there a danger, may I ask the Minister, of a duplication of services at extra cost?

Sir, the danger of duplication, especially unnecessary duplication of services leading to waste, is something which has always been at the top of the priorities in my Ministry. Because of that, we do coordinate the type of services that can be provided at the different hospitals, not just in terms of the neurosciences but in terms of the other specialties as well. In view of the plans for the Neuroscience Institute, the activities of both SGH and TTSH will now be better coordinated to ensure that they work together towards the implementation of the NSI because we expect the staff from both hospitals to be actively involved in the Neuroscience Institute when it is completed in about 2(r) years time.

asked the Minister for National Development if the Housing and Development Board will implement a general upgrading programme for lifts to stop at every floor in older HDB estates.

Mr Speaker, Sir, full lift upgrading to provide lift landings at every floor of an HDB block is already an approved item under the scope of works for the existing upgrading programmes. For the Main Upgrading Programme (MUP), there is sufficient budget for the full lift upgrading. For the Interim Upgrading Programme (IUP), the grant was increased on 22nd March this year from $6,000 to $7,000 per dwelling unit to allow Town Councils to carry out full lift upgrading works. With prudent financial planning and management, lift landings at every floor can be provided for precincts which are identified for upgrading, wherever feasible. There is therefore no need for HDB to implement a separate upgrading programme for lifts to stop at every floor in the older HDB estates.

Sir, the Minister is aware that this sum of money set aside in the Interim Upgrading Programme is not adequate, especially considering the fact that not all the estates that are chosen for upgrading are homogeneous, in other words, not every block requires lift upgrading. Therefore, if the money is channelled to blocks of flats where lift upgrading will be done, then there will be very little money left for general upgrading.

Mr Speaker, Sir, as I said earlier, under the Main Upgrading Programme, there is sufficient budget for lift upgrading. For the Interim Upgrading Programme, we have raised the budget and we expect the Town Councils to also contribute part of the cost through its sinking fund so as to be able to do the lift upgrading. This is the ordering of priorities within the Town Councils.

Sir, in view of the fact that lift upgrading is already part of the Main Upgrading Programme and also a small part of the Interim Upgrading Programme, why does the Minister not agree to a general asset enhancement programme - let's call it Lift Upgrading Programme (LUP) - to complement both IUP and MUP?

Mr Speaker, Sir, today, we are already involving almost 15,000 flats every year under the Main Upgrading Programme and a further 25,000 flats under the Interim Upgrading Programme. So every year, we are involving 40,000 flats in upgrading, of which lift upgrading is an item high on the priority of most residents. That constitutes to me a general programme for lift upgrading, 40,000 flats out of HDB's stock of 600,000-700,000 flats. The cost of upgrading the lifts every year is close to $170 million. Unless you can persuade the Minister for Finance to cough up more money for a general lift upgrading programme, I do not see how we can do it any faster.

asked the Minister for National Development whether his Ministry will consider adopting a planning policy whereby all new Government offices which serve the general public will be located on the ground or first floor to facilitate access to the people.

Sir, the Government is committed to making its offices accessible to the general public. New Government offices are thus sited near MRT stations, eg, the IRAS at Novena, the Immigration Office at Lavender Street and the proposed HDB HQ at Toa Payoh. Where possible, counters which serve the public are located on the ground floor of Government buildings. Where this is not possible due to site or floor area constraints, ramps for wheelchairs and lifts are provided to facilitate movement to offices located on the higher floors. This is part of the overall policy to make public services more accessible and convenient to the general public.

asked the Prime Minister whether any directive was issued to Ministries and statutory boards not to respond to any letter sent by me as NCMP.

Mr Speaker, Sir, no directive has been issued to Ministries not to respond to letters sent by a Non-Constituency Member of Parliament. However, in February 1992, the Secretary to Prime Minister informed all Permanent Secretaries that, and I quote: `It is the Government's ruling that Government organisations will only consider representations from Members of Parliament or Advisors to grassroots organisations on behalf of their own constituents. This is to prevent constituents from making multiple representations through different Members of Parliament or Advisors and requiring Government organisations to respond to several representations on the same cases. Government organisations would then be able to devote more time and resources to consider representations from Members of Parliament and Advisers and to respond expeditiously.'

May I ask the Leader, in the light of what he said, whether the Ministries and statutory boards have been directed to reply to any questions from NCMPs if no letters had been sent on the same subject by elected MPs?

I have just answered the question. There was no directive given to Ministries and statutory boards not to reply or to reply to the NCMP, because the directive given in 1992 is very clear. Ministries only reply to MPs who write on behalf of their constituents. An NCMP does not represent any constituent and therefore, by logic, naturally the NCMP's letters will not be answered because he does not represent any constituent.

Regardless of whether the NCMP represents voters or not, and that is a moot question, why is it not considered necessary that Government departments and statutory boards should answer letters from Members of Parliament here writing on behalf of members of the public?

It is not a moot question that Non-Constituency MPs do not represent any electors. Mr Jeyaretnam himself said so in 1985, that NCMPs do not represent any electors. So it is not a moot question. He has determined that already. Ministries and departments have been given very clear instructions that they only reply to MPs who write on behalf of their constituents, because if they do not do that, then residents will go MP hopping, from one MP to another and, as a result, create, not just more work for the Ministries and departments, but also more confusion to their own cases.

asked the Minister for Health whether his Ministry has any plan to set up a polyclinic for residents of Gek Poh Ville at Jurong West.

Sir, the Ministry of Health plans to set up a polyclinic in Jurong West for the residents living in the New Town. MOH has submitted a request for land to build the polyclinic. The URA is in the process of identifying a suitable location under its new co-location concept. In the meantime, Jurong West residents can attend Jurong Polyclinic in Jurong East. Encik Harun A. Ghani: Sir, I think the Minister should consider building a polyclinic at Nanyang Estate and Gek Poh Ville, because these are populated areas.

Sir, Jurong West New Town is currently about 60% developed. That is why we have plans for a new polyclinic there. As I told the Member just now, a suitable location has to be identified first.

asked the Minister for Health if he will give the reasons for terminating the employment of Dr Maurine Tsakok, former head of Obstetrics and Gynaecology Department, Singapore General Hospital.

asked the Minister for Health why the services of Dr Maurine Tsakok were terminated by the Singapore General Hospital.

Sir, may I take Questions 16 and 17 together as they are related?

Yes.

Sir, SGH received a complaint of misconduct against a senior member of Dr Maurine Tsakok's staff in November 1996. SGH referred the complaint to the CPIB to investigate. Arising from the CPIB investigations, it was revealed that in the period from January 1996 to early 1997, in her capacity as Head of Obstetrics & Gynaecology, Dr Tsakok had extended her services and deployed staff and resources from SGH to assist a private laboratory in Manila without disclosing the material fact that her husband was a shareholder in that company. The staff member complained against and the spouse were also shareholders of the same company. The Hospital was of the view that such information on shareholding in the private laboratory should have been disclosed by Dr Tsakok in her capacity as Head of Department to avoid any potential conflict of interest. It therefore terminated the employment of Dr Maurine Tsakok on 12th June 1997 in accordance with the terms of her employment contract.

Sir, the Minister says the matter was referred to the CPIB. Was it considered that it came within the purview of the Prevention of Corruption Act? And, if so, what was the reply of the CPIB to that?

Sir, the complaint was against a senior member of Dr Tsakok's staff. The CPIB investigated and, arising from the investigations, the facts about the shareholdings came out. The investigations by the CPIB were on the complaint on the staff of Dr Maurine Tsakok, and not on Dr Maurine Tsakok herself.

May I ask the Minister whether Dr Maurine Tsakok was on the permanent staff or was she on contract?

Sir, she was an employee of SGH with an employment contract.

Was her termination referred to the Public Service Commission?

Sir, SGH is a private entity. It is not part of the Civil Service. In fact, all the administrative decisions are taken by the management and the board of directors of SGH.

May I ask what is the protection given to employees of SGH against any unfair termination?

Sir, like in any other private company, if they are aggrieved by the decision of the company, they can take legal action against the company.

May I ask the Minister whether there was an inquiry into this alleged misconduct?

Sir, the administration of SGH does not come under my Ministry. If Dr Maurine Tsakok is aggrieved with the decision of the Hospital, I am sure she knows what to do.

"to provide for the issue from the Consolidated Fund and the Development Fund of the sums necessary to meet the estimated expenditure for the financial year 1st April 1997 to 31st March 1998", recommendation of President signified; presented by the Minister for Finance (Dr Richard Hu Tsu Tau); read the First time; to be read a Second time on the next available sitting of Parliament, and to be printed.

"for making final provision to meet additional expenditure for the financial year 1st April 1996 to 31st March 1997", recommendation of President signified; presented by Dr Richard Hu Tsu Tau; read the First time; to be read a Second time on the next available sitting of Parliament, and to be printed.

"to amend certain statutes of the Republic of Singapore", presented by the Minister of State for Law (Assoc. Prof. Ho Peng Kee); read the First time; to be read a Second time on the next available sitting of Parliament, and to be printed.

"to provide for the dissolution of the Port of Singapore Authority and for the transfer of its property, rights and liabilities to a successor company and others, to make financial arrangements for that company and for matters connected therewith, to repeal the Port of Singapore Authority Act (Chapter 236 of the 1985 Revised Edition) and to make consequential amendments to other written laws", presented by the Minister for Communications (Mr Mah Bow Tan); read the First time; to be read a Second time on the next available sitting of Parliament, and to be printed.

Order read for consideration in Committee of Supply [Allotted Day].

