Hansard, 1998-02-27

Under the provisions of clause 2(d) of Article 46 of the Constitution of the Republic of Singapore, the following Members have been granted permission to be or to remain absent from sittings of Parliament (or any Committee of Parliament to which they have been appointed) for the periods stated: NameFromTo 19981998 Mr R Sinnakaruppan 26 Feb26 Feb Mr Davinder Singh 27 Feb27 Feb Mr K Shanmugam 27 Feb27 Feb Mr Tan Soo Khoon2 Mar5 Mar Mr Inderjit Singh17 Mar24 Mar Encik Othman Bin Haron Eusofe6 Mar8 Mar TAN SOO KHOON Speaker Parliament of Singapore

The following Bills were assented to by the President of the Republic of Singapore on the dates stated: 23 February 1998 Economic Expansion Incentives (Relief From Income Tax) (Amendment) Bill 1998. 24 February 1998 (i) Road Traffic (Amendment) Bill 1998; (ii) Copyright (Amendment) Bill 1998; (iii) Medicines (Amendment) Bill 1998; (iv) Undesirable Publications (Amendment) Bill 1998; and (v) Holidays Bill 1998. TAN SOO KHOON Speaker Parliament of Singapore

asked the Prime Minister, in the light of the Indonesian Government's decision to go ahead with the currency board, what steps would the Singapore Government take to see that the Singapore dollar does not suffer as a result of the fall in the Indonesian rupiah.

asked the Deputy Prime Minister how the relative depreciation of the currencies of Singapore's neighbouring countries will affect our competitiveness.

Prime Minister): Mr Speaker, Sir, with your permission, I will answer Question Nos. 1 and 2 together.

Yes.

The depreciation of the regional currencies relative to the Singapore dollar will have some impact on our export competitiveness. But we should take a broader perspective. First, the Singapore dollar has depreciated against the US dollar and most European currencies since July last year. On an overall trade-weighted basis, the Singapore dollar has been stable. Second, we are not direct competitors with the ASEAN economies in most product categories. An internal MAS study shows that, for both goods and services, our major competitors in the region are the NIEs, and within ASEAN, Malaysia. The Singapore dollar has not appreciated against the Hong Kong or Taiwanese currencies. Third, what matters to our export competitiveness is the real exchange rate, namely, the nominal rate, which is then adjusted for cost or inflation differentials between us and our trading partners. The sharp depreciation of the regional currencies will eventually raise domestic prices in these economies and erode the initial gains in competitiveness. Fears that a fall in the Indonesian rupiah will drag the Singapore dollar down are at this stage hypothetical. The Indonesian government has not yet decided to set up a currency board system. The Singapore dollar should not be unduly affected by movements in the Indonesian rupiah. Indonesia's exports do not compete with Singapore's exports. The weight of the rupiah in our basket is small. Furthermore, our exchange rate policy is not mechanically driven by the trade weights. MAS exercises judgment in managing the exchange rate, and takes into account exceptional market factors. MAS will maintain confidence in the Singapore dollar, by intervening in the foreign exchange market where necessary.

Sir, may I ask the Deputy Prime Minister, with the lowering of the currency rates in our neighbouring countries, like in Indonesia and Malaysia, and therefore they have become more competitive and enjoy low manufacturing cost, would the promotion of the Growth Triangle concept be more useful?

Mr Speaker, Sir, yes, indeed, the Growth Triangle concept is useful and the lower cost in the neighbouring provinces of Malaysia, Indonesia, Johor and Riau, should enable our businesses and companies which have operations there also to benefit from this lower cost. But, as I explained earlier, it is the real exchange rate which determines our competitiveness, not the nominal one. Let me explain the difference. If we trade with Indonesia and the rupiah goes down from 2,500 rupiah to 10,000 rupiah, other things being equal, Indonesian costs have gone down four times and therefore they are four times more competitive than us. But other things do not remain equal. When the rupiah goes down, imports cost more, people are unable to pay, they agitate for higher wages, and wages go up, inflation goes up. And if, for the sake of argument, the rupiah has gone down four times but prices have gone up four times in Indonesia, then although there has been a nominal depreciation of their currency, there is no real effect on our competitiveness or their competitiveness. It will not completely work out like that. It takes some time, and at the end of it, I think our neighbouring countries will end up somewhat more competitive than we are, but not to the extent as shown just by looking at the exchange rates now.

Sir, does the Deputy Prime Minister think that, in light of the fact that probably there will be a real exchange rate devaluation among the regional countries, actually competitiveness will be a bigger issue for us now and particularly in the medium term after these Asian economies recover than before, let us say, July of last year?

I think it will vary from industry to industry. Overall, yes, it will be offset somewhat because we have become more competitive compared to, say, developed countries, and the developed countries were, to some extent, competing against us for investments and exports. But against the neighbouring countries, they will end up somewhat more competitive than us, particularly our more labour-intensive industries. The older plants which have been here for some time - mass production, very low margins - will be under pressure and adjustments will have to be made. At the upper end, the effect on us is not so much on the cost as on the state of the markets, and some of those have been affected too, particularly where they export to the region or where the region has a big influence on world prices. For example, with petrochemicals, when the region boomed it was a big consumer and now that the region is down, prices are down. Some of our projects are going to see investors reconsidering them, and maybe deferring them for some time. But it is part of being in an economic slowdown.

asked the Minister for Labour (a) how many workers were retrenched in 1997; (b) on average, how long these retrenched workers took to find new employment; (c) whether older workers take a longer time than younger workers in securing new employment; and (d) how his Ministry will help retrenched workers, especially those who are unskilled and not-so-young, to find employment.

asked the Minister for Labour what is the current rate of unemployment and whether this rate is rising rapidly and, if so, how the Government plans to address this problem.

Mr Speaker, with your permission, may I take both Question Nos. 3 and 4 together?

Yes.

Sir, in 1997, 9,784 workers were retrenched. This was 11% lower than the 10,956 laid off in 1996. However, the number of workers retrenched has increased since the onset of the regional economic crisis. In the fourth quarter of 1997, 4,278 workers were retrenched, compared to 5,506 during the first three quarters of the year. Total employment in Singapore increased by 122,800 in 1997 compared with 102,600 in 1996. The economy continued to enjoy full employment as reflected in the low unemployment rate of 1.8% for the whole of 1997. However, the last quarter of 1997 saw higher unemployment rate of 2% reflecting the increased retrenchments during that quarter. Fortunately, for most of 1997, we experienced strong employment growth and a tight labour market. Many retrenched workers found alternative employment quickly. Based on CPF's records, 79% of the local workers retrenched during the first three quarters of 1997 were re-employed by December 1997. The re-employment rate for older workers aged 50 and above was lower at 66%. Among the workers who were re-employed, the average time taken to secure new jobs was 1.8 months after being retrenched. There was no significant difference in the average time for workers in the various age groups. As a result of the on-going regional economic crisis and a less than vigorous rebound in certain sectors of the electronics industry, we saw more retrenchments since the beginning of this year. As the economy is likely to grow at a slower pace this year, we are also expecting more retrenchments for the rest of the year. My Ministry has therefore decided to set up a Tripartite Panel comprising representatives from EDB, NTUC, SNEF, PSB and the Ministry itself to assist retrenched workers seeking re-employment. Retrenched workers who are older or lacking in skills will have to make special efforts to acquire useful skills or upgrade their skills to improve their employability. The Tripartite Panel will also look into ways of assisting such workers.

asked the Minister for Labour whether the Government will consider amending the Employment Act to require employers to pay compensation to employees who are terminated by the companies that they had served for ten years or more.

Eusofe) (for the Minister for Labour): Sir, an employee's service may be terminated for a variety of reasons such as poor work performance, ill health or redundancy. Under any of these circumstances, the employer is required to give notice of termination or salary in lieu of notice. Notice of termination is usually provided in the employment contract. In the absence of such a provision, the period of notice will be in accordance with the Employment Act. Where an employee's service is terminated on ground of poor work performance, he will not be given compensation. In the case of an employee whose service is terminated on ground of ill health, his employer would usually grant an ex-gratia payment to assist him financially. For termination on ground of redundancy, an employee who is covered by the Employment Act is eligible to claim for retrenchment benefit if he has a minimum of 3 years' service. The Employment Act does not stipulate the quantum of retrenchment benefits payable. We have taken this approach to enable companies and the affected employees to have greater flexibility in determining the appropriate amount, taking into account the financial position of the company. Thus, the quantum of retrenchment benefit payable for a non-unionised employee is subject to negotiation with his employer. Where a non-unionised employee is dissatisfied with his compensation, he can always appeal to my Ministry for assistance. My Ministry's Labour Relations Department will, through conciliation, help the employee to pursue claim for retrenchment payment. In the case of a unionised employee, the amount of retrenchment benefit is determined through collective bargaining between the union and the company. The prevailing retrenchment benefit payable to affected workers in the non-unionised sector varies from a few days' salary for each year of service to one month's salary for each year of service. In the case of the unionised sector, the norm of retrenchment benefit payable is two weeks to one month's salary for each year of service, unless the financial position of the company warrants a lower quantum. In practice, the quantum of retrenchment benefit stipulated in collective agreements is higher compared to the quantum paid to those who are not unionised. This in itself is an incentive for workers to join trade unions. It should also be pointed out that employees with less than 3 years' service, while not eligible to claim for retrenchment benefit, are in practice also paid some form of ex-gratia payment. As the law already enables a retrenched employee with 3 years' service to claim retrenchment benefit and affected workers are paid such benefit based on the financial position of the company or in accordance with the collective agreements, the suggestion by the Member for Hougang that employers pay retrenchment benefit to employees with at least 10 years' service, is not in the interest of workers.

Sir, is the Minister of State aware that there are employees whose services are terminated by the employer giving just one month's notice or in lieu of notice, paying one month's salary without any further compensation? I think such cases have been referred to the Ministry before.

Sir, as I have stated, if he is a non-unionised employee and he is not satisfied with the retrenchment payment, he can appeal and seek assistance from the Labour Relations Department of my Ministry. In the case of unionised employees, it is based on the negotiations between the union and the company. As I have mentioned earlier, in most cases, the practice for unionised employees is that they can at least have two weeks to one month's salary for each year of service as compensation. But this depends on the financial position of the company. I am not sure which particular case the Member is referring to. In the case where a company has no money, there cannot be any retrenchment payment. So it depends on the financial position of the company and the circumstances of the retrenchment exercise.

Generally, do employers need to specify the reason for termination in their letter of termination or they just say, "Under the contract, I terminate your employment."?

Sir, in the case of retrenchment, the employer will mention to his employee that because of very poor business conditions or some other reasons there has to be a retrenchment. In the case of a unionised company, the union will be informed of any retrenchment that is necessary because of these reasons.

A clarification, Sir. I am referring to termination, not necessarily retrenchment. The employer may just terminate an employee's services by giving him one month's notice, or in lieu of notice, paying one month's salary without specifying any reason. Is there anything under the Employment Act which could compel an employer to specify the reasons for termination?

Under the law, the employer has to give a notice of termination. But whether or not he gives the reasons for termination depends on the circumstances of the case. If it is poor conduct or poor performance, then the employer may want to give that reason. But it depends on the circumstances of the case.

In the case of an employer not stating any reason at all, would the employee concerned be able to claim any compensation?

Sir, there is a termination clause. The employee can also terminate his services and he does not need to give a reason. If he finds another job, he just says, "Okay, I want to leave the company." Since there is a termination clause and the employer wants to terminate the services of his employee, he can also exercise it on the same basis. So it is not necessary for him to give a reason if he does not want to, because it is on a reciprocal basis. The employee can also give notice of termination. If he finds a better job, he does not need to give a reason to the employer. Likewise, it is up to the employer. In the case of retrenchment, and that was the Question filed, obviously in the case of a unionised company, the union would be informed and it will then negotiate on the type of retrenchment benefit or payment that should be paid, and this is based on the financial position of the company.

Does the Minister of State appreciate that the present laws in Singapore and the practices followed by his Ministry leave the worker entirely on the charity of the employer as to how much compensation he is to be paid? The Minister of State says that it will not protect the workers to legislate for payment of compensation for workers who have been employed for 10 years or more. Why will it not? May I ask the Minister of State when will this Government bring in an Unfair Termination Act so that an employee who feels that his services have been terminated unfairly may have it referred and reviewed by a board, quite outside the Ministry, who will then decide what compensation is to be paid to the employee?

Sir, I have already explained that under the current law there is adequate protection for all employees, and if an employee needs any help he can come to the Ministry. Under the law, if a worker has worked for more than three years, he can claim for retrenchment benefit. He does not have to work for 10 years. That was made very clear. If there is any problem relating to the amount of compensation paid, he can appeal to the Ministry of Labour, but the amount of compensation payable is dependent on the financial position of the company. If the company is doing well and retrenches its workers for reasons other than being insolvent, then the Ministry will have to look at the amount of compensation that should be paid. The norm is from two weeks to one month's salary for each year of service for companies which are able to pay. So there is adequate protection under the law and I do not think we need to make any changes at this stage.

May I say to the Minister of State that I was not asking about retrenchment, but about workers whose services are terminated and the law, as I know it, does not require the employer to give any reasons. If he does not like the man's face, he can terminate his services by giving him a month's notice. So what is the protection? Why do we not have an Unfair Termination Board?

Sir, first, I have mentioned earlier that it applies to both employer and employee. The employee can also send in his letter of termination and he need not give any reasons.

That is not an answer.

Second, if the employee feels that his services have been unfairly terminated, he can appeal to the Ministry which will look into the reasons for termination. He can appeal to the Minister who will ask for an inquiry to be conducted. Both parties will be invited to the Ministry. The Ministry will study the reasons. If it is unfair, the Ministry will ask the employer to take whatever action that is needed. The law provides for this and I do not see why the Member is raising this matter.

asked the Minister for Communications what is the status of investigation on the crash of SilkAir MI185; whether there is any evidence or suspicion of foul play; and whether families of the victims are fairly compensated.

Sir, investigations on the crash by a team of Indonesian, Singaporean and American experts are in progress, both in the United States and Indonesia. The task is made more difficult by the lack of useful data from the two black boxes, despite extensive efforts by investigators from the United States National Transportation and Safety Bureau (NTSB) and other expert agencies. The investigation team is headed by Indonesia and includes representatives from Singapore, the US and Australia. It will meet in Jakarta soon to review the status of the investigation and to work out a plan for the subsequent investigation task. These tasks include laboratory examination of wreckage pieces, reconstruction of parts of the aircraft, flight simulations using computers of flight simulators, study of the human performance aspects, review of flight and maintenance documents and further analysis of data from the cockpit voice recorder and flight data recorder. We hope that this phase of the investigation will provide us some clues to the cause of this tragic incident. On the question of foul play, so far, the team has not uncovered any evidence and there is no suspicion of foul play. On the matter of compensation, I am informed by SilkAir that their lawyer is currently liaising with the legal next-of-kin of the deceased. Compensation will be paid in accordance with the contract of carriage under international aviation regulations.

Sir, I would like to ask the Minister whether he would consider calling a press conference of the experts who can perhaps brief the public and the press on some of these issues.

Sir, as I said in my reply just now, the experts will be reconvening in Jakarta some time next week. After they have formulated the next phase of their investigation, I will request them to hold a press briefing to explain the status of the investigation so far, from the experts' point of view, and also to brief the public on what it intends to do in the next phase.

asked the Minister for Finance, in light of the fundamental dilemma of public accountability versus entrepreneurial risk-taking which Government-Linked Companies (GLCs) face, as well as the Government's long-term intention of full divestment of those companies with commercial activities, whether the Government will consider accelerating the full divestment of some GLCs or some of the businesses of GLCs by schemes such as Management Buy-Outs.

Sir, in principle, the Government is prepared to divest fully its stakes in the GLCs other than those of strategic interest to our defence or our economy. Other than these strategic investments, the rest can be privatised in due course. However, apart from the obvious considerations of market conditions, the pricing and the capacity of the market to absorb the divestments, there are a number of other considerations in deciding whether we can accelerate the process of divestment. In particular, the Government has put in much effort and resources to develop the GLCs, and we would want to divest them in such a way that the issue of management succession is properly addressed and that there will be either a single shareholder or a group of shareholders with a significant stake to provide management direction and to grow the company. This is important as Government would want the GLC to remain in relatively good hands. Government has also to be fair to the other minority shareholders of the GLC and be mindful that its divestments do not have too adverse an impact on the future of the company. This requirement will, however, slow down the divestment process. Management Buy-Outs (MBOs) are not ruled out as a divestment method for GLCs where the Government has a direct stake. MBO is possible if there is interest as well as a willingness to take the business risk on the part of the companies' management and agreement on reasonable terms of sale. However, the size of the GLCs often makes them beyond the financial resources of managements. Nevertheless, besides MBOs, other approaches of divestment had been, and will be, considered when the terms of sale are reasonable. Government will continue to pursue its privatisation and divestment programme in an orderly manner as and when the opportunity presents itself.

Sir, in terms of the Government divestment programme, does the Government also intend to divest management, and not merely corporatisation? In other words, is it the Government's intention to have a full divestment, including that of management?

I do not quite understand the Member. By divesting management, does she mean that Government has no longer any responsibility? You are talking about the difference between corporatization -

Corporatisation and full divestment in terms of management.

Yes, we have, in most cases, gone the route of full divestment without residual management control. I will give you a few examples of companies which we have fully divested and only retained a minimal control. In the case of Singapore Press Holdings, it has been fully divested, except that Government holds a golden share because it is a sensitive area. National Iron and Steel Mill has been totally divested. It is in the hands of the public and it has its own management. The others are UIC, Phillips Petroleum of Singapore and so forth. So there are many areas where we have totally divested.

Sir, I may be wrong, but it would seem to me that the shares of many of these GLCs belong to holding companies that are in turn actually owned by the Government.

There are some. Can you name some specific companies that you are concerned about?

As far as I know, I think Temasek Holdings actually holds a substantial number of shares in many of the companies that you have mentioned. To that extent, Temasek Holdings actually would have a substantial say in terms of the management direction of the company.

For those where it retains significant shareholdings, yes. But for those in which it does not hold substantial shareholdings, it would not.

The Minister has mentioned that the Government has still got some residual control of SPH. Can I know what sort of control?

No single person or company can hold more than 3% of SPH shares. And Government holds one golden share to ensure that no third party can take over the company because of the sensitivity of its operations. That is all that is controlled. So financially, as far as the commercial operations are concerned, Government has no control over it.

What does the Minister mean by "golden share"?

One nominal share, but that share has overriding powers over the management of the company. In other words, it can determine the Chairman and the Board.

Does it also include the control of editorial policies?

No.

In so far as there are holding companies, which are fully owned by the Government, would also the full divestment policy of the Government also mean the relinquishment of control of some of these holding companies, so that for the GLCs, for which these holding companies have substantial shares, that these become truly private companies where the Government has no say in terms of management and control?

What holding companies is the Member referring to? Temasek is a main holding company. In Temasek's case, it is quite clear. The Government, through Temasek, manages and controls those companies in which it owns substantial shares. What other holding companies is the Member referring to?

This is where I think there is actually not very much knowledge regarding Temasek Holdings and the companies that Temasek Holdings owns. But as far as I know, Temasek Holdings actually does have substantial shares in quite a number of GLCs, the extent of which I really do not know. So because of Temasek Holdings' share, many of these companies actually are seen as Government-linked. I think my question really is: is it possible to cut off the link from the Government so that these companies are no longer Government-linked companies but become truly private companies?

I suppose that will take place if Government shareholdings fall significantly below 10% where it becomes a minority shareholder and therefore should no longer have any direct say on its management. So that would be a general criterion that applies not only to Government companies but to companies in general.

In light of public accountability, would the Government make the accounts of the holding companies public and transparent, for example, Temasek Holdings?

Temasek does publish its accounts. But whether you have full access, it is a different matter. I think we will consider if it is necessary. At the moment, we would like to preserve our present arrangements.

Why does the Minister say that we want to preserve the status quo by not divulging more information on Temasek Holdings' shareholding position?

