Mr Speaker, Sir, I would first like to thank all Members of this House who have spoken on the Budget over the last two days. As usual, time will not allow me to respond to all the issues raised. I will therefore focus on the main issues and leave other matters of details which are under the purview of individual Ministries to the Committee of Supply. Some Members have reflected the sentiments of businesses that the economic situation is worse than what the Government had thought, and that more should have been done now to help companies and individuals cope with the difficulties brought about by the regional crisis. There were also comments that the Government should be proactive rather than wait for the economic climate to worsen before reacting. A number of Members have also expressed concerns that the Budget has not offered enough help to the manufacturing sector and the small and medium enterprises, and that there were not enough new initiatives to give a boost to the training and retraining of our workers. I will deal with these issues in turn. Let me first address the concern that the Government does not seem to realise the full extent of the difficulties faced by businesses and that it is overly sanguine about the economic outlook. The Ministry of Trade and Industry's forecast that the economy will grow between 2.5% and 4.5% in 1998 was made against a volatile regional backdrop. It was based on the best available data on business and economic conditions in the future. Besides timely hard data on the overall economy and the major sectors compiled on a monthly and quarterly basis, it has also taken into account the qualitative first-hand feedback from businesses and surveys of business expectations. Relevant statistics on the economic performance of the OECD countries and the regional economies are also being closely monitored to ensure early assessment of changes in the economic climate. MTI's assessment is that while the overall economy is expected to slow down significantly this year, the impact will be uneven across sectors and businesses. Businesses servicing the region will be affected the most. Those with revenues in regional currencies will experience exchange losses. However, multi-national companies and businesses servicing the OECD markets in the West will not be affected as much. Those with revenues in US dollars may in fact have gained from the appreciation of the US dollar. As many SMEs service the regional countries, they have felt the brunt of the regional crisis almost immediately. It is therefore not surprising that feedback from local businesses is that they are already feeling the impact of regional economic problems. However, many MNCs and their supporting companies which are servicing the US and EU markets are still enjoying healthy growth. The US and EU economies are expected to grow between 2.5% and 3% respectively this year. With about half of our non-oil domestic exports destined for these markets, the current assessment is that overall economic growth this year would remain positive, although significantly lower. According to MTI, although the January trade and production figures were weak, that was partly statistical, as there were less working days this year due to the festive period. Preliminary estimates for the two months of January and February this year indicate that non-oil domestic exports grew 11.6% compared to the same period last year. There is therefore little evidence at this point in time to suggest that the economy will go into negative growth in 1998. It is against this backdrop that we have come up with the current package of relief measures for companies and individuals. For businesses in general, which are expected to continue to grow, albeit at a slower rate, we have provided some relief in the form of property tax rebate, abolition of stamp duty on most instruments and rental concessions by JTC and HDB. For the property sector and SMEs which have been more badly hit, we have implemented additional measures to address their specific concerns. These include scaling back the release of Government land and reinstating the property tax exemption for land under development. We have also significantly enhanced the Local Enterprise Finance Scheme to address the SMEs' difficulties in obtaining working capital. For individuals and households, despite slower revenue growth, we have continued with the income tax rebate and the S&C rental and utilities rebates. Many MPs have expressed the view that the tax and non-tax rebates should not have been revised downwards from the last Budget, especially when they are most needed by people in these more difficult times. There is also a suggestion that the rebates should be based on per capita income. Tax and non-tax rebates were given in the past for good economic performance and when budget surpluses were healthy. They were like bonuses given out by companies in good years. Generally, in difficult years, no bonuses will be given. These rebates should not therefore be taken for granted as a permanent feature of our budget. Even without the rebates, our personal income tax rates are already amongst the lowest in the world. The rebates should be seen for what they are - bonuses given in good years. Although we expect much slower growth in 1998, nonetheless a rebate has been given this year, but more as a measure of relief to individuals. In a period of economic downturn, we should expect some belt tightening all round. Some Members felt that the rebates should have been higher, citing wage cuts and retrenchments as reasons. But we have yet to see across-the-board wage cuts and widespread retrenchments. There have been some lay-offs, but the retrenched workers have found alternative jobs without too much difficulty. There is therefore no need for significant additional rebates at this time. I have said that the Government is prepared to increase the rebates at a later stage if it is necessary. As for the suggestion that the rebates be based on per capita household income of HDB households rather than by flat size, I agree that rebates based on per capita income would be more equitable, but the administrative cost of ascertaining the household income of every HDB household will be prohibitive. We have therefore opted for the simpler method of going by flat size as a proxy for household income. HDB's survey results have shown that the per capita household income generally increases with the flat size. The package of relief measures announced in the Budget should be adequate if