Final Supplementary Estimates of Expenditure for the financial year 1st April 1996 to 31st March 1997, contained in Paper Cmd. 1 of 1997. I shall deal first with the Head of Expenditure in respect of which an amendment stands on the Order Paper Supplement. Head W, Ministry of Trade and Industry, Mr Chiam See Tong. Head W -

Sir, I beg to move, That the sum to be allocated for Head W be reduced by $10 in respect of Code 2000. Sir, this House is asked by the Minister to approve an additional supplementary sum of $78 million to provide for rebates on utilities for citizens living in 1-, 2-, 3-, 4- and 5-room HDB flats. The Code under which this allocation is made is 2000, Other Operating Expenditure. I looked up last year's Budget which was presented to Parliament under Paper Cmd. 4 of 1996 and there are several subheads. But I believe that the subhead in which this particular allocation is being asked for comes under subhead 2400, Public Relations. Sir, anyone looking at this subhead will notice the tremendous increase of funds allocated from FY 94 to FY 96. In fact, in 1994, the sum actually used up for this particular subcode on "Public Relations" was only $755,000, and the estimated sum for last year jumped to $23 million. This is a huge jump, Sir, for Public Relations. We are being asked in this House today to add to this $23 million an additional sum of $78 million. Sir, the question I would like to ask the Minister is: at the time when this estimate was made in 1996, did he realise that there would be a requirement of an additional $78 million? This is over three times more. If he knew, Sir, then the estimate should have been more correctly put in place rather than giving such a low figure. On the other hand, was this additional $78 million a last minute after-thought? It was felt that it was necessary to have this amount because it was an election year and therefore the money was spent. Sir, these are the questions we would like to ask the Minister. Sir, another question we would like to ask the Minister is this. Under this head of "Public Relations", does "public relations" mean only giving refunds to HDB citizens who are dwelling in 1-, 2-, 3- and even 4- and 5-room HDB flats? As regards handouts, Sir, to me this is an out-and-out handout of $78 million to citizens who are residing in HDB flats, and we are repeatedly told by the Government that it does not believe in handouts. I believe the story has always been told that you should not give a Singaporean a fish which will only fill his stomach for one day, or less than a day, but give him a fishing rod, teach him how to fish and that will serve him for life. I wonder why is the Government now contradicting itself by giving handouts. But we also note that the handouts are very clinical in nature, very specific and not a general handout. We note that, of course, last year was an election year and such big handouts were given. I would ask the Government that instead of giving a fish for one day, just like these handouts, it should, with this money, give the citizens a more permanent benefit. Give every HDB precinct a neighbourhood library, an educational tool which they can use and train themselves for life, and perhaps more recreational and cultural facilities in HDB neighbourhoods. I have always advocated a smaller class size and money could also be allocated to the schools to reduce the class size. Give them a better education, train them and they can use it for life. I notice that this money is handed out for public utilities. Public utilities mean electricity and water. Government is taxing on these two items and we have even heard since 1992 that water conservation is an important factor in Singapore. So this policy of handout to HDB flat dwellers to pay their public utilities bills is in fact a direct contradiction of the Government's policy of conservation of water. The Government is, in fact, taxing Singaporeans for excessive use of water. There is also an announcement that water rates will be increased. So if the HDB flat dwellers know that the Government is going to pay for their water bills, why save? In this sense, the Government is really contradicting itself. But I hope that if the Government believes in the conservation of water, even if it was an election year, they should not give the handouts.

Sir, I am replying because this concerns the Ministry of Trade and Industry, whose supplementary budget the Member is proposing to cut. The Member first raised the point that there is a big increase in the item and whether this was foreseen. The Member may have forgotten the big debate we had last year over the rise in PUB electricity tariffs. The Government had corporatised PUB and found that, in fact, Singapore Power was undercharging for electricity and the return was below acceptable rates. Therefore, the tariff rate had to be increased and so that this would not be a burden on lower income families, the Government decided to give a grant to the lower income families, ie, those living in the smaller flats. It was decided that for 1- to 3-room HDB flats, the dwellers would be given $150 as a rebate of their utility bills, and for 4- and 5-room HDB flats, the rebate was $100. This amounted in total to $75 million. So the sum was not foreseen at the time when the budget was passed. At the time when this item was debated here, I think Mr Chiam did not object. In fact, he was probably one of those who welcomed this. No doubt, it was an election year but this is something that has been given year after year. In fact, when the economy is doing well, the Government has been sharing out the prosperity with Singaporeans through various forms of rebates, such as rebates on utilities bills, rental rebates and rebates on S&C charges of HDB flats. Mr Chiam raised the point: why not use this for libraries and swimming pools and so on. May I suggest to him that he can opt out of all these rebates. He can use the sum saved to pay for the swimming pool or library to be built in his area if he wants to. But I am sure all the other Members would welcome the rebates for their constituents. The other point he raised is in anticipation of a similar rebate to be given for the increase in water tariff that we have implemented with effect from 1st July this year to encourage families to save water. It is important that we increase the water tariffs to drive home the message that water is a precious resource and people should be careful with the use of water. So the rate will be going up significantly over the next four years. In fact, it will be like quadrupling of the rate for some people. To offset this, the Ministry of Finance has worked out, in conjunction with my Ministry, some rebates which will be announced later on. It is important that we price the various resources correctly, and water is a very special resource. So with proper pricing, the users can then decide how they want to use their resources. Do they want to spend more money using water wastefully or conserve on water and make use of the grant that the Government is giving them for other purposes: for the education of their children, for example? So I do not think there is any contradiction in the way that we are doing it. As to why this item is put under the "Public Relations" head, I think it is just a convenient place to put the money. It does not really matter because Ministries are now allowed to vire sums from one item to another. So it happens to be a convenient item where we could increase the amount.

Sir, I beg leave to withdraw my amendment. Amendment, by leave, withdrawn. The sum of $82,000,000 for Head W stand part of the Final Supplementary Main Estimates.

I shall now deal with the remaining heads of expenditure in respect of which no amendment stands on the Order paper Supplement. In respect of the Main Estimates, they are heads B, E, J, L, P, R, U and Z. I propose to take those heads of expenditure en bloc. Question, "That the sums stated for those heads of expenditure which appear in the last column of the Schedule of Total Supplementary Main Estimates of Expenditure shown in Paper Cmd. 1 of 1997 stand part of the Final Supplementary Main Estimates", put and agreed to.

In respect of the Supplementary Development Estimates, they are heads I, J, P, R, U and W. I propose to take those heads en bloc. Question, "That the sums stated for those heads which appear in the last column of the Schedule of Total Supplementary Development Estimates of Expenditure shown in Paper Cmd. 1 of 1997 stand part of the Final Supplementary Development Estimates", put and agreed to. Question, "That the sum of $245,346,700 shall be supplied to the Government under the heads of expenditure for the public services shown in the Final Supplementary Main Estimates contained in Paper Cmd. 1 of 1997", put and agreed to. Question, "That the sum of $1,899,757,330 shall be supplied to the Government under the heads of expenditure for the public services shown in the Final Supplementary Development Estimates contained in Paper Cmd. 1 of 1997", put and agreed to. Resolutions to be reported. Thereupon Mr Speaker left the Chair of the Committee and took the Chair of the House.

Mr Speaker, Sir, I beg to report that the Committee of Supply have come to certain resolutions. Resolutions reported - "That the sum of $245,346,700 shall be supplied to the Government under the heads of expenditure for the public services shown in the Final Supplementary Main Estimates of Expenditure contained in Paper Cmd. 1 of 1997". "That the sum of $1,899,757,330 shall be supplied to the Government under the heads of expenditure for the public services shown in the Final Supplementary Development Estimates of Expenditure contained in Paper Cmd. 1 of 1997".

Mr Speaker, Sir, I beg to move, "That Parliament doth agree with the Committee on the said resolutions."

Question put, and agreed to. Resolutions accordingly agreed to.

Mr Speaker, Sir, I beg to move the Motion* standing in my name under item No. 2 on the Order Paper. *The Motion reads as follows: That this Parliament, pursuant to section 7 of the Civil List and Pension Act (Chapter 44), resolves that the Schedule to that Act be varied by deleting the figures "$1,556,100", "$80,000", "$3,176,500", "$732,000" and "$216,100", in the second column and substituting the figures "$1,779,000", "$84,000", "$3,378,400", "$819,000", and "$226,000", respectively. Sir, it is proposed to increase the provision for the Privy Purse from $1,556,100 to $1,779,000. This will take care of both the July 1996 and July 1997 adjustments to the President's salary. The provision for Entertainment will go up from $80,000 to $84,000 to cater for an increase in the number and costs of hosting official functions. The provision for Salaries of Personal Staff is increased from $3,176,500 to $3,378,400 to cater for normal salary increments and filling of vacancies. A provision of $819,000 is required to meet the Expenses of Household. This is $87,100 or 11.9% higher than the FY96 provision mainly to meet the higher maintenance expenditure of the Istana grounds. The provision for Special Services is increased marginally by $9,900 to $226,000. It will be used to purchase office equipment and replace a station wagon. It is therefore necessary to vary the provisions in the Schedule to the Civil List as indicated in the Motion before the House. Sir, I beg to move.

Question put, and agreed to. Resolved, That this Parliament, pursuant to section 7 of the Civil List and Pension Act (Chapter 44), resolves that the Schedule to that Act be varied by deleting the figures "$1,556,100", "$80,000", "$3,176,500", "$732,000" and "$216,100", in the second column and substituting the figures "$1,779,000", "$84,000", "$3,378,400", "$819,000", and "$226,000", respectively.

4.03 pm

Mr Speaker, Sir, I beg to move, That Parliament approves the financial policy of the Government for the financial year 1st April, 1997 to 31st March, 1998.