I think the number of companies in which Temasek Holdings has is, in fact, published in a book. There is a published book on Government-owned companies in which all the Government-owned companies and their subsidiaries are published. And each of these companies has its own balance sheet and therefore published. So you can quite easily aggregate the totals. I can make this book available to whichever Member is interested. The published book of Government holding companies, in which all the companies belonging to Temasek Holdings are, in fact, set out, with the Board of Directors, and so forth, and each of these companies in turn, particularly if they are public companies, would have annual reports.

asked the Minister for National Development what is the rationale for allowing developers time extensions to complete the sales and purchases of state land and whether he will provide a detailed list of developers and particulars of sites that were granted such extensions from 1993 up to the current year. The Parliamentary Secretary to the Minister for National Development (Mr Koo Tsai Kee) (for the Minister for National Development): Mr Speaker, Sir, first, I would like to thank the Member for asking this question to allow the Ministry to clarify some points. The successful tenderer of a Government land sale site is required to pay 25% of the land premium within 28 days from the date of award. The balance 75% is to be paid within 90 days from the date of award, or any further period as may be extended by the Government subject to late interest charges. These terms are quite clearly spelt out in the tender conditions. Provisions for time extensions are made in the tender conditions as the successful tenderer may sometimes require a longer time-frame to arrange financing for the full payment of the land premium. Since 1993, a total of 33 cases have been granted extension of time for land premium. The breakdown is as follows: 2 cases in 1993; 3 in 1994 [these were boom times, I remember]; 16 in 1995; 2 in 1996; 2 in 1997 and recently 1998, 8 cases. These eight cases in 1998 were fully reported in the press recently. The tenderers were Centrepoint Properties Private Limited, Orchard Terminal Private Limited, Allgreen Properties Limited and the joint venture between Allgreen Properties Limited and Hoe Seng Company (Private) Limited. These tenderers have already made the initial 25% payment and have requested for an extension to pay the remaining 75%, subject to late interest charges.

asked the Minister for Labour, in view of the fact that workers depend on their Central Provident Fund to service housing loans and build up savings for Medisave and their old age and there is already a flexible wage system, whether he will give an assurance that CPF cuts will be allowed only as the last resort.

Mr Speaker, Sir, the regional economic crisis will affect Singapore's growth this year. Barring further adverse developments, we can expect the economy to grow, at between 2.5% and 4.5%. This is significantly lower than 1997's growth of 7.8%. However, the situation is unlike in 1985 when we experienced negative growth and had to cut back on employers' CPF contribution rate. Arising from the 1985-1986 experience and with tripartite support, we had implemented a flexible wage system. Today, 76% of Singapore companies practise flexible wage system with variable components accounting for 16% of the total annual wage cost. The flexible wage system was put in place in anticipation of a period of slow growth, such as the current situation. This system enables a company to trim its wage cost in difficult times by reducing the variable components. Companies encountering difficulties or poor performance should first adjust the variable components in order to achieve wage reduction. They should also look into other cost cutting measures in their operations. The Government has no plans to adjust the CPF contribution rates. I would like to assure the House that the Government would consider the drastic measure of reducing CPF contribution rates only as a last resort.

asked the Minister for National Development (a) whether, in light of the economic downturn, the CIPC funds will be disbursed to grassroots organisations in the PAP-controlled constituencies at the same level as previous year; (b) how much CIPC funds will be allocated this year; and (c) what is the amount of CIPC funds paid out last year.

Development): Mr Speaker, Sir, CIPC funds are allocated to all the CCCs and not only to grassroots organisations in the PAP-controlled constituencies. It is up to the CCCs to decide which community improvement projects within their constituencies they want to support. Since its inception, the CIPC scheme has benefited all the CCCs, including the hon. Member, Mr Chiam See Tong's area. In view of the economic downturn in FY 98/99, the Government has trimmed its expenditure on some projects. CIPC has also carried out a review of its budgetary requirement for FY 98/99. Under this review, useful projects from the CCCs will still continue to receive CIPC funding. The amount of CIPC funds allocated for this financial year, that is, FY 97/98 is $40 million. My Ministry has asked the Ministry of Finance for a budget of $36 million for the coming financial year. The amount to be allocated for the coming financial year will be tabled for Parliament for debate and approval by the Minister for Finance. The amount of CIPC funds paid out in FY 96/97 was $39.9 million.

Can I ask the Parliamentary Secretary, in regard to Potong Pasir, whether the CCC has any outstanding request for CIPC funds?

Mr Speaker, I did not catch the question clearly. Can he repeat the first part again?

I understand that the CCC has been applying for CIPC funds.

Which CCC?

At Potong Pasir. I am only interested in Potong Pasir. I understand that they have been applying for CIPC funds for two covered linkways. Is it still on?

Mr Speaker, Sir, my Ministry has not received a formal submission from the Potong Pasir CCC. So I have no record of a submission on the walkway. But the Potong Pasir CCC was given CIPC funds in financial year 1995 for five estate landmarks in the signposts in Sennett Estate, which is a non-HDB common area. If the hon. Member for Potong Pasir is asking whether his CCC has applied for a walkway, I have no such record.

I wish to clarify. I have got no CCC at Potong Pasir. I am talking about the only CCC that is existing in Potong Pasir and whether they have put in a request for funds. Because I know they have circulated notices asking whether they will get the support of the residents there. I imagine that they would be putting in their case.

My Ministry has not received any formal submission. It could well be lobbying for support to put in a project.

asked the Minister for Education, with the planned conversion to full-day school of secondary schools, (a) how many more secondary schools will be built by December 2001 and (b) whether there is any plan to build a secondary school in Bukit Gombak constituency in the near future.

Mr Speaker, Sir, the Ministry of Education has plans to build 33 new secondary schools over the next five years, ie, from now up to year 2002. These 33 new secondary schools are to implement the single-session programme for secondary schools as well as to meet additional secondary school places requirement due to projected higher secondary school enrolment. There are no plans to build a secondary school within Bukit Gombak Constituency. This is because a secondary school site is not available within the constituency. However, a new secondary school is being built at Bukit Batok East Avenue 3. This is for the relocation of Yusof Ishak Secondary School, which is at present at Clementi. This new school will be completed by the end of 1998 and is well placed to serve the residents in Bukit Gombak Constituency. The school is less than 400 metres from the housing area at Bukit Batok East Avenue 2 in Bukit Gombak constituency.

asked the Minister for Health by how much have the costs of operating polyclinics gone up in 1997 over 1996.

(for the Minister for Health): Mr Speaker, Sir, the operating cost of the polyclinics is estimated to increase by 9%, from $59.9 million in FY96 to $65.3 million in FY97. This is comparable to the average rate of increase of 8.7% over the previous three years. The increase in operating cost is mainly due to manpower cost increases as well as higher prices paid for drugs and vaccines, x-ray and laboratory tests and maintenance of equipment and polyclinic premises.

May I ask the Minister of State: was it not possible to find savings from the other Ministries to meet this increased cost, rather than pass the increase on to users of these polyclinics?

If it had been possible, we would have done it. But our policy is to implement small but regular revisions in our fees in order to catch up with the rise in cost. Costs have risen across the board. So this is to catch up with the rise in costs as well as to reach closer to our cost recovery targets.

Is the Minister aware that in the Supplementary Estimates that are to be debated this afternoon, the Government was able to find something like $400 million from other Ministries to meet the shortfall in defence?

Within the Ministry, each programme has to be considered for its own funding and for primary health care, we have been giving it the kind of resources that we require.

asked the Minister for National Development when the Housing and Development Board will sell more shops in the Yuhua ward of the Bukit Timah GRC.

Development): Mr Speaker, Sir, the Housing and Development Board has taken note of the keen interest of the shop tenants to buy their shops, and will take this into consideration when selecting shops for future sales.

asked the Minister for Law whether any action will be taken against any of the directors of Keppel Corporation Ltd for the bribe given to Mr Cornelius van der Horst and for which the company was fined and, if not, why not.

(for the Minister for Law): Sir, the Public Prosecutor has the discretion to decide whether he will prosecute in any particular case. The Public Prosecutor decides on these matters based on the law, the facts of the case, the reports of the investigating agency, the available evidence and the public interests involved. In this particular case, the Public Prosecutor decided that the company should be prosecuted, not the employees who gave the bribes. He did so after considering all the facts of the case, including the fact that they did not act for their own personal gain.

The Minister of State can be assured that I know that it is the Public Prosecutor's decision. But may we know why was it not thought necessary to prosecute the Managing Director and at least one other director who would appear to have been actively involved in giving this bribe to Mr Cornelius van der Horst? Is the Minister aware that, under section 6(b) of the Prevention of Corruption Act, it is the person who should be prosecuted? I know the Interpretation Act says "person" includes "companies". But may we know why these directors are being let off?

Like I said in my answer, under the Constitution, the discretion to prosecute lies with the Public Prosecutor. So he has considered all the facts of the case, including, like I said in my answer, the fact that the directors did not act for their own personal gain. Having considered all these factors, he has decided to prosecute only the company.

May I know whether Parliament should not be told what are these facts upon which the Public Prosecutor made this decision? May I also ask whether any attempt will be made to recover the $8.3 million that was lost to the company as a result of the directors giving the monies away in bribes?

Sir, the decision of the Public Prosecutor in individual cases should not be the subject of Parliamentary scrutiny. As I mentioned just now, in every case, depending on the merits of the case, the Public Prosecutor has to decide based on the law, the facts of the case, the reports of the agency, the available evidence and the public interests involved. I think that is the assurance that we have - that the Public Prosecutor would exercise his discretion judiciously, carefully and indeed wisely.

May I know from the Minister of State, in view of his answer, are we to understand that the Government will condone companies giving bribes to foreign companies or organisations to secure contracts and let the directors go scot-free every time this happens?

Sir, the Government's position on corruption is very clear. The Government's stand on corruption is very tough. We have in fact fared very well internationally in terms of this criterion. So there is no question of letting people off if they are corrupt. But, like I said, in any particular case, the Public Prosecutor would have to consider all the factors and decide first whether or not to prosecute and, if so, who to prosecute.

asked the Minister for Finance whether the Singapore Airlines Ltd had offered any inducement or gratification to any official of the Middle East Airlines for the leasing of SIA planes to the airlines.

Mr Speaker, Sir, I am not aware that SIA has offered any inducement or gratification to any official of the Middle East Airlines (MEA) for leasing SIA planes to the airline. If Mr Jeyaretnam has any information that SIA has done anything wrong, he should report the matter to the police or the CPIB so that the complaint can be properly investigated.

Is the Minister not aware that there is a judicial investigation in Lebanon over this whole contract between the Middle East Airlines and Singapore Airlines and there is the possibility that officers there may be charged with corruption? Secondly, would the Minister explain how is it that the original contract was revised so substantially to bring down the prices and charges made by Singapore Airlines in the original contract? Was Singapore Airlines overpricing itself in the first contract?

I may or may not know anything about what happens in Lebanon. But as far as I know, no charges have been levied against SIA, and that is the important issue. Nor am I privy to SIA's pricing practices.

May I ask whether the Minister is really not aware of the reports that had appeared of the judicial investigation in Lebanon against officers of the Middle East Airlines?

I have no special interest in this area unless some Singapore entity is charged.

May I ask whether Singapore Airlines had been asked to give the Government, because it is a Government company, an explanation as to how this revision of the first contract came about?

As I said, I do not run Singapore Airlines. You should ask them directly if you are interested.

asked the Prime Minister whether he will consider amending the Constitution to provide for the appointment of a Minister who is not a Member of Parliament with the provision that the appointment will be made as the need arises and that the Minister must become a Member of the House within a stipulated period.

Mr Speaker, Sir, I do not see the need for the suggested amendment. During the Third Reading of the Constitutional amendment on Nominated Members of Parliament (NMP) on 29th March 1990, this House decided against having an express provision prohibiting an NMP from being appointed a Minister. This House agreed with the Select Committee's view that future governments should have the flexibility of appointing some NMPs as office holders should the need arise. However, the Prime Minister does not have any intention or need to appoint any office-holders who are not elected MPs.

Sir, even if there is no NMP available from this House but the exigency of Government requires a Minister to be urgently appointed, is the Deputy Prime Minister happy with the situation or is he prepared to reconsider the position he has just stated to this House?

Mr Speaker, Sir, we have not had problems getting Ministers elected and the Prime Minister has said that he has no intention of appointing non-elected Members as Ministers. I think that is the position we can stay with for some time.

Mr Speaker, Sir, can I direct the question to the person who asked the Question? Can I ask the Member to have a close look at our frontbench? Is he aware that they were all elected?

Dr Tan, please direct your question to the Minister?

I want to seek his views.

Under the Standing Orders, I do not think I can answer.

Dr Tan, the question is directed to the Deputy Prime Minister.

Then can I seek a clarification?

You should ask questions of the Deputy Prime Minister.

No. I want to ask the Member through the Minister.

Dr Tan, please resume your seat.

Mr Speaker, Sir, I would be very happy to answer him in private. But I thought under the Standing Orders -

It is in public. There is no question that it is private.

Order, order. Dr Tan, can you resume your seat? Dr Tan Cheng Bock resumed his seat.

Mr Rai, do you have any question?

No, Sir.

1.25 pm

"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 1998 to 31st March 1999", 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.

"to provide for making supplementary provision to meet additional expenditure for the financial year 1st April 1997 to 31st March 1998", 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.

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

Supplementary Estimates of Expenditure for the financial year 1st April, 1997 to 31st March, 1998, contained in Paper Cmd. 2 of 1998. No notice of amendment has been received. Question, "That the sums stated for the Heads of Expenditure as shown in Paper Cmd. 2 of 1998 stand part of the Supplementary Main Estimates", put and agreed to. Question, "That the sum of $497,053,600 shall be supplied to the Government under the Heads of Expenditure for the Public Services shown in the Supplementary Main Estimates of Expenditure for the financial year 1997/1998", put and agreed to. Resolution to be reported. Question, "That the sum stated for the Heads of Expenditure as shown in Paper Cmd. 2 of 1998 stand part of the Supplementary Development Estimates", put and agreed to. Question, "That the sum of $1,329,541,300 shall be supplied to the Government under the Heads of Expenditure for the Public Services shown in the Supplementary Development Estimates of Expenditure for the financial year 1997/1998", put and agreed to. Resolution 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 $497,053,600 shall be supplied to the Government under the Heads of Expenditure for the Public Services shown in the Supplementary Main Estimates of Expenditure for the financial year 1997/1998". "That the sum of $1,329,541,300 shall be supplied to the Government under the Heads of Expenditure for the Public Services shown in the Supplementary Development Estimates of Expenditure for the financial year 1997/1998".

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.

Order for Second Reading read. The Minister for Information and the Arts (BG George Yong-Boon Yeo): Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." In 1995, I spoke in this House about flyers being stuffed into HDB letterboxes offering pornographic video tapes for sale to residents. Sometimes, young children were used as runners to distribute such flyers. Recently, what has become "hot" are VCDs - video compact discs. Uncensored VCDs, including new releases which are not yet available in stores, are sold at pasar malams, trade fairs and other places. A number of these are obscene. Most have been smuggled in. Of the raids conducted by the Board of Film Censors (BFC) last year, 20% of the items seized were obscene. BFC officers report that the illegal profits are very high. Even after BFC raids, the sellers would be back the next day, selling the same obscene VCDs. Sir, the current penalties are clearly not of sufficient deterrence. In this Bill, we are therefore proposing enhanced penalties. For example, for the first offence, the fine for distributing obscene films or videos will be doubled from a minimum of $1,000 to $2,000 per film, and the maximum from $40,000 to $80,000. For the possession of obscene films and videos, the minimum fine will also be doubled from $500 to $1,000 per film, up to a maximum of $40,000. We are also proposing that the penalty for exhibiting obscene films should be increased from a minimum of $1,000 per film to $10,000, regardless of the number of films. The enhanced penalties are aimed at those who profit from the distribution and sale of obscene videos and VCDs. We are also proposing some new provisions to further control the trade in obscene videos. To deter the inflow of obscene videos through custom checkpoints, we propose, for the first offence, a minimum fine of $1,000 per film and/or a jail term not exceeding one year. To deter the duplication of obscene films/videos, a lump sum minimum fine of $20,000 and/or jail term not exceeding two years is proposed. Although e-mails have been included under the definition of electronic transmission, MITA has no intention to intrude into private communications. The inclusion of e-mails is to enable enforcement action to be taken when individuals complain of obscene films sent to them via e-mail. Under the proposed amendments, electronic transmission is covered under the definition of "supply" in both the Films Act and the Undesirable Publications Act. Adapted from New Zealand law, it is intended to cover the electronic transmission of films which do not involve the supply of physical copies. We need to do this. The market place is changing rapidly. In the US, cinema chain operators now transmit newly released movies electronically, without the need for film reels. Even individuals can package films and disseminate them over the Internet, especially when broadband becomes widely available. Our focus, however, is on those who try to profit from selling pornographic material in Singapore, not individuals who chance upon such material. Protection of minors Our concern is particularly for the young. We should have no sympathy for those who use children to distribute obscene videos or VCDs. Under existing laws, it is hard to penalise operators who use children in this way. Therefore, we have specifically inserted a new section 29C which will allow additional penalties to be imposed on those who exploit children in the making, import or distribution of obscene films. In other words, those who make, import or distribute obscene films commit offences and are liable to the penalties set out in new section 29. In addition, if they use children in committing the offences, they would be liable to additional penalties under the new section 29C. New technology Mr Speaker, Sir, the Films Act was enacted in 1981, 17 years ago, before the advent of new technologies like CD-ROMs, enhanced CDs, VCDs and DVDs. We are redefining "films" to cover these new technologies. Under the redefinition, computer file formats with extensions like .mpg, .dat, .avi and .mov are considered as films because they comprise moving images similar to what is found in a movie or video. Political films In July 1996, the Government rejected an application from the SDP for a licence to sell party political video-tapes. The Government rejected the application because political videos are an undesirable medium for political debate in Singapore. In a political video, political issues can be sensationalised or presented in a manner calculated to evoke emotional rather than rational reactions. Videos also do not allow for effective rebuttals. There is also a risk that political debates on serious matters will be reduced to a contest between advertising agencies, as indeed has already happened in some countries. Our intention is to keep political debates in Singapore serious and not have them become like the selling of soap. The Films Act will therefore include a provision to disallow the distribution and exhibition of party political films in Singapore. The penalty for those infringing this provision is set at a maximum of $100,000. The restriction pertains only to party political films. Although this will affect all political parties, it will not affect the freedom of political debate in Singapore. There are already sufficient avenues for political parties to get their views, platforms and manifestos across to the public. Political parties can print newspapers, publish books and post webpages on the Internet. Debates in Parliament are reported over radio, TV and in the newspapers. During general elections, political parties are also free to hold rallies and dialogue sessions, and are given free broadcasting airtime in proportion to the number of candidates they field. Mr Speaker, Sir, the proposed amendments to the Films Act and indeed to the Undesirable Publications Act, which I spoke about last week, are made in response to rapid technological advances. We have to extend our various Acts - the Undesirable Publications Act, the Films Act, the Newspaper and Printing Presses Act and the Singapore Broadcasting Authority Act - to cover the new media forms. We have decided to take it Act by Act and not go for an omnibus legislation covering the entire media field because the technology is still unfolding and the problems cannot all be foreseen. We should move step by step, be guided by practical experience and not be too ambitious in our legislation of new laws. In addition to amending the laws, we are also restructuring the censorship process in MITA. From 1st April, the current Board of Film Censors, the Censorship Section and the Licensing Section in MITA HQ will be merged into a new department called the Films and Publications Department (FPD). FPD will offer a one-stop service for the public for all matters dealing with publications and films. The Films Act and the Undesirable Publications Act will be administered under one roof by the same group of officers. It is not our object to increase the level of censorship in Singapore. As I said in the debate on the amendments to the Undesirable Publications Act last week, just maintaining the existing level of censorship is difficult enough. What we need is a practical approach and do only what is feasible. For example, certain categories of videos like those intended for children or for training of company personnel are now completely exempted from censorship. Sir, I beg to move. Question proposed.