the economy does indeed grow between 2.5% and 4.5% this year, especially if the actual growth is near the upper end of the range. However, the Government also recognises that the economic outlook is very uncertain. If economic conditions should deteriorate sharply, further relief measures would obviously be called for. I have therefore taken pains in my Budget Statement to stress that the package of measures is based on current assessment of the economic situation. If there should be a significant and sudden downturn, the Government will not hesitate to respond with off-Budget measures. I want to reiterate that the Government has ample resources and is ready to implement further relief measures where necessary. A number of Members have asked what these additional measures would be. These could take the form of deeper income tax and property tax rebates as well as other measures implemented during the 1985 recession. There could even be new measures tailored to meet the specific needs of particular sectors of the economy. We will closely monitor the indicators for any signs of deterioration and are prepared to step in quickly to cushion the economy from any sudden shocks. Some Members have also said that the remedial actions taken by Government may come too late. They prefer Government to take a more proactive approach and do more now, rather than react passively to developments. But the Government has been proactive in putting together the current relief package. We would have taken further actions if, by themselves, they could have prevented a deterioration of the external economic environment. We must remember that, unlike the 1985 recession, we are not trying to correct structural weaknesses within our economy which require immediate adjustments on our part. The problems we are facing are externally imposed and beyond our control. Given the nature of the problem, we should not over-react and direct our resources aimlessly now to mitigate problems that have yet to arise. Instead, we would do well to wait for developments to unfold and then act decisively and purposefully to offset the impact on the economy. Some Members have asked if there is a threshold GDP growth rate which must be reached before the Government would act. In other words, would the Government intervene only if there were a recession. I can say that the Government does not have a particular or absolute threshold GDP figure in mind. As I have mentioned earlier, the impact of the regional problems on the economy is expected to be uneven. If the situation for certain sectors should deteriorate rapidly, we do not have to wait for the whole economy to be similarly affected before taking action. Further, while we would want to base our actions on some hard numbers, instead of relying just on anecdotal evidence, we do not have to wait for all the hard numbers to come in if the feedback from the business community corroborates the available economic indicators. In deciding what additional off-Budget measures to introduce and when to introduce them, we will have to be guided by both qualitative and quantitative factors. The Government will keep in close touch with the business community and will not hesitate to respond quickly with the appropriate measures as and when necessary. I will now deal specifically with the concerns of the manufacturing sector and the SMEs over the absence of new incentives for these two sectors. The perception is that the FY 1998 Budget continues to favour the financial sector and that not enough has been done for the other two groups. The reason for the Government's focus on the financial sector and its seeming neglect of the manufacturing and SME sectors is straightforward. There already exists a plethora of tax incentives and assistance schemes created for both manufacturing and the SMEs over the years. Pioneer tax exemption, concessionary tax rates and other tax incentives which are only now being extended to new areas in financial services and cyber trading have long existed for the manufacturing sector and the SMEs. All these incentives have worked very well for the two sectors. To illustrate, the various tax incentives granted to the manufacturing sector has resulted in revenue loss of more than $500 million in Year of Assessment 1996. To help companies in their business development and skills upgrading, a block vote of $1.3 billion for grants and $3.3 billion for loans have been set aside under the Economic Development Assistance Scheme. In 1994, we also started the $2 billion Cluster Development Fund to enable EDB to go into business partnerships with companies that are venturing into promising new areas of business. To-date, a total of $794 million from the Cluster Development Fund has been committed to various projects, of which $780 million was for the manufacturing sector. The SMEs have long enjoyed Government support. There are currently more than 60 programmes to assist SMEs at different stages of development. The two flag ship programmes are the Local Enterprise Finance Scheme and the Local Enterprise Technical Assistance Scheme. In 1997, applications under the two schemes increased by 13% to about 2,000 compared to 1,700 applications in 1996. To-date, a typical SME applicant has received, on average, about $800,000 in loans and $41,000 in grants. In the FY 1998 Budget, I have announced that the scope of the Local Enterprise Finance Scheme has been extended to make short term loans even more accessible to SMEs to help them cope with the unexpected economic downturn. Altogether, $1.1 billion has been set aside for this purpose. Other forms of assistance are also available, such as the Local Enterprise Upgrading Centre, which is a first-stop centre to assist SMEs in their development programmes. Since its establishment two years ago, the Centre has handled more than 6,000 cases of assistance. There is also a host of training programmes specially tailored to meet the needs of SMEs. A great deal of effort has been made to promote these training programmes, such as providing simplified bilingual application forms and holding of seminars, conferences and the distribution of brochures and so forth. As a result of these efforts, more than 9,500 SMEs have benefited from the training programmes funded by the Skills Development Fund in fiscal year 1996. Several Members were disappointed that JTC and HDB are only freezing posted rentals and moderating rental adjustments for existing tenants. They would have liked to see JTC and HDB rentals reduced. I would like to