Mr Speaker, Sir, the Singapore economy slowed down in 1996 after 3 years of above-potential growth. After 3 boom years, the global electronics industry took some corrections to shed its excessive inventory. The consequential slower growth in regional countries also affected our hub services like shipping and entrepot trade. As a result, after a strong 11.5% growth in the first quarter of 1996, the economy moderated to 7.6% in the second quarter, fell to 3.3% in the third quarter, before rebounding to 5.8% in the last quarter. For the whole of 1996, we managed a 7% growth. This slowdown eased the pressures of high growth but has not adversely affected our economic fundamentals. Our labour market remained tight. Real wages grew by 3.4% , slightly lower than a year ago. Inflation was also lower at 1.4% compared to 1.7% in the previous year. Although productivity growth declined to 0.7% and unit labour cost rose by 3.5% , investors remained confident in our sound economic fundamentals, committing a record $8.1 billion in manufacturing investments in 1996, an increase of 19% over 1995.

The outlook for 1997 is cautiously optimistic. Although growth in 1st Quarter 1997 remained subdued at 3.8% , this was partly due to the high base in 1st Quarter 1996. The semi-conductor industry appears to have turned around. According to the US Department of Commerce, inventories of electronic components in the US have been run down while new orders have risen by a healthy 17% in the first 5 months of 1997. Some disk drive companies are experiencing inventory build-up, with quarterly earnings ending June likely to be below expectations. This also partially reflects the traditional summer slow-down in the disk drive industry in the US and Europe. Overall, however, the disk drive industry is seeing modest growth with new orders for computers and office equipment rising by 5.6% in the first 5 months of this year. As a whole, the global electronics industry is expected to pick up towards the end of 1997. With some exceptions, the regional economies remain healthy and are expected to improve with the recovery in the global electronics industry. The US economy is experiencing unusually strong growth with low inflation. The EU is also expected to record good growth whilst the Japanese economy is picking up. The hand-over of Hong Kong to China has proceeded smoothly. US-China official relations also appear to have moved to a more constructive track. This favourable strategic backdrop will contribute to the continued growth of the region. Given these factors, the Ministry of Trade and Industry has forecast our economic growth in 1997 to be between 5 and 7%, although this figure is subject to review later this year.

Notwithstanding the optimistic outlook, the current economic slowdown should serve as a sober and timely reminder of our vulnerabilities as a small country heavily dependent on world trade. With a limited domestic market and few resources, we have no choice but to be open and to compete in the world market to survive and prosper. We can grow faster by taking advantage of global markets and advanced technology, and by riding on opportunities including the worldwide electronics boom which has prevailed over the last few years. However, our openness exposes us inevitably to the fluctuations of global business and demand cycles. When market conditions change, we are rapidly affected. We have no choice but to stay internationally competitive and trim, even during boom periods when opportunities are plentiful. When a slowdown occurs, we will then have the resilience to weather it, and can use the respite to consolidate our economy, preparing ourselves to rebound when market conditions change yet again. Staying competitive, however, will not be easy. International competition is becoming keener in all sectors in our economy. It is not just that we face more competition than before, but that we are now in a new and qualitatively different environment. Singapore Airlines Singapore Airlines is a good example. Twenty years ago, SIA stewardesses were paid an average of about $1,000 per month, a fraction of their counterparts from developed countries. SIA's excellent cabin service and high operating efficiency were its trademark. Today, the pay plus allowances of an SIA stewardess is about $3,400 per month. But if we add in profit sharing, inputed gratuity and SIA's CPF contributions, the total cost to SIA of employing one stewardess can be as much as $4,200 per month. This is higher than what many other airlines in the world pay. Meanwhile, the service quality and the operating efficiency of other airlines have improved tremendously, closing the gap and posing strong challenges to SIA. For example, British Airways, one of the strongest challengers, has, over the last 4 years, reduced its costs by about o750 million (S$1.8 billion) through single-minded management action. Through strategic alliances with other airlines like Qantas and American Airlines, British Airways is striving to grow in the major markets of North America and the Pacific region. Notwithstanding BA's current problems with some of its unions, the company has turned around dramatically, from an overall deficit of o544 million (S$1.29 billion) for 1982, to a pre-tax profit of o640 million (S$1.5 billion) announced in May this year. The pattern of regional competition in the airline industry has also changed. The fast growing regional economies have fuelled demand, leading to more direct flights from countries in the region to other destinations in the world. This has made it harder for SIA to route passengers from the region into its main trunk routes through Singapore. In response to these changes, SIA has had to find new ways of offering better services at lower costs, and to seek tie-ups with other airlines to protect its market share. SIA also has to ensure that it continues to have first class management and strong internal consensus with harmonious relations between workers, managers and unions. Singapore Telecom Singapore Telecom's experience with the liberalization of our telecommunications sector provides another illustration of the pressures of this new operating environment. The past 3 months have seen major changes in our telecommunications market as Singapore Telecom faced domestic competition for the first time. Mobile phone and paging charges have fallen sharply. For international telephone services, even before we introduce competition in Singapore, SingTel's IDD rates have been coming down. Otherwise SingTel would have lost business to incoming calls charged at lower rates than outgoing calls. Come Year 2000, when other fixed-line operators come on stream, Singapore Telecom will face even fiercer competition. These are, however, just signs of the turbulence sweeping the telecommunication markets worldwide, fueled by new technologies and the breakdown of old regulatory barriers. These trends are irreversible, and will affect every country. Even if governments do not proactively liberalize their telecommunications market, technological developments will de facto bring about the changes regardless of regulatory restrictions. In Hong Kong, for example, Hong Kong Telecom has a monopoly in international calls until 2006. However, through innovative sales tactics including packages offering both resale of Hong Kong Telecom's IDD service as well as call-back, other fixed-line operators in Hong Kong have managed to garner 30% of Hong Kong's international-calls market. There are reports that Hong Kong Telecom has started talks with the Hong Kong government about terminating its monopoly early in return for compensation, because the new operating environment is reducing the value of this monopoly. This is what we did in Singapore with SingTel. Singapore will not be spared this turbulence in the telecommunications market. Even if we succeed in protecting our market and insulating it from the new forms of competition, this would only be at a high and unacceptable price to the rest of the economy. We will raise business costs, stunt the growth of the telecommunications industry, and undermine our position as a regional telecommunications hub. Singapore Telecom thus has to transform itself quickly and adapt to the ways of the market. It has to move into new technologies, services and markets to tap new revenue streams. Manufacturing The challenges of a new operating environment are not restricted to the services sector. For example, Singapore faces increasingly tough competition in the electronics industry. Both developing and developed countries understand the key importance of this sector to their manufacturing base, and are going all out to attract MNCs to locate projects there. We have had many successes, but the Economic Development Board has also seen some desirable projects slip through its hands. While Singapore has managed to maintain the manufacturing sector at about 24% of our GDP, other countries with high per capita incomes have seen their share shrink. Hong Kong, at the extreme, has practically de-industrialized. Manufacturing now constitutes only about 8% of Hong Kong's GDP. Unless we make a special effort to maintain the manufacturing share of GDP, we run the risk of weakening a key pillar of our economy and losing a primary means to generate wealth. The competitive environment, however, has changed tremendously. Unlike the past when we were one of the most liberal countries seeking to attract foreign direct investments, both developed and developing countries are now going all out to attract high-value projects, offering very generous incentives, including in some cases outright grants. Many of our competitors have the advantage of lower land and labour costs. Singapore, on the other hand, is constrained by our small size and limited resources. Industrial land in Singapore costs three to four times that in Johor and Bangkok. Even compared to Taiwan, we are more expensive. Labour costs in Singapore are high too. The cost of hiring a production worker in Singapore, while lower than the developed countries, is much higher than our neighbours in other dynamic economies in Asia. The Government cannot artificially depress labour costs, as these are set by market forces. In any case, our aim must be to create better paying jobs for Singaporeans. We also cannot underprice our land as we have to ensure that each piece of land is used efficiently, and yields full economic returns. We also need to balance the country's needs in housing, industry, commerce and recreation. But at the same time, we must watch the overall cost of doing business in Singapore. For us to remain competitive, higher costs in Singapore must be justified by higher capabilities and performance. The Government has thus made special efforts to improve key supply side factors. In manpower, for example, we have continued to grant work permits and employment passes liberally. The Ministry of Labour has also recently cut the foreign worker levy for the manufacturing sector. In addition, we have created new schemes or customised existing schemes to train engineers and skilled workers in specific areas in the electronic, chemicals, logistics and communications industries. We are also continuing to develop competence in various high technologies sectors including production engineering and biotechnology. The Government recognizes that the cost of industrial land is a key issue for manufacturing investors. Prices of industrial land have escalated sharply in the past few years together with the rise in the residential property market. We cannot afford to let the high prices of residential or commercial land overwhelm the industrial land market, and crowd out manufacturing industries and MNCs. MNCs generally have more choices of where to site their projects, are more sensitive to cost factors, and are less tolerant of high prices for land in Singapore. Singaporean companies in high technology manufacturing face the same cost pressures and have the same options. These companies cannot operate in Singapore if their industrial land prices are inflated by our residential land prices. The Government has therefore taken steps to allocate adequate land for industries, especially for strategic projects, and to price industrial land realistically, considering the likely tenants, to keep Singapore an attractive destination for manufacturing investments.