Mr Speaker, Sir, I rise to support the Bill. I am pleased that attention has been drawn to the advancement of technology which has made the proliferation and dissemination of obscene and objectionable films easier and more extensive. We are aware of the tremendous impact that moving images have on our impressionable youths. And that access to such objectionable and obscene materials has been enhanced through the use of new media like CD-ROMs, computer diskettes and electronic transmissions. In this light, the redefinition of "film" in the Bill serves to ensure that the term remains relevant today. Sir, the numerous seizures of obscene materials by the police and the extensive publicity by the media over how the peddlers of obscene material flagrantly distribute their catalogues, even directly to the mailboxes of residents in the security of their homes, show that the deterrent effect, as the Minister has explained, of current measures is grossly inadequate. And it is appropriate to revise the penalties now, last reviewed in 1981. Sir, this Bill also serves to address the cynical attempts by such peddlers to circumvent the enforcement of the law through the exploitation of minors in the distribution of obscene films. As such, we are encouraged that section 29C, as the Minister has explained, puts the onus on the part of persons having custody of the children to be directly accountable for their action. And the use of children as couriers in this trade is deplorable and we hope that the authorities can make full use of this provision to act against the principals behind. Sir, while I am supportive of the measures tabled in this Bill to tackle obscene films and protect public decency, there may appear, in our haste to stem out such negative films, an unduly onerous provision, and this is with regard to the forfeiture clause in section 16 of the Bill that seeks to retain any deposit put up by promoters and distributors of films for classification and censorship. Sir, I believe there is already a fee to be paid for submitting films for classification. By including this forfeiture provision, I wonder whether this would deter real and genuine promoters and artists from wanting to submit artistic or commendable films for classification. Given that we are actively promoting and marketing Singapore as a centre for the arts and to be the renaissance capital of Asia via the International Arts and Films Festival, which contributes both to the development of the local arts scene as well as tourism, there is concern that in our attempt to eradicate negative films, we may indirectly stifle the genuine growth of the arts scene in Singapore. I am therefore of the view that this provision should be reassessed, as they appear anathema to our goal of being the regional arts and media centre. And I submit to the Minister that perhaps an appeal process or an exemption process for classification of films for the films festivals and arts events be provided for. Sir, we note that there has been some disquiet over the extension of the Films Act to disallow the distribution and exhibition of political videos. It cannot be stressed sufficiently that the national interest is upheld given that the application of the Act across the political spectrum is even handed. By disallowing the debate on political issues to be conducted through the medium of videos, both the ruling party as well as opposition parties surrender their access to what is effectively an efficient but dangerous means of debating political issues, as there is no room for immediate rebuttal in a partisan video. The impact of the use of such mass media by special interest groups with agendas inimical to the well-being and stability of society has been thoroughly researched in many other countries. The speed, the intensity and the impression that can convey in a 15-second film tape cannot be underestimated. Similarly, the tremendous damage to society, based on distortion of the truth through sensationalisation in this 15-second film tape, can undermine years of nation building and it would be almost impossible to unravel. Sir, as a multi-cultural, multi-religious and multi-racial small society like ours, the second best solution of a blanket ban across-the-board serves better to secure the cohesiveness and stability of our country than allowing the free flow of information and views which need not necessarily be conducive to society. Sir, while western liberals argue that in a market place of information, the good ideas will prevail and will outlive the bad, and that the truth will prevail over time, there is no guarantee that this will happen here in Singapore. We are too small a country to risk the consequences that a small partisan populist posture and a medium with so much influence can do as we cannot afford to make mistakes in the path that our nation takes. Sir, I am aware of the concern that the scope for genuine political debate is limited by this measure. However, I am pleased to note that in this Bill there are clear avenues open for such debate to continue unabated, as explained by the Minister. It is specified in new section 2(3)(a) of the Bill that current affairs films are deemed non-political, and that is good news. This clarity is certainly useful as we consciously seek to promote Singapore as a media hub. Similarly, while this Bill effectively prevents political advertising, it respects the integrity of the terms of political debate in Singapore by preventing serious discussion from degenerating into a sound byte and a video clip or a contest between advertising agencies. However, in our effort to be comprehensive towards the eradication of the use of such medium to conduct political debate, there is a grey area and uncertainty in the interpretation of the Bill. New section 2(b)(vi) defines a film directed towards a political end in Singapore as one where a current policy of the Government or an issue of public controversy in Singapore is involved. Sir, on this point, I would like to seek clarification from the Minister as to how the provision of this clause applies to the advertising and the promotion of Government policies and public education drives by the various Ministries. Furthermore, would there be scope for appeal and exemptions for contributions by interest groups that behave in a responsible manner whose main aim is the education and the promotion of desirable causes, such as the professional bodies, Action for AIDS, the AWARE group, among others? The severity of the present draft could be counter-productive towards the development of a civil society and the encouragement of more Singaporeans to participate and contribute in our nation's development. I would like the Minister's comments on this. Sir, it is also not very clear in the Bill, and this is also a matter of concern among some Singaporeans, whether the party political broadcast or the air-time given by TCS during the election campaign is affected by the Bill in question. For the people who are voting and wishing to be informed in a medium accessible to them during campaign time, perhaps a provision could be made in the Bill for such broadcasts during election campaign to be allowed. I think the Bill is not very clear on this. Perhaps the Minister may wish to clarify. In conclusion, Sir, I support the Bill and I hope the Minister will be able to clarify some of the concerns that I have raised.

Sir, this Bill to amend the Films Act to address the deficiencies in the law arising from technological developments and advancement has two main focuses: (1) to prohibit and deter the trade in obscene film, and (2) to prohibit the import, making, distribution and exhibition of party political film. On the first issue, Sir, on obscene film, I support the stand taken to ensure and preserve the high standards of morality and decency. In this regard, the proposal to increase the penalties for making such films must be supported. I must compliment the Minister for the tough stand taken against persons who allow children and young persons to be involved in the production, distribution or exhibition of obscene films. The penalties in terms of fines and imprisonment are indeed severe. But they are necessary. Children and young persons must never be tempted into such undesirable acts. We have the responsibility to ensure that children and young persons in Singapore are not corrupted by sleaze and obscenity. We must strive and continue to make Singapore the best possible place to raise our children. Sir, I welcome the proposal to increase the membership of the Films Appeal Committee from nine to 15. They are given powers to overturn decisions of public officers of the Board of Film Censors. Their participation marks a step in the right direction of having more civic participation in the censorship process and institutionalising such a process in the legislation for greater accountability and transparency. Civic participation is necessary in order to ensure that public officers, in carrying out their work, are guided by the relevant social and cultural attitudes of our society. Sir, the second issue: to make it an offence to make, reproduce, distribute and exhibit any party political film is something different altogether. In the past, this House has seen many changes and amendments made to various Bills to take advantage of technological changes. In this instance, however, it is my view that technology which could have been used to improve communication between political parties and their electorate is somewhat unnecessarily prohibited. Singaporeans have become very interested in their politics. They want to know more about the issues of the state. Contrary to earlier perceptions, Singaporeans are not disinterested or pathetic about politics in Singapore. They want more communication. They want to be better informed. Increasing the means and mode of communication is one such way. Films and videos provide additional and more effective means of communication and this must be further encouraged. What we do not want is excessive politicking, intruding into our bedrooms through political broadcasts and advertising. What we do not want is wrong information or misinformation. What we do not want is clandestine making and distribution of films which will cause instability, racial disharmony, panic and rumour-mongering. However, Sir, we have existing legislation to deal with such abuses. We have already limited the amount of money that political parties spend during elections or for political campaigns. We can limit the time political parties advertise or even broadcast on radio or television. In any case, Sir, we do not have too many competing radio and television stations to cause these problems. There is also other legal recourse. For those who are guilty of defamation, my suggestion is to sue them. For those who are guilty of causing racial disharmony and instability, the Internal Security Act and the Maintenance of Religious Harmony Act have adequate provisions to deal with such issues. For those who breach ethics of broadcasting and journalism, we can bring them to task either through a panel consisting of professional media persons or from the Elections Department. By all means, Sir, we should treat the message and the messenger severely if this is necessary and appropriate. In my view, Sir, the Bill defines "party political film" extremely broadly. A ban would extend to any film made by any person, not just by political parties, as long as it is directed towards any political end in Singapore. This includes any partisan or biased references to Government policies or controversial public issues. The amendment is sweeping and vague. Personally, I do not see a problem if the publication of Petir or Hammer be made into a video or compact disk. Yet such a video would be illegal. In fact, it would take much less than that to run foul of the proposed law. I fear for the implication it has on the arts in Singapore. On literal interpretation, it would seem that even a movie like "12 Storeys", which was Singapore's proud contribution to last year's International Films Festival, could get the producers in trouble. "12-Storeys" included humorous and often critical references to toilet flushing laws, the SDU and many other Government policies. With the new law, it looks as if the producers and distributors of such creative works could be fined or jailed. No doubt, I am assured that although the proposed law is extremely sweeping, the Minister will assure us that we can trust the Government to apply it very selectively, and that producers and distributors like that of "12 Storeys" would be safe. But this is not a satisfactory way for the legislature to deal with such issues. If we believe in the rule of law, then laws that are passed by this House must be clear and transparent. They must not be so sweeping and vague that in the end it is entirely up to the Minister's discretion whether a person has broken the law. Unfortunately, this is how the amendment to the Films Act is written or perceived. In fact, if the Bill is taken literally, even some recent television commercials produced by the Government could probably be banned. For example, in 1996, before the last general election, there were television commercials highlighting the role of public service in keeping Singapore running. Since public service was one anticipated election issue, it could be argued that this television commercial was "directed towards a political end, and that it contained partisan comments on issues of public controversy." Sir, it would be unfortunate if such videos are stopped simply because of this legislation. On the other hand, if such campaigns are going to continue, and I think it should, how are these videos going to be exempted from the ban? Therefore, one objection to this Bill is that it is too broad and vague. The Bill would deny opposition parties one way to reach out to citizens and inform them about their political platforms. Although this Bill affects both the PAP and the opposition parties equally, there is a general perception that the PAP already has many ways of reaching the public. The television companies and the Radio Corporation of Singapore are Government-owned. The newspapers maintain pro-Government editorial policies. For opposition parties, video tapes are perhaps one tiny way to redress this imbalance. To deny them, Sir, of this small opportunity, is unnecessary. Therefore, on the second issue, Sir, I appeal to the Minister sincerely to give party political films a chance in Singapore.

Sir, I agree to the measures on the amendment on the obscene films. I think they are a step in the right direction. I applaud the Minister for the good and increased use of citizen panels in judging what films should be treated as obscene. Let me then turn to my points of concern. This relates to the fact that the Bill intends to ban advertisements by any political party or films directed towards political end, such as attempts to affect voting in an election. Sir, I am well aware that I am not a politician, nor an elected Member of this House. I speak as a citizen, as a voter and I have been a commentator at the last general elections as a member of the Roundtable. As a background to what I am saying, Sir, may I briefly refer to the comment by the NCMP in the last meeting of the House where he said that one of the NMPs was taking up cudgels for the Government. My view in making these comments is that Nominated Members of Parliament such as myself are neither for the Government nor against it, neither pro-PAP nor anti-PAP. We try, at least I try, to look at the merits of what is proposed in a non-partisan way, and today I have tried to consider the Minister's arguments very seriously. I do see his point that there are other avenues of debate available. But my conviction is that I must stand against this Bill in respect of the amendments concerning these prohibitions against party political films, especially in section 29D as proposed. My objection is both on principles and on the particulars of the amendments. Let me turn first to the principles. Sir, free and fair elections should be one of the great hallmarks of Singapore's politics. It is something we can and should be proud about as much as our GNP per capita or Changi Airport. Competition between political parties in free and fair elections is what validates the PAP's continued return to Government. Because of this, a PAP victory must be recognised not only by those who support the present Government but all those who have contested or voted in the election. It is a question of legitimacy. Conversely, an unfair or unfree election makes victory hollow. For free and fair elections, the maximum width for political speech should be allowed. Political free speech has a value. It is the way in which good ideas are recognised and adopted while bad ideas are rejected. Article 14 of our Constitution recognises this. It enshrines that each citizen should enjoy freedom of speech. In practice, I believe this Government has always believed in rational and robust debate. Yes, there are recognised limits for statements that would jeopardise public order, incite racial hatred, falsehoods, or statements that damage individual reputation. But these exceptions should be just that - exceptions. And that is the first reason I am against this Bill's ban on party political films. The ban does not restrict itself to films that threaten this sense of public order, racial harmony or other common good. It is much more broadly stated, too broadly stated in my opinion. Even an innocuous statement such as, "Vote for me and I will upgrade housing." - this if said by a political party would be subject to a ban. It seems to me that the Bill is so widely drawn that even the usual party political broadcasts during the election would be potentially subject to the ban. These are telecasts by TCS. Of course, broadcasting itself is accepted under the proposed section 2(2)(b). But the recording of the broadcast on film, video or other material record could be an offence since each party in turn calls for people to vote for them and it therefore is partisan within the meaning of the proposed section 2(2)(a). Some have suggested, or may say, that this Bill is fair because it applies to all parties in Singapore, including the party in power. This is an equal law on the face of it - that is true. However, it has an unequal impact. The PAP is, to put it mildly, well-known, for what it has done in the past and the work of the current Government. The Workers' Party and the Singapore People's Party too have their representatives in Parliament. But other political parties are not represented here and are less well-known. They cannot showcase their abilities or, in some cases, their disabilities. There is also the consistent public perception that the media in Singapore is pro-Government. Several surveys have shown that the public thinks this is so. In this context, this equal law will have unequal impact. That is the second reason I stand against this Bill. But more than its impact on different political parties, Sir, I oppose this Bill for the effect it can have on the citizens of Singapore. I think that as Singapore enters the 21st century, we should strive towards a greater political maturity. Part of that maturity is to increasingly allow people to discern things for themselves. To do that, we need a system that allows ideas to be communicated as well as their rebuttals and their counter-rebuttals. By banning this avenue for political free speech, this Bill moves in the wrong direction. It shields citizens like children, rather than prepares them to be mature and discerning. This Government has been the one that has asked us to be a thinking nation. Critical thought should apply to all fields, including the political choice that a citizen makes. This is the third reason I am against the Bill. For these three reasons, rather than passing the Bill as it stands, what I believe we should do is to, first, require party political films to observe basic limits, such as the avoidance of falsehoods, incitement against public order and racial harmony, and defamatory remarks. Secondly, we should control the broad parameters of what party political films can do by fixing expenses, length, the time they can be distributed and exhibited and the numbers perhaps that each party can reproduce, exhibit and distribute. And thirdly, we should take up the citizen panels which are used for other films and establish a citizens' board which will license the political films. This is what is done for other films, including those which are potentially considered obscene. Political films should be treated in the same way. Those are my three points and principles why I am against this Bill, Sir. Let me move now to the particulars, and these relate generally to the over-wide definitions that trouble me. First, in the proposed section 2(2)(b), the use of the word "partisan". The word "partisan" is defined by the Oxford Concise Dictionary as being, "an adherent of party, cause, etc, especially unreasoning one." I think if there is an "unreasoning one", an unreasonable point of view, that is something we can agree on. But the meaning of "partisan" in the earlier part is broad enough to encompass sincere and reasonable beliefs, and I think these should be allowed rather than caught in this over-wide definition. Second, the list of examples provided in the Bill, particularly the proposed section 2(2)(b), I believe these examples are over-wide. Section 2(2)(b) bans films that question current Government policy. This potentially handicaps valid criticisms, and valid criticism is the way society improves. For example, a Talking Point programme that covers present review of the financial sector and features interviewees who support or propose more changes could be caught by this Bill. There is an exception, as other speakers have noted, of reporting of current events in section 2(3). But, arguably, the show I have imagined goes beyond this protection. It does more than report because it provides opinion as well. I hope the Minister will consider excluding the subclause and permitting films that discuss current policies, or to allow films directed primarily at reform of existing laws or policies by legal means. The third detail which concerns me is in the proposed section 2(2)(a) and (2)(b). This is the use of the word "partly". These sub-sections mean that the Bill captures films that are not only wholly but also partly within the definitions. I would urge that the Bill be narrowed to films that are "substantially", rather than "partly". If it is not, a film that is almost wholly innocuous may run foul because of a very short, minor section. Some may argue that these over-wide definitions can be left to the discretion of the authorities to take care of. And therefore the examples that I have given are moot, TCS film makers will be saved. But I caution against this approach. One function of the law must be to guide people's actions and expectations of future action. Over-wide definitions fail to do this. Instead, they create uncertainty. No one knows whether they are in the wrong, or even if they are, if they will be prosecuted. Giving the authorities excessive discretion does not help the situation. It can lead to perception that our laws are not equal or transparently applied to all. As compared to these over-wide definitions that I have mentioned, I think that the Bill omits mention of the most obvious and acceptable limits to party political films or indeed any free political speech in Singapore, that is, the limits of common good I have mentioned, such as incitement against political order and racial harmony. These should be put into the Bill for clarity and completeness. In conclusion, Mr Speaker, my view is that our democracy thrives on free and fair elections, that all political parties need a chance to reach out to the citizens. Citizens on their part need to hear political parties to decide for themselves. Different means of communication are available, of which I agree film is just one. But though it is just one, I urge the House to consider that with proper licensing and limits, this avenue need not and should not be closed. Public discussion and debate, the ability of politicians to convince and the ability of citizens to discern are things we must all believe in. It is something I have always thought this Government has believed in, and has been very successful at doing. I urge the Minister and this House to apply this approach to party political films. Don't ban them. Convince the citizens.

Mr Speaker, Sir, I support the Bill. I believe there is a need for us to plug some of the loopholes which have surfaced over the years due to changes in technology as well as to strengthen the deterrent effect of the Act through increased penalties. New provisions to prevent the use of minors in obscene video trafficking are also timely. I believe these provisions dealing with obscene films and videos need no further discussion, as evident in the statements made by Members earlier. However, the Bill also sets forth new provisions dealing with political films and videos. When assessing this part of the Bill, the basic question that we need to ask is what sort of political life we want for Singapore. There are currently various avenues and ample opportunities for political parties to disseminate their ideas and programmes. Political parties can publish newsletters, books, and periodicals at any time of the year. During election time, they are given air time to broadcast their message and programmes to the Singapore electorate. While there are those who decry the lack of opportunities, I believe political parties do, in fact, have the opportunities to provide Singaporeans with detailed and in-depth information through publications and broadcasts. So the point made by the hon. NMP, Mr Simon Tay, of unequal impact may not bear with altogether. Yes, I do agree that at first sight the restriction on political videos and films may appear heavy-handed. However, on further reflection, I do believe that Singaporeans would agree that it is better to put the cap on the genie than to let it out of the bottle. Highly visual media such as videos present a greater danger as manipulatory propaganda tools than publications. Visuals can have an impact that far overshadow and even distort the substantive issues or messages raised in a campaign. The excesses of American political campaigning made a very big impression on me during my stay in the US. During the presidential contest between Michael Dukakis and George Bush, the Republicans launched an advertisement which in effect reduced Dukakis' prison reform programmes to that of releasing unrepentant and dangerous prisoners. The famous Willie Horton advertisement highlighted the case of Willie Horton - a prisoner who committed a crime shortly after being released on a weekend furlough programme in Massachusetts, which was the home state of Dukakis. The advertisement was aired continuously throughout the campaign and this led to a significant opinion shift to George Bush. Dukakis' prison programme and crime prevention record as a whole went largely unexamined by the American public. As the Willie Horton case illustrates, the use of videos can lead to the sensationalisation of issues, reducing the contest of ideas to a process similar to that of selling soap or detergent. I do not think we want political contests in Singapore to go down that road. Yes, we need to protect the Singapore electorate. Yes, there will be those who will argue, such as Mr Simon Tay, that Singaporeans are smart enough to discern the honest leader from the snake oil salesman. But do we really want to take our chances and then have to repair the damages? Even in a mature democracy such as the US, slick political advertising can mislead the electorate. I would rather that we take proactive steps to ensure that sensationalism and demagogic appeals have no place in our political process. At the same time, we must also ensure that Singaporeans have adequate means of examining political parties and their programmes for themselves. Parties can now publish newsletters, books and periodicals to disseminate their ideas, programmes or opinions on current policies. Parties can also broadcast their local messages during election time. These dissemination opportunities need to be kept open and protected to ensure a healthy contest of ideas. This amendment is, in fact, a reflection of an ongoing process in our society. As society changes and new technology develops, we would need to re-examine our regulatory framework for political discourse. This re-examination will need to seek the proper balance between the need to provide political parties with the opportunity to disseminate the ideas and stimulate political discussion and the need to prevent the McDonaldization of political campaigning. Sir, even though I support this amendment, I do have some concerns. Under the leadership of our Prime Minister, Mr Goh Chok Tong, we are moving towards a more participatory-style of Government. It is an attempt to involve more people at all levels in order to create a thinking nation. Given this new thrust or attempt to create a more participatory political culture, we should ensure that any legislation must be clear and precise in setting the parameters of unacceptable political activities. We must ensure that non-partisan groups, such as those raised by Mr Chew Heng Ching, which can make a positive contribution to policy-making are not frozen out of the process. The regulation of political life is not borne out of a desire to simply restrict political discussion. Rather, regulations are needed to ensure that the Singapore electorate is given a fair and honest chance to examine parties and their manifestoes and ideas. If we allow parties to use videos, we endanger what we have achieved thus far in our political life. Do we really want this? Mr Speaker, Sir, I support the Bill.