Singapore has to adapt to the challenges of the new operating environment. Economic liberalization, globalization and the rapid rate of technological advancement have created a completely new competitive paradigm, changing the way business is done and creating new products, services and markets. We must now be even more fleet-footed and move decisively to meet this change. Fortunately, our fundamentals remain solid. We have a robust fiscal position and a sound economic framework. The Government has managed the economy prudently and accumulated surpluses during the years when the economy did well. It has invested heavily in economic infrastructure, education and training to upgrade the knowledge and skills of our workforce. We are an efficient, well-organized society, operating by transparent rules and rational principles. We uphold meritocracy and keep out corruption. These are valuable assets which we should husband and maintain. However, for Singapore to remain successful, it is not good enough to operate the system according to existing rules, trying to do what we have always done, only a little better. Although it is necessary to constantly fine-tune our existing policies, it is even more important to review the overall framework of the policies from time to time, and decide when fundamental changes have become necessary. Major changes in policy directions require a long lead-time to build up critical mass and show results. All the more we must not be slow to shift, when changes become necessary. Singapore's Asian Dollar market would not exist today if, nearly 30 years ago, Dr Winsemius had not proposed that we make ourselves the regional financial hub, to take advantage of the time zone differences between Asia and both Europe and North America. Likewise, we would not have enough engineers to support high-tech manufacturing today, if not for a decision in the early 1980s, also strongly supported by Dr Winsemius, to drastically expand engineering intakes in our local universities. Singapore has succeeded precisely because we have looked beyond the obvious and immediate, and been bold enough to take prompt corrective actions when the problem was not yet obvious. It is crucial that we continue to do so to ensure that we are competitive amidst a whole new operating environment. The Government has set up an Economic Committee comprising representatives from the private sector, academia and public sector to study this crucial issue of Singapore's longer-term competitiveness. The Committee will study trends in the global economy and fundamentally question if our existing strategies and policies that have worked for us in the past are optimal or sufficient in the new operating environment. The aim is not to seek palliatives for current problems, but to identify longer-term solutions and strategies to address the deeper, underlying changes and challenges which Singapore has to overcome in order to maintain our economic growth. This is a crucial exercise. Our livelihoods will always depend on external demand as the engine that drives our economy. This remains a basic fact of life, even though our economy is now bigger and more diversified. We therefore have to focus on remaining competitive and relevant to others. We also have to monitor developments in the region and in the international economy, and position ourselves against this broader backdrop. These are the fundamental economic issues which affect our future. If we get the fundamentals wrong, day to day concerns such as the cost of living or COE prices which consume so much attention and emotion will become irrelevant.

Singapore has achieved economic success on the basis of few advantages and despite many limitations. We are much stronger now economically than we were a decade ago. However, the limitations of geography and size will not go away. Adapting nimbly to changes in the environment and staying relevant to global demands remain fundamental to Singapore's survival. 1996 saw growth moderating in Singapore. In 1997, we expect a gradual recovery, in line with a turnaround in global electronics demand. Over the medium to long term, Singapore can expect to continue to enjoy good growth, if we focus our efforts on staying competitive and remaining responsive to the external environment. The future is not guaranteed but it can be bright. I am optimistic that Singaporeans can rise to the challenges of the new environment and sustain our economic dynamism in the 21st Century as we move up into the ranks of a developed economy.

Mr Speaker, Sir, I will now move on to the Budget for Fiscal Year 1997.

This Government will continue to adopt prudence as the cornerstone of its expenditure policy. As before, we will focus on the delivery of essential public goods and services, consolidate our national economic infrastructure and devote more resources towards the development of our people. The public sector will be contained to grow no faster than GDP, thus ensuring that adequate manpower and financial resources are available for the private sector to continue in its role as the growth engine of the economy. It is important that Government invest heavily in the development of our economic infrastructure and human resources in order to maintain and improve Singapore's economic competitiveness in the face of growing competition from both the region as well as developed countries. This investment will attract more high value-added and strategic industries to Singapore. In tandem with this, we will provide generous financial assistance to upgrade our local companies, train our workers and develop indigenous capabilities in high value-added skills and R&D. At the same time, we will have to cater for the rising aspirations of Singaporeans for a higher quality of life commensurate with increasing affluence. The URA will continue to develop high quality housing concepts such as Ponggol 21. A world-class public transport system is also planned for Singapore, combining a comprehensive public transport system with an efficient road network. It is important that we do not let affluence erode our cohesiveness and resilience as a nation and society. To foster a cohesive, resilient, caring and gracious society, the Government will allocate more funds to promote awareness of our arts and heritage, and community and sporting activities. In particular, nine Community Development Councils will be set up within this fiscal year to promote stronger ties between the Government and the people. Revenue growth in FY97 is not expected to keep pace with the growth of the Singapore economy because of tax cuts introduced to maintain a low and competitive tax regime. Hence, only a modest budget surplus of $4.8 billion is projected for FY97, after providing for an increase in development spending. Some of this surplus will be used to augment Edusave and Medifund and I propose to make a final contribution of $500 million to top-up the Edusave Endowment Fund to its target figure of $5 billion. An allocation of $100 million will also be made to Medifund to ensure that affordable healthcare continues to be available to all. Singapore Allowance The Singapore Allowance is a flat rate supplemental payment made monthly to pensioners receiving a gross pension below a specified ceiling. The Allowance is currently set at $130 per month with the gross pension ceiling at $900 per month. There are currently 16,859 pensioners residing in Singapore, of which 11,827 or 70% enjoy the benefit of the Singapore Allowance. The Singapore Allowance was last revised in 1993. From 1st August 1997, we will increase the Singapore Allowance by $10 per month to $140 per month, and also the gross pension cap from $900 to $950 per month. The revised Singapore Allowance will increase the Government's pension bill of $662 million by about $1.84 million per year.

Total Government expenditure is projected at $23.9 billion or 16.2% of GDP, down from 17.9% for FY96. This is still significantly higher than Government expenditure over FY93-95, which averaged 13.3% of GDP. The increase is mainly due to higher development spending, which has risen from around 4% of GDP in FY93-95 to more than 6% of GDP since FY96. On the other hand, operating expenditure in FY97 is expected to remain in the FY93-95 range of 9-10% of GDP . In line with Government expenditure priorities, the largest share or 38% of the budget will go towards social and community services, which includes education, health, the environment and public housing as these are areas which yield lasting returns. Spending on security will take up the next largest share, at roughly 33% of the budget. Spending on economic and infrastructural development will take up 20% of the budget in FY97, which is much more than the average of 15% over the last 5 years. This includes substantial funding for economic promotion as well as transport improvements such as the building of MRT, LRT and roads. Operating Expenditure Operating expenditure is estimated to be $14.1 billion in FY97, slightly lower than the $14.5 billion spent in FY96. However, FY96 operating expenditure was unusually high, since it included a one-off compensation payment of $1.5 billion to Singapore Telecom for the early termination of its exclusive telecommunication privileges. If this is disregarded, operating expenditure will rise by 8% . This is largely due to a 9% increase in Running Costs, from $11.9 billion in FY96 to $13.1 billion in FY97. This is less than the projected GDP growth rate in nominal terms. Transfers will increase marginally by 2% from $1.02 billion in FY96 to $1.05 billion in FY97. As a percentage of GDP, operating expenditure will decrease from 10.7% of GDP in FY96 to 9.6% in FY97. However, if we disregard the one-off compensation payment to Singapore Telecom, FY96 operating expenditure would have amounted only to 9.6% of GDP, which is the same as projected for FY97. Education accounts for the largest increase of $450 million in operating expenditure. More funds are provided to continue the restructuring of the Education Service by promoting deserving teachers and recruiting NIE trainees to the Service before graduation. Higher grants have also been provided for the tertiary institutions due to an increased intake of students. The Government will spend more to encourage reading and learning. More community and children's libraries will be built in convenient locations to promote the reading habit whilst the greater use of information technology systems in our libraries would provide easier and faster access to information from around the world. Development Outlays Total development outlays in FY97 are projected at $27 billion. This comprises $9.8 billion in development expenditure, which refers to development outlays funded from operating revenues, and $17.2 billion in loans to statutory boards. Development expenditure in FY97 is projected to increase marginally from $9.6 billion in FY96 to $9.8 billion. This is the second successive year for substantially higher development spending, considering that development expenditure varied between $3.9 billion in FY93 to $6 billion in FY95. As a share of GDP, development expenditure is expected to reach 6.6% in FY97, slightly less than the 7.1% in FY96, but substantially higher than the FY95 level of 4.8% . Economic and infrastructural development is expected to take 41% of total development expenditure, exceeding the share of social and community services which was the leading spender in past years. While funding on social and community services continues to increase, development expenditure on economic and infrastructural development is set to double from $2 billion in FY96 to $4 billion in FY97. This shift reflects Government's determination to step up economic initiatives to woo new investments and to boost Singapore's attractiveness as an investment destination. Some of the major economic projects include land reclamation at Changi East, Tuas View and Jurong Island, the building of a road link to Jurong Island, the development of the Southern Islands, and compensation for sites in Woodlands identified last year to be acquired for expansion of wafer fab plants. To strengthen our domestic economy further, financial assistance through the provision of grants and loans will be provided under the Economic Development Assistance Scheme and the Cluster Development Fund. These will attract and nurture investments in Singapore and upgrade the capabilities of our local companies. Another $586 million in research funds is being provided to widen and deepen Singapore's R&D base under the aegis of the second National Science and Technology Plan. Funds are also provided under the Tourism 21 Masterplan to upgrade our tourism industry and to maintain Singapore's position as a tourism centre in the region. On infrastructure, a major commitment is Government's vision to build a world class transport system in Singapore. A firm decision has been taken to proceed with the construction of the North-East MRT Line, the Changi Airport MRT Extension and an LRT system in Bukit Panjang. These are further steps in our aim to develop a first class public transport system as an alternative to private car ownership. Social and community services will take up the second largest share of 32% of development expenditure, with major allocations to education, public housing, the environment and healthcare. If loans are included, the share of social and community services in development outlays rises to 70% . Education accounts for one-third of development expenditures within this sector, mainly on the building and upgrading of schools, and purchases of computer equipment to introduce IT into classroom teaching. Public housing is next, with one-quarter of the allocation, or a sum of $860 million. This includes $257 million in capital subsidies to HDB for building of flats, and a larger sum of $415 million for the main and interim HDB upgrading programmes. Environment projects include the 5-year programme to upgrade sewerage facilities and the development of an off-shore sanitary landfill off Pulau Semakau. Although small in comparison, development expenditure on information and the arts will double, while that for community development is planned to increase by nearly 50% . Our public libraries will be revamped and expanded into a new network of regional, community and neighbourhood libraries supported by a sophisticated IT infrastructure. This will improve access to books and information materials and help cultivate a well-read and informed society in Singapore. It will cost the Government over $600 million over the next four to five years. New sports and recreational centres will be built in Bishan, Bukit Gombak, Choa Chu Kang, Jurong East and Jurong West, to improve access to sporting facilities and encourage wider participation in sports for a healthy lifestyle. Older community centres are also being upgraded to meet the higher expectations of Singaporeans for better recreational facilities. Major development expenditures subsumed under the security sector include the re-development of the Woodlands Checkpoint to accommodate heavier causeway traffic, a new checkpoint complex at the second crossing at Tuas, and the building of a new Police HQ Complex. To ensure readiness during an emergency, civil defence shelters will be built in all new HDB flats and underground MRT stations on the North-East MRT Line. Funds are also set aside for the construction of a new race course complex at Kranji to allow the relocation of the Turf Club from its present site. This will free up land in Bukit Timah for good quality residential housing.