Mr Speaker, Sir, let me say, at the outset, that I support the Films (Amendment) Bill. Modern technology allows for the production of films which is a result of camera tricks and, worse, the digital manipulation of figures and pictures. We have seen the movie Forrest Gump in which the actor Tom Hanks is seen in the film very realistically shaking hands with dead Presidents and former Presidents of the USA. We have seen other examples of digital manipulation of advertisements in which a very plump lady suddenly becomes very slim. And I think we also have seen examples, even without digital manipulation, of pictures which appear to present certain ideas and these ideas obviously are false. It could, for example, make a person look sinister under certain lightings and you could then persuade the audience that this is a sinister person and in the political broadcast, it would be to persuade people not to elect him. It is therefore prudent and cautious of us to exclude a medium like this from the hurly-burly of politics and that we should restrict political debate to arenas that can be controlled, in the sense that publications and rally speeches can be controlled. There will always be opportunities for rebuttal and there will be no opportunities for making manipulated pictures like that. In my work as the President of the Consumers' Association of Singapore, very often we have to deal with advertisements, particularly TV commercials, which we find objectionable because they make certain allusions or present certain pictures which lead the viewer into wrong conclusions. But very often, when we approach the Advertising Standards Authority of Singapore to pull off the advertisement, the sale has been clinched and it is too late for us to stop it. We can actually pull off the advertisement but, as they say, the harm is already done. So I support this Bill to keep political debate to arenas that we are familiar with. Nevertheless, I have some points which I hope the Minister will clarify. Firstly, clause 2(b) introduces a new definition of "electronic transmission". I see that this definition excludes "broadcasting". Unlike the Undesirable Publications (Amendment) Bill passed at the last sitting of this House, there is no definition of "broadcasting" here. In our laws, there is the definition in the Copyright Act and a definition of sorts in the Singapore Broadcasting Authority (SBA) Act. The Copyright Act definition is slightly archaic as it refers to "broadcasting by wireless telegraphy". The SBA Act is more up-to-date. I would take it that the meaning of "broadcasting" here is the same as that in the more modern SBA Act. Whichever definition is adopted, however, I believe the new Bill does not appear to cover the use of telecommunication lines to do a computerised "broadcast" to all Internet users, for example, which should be an act penalised under this new Bill if the films or pictures sent are obscene or of an unauthorised political nature. Secondly, clause 2(f) introduces a definition of "supply". I know the Minister has said that it is an adaptation from the New Zealand provision. With due respect, Sir, I find this definition verbose and incomprehensible. I would like to commend the use of plain English in statutes and hope that more care will be put into drafting such legal provisions in future. Thirdly, clause 2(d) gives a new definition to "obscene". I have discussed at length my views on "obscenity" in the earlier debate on the Undesirable Publications (Amendment) Bill and received an answer from the Minister and so I will not repeat them here. Next, I would turn to clause 2(g). This paragraph inserts a new subsection (2) to section 2 of the principal Films Act. A film is directed to a political end if it is, inter alia, "intended or likely to affect voting in any election or national referendum". I fear the words are overly broad. There are all sorts of elections in Singapore, including elections at annual general meetings of societies and companies and elections on residents' views in relation to upgrading projects and perhaps even elections to choose popular TV commercials. I know the Minister probably has in mind Parliamentary and Presidential elections only and would ask if he could amend or clarify this accordingly. All the other references to "any election" in the new subsection (2)(b) should also be similarly construed. A film dealing with "an issue of public controversy" is also political under the amendment Bill. In most instances, this may be right. Yet, with utmost respect, Sir, I think the words are again over-broad. The question whether cloning of humans should be made illegal is "an issue of public controversy"; so too is the question whether owners of pets who take long holidays should be allowed to leave their pets unattended. Would films on these topics be political? I submit that they are not. For the avoidance of doubt, the Minister may wish to clarify this point. Additionally, could the Minister also consider amending or clarifying the provisions of the new subsection (3) which states that films solely for the purpose of reporting current events are not political. I expect this would, of course, cover the broadcast and the filming of election rallies and other political events as news. But I would like to argue that films "discussing" current events (and not merely "reporting" them), such as TV talk shows, or shows which contain obviously unbiased material in an attempt to inform or educate the public (as in many documentaries we see), are also not political. I await the Minister's views on these points.

Mr Speaker, Sir, I totally support the banning of obscene films and the levy of harsh penalties on offenders in order to protect our young. I am concerned, however, by the aspect of the Bill which seeks to define and then prohibit production and dissemination of what is called "party political film". I have several specific concerns. Let me elaborate. My first concern is about the definition of what constitutes a party political film. There seems to be two components. The first is obvious, a film made by or on behalf of a political party or a group advertising its views. The second component is far more ambiguous and disturbing to me. The second definition of a party political film is if "it is made by any person and directed towards any political end in Singapore". The term "directed towards any political end" is further defined to include specific examples, most of which relate to elections and can quite arguably be considered party politics. However, a film which "contains wholly or partly either partisan or biased references to or comments on any political matter, including but not limited to a current policy of the Government or an issue of public controversy in Singapore" is defined as "a film which is directed towards any political end" and is therefore prohibited. That, I submit, is far too broad, Sir. What is biased and what is not biased? What is a political matter and an unpolitical matter? An issue of public controversy at one time was the COE policy. Another time was the levy on the foreign maids. Only recently, it was housing prices. Are these not political matters? And what about the current policy of the Government? Can anything be more all encompassing than this definition? The concern of the drafters of this Bill surely cannot be trying to stifle films which legitimately and constructively comment on Singapore society. After all, the Government actively encourages the development of a local film industry. On the one hand, we complain that Singaporeans are politically apathetic and the young people are not committed to this society. We want to develop a vibrant cultural scene where Singaporeans can develop art forms, including film, which have contemporary relevance. But under this amendment, any so-called biased reference to a current policy of Government or an issue of public controversy will be banned. We all know that what constitutes "right" or "wrong", "biased" or "non-partisan" can be a less than objective exercise or evaluation, and the evaluation depends on who says it, when and with what intention. How is the mechanism of evaluation carried out anyway? From what I understand, this Bill does not disallow the making of a film by any individual nor does it require any film-maker to submit a story line and film script prior to production to the Ministry for approval. Film-makers therefore risked their money, time and talent on a production which may raise public controversy after it was screened. How would the Ministry respond to this? Whether a film will raise a political controversy in society is an uncertain and, often times, unintended outcome on the part of the producer. Even if it recognises the possibility of political tensions from such a film, it is more difficult to assess its degree of seriousness to justify its ban. What may result is an unhealthy situation of individuals, film producers, political party members as well as political institutions making allegations against one another and defending their positions on different reasons. We do not want to be drawn into this kind of unguided judgement battles. Not that such allegations will not be made under this existing Bill, but the amendments now proposed only give more room for contentious interpretations. Moreover, the offender is liable to a fine not exceeding $100,000 or to imprisonment for a term not exceeding two years. In our effort to promote the arts, Sir, the spectre of a hefty fine, due to many "possible" wrongful allegations can be daunting. I appreciate the Government's need to establish reasonable limits to self-censorship within the artistic community, but we need to offset this against an equally important need for Singaporeans to free their imagination and intellect to create without ambiguous restrictions. I do not believe that our top leaders are intolerant or afraid of criticisms. They can hold their own in any debate against any of Singapore's detractors. That makes me all the more perplexed as to why this Bill needs to have such a broad definition of "party political films". Is this not giving unnecessary broad powers to bureaucrats who will want to err on the side of caution and end up banning any social commentary in our home-made film industry? I am afraid the lack of clear guidelines and definitional criteria will paralyze appropriate exercise of judgment and, worse, it cripples creative effort in our young and stifles quite legitimate and constructive commentary on Singapore society. Deputy Prime Minister Lee Hsien Loong has once said, on the subject of financial deregulation, that previously what was not expressly permitted was prohibited must now change to what is not expressly prohibited is permitted. I believe that what applies to the finance industry in Singapore should apply to the film industry. I am afraid the amendments to the Act create a situation which is what is not expressly prohibited is also not permitted. I would like to make a specific proposal that the definition of "party political film" be more realistically defined so that it can only refer to films made by political parties or groups and on specific issues related to electoral matters and that broad catch-all reference such as current policies of Government or issues of public controversies be deleted. In any Bill to prohibit an activity, I believe it is the onus of the drafters to be as precise and specific as possible and not to cover themselves by including everything under the sun. It is convenient to do so but it would only impede the development of an open and civil society. For me, self-censorship is a necessary civic function but it must be exercised based on knowledge and acceptance of terms of the contract, not out of fear and muddled understanding. Another matter which I feel that the Films Act could also address is violence, and the question of harm to children. I would like to suggest that the Censorship Board broadens its scope to include the issue of violence in films and to develop a classification scheme to define "acceptable" and "not acceptable" portrayals of violence on the screen. I am concerned that violent scenes have become more graphic and brutal. However, there is inadequate research on the extent to which the prevalence of violence depiction desensitizes the public. There is reasonable ground to fear that children are vulnerable victims because they are immature and more easily led into committing copycat behaviour of violent portrayals in films. It is important that this Bill allows the Government to establish clear guidelines to ban obscene films as well as political films which have a negative impact on social cohesion, but violent films which have no regard for women, children and the higher ideals of the human condition must also be regulated, because they only degrade our sense of decency, impoverish our moral universe and fray the social fabric. This is not a gracious and gentle society which we promised for the people of Singapore. I hope the Minister will seriously reconsider the amendments to this Act and if need to, perhaps, in the interest of the public, subject it to a Select Committee for review and recommendations, to give Singaporeans an opportunity to question their own civic identity by airing their views on the limits of State control vis-a-vis individual rights and responsibility. This may be a significant political and social agenda on community building as we enter the 21st century. Mr Speaker, Sir, I do not support the Bill as it is.

Mr Speaker, Sir, thank you for giving me this opportunity. At the outset, I would like to disclose my interest. I am a member of the Indian PAC which is chaired by Mr S. Dhanabalan. Sir, the Bill introduces a new area, namely, political films which are subject to the purview of this Bill. I wonder why the need to have this area legislated. I share the concerns shown by the other NMPs and I will not repeat them. Political parties still could hold rallies and speak their mind during the election, and yet they have to be subjected to this law if they were to produce a film with a political end. Sir, as a people and as a government, I think we can take pride, and I say this seriously and even the opposition parties will agree, that we have the most fair elections anywhere in the world. Issues are debated openly and the voters have the right to choose. I think we should preserve this. In other countries, violence and money politics take the front stage. We have, under the leadership of the Prime Minister, started building a participatory democracy. Civil organisations are growing up. Even the Straits Times' Forum page, compared to, say, 20 years ago, has more serious issues debated. On Saturday, the political page Insight deals with current issues in some depth. It airs the views of the various leaders and the man-in-the-street. There will be criticisms of this Bill from some quarters, especially the Western press. I think there will be some criticisms by Singaporeans that this Bill is going to silence the opposition. Sir, the definition of "political end" cannot be exhaustive. I agree. But the definition, as it stands, is very wide. I do not have any notion whether any other country has got similar legislation. And in the absence of other judicial authorities, our courts would have to evolve our own law and it will take some time for the law to be settled. Meanwhile, the question that has to be asked and answered is this: are we sending the wrong signals to Singaporeans that we are becoming less tolerant of political dissent? We have seen a slow nurturing of civic bodies whose aim is to get the community involved in decision making and to provide a valuable link to the policy makers. In fact, two of the NMPs in this House have come from this background. The question that we have to ask is: what would happen if one of the civic bodies were to make a film to educate its members? Under the Bill, a film which has got a political end is subject to the control of the law, even if only a small part of the film is likely to affect voting in any election. This is indeed very restrictive. Even a civic group which intends to educate its members may run foul of the law. Unlike the other Members, I have no contention with the second part of the definition which tries to contain partisan or biased comments. I think the judge will be in a position to decide. There are other concerns, Mr Speaker, Sir, which I would like to highlight in the House. Whilst the definition of "obscene" is something of a question of judgment value, I hope that the officials dealing with the matter would be a little bit more liberal in the definition. Value judgment and question of morality change from society to society and from age to age. What was decadent sometime ago may not be so now in the light of new attributes. Although the fine line between what is work of art and what is yellow culture may be strained, we should try to be more accommodating. My other concern is on the Committee of Appeal. The present members are distinguished people with very rich backgrounds. We have a young poet, banker, architect, accountant and people from the academia. Sir, it is a credit to the Minister that he need not have amended this section. The Minister could have allowed the membership to remain at nine and then reduce the quorum from five to three, which is a respectable number in most panels and tribunals. Even our Court of Appeal has three members. It just goes to show that the Minister is sincerely concerned with the decision-making process and to make it more transparent. I think this House should applaud this action by the Minister. I welcome the increase in the number and I hope the Minister would include retired lawyers, civil servants and community leaders who could provide valuable inputs in this decision-making process. Sir, I read yesterday's Straits Times and I appreciate the arguments and sentiments by Koh Buck Song in the editorial page. But I think the quorum should perhaps be increased from five to seven for cases which are controversial, but not in all cases. But for cases which are of public interest, it should be increased. It should be left to the discretion of the Committee's Chairman or Vice-Chairman. Sir, there is another area which I would urge the Minister to consider and this is on the appointment of two Vice-Chairmen, instead of the present practice of choosing by the members themselves when the Chairman or Vice-Chairman is not available. Sir, I think we should institutionalise the Committee of Appeal's work. In landmark cases, it should give its grounds which should be published. By doing so, the public and the trade would know the view of the Committee of Appeal. Sir, I am also concerned that the fines have been increased excessively. I support the move to increase the fines but not in the way it has been done. I think we have overdone it. Let me give the House an example. Under new section 29(4)(b), the maximum fine is $100,000. We all know that the courts normally do not impose the maximum fine, but they always bear in mind the quantum laid by Parliament, and in this case, it is $100,000. When we compare the fine imposed in more serious crimes under the Penal Code, this House will realise that the proposed fine is excessive. The other area I am concerned is the definition of young persons, which I do not think any of the Members has raised. So I will raise it here. I think we should start a new definition of a young person as anybody who is above the age of 12 instead of 14. Most secondary students have the mental and physical attributes which their parents 30 years ago may not have. I wonder why the Minister wants to conform to the traditional definitions of young person. In any case, I must congratulate him for giving the protection to young people. Under the proposed law, they would not be exploited and abused. This is to be welcomed. As the Minister has pointed out, flyers and all sorts of literature appear in letter boxes both in HDB estates and even in private residential estates. Sir, there is another area which I would like the Minister to consider. Both Tamil and Hindi films seem to have a great deal of violence and obscenities, not pictorial obscenities but in the words used. The fact that the Indian censors have cleared the film must not lull our Board of Censors. Some of the words, especially in Hindi, are indeed obscene and cannot be mentioned. Not related to this, but I would like to touch on, is the question whether we want our women to be treated in the fashion that some of the Indian films portray. Sir, the Indian PAC has conveyed its views to the Minister about television programmes but censorship does not come under our purview. I hope the Minister will take this into consideration. Whilst SINDA and the Indian community are trying hard to uplift the Indian community, the Indian films are our biggest drawback. Sir, Mr Simon Tay has mentioned that we are here not to support the Government or the opposition. We are here, chosen by Parliament, to give our views independently so that the decision-making process of this Parliament would be easier.

Sir, I must first question the sweeping statement of the NMP when he said that Singapore has the fairest election in the world. I wonder whether he has stood in any of the elections in Singapore, especially on the opposition side. Standing as a bystander and observing from the outside, surely he cannot get the full picture. Until he has stood in an election, he has got no right to make such a sweeping statement. Sir, I cannot support this Bill because the part on banning party political films is purely political. It has got nothing to do with public good or the public interest. Its purpose is to give more advantage to the ruling party at the elections and to ensure that the PAP shall never lose its majority in every election. I can support the part of the Bill disallowing the exhibition and trade in obscene films as they tend to deprave and corrupt members of the public, especially young Singaporeans. Therefore, banning of obscene films is for the public good and the public interest is served. I support that part of the Bill. But banning party political films is another matter altogether. How does banning party political films help to promote public good or public interest? In fact, it is just the opposite. The public, especially in Singapore, hardly know anything about the opposition. They only see and hear and read PAP news. Anyone who turns on the news on our local television cannot fail to see and hear anything but PAP news. PAP Ministers' and Members' public activities are prominently broadcast. Anyone watching local television would think that there are no activities organised by the opposition MPs at all. At Potong Pasir, I organise between five and seven public activities every year. Our Lantern Festival attracts about 1,000 participants every year. As for the Kite Flying Day, there are usually about 200 to 250 persons who come to join in this very delightful activity. None of these activities organised at Potong Pasir over the last 12 years have been reported in the local press or over television. Now there are new technologies like the videos and the CD-ROMs which can give a chance for the opposition to make known their views and activities, but the Government, with this Bill, is quick to clamp down on the use of this new technology by the opposition. Any progressive Singaporean would welcome all new technologies and make use of them to the fullest advantage. But in Singapore the situation is different. New technologies are only good if they are to advance the cause of the PAP and not the opposition. This message is loud and clear with the implementation of this Bill when it becomes law. There is no half measure as far as the Government is concerned. They want to make sure that the opposition is completely deprived of new technologies to advance their cause. The punishment meted out for disobeying the law is a very heavy penalty of a fine not exceeding $100,000 or to imprisonment for a term not exceeding two years. This punishment is even more onerous than the ones meted out for first time aggravated offence in connection with dealings in obscene films where children and young persons are involved. For the first timers of aggravated offences involving children and young persons, the upper limit of the fine is only $80,000, and the maximum prison sentence is 12 months. As compared to the first time offenders in relation to party political films, the maximum fine is $100,000. As I said, the maximum jail is two years. There is in fact no need to impose such heavy fines and jail sentences for offenders of party political films. A fine of $2,000 or a jail sentence of six months would suffice. Since the whole matter is political, the intention of this part of the Bill is for the Government to neutralise the opposition parties. This can be achieved by stopping opposition members from taking part in elections by fining them just a mere $2,000 or six months' jail, if they are caught involved in dealing with party political films. Under the Singapore Constitution, once a person is fined $2,000 or jailed six months, he is banned from taking part in any parliamentary elections for a period of five years. So a fine of $2,000 or a jail of six months is a sufficient deterrent in regard to party political films. The present punishment is out of proportion and is really uncalled for. These heavy fines and jail sentences only indicate that the ruling party suffers real weaknesses. They think that if the opposition have a chance to use party political films they can win even more seats in Parliament or even topple the PAP if such new technologies can be exploited by the opposition to the fullest. That is why draconian punishments are meted out to completely deprive the opposition of using new technologies to advance their cause. Is the use of new technologies by the opposition something bad? I do not think so. I can think of at least five reasons why party political films should be allowed. Firstly, the public will have the advantage of more than one point of view. Every day, for 365 days a year, and year after year, from one general election to the next and continued non-stop, Singaporeans are bombarded with PAP news. It is high time that the Government opened up and allowed more than one point of view. Singaporeans should be given an opportunity to hear not one or two points of views, but a diversity of views. I believe Singaporeans are intelligent and mature enough to know what is good for Singapore. They are discerning people and can accept the point of view that is best for Singapore and for them. It has been said that with party political films, the opposition can give wrong information or misinformation. If they really do that, they will in fact be shooting their own feet with a gun. Because if they are found out, their whole credibility will go and they will never get elected again. So I do not think that they will dare to be so irresponsible. There should be no fear of allowing Singaporeans to watch and hear party political films. If Singaporeans are forced to hear and accept only one point of view, very soon an absolute tyranny will develop in Singapore. Further, the PAP is not always right. The stop-at-two policy is a glaring example. Secondly, it is a shame if new technologies cannot be used to the fullest. Singapore encourages its people to be creative and innovative. It would appear that the mood now is that should any more new technologies be invented, they cannot be used by the opposition to their advantage, but only by the PAP. This kind of values promulgated by the PAP is definitely retrogressive and unfair. This Bill only retards the growth of creativity and innovativeness. Politics is not something dirty like obscene films, and Singapore should be given a free rein to indulge in politics using new technologies. The Government should have no fear because the Maintenance of Religious Harmony Act and the defamatory and sedition laws are still all in place and the Internal Security Act has not yet been abolished. The only harm that can be done by the opposition or Singaporeans generally using party political films is to the PAP and not to Singapore. I hasten to say that the PAP is not Singapore. If the opposition is given a climate whereby they can grow and attract good men, in time they too can be just as good as the ruling party. But with this kind of a Bill that is before us, such a climate I speak of shall never come about. The third reason why party political films should be allowed is because there are vast numbers of Singaporeans who shall oppose this Bill. There are already two opposition-held constituencies at Hougang and Potong Pasir. The majority of people at these two constituencies shall surely oppose this Bill since they have already voted for the opposition. In many of the constituencies that were contested, the votes polled by the opposition were over 40%. Generally, we can safely say that about 40% of the voters in Singapore would definitely oppose the banning of party political films since they are not against the opposition. In the results at the first poll for the Elected President, there were about 40% of the voters who did not vote for the Government candidate. I would think that they too would be against this move to ban party political films. Indeed, if those parts of the Bill concerning banning party political films were to be put to a referendum, my view is that the Government may just not get what it wants. The fourth reason why party political films should not be banned is because the Government is setting double standards by implementing this Bill. The Government, under the new section 2(3), is allowed to broadcast party political films through the mass media because the purpose of which is purportedly the reporting of current events. Therefore, at election time, under this section, the Government can report all their members' election speeches and election activities through the local television and radio as current events. At the same time, opposition members shall not benefit from such wide coverage unless, of course, the news are bad about the opposition. By this Bill, the playing field is further tilted to the advantage of the PAP in coming elections. The fifth reason for not allowing the banning of party political films is that it is one more step to discourage political awareness among Singaporeans. The Bill also further gives an impression to our young citizens that discussing opposition politics is something to be avoided because normally a government would only ban something which is bad for the people. And by banning party political films which is really aimed at the opposition, the people of Singapore will also have the impression that films made by the opposition must be bad. They are to be lumped together with obscene films. Obscene films are actually worlds apart from party political films. Yet they are lumped together in this Bill. I strongly object to the passing of this Bill banning party political films. On record, by the votes cast at the last general elections, there are almost 50% of those who voted shall be against this Bill as it stands. On this line, I would say that there are very good grounds to send this Bill to a Select Committee and I call upon the Minister to do so.

Mr Speaker, Sir, could I have a clarification from Mr Chiam? He said that one has to stand for election to know whether the elections are fair. I think he is wrong. In fact, the public of Singapore, the 3 million people, know what is a fair election. Is he saying to the House that he came to this House by unfair election?

I am sorry that the NMP has to ask me to clarify. The best thing is actually for him to take part in an election. Then he will know the difficulties as regards election rallies, putting up election posters, party broadcast time, and as regards the Police who are always about. There are many things that he does not know and I think it is best for him to stand in an election. Then let him say whether we have the most fair elections in the world.

(In Mandarin): Mr Speaker, Sir, the Films (Amendment) Bill clearly provides for anyone who produces, distributes or exhibits any party political film to be fined up to $100,000 or imprisoned for as long as two years. The Singapore Democratic Party (SDP) once produced a video film but it was banned from distribution by the Government. This Bill further deprives the Opposition of the right to make use of other media to reach out to the people in order to express their views on the nation, society and the Government. However, the Bill also provides that films covering current affairs shall not fall under the category of political films. Then, the People's Action Party (PAP) will not be affected, because the PAP can make use of the current affairs programmes on the television channels to send their signals effectively to the people at any time. The real purpose of this Bill is not just to prevent the opposition from producing and distributing films or video which are not in the interest of the PAP, but more importantly, it is designed to block out the unfavourable comment on the PAP by any foreign media. As such, the real question is whether this Amendment Bill covers also the TV broadcast relayed by Singapore Cable Vision (SCV). We all know that SCV will eventually reach out to each and every household in Singapore. SCV relays TV programmes from other countries. Some of these may contain the views of people from other countries on Singapore, particularly some comments on policy matters, or on the way in which the PAP rules Singapore. The PAP introduces this Amendment Bill just as the people of Singapore are beginning to avail themselves of some different views and comments from SCV. In clause 2 of this Bill, the definition of political films is very wide. Any film that touches on any of the Government's policy, controversial issues, or comments on any political matters shall be deemed to be a party political film. In future, if SCV is to telecast any of these films, or any programme containing unfavourable comments or criticism on the PAP, will it then be committing an offence? The Government has been telling the people of Singapore that our information is open. Our people can tune in to foreign TV programmes through SCV. However, after this Bill is passed, if SCV is to telecast any programme that contains unfavourable comments on the PAP which are considered to be biased, and the officer-in-charge is accordingly found to be guilty of an offence, then is this what the PAP Government mean by saying our information is open?

Mr Speaker, Sir, my concern, of course, is with that part of the Bill that seeks to shut out any film of a political activity in Singapore. I have no quarrel with the amendments proposed to punish exhibitors of pornographic films, and particularly child pornography. I wonder, Mr Speaker, Sir, how many people outside this House were aware, before the House sat today, that this Government intends to categorise a political activity, and that is, making a film on political issues, and thereby educating our citizens into greater awareness, with obscenity and lewdness. I find this totally inexplicable, that the Government should try and lump a particular form of political activity with obscenity and lewd films. And that is made clear, if you look at one of these clauses, that is, clause 11, which seeks to amend section 35(1) of the Films Act. And the amendment is that instead of the word "lewd", you insert "a party political film". So a party political film would appear to be in the minds of the Government to be the same as a lewd film. Mr Speaker, Sir, I do not propose to repeat what has been said before. I am not going to go over the definitions in this Bill. To me, it is not just a question of amending the definitions and curtailing the impact of this total ban on a form of political activity in Singapore. The whole thing is totally unnecessary, with or without any amendment, and any amendment is not going to make it any better. The Minister, in introducing the Bill and in attempting to justify the ban, says a video-tape which contains issues that concern Singaporeans may be emotional and perhaps move them to action. What the Minister forgets, and the PAP forgets, is that politics is an emotional matter. People are moved by political decisions that are made by the Government. They do not remain cold and impassive to a decision made by the Government. Some are moved very deeply by a decision of the Government. Is that wrong? Is that to be dismissed as simply that they are emotional? So I cannot understand this justification that a videotape which tries to bring to the citizens any issues that concern them, and politics is simply nothing but discussion of issues that concern the people, that it is emotional. Politics concerns the body politic. It covers everyone. So if there is any issue that concerns them, then it is politics. And so I cannot accept the attempt made to justify the ban on the ground that people may be moved. Secondly, what is forgotten is that our citizens have to be educated on issues, and a videotape or a film is perhaps the most effective way to educate our citizens on political issues. It is quite clear that our Government in Singapore has no intention and has no wish to educate our citizens politically. All they are concerned with is to drive home to our citizens their message, their goals, regardless of whether it is good for Singaporeans or not. And as a result of all these, for the last 30 years, this drone of Government propaganda is churned out over the TV every night, churned out over the radio, and our people have become resigned, as the former Deputy Prime Minister of this Government said, to hearing nothing else but PAP propaganda, and they are unable to make any judgement on whether what the PAP proposes is good for the society or not. That clearly is what the PAP wants. There is no question about it. The second justification made by the Minister is that there is already an arena for serious political discussion. I really wonder whether the Minister has thought about what he is saying that there are enough opportunities provided in Singapore for political discussion. The PAP's record, ever since it took power in 1959, is one to stamp out political discussion, to stamp out any raising of issues by people who feel concerned about what is happening in the society. Why has this Government continued and strengthened the Internal Security Act when previously there was an appeal to an independent board from any detention? This Government took away that appeal and so it has a very effective tool in silencing any discussion on politics in Singapore. As I said, the record of this Government is one of deliberate and systematic suppression of any political debate or discussion in Singapore. Politics has become a dirty word in Singapore, and we see it here, it is to be lumped with obscenity. That is the place for politics in Singapore, not anywhere else. After the PAP took power in 1959, they began a deliberate and systematic suppression of the institutions in Singapore that may provide opportunities for political discussion and debate. I do not propose to dwell at length on this track record of the PAP. But I wish to highlight to Singaporeans the principal ways in which they went about this. The trade unions were brought under control. Trade unions were not allowed to express any views on issues that concerned the people at large. The trade union movement was put under a man of their own party who was brought out from Malaysia to lead the trade union movement. And after him, the trade union movement has been put into the care of a Cabinet Minister. So what freedom was there left for trade unions to express their views on matters that concern the society? Then there was the press. At one time, Mr Speaker, Sir, there was some freedom in the press. It tried to be a responsible press. I recall that, before the 1959 elections, when the then Secretary-General of the People's Action Party was threatening fire and thunder against the press because he thought they would be advocating wrong ideas, they sent their representative to Helsinki to protest against this intention announced by the Secretary-General. But after the PAP took over, by a number of manoeuvres, the press have now become mere propaganda agents for the Government. What real opportunities are there for serious political issues to be debated or advocated through the press? We have in the Party sent a number of press releases, I have written a number of letters and a substantial number of them never see the light of day. It is probably because they all have got to be cleared first. So the press have ceased to play any part in providing a forum for political discussion. Then there is the clamp down on professional and religious organisations. One by one the professional bodies were told, "You are not to concern yourself with any issues that may concern Singaporeans. You are only to concern yourself with matters that affect your members." And so the Legal Profession (Amendment) Act was passed which forbade the Law Society from commenting on any Bill that was to be presented to Parliament unless the Bill had first been sent to them for their comments. And then there were the religious bodies. Now we have the Maintenance of Religious Harmony Act and under which any cleric can lose his licence if he dares to comment on any issue that may concern the Government. It is again based on the fallacy that religion and politics are two distinct and different things, forgetting that religion has to do with the citizen's views and attitudes to the society around him. That is what politics is all about. So you cannot divorce religion from politics. Then there was the onslaught against the opposition political parties. It is very difficult for anyone who has not been in any opposition party to know the difficulties and problems that are put in the way of opposition parties. We are not allowed any public meetings other than the meetings perhaps on National Day or Labour Day.

Order. Mr Jeyaretnam, can I ask you to be relevant to the Bill under discussion?

I am dealing with suppression of political activities. This is one of them.

I think you are taking it a bit too far. Can I ask you to get to the Bill?

All right, Mr Speaker, Sir. What I am attempting to say is that this amendment drives another nail into the coffin, an attempt to kill all political activities in Singapore. That is what I am attempting to say here, that one by one, all political activities are being killed off in Singapore. And it may not be very long before we have another Bill presented to this House which will perhaps even prohibit the publication by a political party of any newspaper or journal because it may contain issues concerning the people which might arouse their emotions. I can see that coming with this Bill that seeks to ban films put out by a political party to educate the people on any issues in Singapore. The speakers who spoke after the Minister also made a number of assumptions which I do question. As Mr Chiam has already pointed out, an assumption is made that elections in Singapore are free and fair. Knowing how elections are held in other countries and how elections are held in Singapore, may I say that elections in Singapore are not free and fair. They are anything but free and fair. Then again the assumption made by a number of speakers, that there are other areas for serious discussion. But no attempt is made to try and define where these areas exist. There are no areas for public discussion of issues in Singapore. Has the PAP made any attempt to call a public meeting of citizens to discuss any policy or Bill that they propose to bring into Parliament? Have we heard of any such meeting or read of any such meeting? This Bill and the way it has been introduced demonstrates that only too clearly. This is a momentous decision, to stop one form of political activity.

Order. Mr Jeyaretnam, you are engaging in tedious repetition. If you have nothing new to say, could you end your speech?

All right, Mr Speaker, Sir. What I will say to the Government is this. Why do we not be honest? Why does the Government, the PAP, not say that our brand of democracy - because that is what it has often said - that Singapore's democracy is something quite different. Our brand of democracy will not permit opposition political parties to put forward their views, unless the views conform to what we say are the stated goals and objectives. Then at least one can say that the Government is being honest about it. At the moment, a lot of Singapore is pure pretense, pretense that we have got democracy, pretense that people are allowed free discussion on matters that concern them, pretense that we have a responsible press, pretense that we have a responsible trade union movement. This amendment Bill seeks only to strengthen the PAP's hold on Singapore, and that clearly seems to be the object despite all the high-sounding words that have been said to justify the amendment to ban all party political films.

Mr Speaker, Sir, it is our brand of democracy that has enabled the NCMP to be here in this House to speak on this Bill. He opposed the NCMP provision, in case we forget. He lost in the election at Cheng San.

How did I lose?

He came in here because of a provision we made to ensure that there will always be a lively debate in this House, and for which I think we are all happy that he has spoken his piece, somewhat tediously perhaps, but still by the extreme way he has presented his views, he has helped to clarify the landscape. Now our main positions have emerged and everything else in between are details. Sir, I am very grateful to many Members of the House for spending time looking into the details of the Bill. I have no doubt that all those who spoke spent a lot of time checking the Bill, the original Act, looking for inconsistencies, checking definitions in the Bill with definitions in other Acts. It shows how important this Act is to us. Before I touch on the rather controversial amendment on party political films, let me first clarify some of the other issues which were raised. By and large, Members supported the other amendments, but there were some questions raised which I feel I ought to respond to. Mr Chew Heng Ching asked whether the threat to forfeit all or part of the deposit might somehow inhibit the growth of the film industry. Not at all. The purpose is a practical one. It is in response to a practical problem. Ever since we introduced R(A) rating in our cinemas, we have required cinema operators to check the ICs of young people who buy tickets to ensure that they are above 21 before they can watch R(A) rated movies. Sometimes they have been lax and young people have gotten in. So this is to ensure that they can be fined, that a penalty can be imposed upon them when they have not kept to the conditions of their licence. It is an administrative thing, a provision which we have not had in the past. The only recourse we had in the past was between giving them a warning and withdrawing their licence, and we felt we needed something in between. A number of MPs asked whether the proposed changes would somehow stifle the arts or stifle the growth of the film industry. Not at all. In fact, what we have tried to do is to clarify a particular area about which I will talk in greater detail later. But our objective remains the same, which is to promote the arts and to promote the film industry. In fact, it is the plan of the Ministry of Information and the Arts to form a Films Commission under the National Arts Council specifically to help promote the growth and prosperity of the film industry. Films like Twelve Storeys will not be affected. The same process of consultation between BFC and the trade will continue. If you are not sure whether a film will infringe censorship guidelines, you can consult the censors. They will give you advice. They will say, "These are the benchmarks. These are the things we have allowed in the past. These are the things we have disallowed. So please adjust accordingly." And we also have a system for classification. Whether films to educate members of the public produced by Ministries will be affected, no. It is clear in the Bill that Government films are exempted from the provisions of the Act. Dr Toh See Kiat asked some questions about definitions. "Election" is separately defined in the beginning of the Bill to make it clear that it does not refer to elections for private clubs or whatever. The definition of "broadcasting" is the dictionary definition, which is if you broadcast programmes, television or radio, by wireless or by cable. It is a simple definition. It suits our purpose. There is no need to define it at this point in time more clearly. Internet broadcast will be covered under the Singapore Broadcasting Act. These are some of the clarifications which I owe Members. I would now like to talk about the special amendment to ban party political films. In 1996, around March, Dr Chee Soon Juan of the SDP wrote to BFC to ask whether he required a licence to distribute political videos. BFC said yes. Then he submitted an application. This is the first time anything of this sort had happened in Singapore. For those Members who talked about this restriction somehow affecting fair and free elections in Singapore, we have had free and fair elections all these years in the pre-video age. I do not think with or without this provision, it will affect substantially the way elections are conducted in Singapore. The Chairman of the Board of Film Censors, sensing that this is a new area, referred the matter to the Ministry and asked for policy guidance. There were two approaches we could have taken. We could have allowed political films. If we had allowed party political films for the SDP, then naturally the Workers' Party and the PAP would all have jumped in. Right through the nine-day campaign period, we would all be busy putting on make-up, combing our hair, dressing up, appearing in political videos and distributing them to Singaporeans in order to win votes. Or we could say, do we want everybody to jump into this new medium? The question we have to ask ourselves is: will this new medium improve democracy in Singapore or degrade it? The advantage of having a debate in this House is that there is an immediate encounter. A point is raised, a point is rebutted. Views are immediately clarified. The media is up there to report on everything that is happening. You do a political video, we worry about sound bites. We watch the tone of our voice. We smarten ourselves up. We distribute. You distribute. To whom? I do not know. We distribute. To whom? You do not know. After a while, members of the public, receiving all these versions, will develop a very cynical view of who we are. We are not film stars. We are not TCS stars. We are here elected by the people of Singapore to discuss serious matters. And when we have a debate, let us have an encounter, a meeting. If you object about something written about you in the newspapers, you write in to rebut. You write something scurrilous or libelous in a political newspaper, the offended party can require you to clarify, if a case can be put up to the judges. On television, do we really want political parties to have the right to buy commercials? You know how expensive TV airtime is. In America, before you think about running for elections, you first ask yourself, "Can I raise the money?" And the financial hurdle is enormous. We are a small city state. Even if there were a massive power failure and there is no television and the telephone lines are dead, within a few hours, from one end of the island to the other, from Changi to Tuas, the grapevine will operate. Singaporeans are not ignorant. How could we be where we are now as a major financial trading centre in the world if we are an ignorant people, if we are as suppressed the way Mr J B Jeyaretnam would have us believe? But if we allow this medium, what happens? We will all become entrepreneurial. There will be any number of PR men in Singapore or foreign consultants offering their services to us. You know, in America, it is an industry and they are very good at it. It is an art form. They will teach us all kinds of new tricks, how we should sit down, how we should look when the TV camera pans at us, how many seconds of sound bites we should plan for, what kind of particular spin to give to every political ball that we kick. It is not good for the political process in Singapore. We will reduce it to the selling of detergent. Every evening, when we watch the television, toothpaste, detergents, soaps, hamburgers, any number of reasons attractively put across. With ditties our children are able to reproduce with accuracy. If the quality of our democracy in Singapore is reduced to that, our democracy would be debased. That was the question we had to ask ourselves: should we or should we not encourage this medium in Singapore for political debate? If we do, then all of us are in. Mr Simon Tay talked about unequal impact. If we are in, I think the PAP would not necessarily be disadvantaged, because you will need money, and because of our wide base of support in Singapore, we are likely to be able to raise more money than the opposition can. But to its credit since 1959, the PAP has never used the financial hurdle to keep out the opposition from this House. Till today, does it cost a lot for Mr Chiam and Mr Low Thia Khiang? Mr J.B. Jeyaretnam has a different problem because he skirts on the margin of libel and so gets caught out from time to time. But did it cost Mr Low Thia Khiang and Mr Chiam See Tong a lot of money to get voted in? Did they have to be businessmen? Did they have to be independently wealthy? You can get in today on a shoe-string if you can win the hearts and the minds of the people of Singapore. And that is what it should continue to be. Do not make it show business. Keep it to an encounter of ideas so that Singaporeans will decide whom to vote for, whom to represent them in this House on the basis of ideas. Because it was a very serious matter, I put it up to the Cabinet. We had a discussion in the Cabinet. Then my Ministry issued a policy instruction to BFC to say, "Look, we should not allow the making and distribution of political films." So the SDP's application was turned down. That was in July 1996. At that time, we had three SDP Members in this House. We had a Member from the Workers' Party. Did anyone of them raise a single question and cause the matter to be debated? Not a word. If it was such an important matter, so crucial to the outcome of the election, all of them would have jumped up and down. Did they? The records speak for themselves. We could have gotten by, I could have gotten by, without tabling this Amendment Bill because, under the existing Films Act, we are able to ban political videos, and that's that. But why then did we decide to enact this amendment? In order that we have this debate in the House today. Because it is such an important matter, and is a matter which will recur, it is very important for the public mind that we know what the issues are, and if Singaporeans are excluded from using film as a medium for political debate, they know why. I was under no pressure from the opposition, or from anybody for that matter, to enact this amendment. Mr Simon Tay asked, "If politics, why not race or religion?" In fact, the Films Act does not explicitly state the grounds on which films can be censored. We inherited this Act from the British. It is left open so that internal guidelines would build up over a period of time. For obscenity and violence, detailed guidelines have been drawn up and this is also my answer to the NMP, Claire Chiang. If a film is made, which inflames public emotions, let us say, the Indian Army's storming of the Golden Temple in Amritsar, we will have to look at it very carefully. If it is inflammatory or incendiary, we would have stopped it. That's that. This is because the public interest requires it. But in this particular case, because it affects the evolution of political debate and discussion in Singapore, we thought it better to have a full airing so that we all know why we are doing this. It is not because we have to, not because we are under pressure to, but because it is good for the development of our democracy in Singapore.