Allow me now to update the House on the progress of our efforts to improve financial management in the public sector under the Budgeting For Results (or BFR for short) initiative which we launched in 1994. Members will recall that 14 organisations were commissioned as Autonomous Agencies in April last year. Starting this financial year, another 102 Ministry Headquarters, Departments and Government-Funded Statutory Boards are being managed as Autonomous Agencies (or AAs). What this means is that practically the entire Civil Service and all Government-funded Statutory Boards are now operating as Autonomous Agencies. Every AA has been provided with greater autonomy and flexibility to respond quickly to changes, along with incentives for efficient and superior performance, and the wherewithal to nurture enterprise and creativity. Over the next few years, we will consolidate and fine-tune the various changes that have been introduced so that AAs can better manage their resources and achieve even higher performance. This will help us achieve our objective of creating a leaner, more efficient and enterprising public service to help Singapore succeed. Last year, some Members of the House expressed concern that financial management reforms under the BFR initiative could lead to increases in the price of public services or create a profit-oriented mindset in Government without regard to the larger goal of providing quality public services. I wish to reassure the House again that this will not be the case. Pricing of public services is a policy matter, and prices of goods and services provided by the public sector should not therefore increase on account of improvements in financial management. On the contrary, a more efficient public sector would be better placed to moderate price increases.

Order. I suspend the Sitting and will take the Chair again at 5.05 pm. Sitting accordingly suspended at 4.43 pm until 5.05 pm Sitting resumed at 5.05 pm

Debate resumed.

Mr Speaker, Sir, let me turn next to the fiscal position and the proposed tax changes.

GDP growth in 1997 is projected to be between 5 to 7% . For FY97, revenue collection is estimated at $28.6 billion, while operating and development expenditures are budgeted at $23.9 billion. The budget surplus for FY97 is therefore expected to be $4.8 billion, the lowest since FY92. There are two main reasons for the decline in the projected surplus. One is the slowdown in the growth of revenue collection, due largely to the cumulative tax cuts over the years. The other is the rise in development expenditure, mainly because of increased spending on economic development projects, implementation of the Education IT MasterPlan, and the construction of the North-East MRT line and the Bukit Panjang LRT. In the past five years, we have cut the corporate tax rate from 31% to 26% . We have similarly reduced the top marginal rate for personal income tax from 33% to 28% , with corresponding reductions to the other marginal tax rates. Property tax was brought down from 16% to 12% . We also abolished the stamp duty for a number of instruments and reduced the rates for others. All these measures resulted in an average revenue loss of about $2.5 billion a year. The revenue loss amounts to about one and a half times more than the additional GST collection of $1.7 billion a year. Development spending, on the other hand, has grown by more than two and a half times from $3.6 billion in FY92 to $9.6 billion in FY96. The tax cuts and higher development expenditure are in line with our policy of keeping taxes as low as possible, and directing spending to productive infrastructure which will yield lasting returns. This policy has served us well. It has provided the basis for Singapore's economic growth. It will remain a cornerstone of our economic strategies. We will continue to give priority to investments in infrastructure and ensure that our tax rates are competitive. We reduced our corporate tax and personal income tax rates last year. The lower rates will take effect from Year of Assessment 1997. There is therefore no need to make further adjustments to these tax rates so soon after the last revision. As it is, our tax rates are already among the lowest in the world. However, we will continue to fine-tune our tax incentives to promote activities which are of high value-add and high growth potential. We will also adjust some of the personal reliefs for income tax. The projected surplus for FY97, although lower than previous years, is still at a healthy level. Government will therefore continue to return part of these surpluses to Singaporeans. I will elaborate on the details later. Let me now deal with the tax changes for companies.