Singapore's own democracy.

Yes, which allow Mr J. B. Jeyaretnam to now make this interruption.

Singapore's own brand of democracy.

Every society treats film as a special category, because it has a mass impact which books and other forms of broadcast do not have. For television, we are watching different channels. We watch desultorily. I may be in the toilet, I may come back with popcorn. There is no focused attention. For books, we read different books. For Internet, there are millions of web pages. But when you gather a group of people together in a theatrette or an amphitheatre and watch the same drama, by words, pictures, music, sound, you can bring everyone to laughter and tears into their eyes or you can arouse in them deep hatred and a desire for revenge. The communists and the fascists work this into an art. In China today, the whole of China, in a year they show 200 films. They treat the cinema hall as they do the television station. Every year, we show over a thousand films in Singapore. We consider them mostly entertainment. But in the wrong hands, films can have a powerful impact. It is for this reason that over a period of time, in all societies special laws have been enacted to govern the making, distribution and production of films. This is why this Act is different from, say, the Publications Act or the Newspapers and Printing Presses Act or the Singapore Broadcasting Act. Many Members have talked about whether somehow we would stop having discussions on television, whether party political broadcast would cease, whether we would stop foreign views coming in through SCV. None of it. Because the Act makes it very plain that it does not cover broadcasting. We are talking about films and its variants, videos and new mutants on the Internet. But we are talking principally about films, about people coming together for a group exhibition being moved together one way or another. Why the heavy fine of $100,000 and up to two years of jail sentence? Because the impact during an election campaign can be dramatic. Let us say, $2,000, as proposed by Mr Chiam. Election day minus two, you suddenly mass-distribute throughout Singapore in key constituencies and you swing the public vote, whether PAP or opposition. And we transform the nature of this House. After that, you can pay the fine. But the damage has been done. The damage can be dramatic and catastrophic. So there must be no doubts in people's minds as to the seriousness of this offence. Of course, if this is done years before an election and under less serious circumstances, I am sure the judge would take it into account. But the purpose of having a high maximum is because in an election campaign, the consequences of such a wrongdoing can affect gravely our country. A number of Members have asked, "Why can't we just restrict the definition to films made by political parties? Then it is a simple definition. It is clear. I am not a political party. I do not make the film. That's that." But imagine if we had confined it in this restrictive way, and you are a political party desperate to win votes and wanting to use film as a way to win votes, what would you do? You get your friends outside the party to produce and to distribute the films. You do it in the Workers' Party, the SDP will do it, the PAP will do it. This is why the second limb has to be constructed because if you do not construct the second limb, that wider definition, you cannot maintain the position in the first limb. But the intent is clear. It is not, in non-party political fields, to do anything more than what we are doing now. Mr Chiam and Mr J.B. Jeyaretnam suggested that we are denying high-tech to the opposition. You will remember that some years ago, I caused the Young PAP to start an Internet web site, knowing full well that we would have to eventually regulate political web sites on the Internet. Letters which Mr Jeyaretnam complains are not being printed in the Straits Times, he is quite free to post them on his web site. Singaporeans are free to click in on his web site and be moved by the force of his arguments. I would suggest to members of the public from time to time to scan political web sites to see what is on them. If our political parties are really so deprived, so excluded from all channels of communications, so denied of free speech, you would have thought that their web sites would be flourishing centres of debate and discussion and enlightenment. Are they? Some Members have also asked, "We already have the Maintenance of Religious Harmony Act and the Internal Security Act. Are they not enough?" In an election campaign, you cannot lightly use the Internal Security Act because it would be immediately misunderstood. If you use it after the elections are over, the damage is already done. It is a blunt instrument. We need something finer. Dr Toh See Kiat asked whether the definition of political films would somehow prevent discussion on animal rights or about the moral issues concerning cloning or whatever. It depends on the actual facts of the situation. If animal rights become a gripping political issue in Singapore, and all political parties take positions, then, yes. But if it is just a fringe activity, firstly, I do not think we will take notice, and secondly, if it is unbiased and takes in all views, I think that may well qualify as a reporting rather than anything else. The key is: is it partisan? Is it biased? Is it intended to influence an election, or legislation? An MP asked, "Why not have more civic participation? Why not have a Select Committee?" There are so many consultation boards in Singapore that I have quite lost count. In my Ministry alone, we have proliferated. So have the other Ministries. Many Singaporeans complain that they are being asked to sit on so many boards and so many panels. Far from it being that we do not consult, if there is a criticism now, it is perhaps that we consult a little too lightly and too frequently. Is this somehow a restriction of free speech, free debate, in Singapore? Recently, the two major financial television channels merged, ABN, which is owned by Dow Jones and TCI, and CNBC, which has a joint arrangement with Microsoft. They merged and they decided to keep as their common entity, CNBC. CNBC was based in Hong Kong, and ABN in Singapore. The merged entity would be called CNBC. They decided that it should be based in Singapore and not Hong Kong. If we blithely enact laws to prevent debate and free speech and the education of our people, would big international media corporations like Dow Jones and TCI and NBC have taken such a position? But this does not mean that we should not be masters of our own destiny and shape the evolution of our own democracy. Once again, I thank Mr J.B. Jeyaretnam for providing contrast to our argument. He asked why we should separate religion from politics, by which I infer that he would encourage monks and priests and ulamas to talk about politics.

About issues.

On political issues, in places of worship. Mr Jeyaretnam's position on this is clear. Our position on this is clear. I think the majority of Singapore's position on this is also very clear. So too our proposal here to exclude film as a very poor medium, and a degrading medium, for political debate in Singapore.

Sir, may I ask the Minister by way of clarification? I understood him to say that if videotapes were allowed in the elections, and he mentioned one, two, three constituencies, it would transform the nature of this House. I take it that the Minister says we would then have more opposition Members in Parliament. And he says that the damage would have been done. May I know what would be the damage if you had more opposition Members in Parliament?

Sir, I was not saying that at all. If we had political videos, Mr Low Thia Khiang and Mr Chiam may not be in this House.

Question put, and agreed to. Bill accordingly read a Second time and committed to a Committee of the whole House. The House immediately resolved itself into a Committee on the Bill. - [BG George Yong-Boon Yeo]. Bill considered in Committee; reported without amendment; read a Third time and passed.

Order for Second Reading read.

The Member in charge of the Bill has informed me that he would like to defer the Second Reading of the Bill to a sitting after 19th March 1998.

Mr Speaker, Sir, I beg to move, 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 "$84,000", "$3,378,400", "$819,100" and "$226,000" in the second column and substituting the figures "$100,800", "$2,404,700", "$841,300" and "$17,000" respectively. Sir, it is proposed to increase the provision for the Class I expenditure by $16,800 for entertainment allowance to cater for higher costs of hosting official functions. The provision for Salaries of Personal Staff is expected to decrease from $3,378,400 (for 103 posts) to $2,404,700 (for 52 posts) due to the transfer of the Horticultural Section from the President's Office to National Parks Board on 1st April 1997. A provision of $841,300 is required to meet Expenses of Household. This is $22,200 or 2.7% higher than the FY 97 provision mainly to meet the higher maintenance expenditure of the Istana grounds. A sum of $17,000 is required for Special Services for the purchase of office equipment ($5,000) and the honorarium payment to the President's legal adviser of $12,000. It is substantially lower than the FY 97 provision which included $140,000 for the replacement of a station wagon. It is therefore necessary to vary the provisions in the Schedule to the Civil List and Pension Act (Chapter 44) 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 "$84,000", "$3,378,400", "$819,100" and "$226,000" in the second column and substituting the figures "$100,800", "$2,404,700", "$841,300" and "$17,000" respectively.

Order. I suspend the Sitting and will take the Chair again at 4.30 pm.

Sitting accordingly suspended at 4.07 pm until 4.30 pm. Sitting resumed at 4.30 pm

Mr Speaker, Sir, I beg to move, That Parliament approves the financial policy of the Government for the financial year 1st April, 1998 to 31st March, 1999.

Mr Speaker, Sir, the Singapore economy grew by a robust 7.8% in 1997. However, this did not reflect the seriousness of the ongoing regional economic turmoil which started in July last year. Economic growth in 1997 was largely shaped by two factors. First, we benefited from the recovery in the global electronics industry. Corrections in inventory overhang and healthy new orders in US and Europe boosted export demand, and confirmed our earlier assessment that the slowdown we experienced in the second half of 1996 was primarily cyclical. This turnaround provided the fillip for the manufacturing sector. We expected this. But nobody expected the second factor - the spread and subsequent deepening of the economic crisis in the region. The speed and severity of contagion caught everyone off-guard. What started off as a devaluation of the Thai Baht led to widespread financial and economic turbulence in the region. One after another, regional currencies and stock markets plummeted as international confidence in the region as a whole fell and global capital flowed out of East Asia. Singapore, despite our strong fundamentals, was not spared. Fortunately, the impact on the real economy in 1997 was muted. There were two primary reasons for this. First, a large part of Singapore's regional trade consists of intra-firm movement of parts, components and final products by multi-national companies (MNCs) for export to end markets in the OECD countries. As final demand from the US and EU was healthy, Singapore's overall trade was not too seriously affected by the regional crisis. Second, the upswing in global electronics demand also supported our manufacturing growth, generating favourable spin-offs for our related hub services.

The regional crisis is far from over. While its impact on us in 1997 was minimal, the same cannot be said for 1998. Being at the heart of South East Asia, we are not isolated from regional conditions. We have comprehensive economic linkages with the region and a strong stake in our neighbours' prosperity. In particular, our tradable services sectors like finance and tourism have a strong regional orientation and will be directly affected. It is useful to review how the regional crisis started and spread, assess its impact on the Singapore economy and businesses, and identify the measures which the Government, companies and Singaporeans can take to tide over this difficult period. What Caused the Crisis The roots of the crisis can be traced back to the huge influx of cheap foreign capital to the region in the early 1990s. With inadequate prudential supervision, regional financial institutions over-extended themselves and lent excessively, often to unproductive sectors and projects. This rapid build up of foreign debt was not sustainable. It created asset bubbles in the property and stock markets. For a time, strong regional economic growth enabled the countries to service their debt obligations through buoyant export revenues. Confidence in the region's export potential began to waver towards the mid-1990s, with various exchange rate realignments. In 1994, China devalued the Yuan. In 1995 the Japanese Yen started depreciating against the greenback. In countries whose currencies were tightly pegged to the US dollar, exports began to lose competitiveness. Economies such as China and Latin America emerged as keen competitors. These developments coincided with a cyclical downturn in the global electronics industry and precipitated a regional export slowdown in 1996. With the export engines stalled, investors and creditors grew nervous of the regional countries' continued ability to service the growing foreign debt burden. Eventually, the market lost faith in the sustainability of the linked exchange rate systems adopted by regional economies. Thailand was the first to suffer this loss of investor confidence. Speculative attacks against the Baht mounted as concerns about the Thai economy grew. The breaking point came when Thailand's foreign reserves dipped below its short-term foreign debt obligations in the middle of 1997. Without sufficient reserves to defend its currency, the Thai Government was forced to allow the Baht to float on 2nd July 1997. The contagion effect of this de-facto devaluation of the Thai Baht quickly spread to Malaysia and Indonesia as the market switched its attention to other Southeast Asian economies with similar structural weaknesses in their financial and banking systems. By September, the financial crisis extended to North East Asia. Hong Kong's US dollar peg came under severe pressure, but managed to hold. Long standing structural weaknesses in Japan's financial and banking system caused some major institutions to fail. South Korea, with weaker fundamentals and large private sector debt, took the biggest hit. A massive US$57 billion IMF-led bail-out package was necessary to stabilise the Won, and to keep the Korean economy on its feet. Depending on how successfully Governments manage economic recovery, maintain political and social stability, and restore investor confidence, the regional situation could either gradually stabilise and start to recuperate, or continue to deteriorate before it gets better. Even if regional countries take all the right steps and see through painful but necessary political and economic reform policies, the recovery process cannot be immediate. Overall, we can therefore expect slower regional growth over the short to medium term. Outlook for the Singapore Economy Looking ahead, it is difficult to predict precisely the immediate economic outlook for Singapore. The regional context is too volatile and fraught with uncertainties. Further, political, social and economic changes can trigger off new discontinuities, and render past trends irrelevant. What we can do is to assess the economic outlook based on the current situation, assuming there are no drastic developments. The Singapore economy is expected to feel the full impact of the regional economic crisis this year. The latest business expectations survey results indicate that nearly all major sectors expect weaker business conditions for the next 6 months. The Composite Leading Index, which leads economic activity by about 9 months, has been slowing down since September. Growth in the financial services sector is likely to moderate significantly. The Asian Dollar Market, one of the key financial growth engines, will slow considerably. With the risk premium for the region having risen significantly, financial institutions are adopting a wait-and-see stance before committing any new loans to the region. Activity in the foreign exchange and stock markets is also expected to moderate from the high levels in the second half of 1997. The commerce sector has already registered early impacts from the regional crisis. Entrepot trade will moderate as import demand from regional countries for consumption and capital goods slows. The other domestic segments within commerce will also not be spared. The tourism and retail trades are already seeing slower tourist arrivals and consumer spending, with no immediate prospects of a pickup. The transportation sector, especially our air and sea ports, will also be adversely affected by the fall in tourist arrivals and regional transhipment activities. However, the telecommunications sub-sector should continue to expand, albeit at a more moderated pace. In manufacturing, the continuing robustness of our major export markets in US and EU will help to sustain growth. The US is enjoying an unprecedented stretch of strong growth accompanied by low unemployment and low inflation. The uptrend in US demand for electronics components since the second half of 1996 is continuing. Growth in the EU is also expected to remain firm. The healthy pipeline of investment commitments over the last few years will also contribute to additional industrial capacity in 1998. These positive factors will help our manufacturing sector, although we will still see some consolidation in industries where there is global over-capacity and keen competition. Construction should see robust growth. Private residential developments are sluggish. But growth will be supported by the continued healthy pipeline of public sector infrastructure projects, including the North-East MRT line and public housing projects. Under present conditions, the Ministry of Trade and Industry (MTI) expects the Singapore economy to slow down significantly, but not to the extent of going into a recession. MTI's economic growth forecast for 1998 is 2.5 to 4.5%. MTI will continue to monitor future developments closely, and review its forecast where necessary. Lessons from the financial crisis The rapid development of the regional crisis and the regional outlook for 1998 contains two important lessons for Singapore. First, even while the external environment appears favourable, things can deteriorate rapidly. We cannot assume that the external environment will remain benign forever. We should never be complacent. Policy vigilance is necessary. We must save and invest wisely in good times, to build up a deep and firm economic foundation. Second, the regional crisis has reaffirmed the importance of preserving and instilling confidence internationally and domestically for continued stability and economic growth. International and domestic investors determine demand, invest ment and hence the level of business activity. The Government must therefore build up the confidence and trust of investors through credible, consistent and pro-growth policies. During crises, we must be responsive and ready to effect rational measures judiciously and promptly to restore market confidence. Policy Stance/Adjustments We should use this period as an opportunity to build on our considerable strengths, review our longer term strategies and position ourselves for future growth. Fortunately, our economy is now much stronger and more resilient than it was in 1985. Our economic structure is more mature, our costs more aligned with productivity and economic growth, and our people better trained and skilled than a decade ago. Our current account surpluses and reserves are healthy, our export markets are well diversified, and our industrial and services base is broad. Overall, our fundamentals remain sound. The Government is watching closely the impact of the regional crisis on our economy. The Committee On Singapore's Competitiveness has gathered private sector feedback and recommendations. We must make some adjustments to keep our business environment competitive, but drastic policy changes are not appropriate or necessary at this juncture. In formulating our policies, the Government's key objective is to maintain the framework for economic activity. Market forces will compel industries to consolidate and restructure. Some industries will feel the fall in business demand more than others. Weak and over-extended companies may have to merge or fold. We must accept this. It is the normal process of adjustment to new economic conditions. The Government cannot prevent it from happening, or intervene to support companies which are in difficulty, without paying a high price in terms of misallocated resources and moral hazard. At the same time, we will push ahead with plans to restructure our economy towards higher value-added activities, and enhance our economic capabilities and competitiveness to support future growth. (A) Fiscal Policy During this period of uncertainty, we have emphasised fiscal prudence in planning the Government Budget. We have decided to adopt a conservative fiscal stance, and target for a modest budget surplus, smaller than in recent years. Government revenues will be stagnant. We are keeping a tight lid on operational expenditures. But we are increasing capital expenditures, particularly in the key areas of education, economic infrastructure and defence, in order to invest for the long-term. Education Human talent has always been our most precious resource, and will become increasingly critical as we develop into a knowledge-based economy. The quality of our education system will determine whether young Singaporeans will be able to access, process and apply knowledge creatively. The Ministry of Education (MOE) has embarked on a comprehensive plan to upgrade both the hard and soft aspects of our school infrastructure. For example, the Master Plan for Information Technology in Education seeks to impart thinking, learning and communication skills through the use of information technology (IT) in our schools. At the same time, the Master Plan aims to continually anticipate the needs of society in future and cater courses to meet these needs. Economic infrastructure Our world-class infrastructure has helped to keep us in front in a highly competitive environment by keeping our total business cost relatively low. We must continue to invest in building our longer-term productive capacity. Key economic infrastructure projects we will push on with include reclamation at Changi East, Jurong Island Phase 3 and the upgrading of industrial facilities at Tuas. This counter-cyclical spending will boost the economy, and enable us to take advantage of lower construction costs during the regional slowdown. Defence Economic prosperity depends on a framework of stability and security. A strong, credible SAF deterrent has been a key element of this framework. A professional and effective defence force with cutting-edge capabilities is not built up overnight, but through prudent and consistent investment over many years. Defence spending must be seen as a long-term investment, not dependent on the ups and downs of the economy from year to year. A credible defence capability is the pre-condition for Singapore's continued peace and prosperity. (B) Wage Restraint & Skills Upgrading Our overall cost structure is not significantly out of line. Singapore is internationally competitive, unlike in 1985. But we should be careful to do nothing to weaken our competitiveness during this period of slower economic growth. Cost containment will be a major concern for all businesses. Wages form the largest component of business costs. We need to watch wage costs very carefully. Our priority this year should be to protect jobs. Companies are already trimming back wage increases, and in some cases freezing wages. The Government has announced that salaries of ministers and civil servants will effectively be frozen this year. Wage moderation and flexibility are an important part of our response to the regional crisis. Up to the 1985 recession, our wage system was too rigid. This made it difficult for companies to trim wage costs when the economy slowed, and contributed to deepening the recession. To trim costs, we had no alternative but to cut the employers' CPF contribution rate. So after the recession, we set up the flexible wage system. As the economy grew, year by year we built up a variable component of wages, instead of locking in all the wage increases of good years in the fixed wage. This variable component would be a buffer that could be reduced not too painfully when business conditions changed. In 1987, when the flexible wage system was introduced, the variable component was, on average, 11% of total annual wages. Today, in the civil service the variable component has increased to at least 20% of annual wages, while in the private sector, the variable component is about 16%. We built up the variable component of salaries precisely to meet a situation like this year. If we need to trim wage costs this year, these variable components will be the first line of defence. This will depend on the NWC recommendations. Slower economic growth also makes it more urgent for workers to re-skill, re-train and upgrade themselves. There will be retrenchments as industries and companies consolidate. Workers who add significant value to companies are those who will keep their jobs. The key challenge for workers is to remain relevant and employable. The Government's policy has always been to create the right conditions for companies to create good jobs, and to provide ample training and upgrading opportunities for workers. We have not opted for unemployment insurance, but instead have kept our labour market flexible. This approach has served workers well and produced full employment for many years. However, despite this, nobody can expect lifetime job security. From time to time workers will be retrenched, even in a full employment economy. When this happens, those who have been retrenched must be willing to be flexible in their expectations, and if necessary accept a little less pay to secure a new job. The longer a worker stays unemployed, the more difficult it will be for him or her to rejoin the workforce. Even now the number of foreign professionals and workers is still increasing in Singa pore. There are more jobs to be filled than Singaporeans available to do them. Companies too need to tighten their belts during this period. They should look at streamlining and consolidating their operations to cut costs. They should also take the opportunity to upgrade their capabilities, and enhance their existing products and services to prepare for the upturn. At the same time, they should make more efforts to upgrade their workers. While MNCs and larger companies have made significant progress in worker training, reaching roughly 4-6% of investment payroll, smaller companies still lag behind, spending an average of only about 2%. Just as the Government is not letting up on our investments in education, companies too should not neglect to improve the quality of their workforce. (C) Local Enterprise Financing Scheme Another key concern of businessmen during this period of slower growth is the availability and cost of capital to support their business activities. Some businesses have reported that they are facing higher interest rates and that their credit lines are being pulled back. Some tightening of bank credit and increase in interest rates is inevitable at a time of regional uncertainty. The Government has explained that it cannot intervene to ask banks to extend loans or to lower interest rates. These are commercial lending decisions, which the banks themselves have to take. However, the Government will enhance its Local Enterprise Financing Scheme (LEFS) to help local businesses to obtain working capital. First, we will expand the scope of LEFS to cover more local enterprises. For factoring and working loan facilities, we will raise the eligibility threshold for manufacturing companies from a maximum of $15 million in fixed productive assets, to $30 million. For services companies, the cap on maximum employment size will be raised from 200 to 300 employees. Second, the Government will share a greater part of the risk in LEFS. Currently, for factoring loans, the risk is borne fully by the financial institution administering the LEFS loan, while for working capital loans, the Government and the financial institution share the risk 40:60. The Government will now co-share the risk for both factoring and working capital loans on a 50:50 basis with the financial institution. However, the financial institution must still undertake the necessary credit analysis, and satisfy itself that the company is a good risk. Third, the maximum loan quantum per company for factoring and working capital loan facilities will be increased from $5 million to $8 million. To cater for the expected increase in the volume of LEFS loans, the Government will increase its provision in LEFS loan lines from $760 million to $1.1 billion. We will review these enhancements to LEFS in 2 years' time. The Productivity and Standards Board and the Economic Development Board will be releasing more details of the enhanced LEFS shortly. (D) JTC/HDB Rentals Besides wages and the cost of capital, rentals form another significant component of business costs. In July last year, the Jurong Town Corporation (JTC) implemented several measures to moderate or defer rental increases for its lessees. These measures are up for review on 1st July 1998. Similarly, in December 1997, the Housing and Development Board (HDB) implemented a package of rental concessions for its industrial and commercial tenants. The HDB package included moderating rental adjustments at 3rd renewal of tenancies and staggering increases in rent for sub-letting and assignment cases. These steps were part of the Government's continuing efforts to review and moderate cost pressures on businesses. JTC and HDB will now extend additional rental concessions to their tenants and lessees. (a) JTC and HDB will freeze their posted land rentals for an additional 12 months, till end June 1999. They will moderate rental adjustments for their industrial land lessees who are paying less than the posted rates.

JTC will freeze the posted rentals of its factories, workshops and warehouses till end June 1999, and similarly moderate rental adjustments for existing tenants. (c) To help tenants and lessees who may have temporary cashflow problems, HDB and JTC will make upfront collections of rental payments monthly rather than quarterly. JTC and HDB will be releasing more details of these concessions separately. (E) Government Land Releases Another area of concern is the health of the property market in Singapore. An unstable property market will not only affect the property value of homeowners, but also has repercussions on the financial and economic system. In November, the Government announced adjustments to the private residential policies to avoid aggravating the excess supply in the market. The sale of sites for some 2,000 units from the 1997 Government Land Sales (GLS) programme was deferred to the first half of 1998. The 1998 GLS programme was postponed until the second half of 1998, and the original sale quantum of 5,000 units was to be reviewed. But the situation has altered considerably since November. The Government has decided on further adjustments to its land sales in 1998 as follows: Private Residential Properties The Government will defer the sale of sites for 2,000 units, scheduled for the first half of 1998. It plans to release a total of 2,500 units for private residential development in the second half of 1998. We will continue to monitor the regional and domestic situation, and if necessary, adjust the land sales programme again. The policy to release sufficient land over the medium term to meet Singaporeans' aspirations to own private properties is unchanged. The Government will resume selling a steady supply of land when the market recovers. Executive Condominiums Like private residential properties, the demand for Executive Condominiums has also been affected by the economic slowdown. The Government will reduce the land supply for Executive Condominiums in 1998 from the 3,000 units originally announced to 1,500 units. Commercial Space & Hotel Rooms The Government will release land for about 80,000 square metres of nett commercial space in 1998. This is about half the 166,000 square metres made available in 1997, and takes into account the demand and supply situation in the medium term. As there are enough hotel rooms to meet the needs of the tourism industry in the medium term, the Government will not release any land for hotel development in 1998. The Ministry of National Development will separately announce details of the sites to be released in 1998 for private residential properties, Executive Condominiums and commercial development. The Government will also be making some tax changes and concessions to help ease business costs. I will elaborate on the details in a later part of my speech.

The regional financial crisis arose out of financial excesses and a rapid erosion of investor confidence. Provided stability is maintained and effective reform measures are implemented, market confidence will be gradually restored in the regional economies and further fall-out will be minimised. But if reform measures are unsuccessful or stability is shaken, it could trigger off further uncertainty and economic difficulty. The regional crisis will affect the Singapore economy significantly in 1998. We must all be prepared for the slower growth. However, Singapore is in a strong position to weather this regional storm. Provided businesses, workers and the Government rally together, we will successfully weather this difficult period and emerge more resilient. Intense economic competition is already a reality. When the region recovers, the regional economies will be leaner, fitter and more competitive. Singapore must use this time to invest wisely, restructure, consolidate and build up our capabilities and productive capacities. Whether we can ride the next wave of growth when the region recovers depends on whether we continue to add value to the world.

Mr Speaker, Sir, let me now present the Budget for Fiscal Year 1998.

Operating revenue in FY98 is expected to grow by 3.8% in FY98, lower than the average growth rate of 6.7% over the past three years. This is due to the effects of lower economic growth and the follow through of tax cuts introduced in previous years. Notwithstanding the slower increase in revenues, our revenue base remains robust and a deficit budget is not envisaged. Adequate funds will be available to maintain, and even increase, where necessary, expenditures needed to support long term growth and future competitiveness. As mentioned earlier, this will mainly be in the areas of education, economic infrastructure and defence. However, because of the considerable uncertainties which continue to overhang the region, we will exercise fiscal restraint in other non-crucial areas of expenditure. The FY98 Budget Estimates have been prepared on this basis.

Total Government expenditure in FY98 will increase by 15% to $27.2 billion. This is more than double the expected nominal GDP growth rate, which will provide some fiscal stimulus to the domestic economy. As in past years, we have however continued to keep a firm rein on operating expenditure, which will rise by 7.8% to $15.5 billion. This is 9.8% of GDP, up marginally from 9.7% of GDP in FY97. On the other hand, development expenditure is expected to jump by 25% to $11.7 billion, carried by the momentum of economic and infrastructural development which began in recent years. This accounts for 7.5% of GDP, up by more than 1 percentage point from 6.3% of GDP in FY97. I will now highlight the salient features of this year's expenditure budget against the backdrop of our budgetary policies.

Overall, this year's budget continues to emphasise the Government's priorities on education, security, health, public housing, environment, transportation and economic development. Chief among these are education and security which have a strong bearing on Singapore's long-term strategic interests. Total spending on education will rise by a hefty 30% from $4.4 billion in FY97 to $5.7 billion in FY98. The jump from 3.0% to 3.6% of GDP brings our spending on education closer to the medium-term target of 4% of GDP. We can take pride in having developed an educational system which we believe is one of the best in the world. Our students' performances have been outstanding in international mathematics and science surveys and Olympiads. This year, higher enrolments are projected in schools and tertiary institutions, leading to a 12% increase in operating expenditure. The main boost in the education budget however comes from a 80% increase in development spending on the building of new and better schools and campuses, the single session secondary school building programme and the roll-out of the IT Master Plan in schools. Defence spending will amount to 4.6% of GDP, up from 4.4% in FY97, but still well below the 6% of GDP that Government is prepared to commit to develop and maintain a strong and credible defence force. So long as revenues hold up, we should not slacken spending in this area since the security of our nation is the very basis of our survival and prosperity. With the emphasis on education, the social and community services sector as a whole will account for the lion's share of 37% of total expenditure in FY98, with security coming in close at 34%. The share of spending on economic and infrastructural development will exceed 20% for the second consecutive year, up from an average of only 15% over the period in FY93-96. The increase in this sector is driven by higher development spending. Operating Expenditure Operating expenditure in FY98 is expected to be 9.8% of GDP. As a share of GDP, this is consistent with levels in previous years, barring the one-time compensation of $1.5 billion to SingTel in FY96 for removal of monopoly privileges. At around the 10% GDP level, our operating expenditure is also considerably lower than that of most developed countries. This is the result of a deliberate policy to keep the public sector lean and trim, avoiding welfarism and confining Government's role to one of providing basic public goods and services, thus freeing more manpower and financial resources to the private sector as the engine of growth. At the same time, the growth of operating expenditure will not be held down dogmatically without regard to public expectations for new and higher quality services as well as increased workload. Where warranted, we will provide for increases in operating expenditure. Since 1994, we have also introduced a financial management system called Budgeting-for-Results or BFR, to raise the quality and efficiency of public services. Under the BFR programme, the public sector is managed along the lines of Autonomous Agencies, or AAs. With effect from April last year, all AAs are required to pre-specify output and performance targets that they hope to achieve for the budgets voted to them in return for greater autonomy in financial and personnel management. Wherever possible, they will attempt to link their outputs directly to their funding. In this way, there is greater accountability for deliverables, and transparency in the utilisation of public resources. The aim is to ensure that public sector recurrent spending does not outstrip nominal GDP growth rate, with compensation made for increased workload and new programmes and services. The BFR framework is appropriate and effective in regulating the running cost of Government departments and Government-funded statutory boards. Running costs constitute more than 90% of our operating expenditure. Since annual increases in cost factors are generally lower than GDP growth, any increase in running costs as a share of GDP is due entirely to new programmes and higher workload. Transfers, the other component of operating expenditure, are budgeted at $1.2 billion. These constitute less than 10% of operating expenditure. More than half will go to restructured hospitals as healthcare and medical subsidies, another 16% will go to town councils to subsidise estate management costs, and 10% will go to welfare and community self-help organisations. This reflects the Government's philosophy on subsidies. Subsidies are given selectively, and only on essentials such as basic healthcare and public housing on a cost-sharing basis. For example, medical subsidies on hospitalisation are fixed as a percentage of charges and skewed heavily in favour of the lower income groups. At the same time, genuine cases of dire need are never ignored. Medifund, set up in 1993 as a fall-back for those who cannot afford to pay their share of medical cost, is expected to pay out some $18 million in medical subsidies in FY97 to cover the needs of those who cannot afford even the heavily subsidised C class charges. Since its launch, the Medifund has received $600 million in transfers from the Government to build up its capital endowment. Based on the current level of capital in the fund, projected income will be adequate to meet projected drawdowns in FY98. I do not therefore propose to make an additional transfer of capital to the Medifund this year. The absence of large scale public assistance programmes reflects the Government's stand on state welfarism. We believe that extensive welfare programmes damage the fabric of our society as they diminish individual responsibility, self-reliance, community support and the work ethic. Even in the UK, the Government has realised that welfarism is not the right way to go, and is trying to roll back many of the welfare programmes and policies introduced after the Second World War. Our approach is one of many helping hands, with co-funding from Government and public donations, and services rendered by volunteers and members of the community. Development Expenditure As a percentage of GDP, we spend much more on development than the G-7 economies. This reflects the emphasis we place on building up a world-class infrastructure, focusing on areas which bring high returns and lasting benefits. We will invest in infrastructure to support economic activities. We will develop a first-rate road and rail network system to transport people and goods efficiently and more industrial land will be made available through reclamation. School buildings and teaching systems will be constantly upgraded to prepare our young to deal with future challenges in the workplace and society. We will continue to invest in affordable and good quality public housing, and in modern drainage, sanitary and waste handling systems to support healthy living. Not least, we need to constantly upgrade our defence and internal security infrastructure so that our families and assets are well protected. Over the last three years, that is, FY95-97, spending on development has risen steadily from between 3-5% of GDP prior to FY95 to 6.3% in FY97, and now, to 7.5% in FY98. As Singapore's economy graduates from the ranks of developing country status to an advanced developing economy, we will face new challenges and stronger competition. We will need to quicken the pace of economic infrastructural development and renewal, and to accelerate the development and education of our workforce. Notwithstanding the current regional economic turmoil, we intend to implement all the essential development programmes. We will then emerge stronger and more robust once the storm blows over in this part of the world. Economic development programmes under the Ministry of Trade and Industry are expected to cost $2.8 billion and account for the largest share of development expenditure. Its share of GDP will rise from only 0.3% of GDP before FY95 to 1.8% of GDP. The thrust of development is in land reclamation on Jurong Island to meet expansion needs of the petroleum, petrochemical and chemical industry, an important and growing arm of our manufacturing sector. More than $1 billion is committed in FY98 for reclamation of 1,800 hectares and a road link to Jurong Island. In addition, another $420 million has been earmarked for on-going reclamation and development at Tuas View. Funds are also provided under the Economic Development and Assistance Scheme, and the building of a mega exhibition centre, a centrepiece of the Tourism 21 plan. Communications ranks second with a development budget of $1.8 billion. This is 1.2% of GDP, doubling from 0.66% of GDP in FY96, as we are committed to create a world-class land transport system. A sum of $1.2 billion is provided for the North East MRT Line, Changi MRT Extension, Bukit Panjang LRT, Sengkang LRT, a new MRT station at Singapore Polytechnic and the construction of a building directly above and integrated with the Dhoby Ghaut MRT station. Also on the cards are several improvements to our road network, such as the upgrading of expressways and the building of new junction interchanges and roads to ease congestion for faster movement of people and goods. As a result, spending on economic and infrastructural development as a whole is set to more than double from 1.3% of GDP in FY93 to 3.1% of GDP in FY98. For the second consecutive year, it has overtaken social and community services as the top priority in development spending. But this has not been achieved at the expense of reduced development spending on social and community services. In fact, development spending on social and community services has also risen steadily and strongly over the past five years, from 1.7% of GDP in FY93 to 2.7% of GDP in FY98. This is driven mainly by increased spending on education projects, which will almost double, from 0.7% of GDP in FY93 to 1.2% of GDP in FY98. Spending on drainage, sewerage and waste disposal facilities under the Ministry of the Environment has also gone up three-fold from 0.2% of GDP in FY93 to 0.6% of GDP in FY98. On the slate are a fourth incineration plant, a landfill at Pulau Semakau, and the upgrading of various sewerage works and facilities to expand processing capacity to accommodate future demand. Capital expenditure on public housing is expected to remain at about 0.5% of GDP, increasing by 8% to about $790 million. This includes $150 million in capital grants to HDB, $350 million for the main upgrading programme, and another $130 million for the interim upgrading programme.

Order. I suspend the Sitting and will take the Chair again at 5.35 pm. Sitting accordingly suspended at 5.20 pm until 5.35 pm

Sitting resumed at 5.35 pm

Mr Speaker, Sir, let me turn next to the fiscal position and the proposed tax changes. Revenue growth is expected to slow in 1998 in tandem with slower economic growth. Estimated revenue collection is $29.9 billion, while operating and development expenditures are budgeted at $27.2 billion. The operating surplus for FY98 is therefore expected to be $2.7 billion or about 1.7% of GDP. As a percentage of GDP, the surplus is much lower than the average of nearly 7% achieved over the five years between 1991 and 1995 and even lower than the 3.8% average of 1996 and 1997. Apart from the direct impact of the regional turmoil on lowering growth and revenue in FY98, there are two other reasons for the smaller surplus. One is a general slowdown in the growth of revenue collection due to the cumulative effects of tax cuts introduced over the past 12 years. The other is the substantial rise in development expenditures in recent years. Over the 5-year period between 1991 and 1995, development expenditures averaged 4.3% of GDP per year. In 1996 and 1997, development expenditures jumped to nearly 6.5% of GDP when we embarked on major programmes to upgrade and expand our economic and educational infrastructures. Development expenditure will rise further to 7.5% of GDP in FY98 as implementation of the Education IT Master Plan, North-East MRT Line and land reclamation programmes accelerate. These expenditures are expected to peak in FY99. Despite slower revenue growth and higher development spending, the forecast surplus of 1.7% of GDP will allow us to continue with the policy of adding to our surpluses each year. The need to build up our financial reserves cannot be over emphasised. The regional crisis has clearly demonstrated the importance of such reserves, especially for a small and open economy like ours. If not for our strong fiscal and reserves positions, our currency and stock market would have been much more severely affected by the fallout from the financial crisis. The comfortable reserves position which we enjoy today is the result of prudent fiscal policies steadfastly pursued in the past 30 years. We are committed to continuing with these policies, and remain confident that our strong fundamentals will carry us through the current financial turmoil. For the FY98 budget, substantial increases in infrastructure expenditure will provide stimulus to offset slowdowns in sectors affected by the regional crisis. Although GDP growth is expected to slowdown substantially this year, a decline to negative growth is not foreseen, so major stimulus initiatives are not contemplated at this time. Our tax rates remain competitive and no major tax changes will be made against a background of declining revenue collections and rising development expenditures. However, as the economic outlook in the region this year is volatile and unpredictable, the situation will be closely monitored. If a sudden downturn should take place, Government will not hesitate to respond with off-budget measures, as we have more than adequate resources to cope with any eventuality. In the interim, we will make some adjustments to lower the cost for businesses. We will also provide some assistance to individuals and households to help them tide through a more difficult year. I will elaborate on the details later. In addition, we will continue to fine-tune our tax incentives to promote activities with high growth potential. In particular, there will be a package of incentives to promote the development of the financial sector. These refinements will sharpen our competitive edge and ensure that when the region recovers, we will be ready to take advantage of the opportunities. Let me now deal first with the tax changes for companies.