Financial Services Sector The financial services sector is one of the key sectors of the Singapore economy, contributing 12% to GDP. It is the second largest economic sector after manufacturing. The financial services sector is a high value-add industry, employing almost 90,000 people or 5% of the workforce. Singapore has successfully developed into a major international financial centre. Today, we have about 700 international banks and financial institutions from almost 40 countries operating in Singapore. We are also the fourth largest foreign exchange and derivatives trading centre in the world, after London, New York and Tokyo. The fund management industry has seen rapid growth in recent years. There are now 161 fund managers operating in Singapore, managing funds totalling more than S$125 billion. The Stock Exchange of Singapore (SES) has also developed into a regional securities trading centre. There are now 45 foreign companies listed on the exchange and their total market capitalisation is about S$137 billion. Our financial futures exchange, or SIMEX, trades a wide range of international products with an annual turnover of 22.6 million contracts valued at US$ 16.1 trillion. Our financial services sector has come a long way. However, there is room for our financial market to grow. To further develop our financial services sector, I have decided to introduce a package of new incentives. Tax Incentive for ACU Activities At present, Asian Currency Units (ACUs) of banks and merchant banks enjoy a concessionary tax of 10% on income earned from ACU activities. They also enjoy a further reduction in the tax rate to 5% on the incremental income derived from certain high-value added activities. To qualify, the taxable income of some of these activities must each exceed S$10 million. To give a further boost to ACU activities, the 5% tax on incremental income will be extended to income derived from all taxable ACU activities if the total taxable income from all such activities exceed S$50 million. ACUs can avail themselves of either the existing incentive for selected high-value activities or the new incentive which covers all ACU activities. The new incentive will be granted for an initial period of 5 years with effect from Year of Assessment 1998. Tax Incentive for the Fund Management Industry Since 1986, fund managers approved under the Tax Exemption Scheme for Fund Management enjoy a concessionary rate of tax of 10% on income earned from managing non-resident funds. Further, with effect from Year of Assessment 1996, those which manage more than S$5 billion worth of non-resident funds can enjoy a reduction in the tax rate to 5% on the incremental income earned compared with the previous year. To encourage major fund managers to further expand their business in Singapore and use Singapore as a base for their regional operations, I have decided that fund managers who have substantial operations in Singapore will be exempted from tax altogether for income earned from managing non-resident funds. To qualify for the tax exemption, the fund manager must be managing at least S$10 billion of non-resident funds in Singapore, employ at least 7 professional fund managers and analysts, and have a track record of 3 years operating in Singapore under the Tax Exemption Scheme for Fund Management. The incentive will be granted for an initial period of 5 years with effect from Year of Assessment 1998. Tax Exemption for Managing IPOs of Foreign Currency Shares In line with the objective of developing Singapore into a regional financial market, the SES has been actively encouraging foreign companies with the necessary track record to list their shares on the Exchange in foreign currencies. To further develop the Exchange into a regional securities trading centre, I have decided that income earned by banks and merchant banks from managing initial public offering of foreign currency denominated shares to be listed on the SES will be exempt from tax for an initial period of 5 years, beginning from Year of Assessment 1998. The tax exemption will enable banks and financial institutions in Singapore to offer more competitive terms to foreign companies to list their shares on SES. This will make Singapore a more attractive centre for fund raising by international companies. Tax Exemption for Trading in Foreign Currency Shares ACUs and Approved Securities Companies (ASCs) currently enjoy a concessionary rate of tax of 10% on income earned from the trading of foreign currency denominated shares. We need to ensure a certain degree of liquidity in the trading of foreign currency shares if we are to attract foreign companies to list their shares in Singapore. To encourage the trading of foreign currency shares, I have decided to fully exempt from tax income earned by ACUs and ASCs from the trading of foreign currency denominated shares which are listed on SES. The exemption will be granted for a period of 5 years with effect from Year of Assessment 1998. Extension of Tax Exemption Scheme for Syndicated Offshore Credit and Underwriting Facilities Under the existing tax exemption scheme for syndicated offshore credit and underwriting facilities, income earned from the underwriting of syndicated offshore debt securities are exempted from tax. One of the conditions for granting the tax exemption is that the issue must be underwritten by financial institutions in Singapore. As borrowers in the region become more sophisticated and their credit standing becomes more acceptable in the financial markets, the debt papers of reputable issuers would not need to be underwritten by financial institutions. To encourage such borrowers to issue bonds and other debt securities in Singapore, the requirement that the debt issues must be underwritten by financial institutions will be removed with immediate effect. All fees earned by financial institutions in arranging offshore debt issues will therefore be exempted from tax irrespective of whether the issues are underwritten by financial institutions or not. Tax Incentive for Credit Rating Agencies The Asian debt market is expected to grow sharply in the next decade to meet the huge financing needs of Asian economies. The attractiveness of Asian debt papers to international investors would be enhanced if such papers are rated by international credit rating agencies. Singapore can play a pivotal role by attracting internationally reputable credit agencies to conduct such operations here. This would also complement our efforts to develop Singapore into a regional capital market. To encourage the setting up of reputable credit rating agencies in Singapore, I have decided to grant a concessionary tax of 10% on the income earned from providing credit rating services with respect to the issue of foreign currency denominated securities in Singapore. The incentive will be for an initial period of 5 years, and will take effect from Year of Assessment 1998. To qualify for the incentive, the credit rating agency must: have a track record in international credit rating of at least 10 years; employ at least 2 qualified credit analysts in Singapore; and incur annual business spending of at least S$500,000 in Singapore. Tax Deduction for General Provisions Made by Banks and Merchant Banks Since 1991, banks and merchant banks in Singapore have been given tax deduction for general provisions up to a limit of 2% of their loan and investment portfolios. As the financial markets become more competitive and sophisticated, banks and merchant banks are now exposed to greater risks in their activities. To encourage banks and merchant banks to increase their level of general provisions to buffer against any unexpected losses, the limit on tax deductible general provisions will be raised from 2% to 3% of qualifying loans and investments from Year of Assessment 1998. A higher level of general provisions will make for a more sound and stable banking system. The above package of tax incentives, which I have just outlined, will further enhance the competitiveness of our financial services sector. The package is designed to give an added boost to the growth of our financial market, and to strengthen Singapore's position as a regional financial centre. The Government is committed to developing Singapore into a major financial hub. We will provide every necessary support to ensure the growth of our financial services sector. I will now move on to other tax changes for companies. Overseas Enterprise Incentive - Onward Payment of Tax Exempt Dividends Out of Qualifying Income In the 1993 Budget, I introduced the Overseas Enterprise Incentive (OEI) as part of the Government's effort to encourage the development of an external economy. The OEI provides for tax exemption on income derived from approved overseas investments and projects for a maximum period of 10 years. The OEI also allows the follow-through of tax exempt dividends up to two levels of shareholding, subject to a 100% shareholding requirement. In 1995, changes were made to the Income Tax Act to allow the follow-through of tax exempt dividends beyond two levels of shareholding for foreign sourced income exempted under the Income Tax Act, provided the 50% shareholding requirement is satisfied. The new rules have worked well. To further support regionalisation, I have decided that the OEI scheme be similarly relaxed. I will therefore be making the following changes to the OEI: reduce from 100% to 50% the shareholding required for follow-through of tax exempt dividends to the second level of shareholding; extend the follow-through of tax exempt dividends beyond the two levels of shareholding provided the 50% requirement is satisfied. Holding companies at every tier of a group corporate structure will be allowed to onward pay exempt dividends declared out of the qualifying OEI income; and waive the 50% shareholding requirement in the dividend paying company for onward payment of exempt dividends on a case-by-case basis. These changes will apply to dividends received on or after 11th July 1997. Tax Incentives for Satellite Operations Satellites play an important role in today's telecommunications and broadcast industries. With most of the world still unwired by conventional land lines, there exists a huge potential market for wireless transmission of voice, video and other multimedia content which can be exploited. To encourage companies in Singapore to launch their own satellites, I have decided to extend the investment allowance incentive to satellite operators on approved capital expenditure which satisfy certain criteria. The extension of the investment allowance incentive will take immediate effect. Having our own satellites will enhance Singapore's competitiveness as a communications and media hub by extending our communications infrastructure beyond just submarine cables, land lines and TV broadcasting stations. It will also allow service providers in Singapore to offer competitive packages to attract content creators, developers and distributors. Currently, payments to non-resident persons for the use of satellites are subject to withholding tax at a rate of 15% . To give a further boost to the broadcasting and telecommunications industry, I have also decided to exempt from tax payments for the leasing of capacity on satellites operated by non-resident persons. The exemption will take immediate effect for an initial period of 5 years. Industrial Building Allowances for Logistics Operators There is a growing trend by manufacturers and traders to focus on their core activities and to outsource their logistics needs. With this development, there is now an increasing demand for integrated logistics services covering physical distribution, warehousing and information management. Singapore, with its strategic location and network of comprehensive infrastructure, is well positioned to serve as a logistics hub for international companies. To promote the growth of the logistics industry, I have decided to grant industrial building allowance (IBA) to buildings owned and used for storage of goods or materials by companies providing logistics services, and which currently do not qualify for IBA. These would include companies which provide integrated logistics services covering warehousing, distribution, information management and other high value-added logistics operations. The change will apply to approved buildings with effect from the Year of Assessment 1997. Singapore Commodity Exchange (SICOM) The Singapore Commodity Exchange Limited (SICOM), formerly known as the RAS (Rubber Association of Singapore) Commodity Exchange, was granted a five-year tax holiday when it was established in 1992. This was to allow the Exchange to get off to a successful start. As the Exchange is still in its developmental stage, I have decided to extend the tax holiday granted to SICOM for another five years. In addition to existing income items which qualify for the tax holiday, I have decided to exempt from tax new income items which have arisen from the Exchange's development such as fees for the quality assurance of physical commodities, registration fees for Nominated Warehouses, fees for the processing of applications for Registered Representatives and Associated Persons, annual subscription fees from Registered Representatives and Associated Persons, locals membership processing fees, fees for the processing of leases of seats on SICOM, and proceeds from the sale of trading permits.

Income Tax Rebate Despite a sluggish global electronics market, we managed to achieve a creditable 7% economic growth for the whole of 1996. This is due in no small part to the hard work and enterprise of our people. I have therefore decided to reward their effort by giving an across-the-board one-off rebate of 10% on individual income tax in Year of Assessment 1997. The estimated revenue loss to Government is $250 million. Income Tax Relief for Dependants As our population ages, care for the elderly will become an area of increasing concern. We believe that the elderly are best cared for by their children in the familial surroundings of their own homes. We therefore encourage children to live with their aged parents and to provide them the necessary care and support. Currently, there is already a tax relief of $3,500 for the maintenance of each aged parent. As a recognition to those who live with their elderly parents, I have decided to introduce a two-tiered relief for aged parents. The relief for those who live with the aged parents in the same household will be raised from $3,500 to $4,500. For those who maintain their aged parents but do not stay with them, the relief will remain at $3,500. I am also proposing the following changes: increase the allowable wife relief from $1,500 to $2,000; increase the allowable normal child relief from $1,500 to $2,000 each; and relax the income ceiling condition for eligibility of parent relief, wife relief, handicapped siblings relief and child relief. The respective reliefs will be allowed so long as the dependant has income of not more than $2,000 in the year, instead of the current level of $1,500. The above changes will take effect from the Year of Assessment 1998. The revenue loss to Government is estimated to be $40 million a year. Rebates on HDB Service and Conservancy and Rental Charges Following the GST-related changes made to personal income tax, currently some 70% of individuals no longer pay income tax. To ensure that their contributions to the economy are also recognised, the Government will grant rebates on HDB Service and Conservancy (S&C) charges and rentals to citizens staying in rented and owner-occupied HDB flats. The rebates will be as follows: 1-Room Flats Two months' net rent and three months' net S&C charges, after deduction of the GST offset rebates and the S&C grant which I will elaborate later. The rental rebates will be made on 1st October and 1st December, and the S&C rebates on 1st October, 1st November and 1st December this year. 2-Room Flats One month's net rent and three months' net S&C charges, after deduction of the GST offset rebates and S&C grant to be given. The rental rebates will be made on 1st October, and the S&C rebates on 1st October, 1st November and 1st December this year. 3-Room Flats Three months' net S&C charges, after deduction of the GST offset rebates and S&C grant to be given. The S&C rebates will be made on 1st October, 1st November and 1st December this year. 4-Room Flats One month's net S&C charges, after deduction of the S&C grant to be given. The S&C rebate will be made on October this year. 5-Room Flats One month's net S&C charges, to be made on 1st October this year. The estimated cost of these rental and S&C rebates is $36 million. Rebates for Revisions in Utilities Rates The Government had earlier announced that water tariffs and the water conservation tax would be raised and restructured over three years to get Singaporeans to treat water as a precious and strategic resource. It was also announced that the Government would offset the water rate increases for the lower income households so that while they would have to pay more for water like everyone else, overall they would not be worse off. This would be done partly through providing rebates on utilities bills and partly through giving service and conservancy (S&C) grants to the smaller HDB flats. Last year, I also announced that, subject to the state of the economy, the Government would continue to grant utilities rebates to offset the increase in electricity tariffs for the lower income households in 1997 and 1998. The Government has decided to give a rebate on the public utilities bills for Singaporeans living in 1-, 2-, 3- and 4-room HDB flats. The amount will be $100 for 1-, 2-, and 3-room HDB flats, and $50 for 4-room HDB flats. The utilities rebates will be credited against the utilities bills of eligible households for the month of September which are payable in October. Households with smaller bills which are unable to use up the rebate within the month can carry over the balance of the rebate until it is fully used up. The Government has also decided to grant the same utilities rebate of $100 for 1-3 room HDB flats and $50 for 4-room HDB flats in 1998. In addition, the Government will provide additional grants to help defray the S&C charges for Singapore citizens staying in 1-, 2-, 3- and 4-room HDB flats. The S&C grant will be $3 per month for 1-room flats, $4 per month for 2-room flats, $5.50 per month for 3-room flats, and $4 per month for 4-room flats. The grant will be given monthly for a two year period from July 1997 to June 1999. The utilities rebate, together with the S&C grant, will more than offset the increase in water and electricity rates for the 1 to 3-room HDB flats. For the 4-room HDB flats, the package of utilities rebate and S&C grant will cover at least half of the increase in utilities rates. The utilities rebate and additional S&C grant will cost the Government about $72 million a year. Subject to good economic performance, the Government plans to continue to grant utilities and S&C rebates to the lower income households in the next few years to help them defray the increase in their utilities bills. Those lower income households who do not live in HDB flats and hence are unable to benefit from the utilities rebate and S&C grant can obtain help from the Citizens Consultative Committees (CCCs) assistance scheme. The scheme was created in 1994, when GST was introduced, to help lower income households who for whatever reason are unable to benefit from the package of offsets for GST. This CCC assistance scheme will be extended to lower income households affected by the increase in utilities rate but who are unable to benefit from the utilities rebate and S&C grant. CPF Medisave Top-Up Scheme Last year, we topped up the Medisave account of Singaporeans to emphasize the key role of Medisave in providing for the medical needs of citizens. To further assist Singaporeans to build up their Medisave, the Government will pay $100 into the account of every Singapore citizen between 21 and 59 years of age, and $200 into the account of every citizen aged 60 and above. The larger quantum for the senior citizens is in recognition of their contributions towards nation building, their lower accumulation of Medisave during their working years, and also their greater medical needs. The payment will be made on 1st October 1997. This is expected to cost the Government $227 million. Pre-Medisave Top-Up Scheme The Pre-Medisave Top-Up Scheme is to help older Singaporeans who retired before or soon after the introduction of Medisave to build up their Medisave accounts. The first two instalments under the Scheme had been paid in January 1996 and January 1997. The third and last instalments are to be paid in January 1998 and January 1999, subject to the state of the economy. As the economy has done reasonably well, I am happy to confirm that the Government will pay the third instalment of the Pre-Medisave Top-Up Scheme in January 1998 as scheduled. The top-up grant will be paid into the CPF Medisave accounts of eligible Singaporeans who are 63 years or older on 1st April 1997. For this third instalment, the co-payment required will be $20. In the first two instalments, not all eligible persons participated in the scheme as some might have had difficulties making the $50 co-payment. Lowering the co-payment to a token $20 is a special gesture to enable as many elderly Singaporeans as possible to benefit from the scheme whilst maintaining the principle that health care should be a joint responsibility between the individuals, their families and the Government. Eligible recipients will have to make the co-payment of $20 between now and 31st December 1997 into their CPF Medisave Account. The Government will match this $20 with a contribution of $100 to $350 depending on the age group. 300,000 senior citizens qualify for this scheme and the total cost of this, if fully taken up, is $85 million. Voluntary Contributions to CPF In 1995, the Ministry of Labour announced that mandatory CPF contributions by employers will no longer be required for foreigners who are issued with an Employment Pass, Professional Visit Pass or Work Permit on or after 1st August 1995. A grace period up to 31st December 1998 was given if foreign workers jointly apply with their employers to the CPF Board to continue with the mandatory CPF contributions provided the employee remains with the same employer. Under current tax laws, where the employer and employee agree in the contract of employment to contribute to CPF, the employee's contributions continue to be tax-deductible even though it is no longer required under the CPF Act. The employer's contributions are also deductible for the employer but is considered as income and subject to tax in the hands of the employee. This tax treatment allows employers to tax-plan and enjoy the tax deduction merely by including the requirement for CPF contributions within the contract of employment, even though it is no longer required under the CPF Act. In line with our policy of allowing preferential tax treatment only for compulsory CPF contributions, I have decided to rationalise the tax treatment such that all CPF contributions made voluntarily or obligatory under contracts of employment will no longer be tax deductible for both the employer and the employee. Further, the employers' contributions will be taxable as income in the hands of the employee. As a concession, the new tax treatment will take effect from 1st January 1999. However, exception will be made for Singaporeans posted overseas. In support of the regionalisation programme, we will continue with the current tax exemption for Singaporeans posted overseas who make voluntary CPF contributions.

Concessionary Tax Rate for Residential Properties Undergoing Construction Currently, home owners who demolish their properties for reconstruction will have to pay property tax at the rate of 12% on the annual value of the vacant land. This is generally very much higher than the annual value of the residential house. As a concession, I have decided to allow home owners who rebuild their houses for their own subsequent occupation a concession during the period when their houses are undergoing reconstruction. These home owners will be eligible for the owner-occupier's rate of 4% on the annual value of the residential house. This concession will take effect immediately. All home owners who are presently rebuilding their homes will also be eligible for the concession.

Mr Speaker, Sir, globalisation has brought with it new challenges. Today, the world economy is much more open. Investments and labour flow freely across borders. Many more opportunities abound. But competition in this new global environment is also keener, and much more intense. Singapore's continued success will depend critically on our ability to adapt and adjust to this new world economic order. Singapore's economic fundamentals are sound. We have invested in the education of our work force, built up an excellent infrastructure, and fostered an environment which is conducive to business and economic growth. If we continue to adopt far-sighted policies, remain alert to new opportunities and challenges, and stay nimble and fleet-footed, I am confident that we will be able to succeed in the new global economy, and continue to do well in the years ahead. Mr Speaker, Sir, I beg to move. [Applause].

The Question is, "That Parliament approves the financial policy of the Government for the financial year 1st April, 1997 to 31st March, 1998." In accordance with paragraph (1) of Standing Order No. 86, the debate now stands adjourned. Debate to be resumed on what day, Dr Hu?

Monday, 21st July, 1997, Sir.

So be it.

Resolved, That at its rising today Parliament do stand adjourned to Monday, 21st July, 1997." - [Mr Wong Kan Seng].

Mr Speaker, Sir, I beg to move, That Parliament do now adjourn. Question proposed.

Mr Speaker, Sir, the House has listened to the Minister for Finance outlining his Government's plans for continued economic growth of the country. I now crave leave of this House to listen to what some may think a mundane matter, but albeit a matter which concerns the human dignity, the human rights of one of our citizens.

5.47 pm Mr Deputy Speaker, Sir, one of the things that a civilised society with a conscience has to do is to redress any wrong done to a member of the society if the society is not satisfied of the wrongdoing of the person concerned. This is the least that a civilised society can do. Sir, I asked to speak on the adjournment on the conditions imposed on persons released after serving terms of years under detention, under the Internal Security Act. But I did say in my notice that I would confine or concentrate on the conditions that still hover around a man who was detained for 23 years and although physically free, not kept within the confines of a cell, is still subjected to constraints which other members of the society are not. And this, as I said, has gone on for 31 years. Is it not time that we asked ourselves, in all honesty and in all conscience, whether this state of affairs should continue in this society? Mr Chia Thye Poh was detained in 1966 under the catch-all phrase that he was a threat to the stability of the country. No precise allegations, as I understand it, were levelled at him. But under this, he was detained. In 1985, speaking in this House sometime in May, I asked the Minister for Home Affairs about the persons detained under the Internal Security Act. The Minister replying said and I quote: `. only one person was detained ... He is Chia Thye Poh, a member of the illegal Communist Party of Malaya (CPM). Chia was specifically instructed by the CPM to penetrate the Barisan Sosialis and engage in Communist united front agitation to destabilize the Government. This he did by mounting a series of illegal demonstrations and industrial strikes. Chia was therefore placed under preventive detention in November 1966. He will be released as soon as he is prepared to give a public undertaking disowning the CPM's use of force and terror to overthrow the Government.' Be it noted, Sir, that it took 19 years for the Minister for Home Affairs to come up with this allegation for the first time that Mr Chia Thye Poh was a member of the Communist Party of Malaya and was engaging in Communist united front agitation to destabilize the Government. At no time, I understand, was this allegation made and yet the man had been detained for 19 years. Mr Chia asked, not only once but several times, that he be tried on these allegations, but he was never given this opportunity, an opportunity which any society which observes Rule of Law and believes in natural justice would have granted. But we quoting, as it were, a supposed threat to our society have not granted him this opportunity. Is it not time that we now put this right - this man whose crime, as it were, was to voice his opinions on what he thought then was wrong about our society and to detain him for that? Is it not time that we put this right and give him an opportunity to answer these allegations? I think any person with a sense of justice would say we should. But even if we do not do that, is it really necessary that we continue to constrain him with these conditions? The last order that was made against him on 28th November 1996 requires that he does not issue public statements, address public meetings or hold office in, or take part, or in any way assist in the activities of or act as adviser to, or be a member of any organisation or association, or take part in any political activity without the prior written approval of the Director, Internal Security Department. And, secondly, that he shall not knowingly associate with anyone who has been detained. Sir, these are civic rights which should be accorded to every citizen of Singapore. Why is Mr Chia Thye Poh still deprived of these rights, may I ask? How is he a threat to Singapore at this moment? Mr Chia Thye Poh has been accused of advocating violence. Sir, I have known him now for many, many years and I think it is very difficult to find a more peace loving man than Mr Chia Thye Poh, with his gentle manner and mode of speaking. So, I would, in all conscience, appeal now to the Government and to this House that it is time we tried to set the record right for Mr Chia Thye Poh. Was he really a member of the Communist Party of Malaya? Did he really advocate violence? Was he all these wicked things that we say he was? I would ask the Government to consider seriously the setting up of a tribunal to consider these allegations against him and give him the opportunity that he has been clamouring all these years to answer. Communism is no longer a threat in this country. It was a threat perhaps many years ago, but it has now receded in most countries. Why do we still hang on to this bogey of Communism and threat to our society? If it is not possible that he be given an opportunity now to answer these allegations and to confront whatever evidence that the Government can produce against him, he should at least be now spared the humiliation of having to live as an outcast in our own society. As I say, what is his crime? His crime is that he was trying to further the interest and the welfare of his fellow beings as he thought right. Is it right that we should go on punishing him? How long are we to go on punishing him? I ask the Government to consider seriously, first of all, whether it is not time now to give Mr Chia Thye Poh an opportunity to answer these allegations, and if that is not possible, to immediately release him from these conditions that still fetter him.