Currently, fund managers approved under the Tax Exemption Scheme for Fund Management enjoy a concessionary tax rate of 10% on the fee income earned from managing non-resident funds. In addition, fund managers which manage at least $5 billion worth of non-resident funds can also enjoy a reduction in the tax rate to 5% on the incremental income earned compared with the previous year. Further, those which manage at least $10 billion of non-resident funds are totally exempt from tax for the income earned from managing non-resident funds. These tax incentives, coupled with the Government's decision to place more public funds with the private sector for management, have boosted the growth of our fund management industry. In 1996 alone, total funds managed by financial institutions in Singapore jumped 45% to reach $125 billion. While growth in the fund management industry may have slowed somewhat amidst the current financial turmoil, we remain optimistic about Singapore's long-term potential as a major fund management centre in the region. I have therefore decided to introduce further measures to enhance the competitiveness of the industry. These complement the initiatives to promote the fund management industry, announced by DPM Lee on Thursday, 26th February. To encourage more fund managers to expand their operations in Singapore, I have decided to lower the threshold requirement to qualify for the full tax exemption. Fund managers which manage at least $5 billion of non-resident funds will now enjoy the full tax exemption for fee income earned from managing non-resident funds for a period of 5 years. This will replace the existing concessionary tax rates of 5 and 0% for fund managers which manage $5 billion and $10 billion worth of non-resident funds respectively. For those which already manage $5 billion of non-resident funds and have made strong commitments to further increase their level of fund management activities in Singapore, a longer exemption period of up to 10 years may be considered. In addition, fund managers which manage less than $5 billion of non-resident funds may qualify for the tax exemption for up to 5 years if they increase their fund management activities in Singapore substantially. MAS will negotiate these conditions with individual fund managers, on a case-by-case basis, in the same way that EDB negotiates pioneer status and investment allowance awards with individual companies. This new incentive scheme will be effective from Year of Assessment 1999 and will be reviewed after 5 years. Tax Incentives to Promote the Bond Market Singapore has grown in importance as a regional centre for the issue of bonds and other debt securities. However, our bond market is still less developed compared to our equity market as most corporations still prefer to raise funds through equity listing on the stock exchange or through direct borrowing from banks. This is generally true of most markets in Asia. A vibrant bond market is important to the overall development of Singapore as an international financial centre. I have therefore decided to introduce a package of incentives to promote the development of an active bond market in Singapore. They are: (a) tax exemption on fee income earned by financial institutions in Singapore from arranging debt securities in Singapore, including the underwriting and distribution of such securities; (b) a 10% concessionary rate of tax on interest income earned by financial institutions and corporations in Singapore from debt securities arranged by financial institutions in Singapore; (c) tax exemption on interest from debt securities arranged by financial institutions in Singapore and earned by non- residents who do not have any permanent establishments in Singapore. The exemption will apply automatically to debt securities which meet the criteria. There will be no need to seek approval for the tax exemption for each debt issue as is currently the case; and (d) a 10% concessionary rate of tax on income earned by financial institutions in Singapore from trading in debt securities. The new tax treatment for fee and interest income will apply to debt securities issued within a period of 5 years commencing 28th February 1998. The incentive for income earned from trading in debt securities will be granted for a period of 5 years from 28th February 1998. Taxation of Unit Trusts In the 1995 Budget, I introduced a tax incentive to promote the domestic unit trust industry. Under this incentive, income except Singapore dividends received by a designated unit trust would be taxed at the time of distribution instead of at the time when the income was received by the trustee. The trustees are however required to withhold tax on the taxable distributions. The incentive also granted a concession to resident individual unit holders who were taxed only on 10% of the distributions made out of gains from the disposal of securities. To make investments in unit trusts more attractive to resident individuals, I have decided to remove the tax imposed on resident individual unit holders for 10% of the distributions paid out of gains from the disposal of securities. Further, to simplify the management of unit trusts, I have also decided to remove the withholding requirement on taxable distributions made to unit holders who are tax residents of Singapore. Unit holders who are tax residents are however still liable to pay tax on the distributions. The changes will take effect from 28th February 1998. Tax Exemption Scheme For Syndicated Offshore Credit And Underwriting Facilities The tax exemption scheme for syndicated offshore credit and underwriting facilities was introduced to promote the development of loan and debt syndication activities in Singapore. Under the scheme, income earned by financial institutions in Singapore from arranging and participating in syndicated facilities denominated in foreign currencies for non-resident borrowers is exempt from tax. The scheme has resulted in the growth of the loan and debt syndication activities in Singapore. In the past three years, an average of $13.5 billion of such facilities were syndicated by financial institutions in Singapore annually. The scheme is due to expire on 31st March 1998. I have, however, decided to extend it for another five years. In addition, I have also decided to extend the scheme to credit and debt facilities which are syndicated by financial institutions in Singapore for Singapore borrowers, provided the funds raised are used outside Singapore. These measures will help to further develop the syndication market in Singapore. They will take effect from 1st April 1998. Tax Deduction for General Provisions Made by Banks and Merchant Banks In 1991, we introduced an incentive to encourage banks and merchant banks to build up their level of general provisions as a cushion against unexpected losses. Each year, banks and merchant banks are allowed to claim tax deduction on general provisions of up to 25% of qualifying profits or 0.5% of qualifying loans and investments, whichever is lower. For each bank or merchant bank, the level of tax deductible general provisions on a cumulative basis cannot exceed 3% of qualifying loans and investments. Many banks and merchant banks have taken advantage of this incentive to build up their general provisions. This has helped to enhance the soundness of individual banks and merchant banks, and also the financial system, especially during this period of regional financial turbulence. To encourage banks and merchant banks to further build up their general provisions, I have decided to temporarily suspend the annual limits of 25% of qualifying profits and 0.5% of qualifying loans and investments for a period of two years with effect from Year of Assessment 1998. This will give banks greater flexibility to make as much general provisions as possible to cushion against potential losses arising from the regional financial difficulties. The overall limit of 3% of qualifying loans and investments, which was raised from 2% last year, will remain unchanged. Extension of Tax Holiday for SIMEX The Singapore International Monetary Exchange Limited (SIMEX) was granted a 5-year tax holiday when it was first established in 1984. The tax holiday was extended in 1988 and again in 1993 for additional 5-year periods to support the growth of SIMEX. The incentive has enabled the Exchange to build up its reserves and improve on its trading infrastructure. SIMEX is currently the foremost financial futures exchange in the Asian time zone for the trading of international futures and options contracts. But there is no room for complacency. In order to meet the challenges of global competition and the emergence of other exchanges in the region, SIMEX must continue to improve on its facilities and strengthen its financial reserves. I have therefore decided to extend the tax holiday for SIMEX by another 5 years to the year 2003. Extension of Venture Capital Incentives The Government has been actively promoting the venture capital industry since the mid-1980s. Venture capital funds managed in Singapore have reached $7.7 billion as at end of last year. Currently, venture capital funds enjoy tax exemption on the gains from disposal of investments, and on certain investment incomes for a maximum of 10 years. At the same time, fund management companies which manage venture capital funds are awarded pioneer status for managing these funds. The current 10-year limit may be too restrictive for some investments which have maturity periods which are longer than 10 years. I have therefore decided to extend the tax incentive enjoyed by venture capital funds, on a case-by-case basis, by up to a further 5 years beyond the current maximum of 10 years. This will encourage venture capital funds to take a longer term perspective of their investments and to minimise premature divestment. The extension will take the form of a concessionary tax rate of not more than 10%. The fund management companies which manage these venture capital funds will also in tandem enjoy concessionary tax rate under the Development and Expansion Incentive beyond the tenth year. The changes will take immediate effect. Transport and Logistics Our transport and logistics network has played a pivotal role in Singapore's development as a global city of international trade. Today, the transport and logistics sector contributes 9% to GDP and employs more than 110,000 workers or about 7% of our work force. As an industry which provides essential support to our trade sector, it needs to constantly evolve new and improved services to meet the demands of the trade. Our continued growth as a global city of international trade and hub port also depends critically on the development of a transport and logistics sector with extensive networks. To encourage major transport and logistics operators to further expand their businesses in Singapore and use Singapore as a base for their operations, I have therefore decided to introduce the following tax concessions: (a) Tax Exemption for Income Derived from Uplift of Freight Currently, tax is levied on the uplift of cargoes from Singapore, except for Singapore-flagged vessels and vessels from countries with which Singapore has signed a tax treaty. To further boost Singapore's development as an international cargo and shipping hub, I have decided to exempt non-resident ship owners and charterers from tax on their freight uplift from Singapore. This benefit will also be extended to resident shipping companies and companies under the Approved International Shipping Enterprise Scheme. Removal of the tax on freight uplift would allow shipping companies greater flexibility in planning their shipping schedules and operations. The exemption will take effect from Year of Assessment 1999. (b) Tax Concession for International Freight and Logistics Operators Singapore has a long history as the main shipping and distribution hub in the region. To further enhance our hub status, I have decided to introduce a tax incentive to encourage international freight service providers to expand their activities in Singapore. This incentive will be available to ship agencies, ship management companies and logistics providers. To qualify for the incentive, the company must have substantial operations and a good track record in the provision of freight and logistics services. Companies that qualify will be accorded a concessionary tax rate of not less than 10% on their incremental income. The incentive will be granted for a period of five years and will take effect from Year of Assessment 1999. c) Tax Exemption for Income Derived From Writing Offshore Marine Hull and Liability Insurance Business It is estimated that Asian shipping companies own more than 40% of world shipping tonnage today. Singapore is well placed to serve the marine insurance needs of the companies in the region, particularly in the provision of marine hull and liability insurance. I have therefore decided to exempt from tax the income derived by approved insurance companies from writing offshore marine hull and liability insurance business for a period of 10 years. The incentive would allow insurance companies to tap the insurance potential of the shipping communities in the region. It would also complement Singapore's development as a shipping hub. This concession will take effect from Year of Assessment 1999. Tax Incentive For Exhibition Organisers Singapore is currently a major venue for international exhibitions and trade fairs. Given our strategic location and excellent infrastructure, we are well positioned to develop into an International Exhibition City. To provide further impetus to the development of the exhibition industry, I have decided that approved exhibition organisers will be granted a concessionary tax rate of not less than 10% on their incremental income. The incentive will enable exhibition organisers to offer better quality and bigger exhibitions and trade fairs to the international business community. The incentive will take effect from Year of Assessment 1999. Approved Cyber-Trader Scheme Changes in technology have revolutionised the mode of business transactions. Internet, for example, is set to change the way companies conduct their businesses. The value of goods and services currently being traded on the Internet is estimated at US$46 billion. It is expected to grow to between US$200-300 billion by the year 2002. Internet electronic commerce holds many opportunities for businesses. The financial and logistics sectors will gain from the increased international trading generated by this new mode of transaction. The media and communications sectors, including advertising, information technology, and content creation will also benefit from this development. Local companies can take advantage of this new medium to expand their businesses to the region and beyond through direct marketing and other new strategies. Foreign companies can also use Singapore as a test-bed for broadband applications and a launch pad for its Internet trading activities in the region. The uniqueness of Asia calls for a hub that can service this time zone, and meet its distribution and consumer needs. Singapore is well placed to become an electronic commerce hub. To tap this growing market, I have decided to grant a concessionary tax rate of 10% on offshore trading income derived from transactions made over the Internet under the Approved Cyber Trader Scheme for companies that qualify. Approved companies will also enjoy an Investment Allowance of up to 50% of the cost of qualifying new fixed investments, and full or partial exemption of withholding tax on qualifying payments. These incentives will be granted for a period of 5 years with effect from Year of Assessment 1999. The scheme will be administered by the Trade Development Board. Double Tax Deduction for Employing Talent from Abroad The Prime Minister has at last year's National Day Rally spoken on the need for Singapore to tap the best talent from around the world to meet future competition. In support of this, I have decided to allow companies to claim double tax deduction for approved relocation and recruitment expenses incurred in the hiring of talent from abroad. The double tax deduction will help to offset the extra costs which companies have to bear in employing such talent to supplement our local work force. Further details of the scheme will be announced later. One-Year Accelerated Depreciation Allowance For Industrial Noise And Chemical Hazards Control Noise and harmful chemicals are the two main occupational health hazards in industries. Exposure to excessive noise can cause hearing loss, while overexposure to harmful chemicals may result in poisoning and diseases. As Singapore continues to industrialise, more workers could be exposed to these hazards unless measures are taken to prevent them. To encourage factories to implement effective measures to counter noise and chemical hazards, I have decided to allow expenditure on such measures to enjoy 100% depreciation in the first year, provided that certain qualifying criteria relating to noise and chemical exposure levels are satisfied. This incentive will apply to expenditure incurred with effect from 1st January 1998. The scheme will be administered by the Ministry of Labour. Details of the guidelines and qualifying criteria for these incentives are set out in Annexes (Cols. 565 - 572) I and II. Annexes - ACCELERATED DEPRECIATION ALLOWANCE FOR NOISE CONTROL IN FACTORIES (Cols. 565 - 568) Annexes - ACCELERATED DEPRECIATION ALLOWANCES FOR CHEMICAL HAZARD CONTROL IN FACTORIES (Cols. 569 - 572) (c) Three-Room Flats One and a half months' net S&C charges, after deduction of the GST offset rebates and S&C grant to be given. The S&C rebate will be made on 1st June and 1st December this year. (d) Four-Room Flats Three quarter month's net S&C charges, after deduction of the S&C grant to be given. The S&C rebate will be made on 1st December this year. (e) Five-Room Flats Half a month's net S&C charges, to be made on 1st December this year. The estimated cost of these rental and S&C rebates is $29 million. Rebates for Revisions in Utilities Rates Last year, utilities rebates and monthly S&C grants were given to citizens living in 1 to 4-room HDB flats to offset the utilities rates increases for the lower income households. I announced that the Government would grant the same utilities rebates and monthly S&C grants in 1998. I am happy to confirm that the same utilities rebates and S&C grants will be given this year. The utilities rebate will be $100 for 1-, 2-, and 3-room HDB flats, and $50 for 4-room HDB flats. The 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 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 monthly grant, which started from July 1997, will continue until June 1999. The utilities rebates and S&C grant will cost the Government about $72 million. 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 Assistance Scheme. Pre-Medisave Top-Up Scheme The Pre-Medisave Top-Up Scheme was introduced in 1996 to help older Singaporeans who retired before or soon after the introduction of Medisave to build up their Medisave accounts. The first three instalments under the Scheme had been paid in January 1996, January 1997, and January 1998. The last instalment is to be paid in January 1999, subject to the state of the economy. Notwithstanding the expected slowdown in the economy, I am pleased to confirm that the Government will pay the final instalment of the Pre-Medisave Top-Up Scheme in January 1999 as scheduled. The top-up will be paid into the CPF Medisave accounts of eligible Singaporeans who are 64 years or older on 1st April 1998. As with the third instalment, the co-payment required will only be $20, instead of $50 for the first two instalments. The lower co-payment is to help as many elderly Singaporeans as possible to benefit from the scheme while 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 1st July 1998 and 31st December 1998 into their CPF Medisave Account. The Government will match this $20 with a contribution of $100 to $350 depending on the age group. 250,000 senior citizens qualify for this scheme and the total cost of this, if fully taken up, is $70 million. Revision of CPF Interest Rates for Special and Retirement Accounts & Voluntary Transfer of CPF Savings from Ordinary Account to Special Account Currently, the CPF Special Account and Retirement Account both receive an interest rate premium of 1.25% over and above the Ordinary Account. From 1st July 1998, the Government will raise the interest rate premium for these two accounts by a quarter percentage point, to 1.5%, above the Ordinary Account interest rate. This is to enable CPF members to achieve a higher rate of saving in these two accounts. In addition, from 1st July 1998, CPF members will be given the option of transferring their savings from the Ordinary Account to the Special Account. These transfers will be on a voluntary basis. The amount that can be transferred will be subject to a cap of $40,000 in the Special Account, that is, a CPF member can only transfer up to the difference between $40,000 and his Special Account balance at the time of the transfer. The $40,000 limit is equal to the eventual cash component of the CPF Minimum Sum. The transferred funds will form part of the Special Account and will enjoy the higher interest rate applicable to the account. However, the transferred funds will be subject to all existing CPF rules on the Special Account, including the restrictions on the use and withdrawal of funds from the account. Also, all such transfers from the Ordinary Account to the Special Account will not be reversible. CPF members should therefore consider carefully before making such transfers to the Special Account to earn higher interest. These two changes to the CPF will help CPF members enhance their retirement cash savings. They are estimated to cost the Government more than $100 million per year.

Property Tax Rebate To help ease cost pressure on companies, I have decided to give a 15% rebate for commercial and industrial properties for the year commencing July 1998. The revenue loss to Government is estimated to be $145 million. HDB, JTC and other Government agencies owning properties will pass on most of this rebate to their tenants. The Government also strongly encourages landlords to do likewise, and pass on at least half of the rebate to their tenants. Property Tax Exemption for Land Under Development Between 1986 and 1995, land under development was exempted from property tax. The exemption was introduced to help developers tide over the economic downturn during the recession years. It was subsequently withdrawn after the economy and the property market had shown strong recovery. In view of the current difficulties faced by the property sector, I have decided to reinstate the property tax exemption for land under development. The exemption will be for a period of up to 5 years, and will apply from the time construction begins to the time the Temporary Occupation Permit is granted. The exemption will take immediate effect. The estimated revenue loss from this measure is $200 million a year. Stamp Duties Currently, stamp duty is levied on a variety of instruments specified in the First Schedule of the Stamp Duties Act. In the 1996 Budget, stamp duty was abolished on 13 types of instruments. To further reduce costs and inconvenience to businesses and members of the public, stamp duty will be abolished on all instruments, except for those which relate to stock and shares, and immovable properties. The estimated revenue loss from these changes is $33 million. The changes will take effect from 28th February 1998. Details are set forth in Annex III (Cols. 573 - 576). Annex III - INSTRUMENTS WHERE STAMP DUTY IS ABOLISHED (Cols. 573 - 576) Duties on Cigarettes Duties on cigarettes were last increased in February 1993 to discourage smoking. In support of the national effort to discourage smoking, particularly among the younger population, the excise duty on cigarettes will be raised from $115 to $130 per kilogram. Details of the changes are in Annex IV (Cols. 577 - 580). The changes in duties is estimated to increase revenue by about $35 million a year, and will take effect from today. Annex IV (Cols. 577 - 580) Electronic Road Pricing and Vehicle Tax Rationalisation The Ministry of Communications will be introducing the Electronic Road Pricing (ERP) system this year. It will commence on 1st April 1998 on the East Coast Parkway (ECP), and would be phased in to other parts of Singapore over the next two years. In conjunction with the introduction of the ERP, the vehicle tax structure will be rationalised and a package of road tax rebates will be given. The changes in road tax structure and the road tax rebate package will result in a revenue loss of about $1 billion for the Government for the next 5 years. This revenue loss will be partly offset by ERP revenue and additional revenue from the release of more COEs over the next 3-5 years. Overall, the Government expects to achieve revenue neutrality for this exercise in about 8 years. Details of the ERP implementation plan, the road tax rebate package and the new vehicle tax structure will be announced by the Minister for Communications next week.

Mr Speaker, Sir, the events since July 1997 have shown how quickly the regional environment can turn unfavourable. The policy measures introduced in this budget are based on our assessment of the present state of the Singapore economy and the outlook for the year. They assume that no major changes will occur in the external economic environment which will affect us drastically. But we cannot be certain how the situation will develop. The Government will monitor the regional environment and economic conditions vigilantly, and keep in close touch with the private sector. If the picture changes, we are ready to implement further measures promptly. We have the resources to do so. We cannot totally neutralise the fallout from the regional crisis, but we will do everything possible to offset its impact on Singapore. Businesses and individuals must prepare themselves for a period of slower growth and uncertainty. They must be ready to respond to unanticipated developments, and not flinch from tough measures where warranted. Our best approach is to acknowledge the realities of the situation, however adverse they may be. This maximises our chances of surmounting the problems. It also demonstrates to investors and analysts our preparedness to tackle problems directly rather than evading them. This adds to confidence in Singaporeans and in Singapore. If we stay united in tackling the problems which come our way, we will strengthen our competitiveness, ride out the crisis, and emerge stronger than before. Mr Speaker, Sir, I beg to move.

The Question is, "That Parliament approves the financial policy of the Government for the financial year 1st April, 1998 to 31st March, 1999." 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, 9th March, 1998, Sir.

So be it.

Resolved, "That Parliament do now adjourn to Monday, 9th March, 1998." - [Mr Wong Kan Seng]. Adjourned accordingly at Nineteen minutes past Six o'clock pm to Monday, 9th March, 1998. Annexes - ACCELERATED DEPRECIATION ALLOWANCE FOR NOISE CONTROL IN FACTORIES (Cols. 565 - 568) Annexes - ACCELERATED DEPRECIATION ALLOWANCES FOR CHEMICAL HAZARD CONTROL IN FACTORIES (Cols. 569 - 572) Annex III - INSTRUMENTS WHERE STAMP DUTY IS ABOLISHED (Cols. 573 - 576) Annex IV (Cols. 577 - 580)