Mr Deputy Speaker, Sir, this is not the first time that Mr Jeyaretnam has raised this question. It is as if on cue that at every Parliamentary sitting, whenever there is an occasion, like the bell rings, he will raise this question again. He painted Mr Chia Thye Poh as if he were such an angel, a gentleman, a peace loving person. For the benefit of those Members who were not here in 1985, when my colleague answered this question, I would just like to recount a bit of the background. Chia Thye Poh was arrested and detained in October 1966 for his involvement in the Communist Party of Malaya (CPM) and the communist united front activities. There is no question that Chia Thye Poh was a member of the CPM. We have disclosures of his CPM membership from his superiors in 1968 and had confronted him with these evidence. He was specifically instructed by the CPM to penetrate the Barisan Sosialis and engage in communist united front agitation to destabilise the Government. There is no question that he had advocated the use of violence and the use of force in his speeches and statements, and the Government has cited specific instances of these speeches and statements. Let me just quote two examples. At the 8th Annual Conference of the pro-communist Labour Party of Malaya, Perak Division, on 24th April 1966, Chia Thye Poh called for the revival of armed struggle in Singapore and Malaysia and asked the audience to emulate the Vietnamese who had resorted to armed struggle against the United States. As a result of this speech, Chia Thye Poh was prohibited from entering Malaysia permanently by the Malaysian Government in 1966. He is still banned from entering Malaysia. He again advocated militancy when speaking at the pro-communist Singapore Commercial Houses and Factory Employees' Union meeting on 26th July 1966. He called for the formation of a "worker-peasant" alliance and the launching of a struggle to topple the "reactionary regimes" and he also called that the "Tunku-Lee Kuan Yew blocs". He also urged the audience to emulate the struggle of the Vietnamese people against the Americans in Vietnam. In October 1966, shortly before he was arrested, he and other Barisan Sosialis MPs resigned en mass from Parliament to take the struggle to the streets. He said, "We are going to strengthen our extra-Parliamentary struggle. It takes various forms, street demonstrations, protest meetings, strikes." From 1974 to 1979, while he was still under detention, he carried out his pro-communist activities by subverting some of the prison warders and getting them to distribute to other detainees folded slips containing transcripts of radio broadcasts of the Communist Party of Malaya. Surely, he is not just a friend of the Voice of the Malayan Revolution, the radio station of the CPM? On 31st August 1985, when Mr Jeyaretnam moved the motion of adjournment on Chia Thye Poh, Prof. Jayakumar, as Home Affairs Minister, distributed to Members a list of the communist united front activities in which Chia Thye Poh participated in and a list of speeches and statements made by him which advocated armed struggle. I think Members can look up the Hansard [Vol. 46, Cols. 466 - 486] and the record is there. Chia Thye Poh has never disputed the specific statements attributed to him, even though the Government had repeatedly publicised it. Now he claims that he is innocent and we have Mr Jeyaretnam protesting his innocence. Is he really a prisoner of conscience, as claimed and adopted by the Amnesty International, and as such a gentle, peace loving person who was detained for his peaceful beliefs, as he and his supporters would have us believe? Mr Jeyaretnam asks why did we not send him to court and try him? I think the answer is quite obvious. The Internal Security Act provides for preventive detention. If he is that innocent, as he claimed, then why did he not appeal to or appear before the Advisory Board that is set up under the ISA? He has not challenged any of the grounds of allegations of his detention before the Advisory Board since his detention in November 1966. He is legally entitled to do so. He can represent himself. He can engage a lawyer, or counsel, to represent him. Why did he not do if he is innocent? Now Mr Jeyaretnam would have us believe that we should convene a tribunal just to hear him. He has all these years to do so and yet he failed to do so. He did not want to do so. The Advisory Board is constituted by no less a person than a High Court Judge, and two prominent citizens. They are independent. They are not employees of the Government. As I said, the ISA provides for preventive detention and we all know that there are security cases where it is not possible to secure witnesses to give evidence in court, because we know the CPM is utterly ruthless. They would intimidate and liquidate their potential witnesses. An open trial of a communist would not be possible because police officers would have to disclose the names of the witnesses and their lives would be in jeopardy. The CPM and their satellite organisations have standing instructions and directives to punish with death those who betrayed the CPM revolution. These had been carried out in Peninsular Malaya. For example, in just 12 years, between 1973 and 1985, more than 40 people were assassinated. They were police officers, Government officials and civilians. They were assassinated by the CPM. Now Mr Jeyaretnam would want us to relax or remove the conditions. The Government has said that if Chia renounced communism or disavowed the use of force, then the Restriction Order (RO) can be lifted. But the RO is still necessary to prevent him from re-involving himself in activities prejudicial to the security of Singapore. But over the years the Government has taken a more relaxed approach. The Government decided first to release Chia Thye Poh on a suspension direction in May 1989, and subsequently put him on a Restriction Order subject to various conditions because, unlike other cases, Chia Thye Poh has not disavowed the use of force or renounced the CPM. The Government took the step of releasing Chia Thye Poh in May 1989 to Sentosa because at that time the CPM's strength had been weakened and we knew that they were engaged in peace talks. However, we continue to be very cautious about this. Of course, the peace agreements between the CPM and the Malaysian and Thai authorities have been signed but we must bear in mind that the CPM organisation is still there. Although it is disarmed, it is still intact. So its ability to conduct subversive underground activities and united front activities of the type that Chia Thye Poh was involved in is still a potential problem. Nevertheless, as I said, we have relaxed the conditions and now there are only two conditions imposed on him. He is free to seek employment and he is free to travel abroad. As you have read in the newspapers, he has got his passport and he is going overseas. The only thing he cannot do are the two conditions which are aimed at preventing him from re-involving himself in activities that would be detrimental to our interest. These two conditions will still be necessary because it will enable the ISD to ensure that Chia Thye Poh does not work with individuals or any organisations which may have the propensity to be involved in or be made use of for subversive activities. The Government would rely on the advice of the professionals' assessment, ie, the ISD officers, on whether or not he continues to pose a security threat to Singapore if these restrictions are lifted. But, Sir, ultimately, the lifting of these restrictions would depend on Chia Thye Poh himself. If he renounces communism and disavows the use of force and behaves himself, it is likely that the ISD will favourably consider recommending the lifting of restrictions. Not because he is a political threat to the Government. Chia Thye Poh seems to say that these restrictions were enforced because he is a threat to the Government. He is a political risk. No, not at all. Even the opposition has said that he is politically irrelevant. So as far as politics is concerned, he is irrelevant and he is not a threat. But the Restriction Orders are necessary to prevent him from reverting to his former subversive activities.

Mr Deputy Speaker, Sir, may I just respond very briefly to this?

You have no right to reply. But if you want to clarify the point which the Minister has made, I would allow it.

Thank you. Mr Deputy Speaker, Sir, the Minister says that Mr Chia Thye Poh has not availed himself of the opportunity given to him to appear before the Advisory Board. Is the Minister aware that in proceedings before the Board, he is not allowed to see any statements or question anyone who has made any allegation against him, or produced any evidence against him? That is the only reason why he has not sought to appear before the Advisory Board.

That appears to me to be a reply. I would not allow that.

Question put, and agreed to. Resolved, That Parliament do now adjourn. Adjourned accordingly at Thirteen Minutes past Six o'clock pm to Monday, 21st July, 1997.

asked the Minister for National Development whether the Housing and Development Board will consider waiving the forfeiture of the $5,000 deposit of a first-time HDB applicant who opts to purchase a resale flat instead of a new flat while queuing for a new flat.

In view of the increasing number of cancellations under the Fianc,/Fianc,e Scheme, the registration deposit has been imposed to deter frivolous applications. Applicants who cancel their applications will have their registration deposit forfeited. The CPF Housing Grant is provided by the Government for first-time HDB applicants who decide to buy a resale flat or an Executive Condominium instead of a new HDB flat. It offers an alternative for young couples who are in need of a home to set up their families. When these applicants opt to use the CPF Housing Grant, their application to purchase a new flat will be cancelled. This will benefit other applicants on the queue as their waiting time for a new flat will be shortened. Therefore, for first-time HDB applicants under the Fianc,/Fianc,e Scheme, HDB will not forfeit their registration deposit if they subsequently cancel their application to buy a new HDB flat and opt to take up the CPF Housing Grant.

asked the Minister for Finance how much was expended for Ministerial travels (Cabinet Ministers and Ministers of State) for the whole of 1996 with a breakdown Minister by Minister.

The total sum expended on Ministerial travels for the whole of 1996 amounted to $519,427.

33. Details of the amount incurred by each Minister and Minister of State are given in Annex A (Cols. 521 - 522). Annex A (Cols. 521 - 522) This amount constituted 5.9% of that spent by Government on all travel and travel-related expenditure in 1996. In terms of the total running costs of Government, it came to 0.005%. It is expected to go up in future years, in line with Singapore's increasing international profile and its regionalisation drive. Annex A (Cols. 521 - 522)