assure Members of the House that JTC and HDB rental reductions are not precluded if conditions warrant it. For the present, the freezing of posted rentals and the moderation of rental adjustments where existing rates are below the posted rates is considered sufficient. Many Members have also spoken on the need to give greater support to training and retraining. Let me reiterate that the Government fully recognises the importance of training and retraining. As our economy continually restructures to move into more higher value-added activities, constant upgrading of the skills of our workforce is paramount. I will touch briefly on a number of new training schemes launched recently or are under consideration. The NTUC first launched the Skills Redevelopment Programme (SRP) in 1996 to equip lower educated workers with the relevant skills needed to enhance their employability. The programme is supported by PSB, EDB and ITE. The SDF provides up to 80% of the course fee and EDB defrays up to 70% of the absentee payroll through its INTECH grant scheme. Some 50 companies, mainly in the electronics industry, have signed up about 5,000 workers for the SRP. Around 1,000 workers have started training. More than 50% of the trainees are aged 40 and above. The expansion of the SRP into a national programme is now being considered. A "People Developer" Scheme was launched in December 1997 to recognise companies with comprehensive systems for developing staff. SDF is providing 80% of the consultancy cost for implementing the scheme. A new National Skills Recognition System will be piloted in the second half of 1998. The system will certify worker skills and provide a progression path for the workforce, thereby encouraging workers to raise their skills base and help employers reward skill attainments. PSB is also working on a Critical Enabling Skills Programme (CREST) to prepare the workforce for a knowledge-based economy. The programme aims to equip 50% of the workforce with competency in key skill areas such as learning-to-learn, group effectiveness, organisation effectiveness and leadership by the Year 2005. It is expected to be launched in the second half of 1998. A Job Redesign Programme is also being redeveloped to help companies restructure their jobs and processes for greater productivity. PSB will provide training and consultancy to companies interested in the programme with funding from the SDF. Currently, the SDF provides between 50% and 80% funding for the course fees of the programmes it supports. Total grant commitments made by SDF in the fiscal year 1996 rose to $72 million compared to $68 million in FY 1995. Should there be a dip in the pace of training over the next one or two years because of the economic slowdown, SDF is also prepared to increase its support level selectively in critical areas of training. Government will also consider supplementing SDF with additional funding, if necessary. But before I move on to address other concerns by Members, allow me to restate the basic tenets of the Government's fiscal policy. In years of strong economic growth, our aim is to run budget surpluses to augment our foreign reserves. The reserves are a buffer against unforeseen shocks to our economy. Members will have seen how important financial reserves are in instilling confidence among investors in our economy. If not for our large stockpile of reserves, we would have been buffeted much more by the regional turmoil. The accumulation of reserves, however, is not achieved at the expense of heavy taxes that burden the economy. This is in line with another basic tenet of our fiscal policy, which is to maintain a competitive tax regime which taxes the factors of production as lightly as possible. Our fiscal policy has served us well. When times are not so good, as is now, we will be prudent and target for a reduced surplus. But when times are bad, we are prepared to run a budget deficit and draw down on reserves, as we did during the 1985 recession. Over the years, we have also lowered our tax rates progressively to ensure that they remain competitive. Our current tax regime is still competitive. We have a wide range of tax incentives, which means that the actual average rate of tax is lower than the corporate tax rate of 26%. Our extensive network of tax treaties also help to lighten the burden of companies operating in Singapore. We have been consistent in maintaining a competitive tax regime and will not hesitate to adjust the corporate tax rate if there is a need to strengthen our competitiveness. I will now turn to specific concerns raised by other Members. But first, I will deal with some misplaced suggestions from the NCMP and the Opposition Members. Both Mr Low Thia Khiang and Mr Jeyaretnam have asked that the GST be suspended. Mr Jeyaretnam claimed that GST would raise prices significantly but that Government had nonetheless introduced the tax because it would generate significant revenue. He also suggested that basic necessities be exempted from GST. Mr Jeyaretnam may like to know that the Cost Review Committee had in 1996 studied the impact of GST on the cost of living of Singaporeans. The Committee concluded that GST did not cause prices to shoot up. Instead, it resulted in only a one-off rise in the CPI in 1994 of less than one percentage point. Inflation in that year also remained low at 3.1%. On the claim that the Government had introduced GST to raise additional revenue, I would like to point out that GST has remained revenue negative every year since its introduction in 1994 because of the accompanying cuts in direct and indirect taxes and the generous GST offset package introduced. In the four years between FY94 and FY97, total GST collections were $6.7 billion. But the total revenue loss in the same period was $8.2 billion. The net revenue loss to Government was $1.5 billion in the last four years. If we were to suspend GST, it would result in a further revenue loss of $2 billion a year. Even if we need to stimulate the economy by $2 billion, suspending GST across the board may not be the best way to do it. We would do better to adopt a more targeted approach and apply the money judiciously to specific areas and groups which are more in need of help from the Government. As for Mr Jeyaretnam's suggestion to exempt basic necessities from GST, the matter has been discussed at length before the implementation of GST. But I will repeat the basic considerations here for his benefit. The GST is designed to be comprehensive to keep the GST system simple, thereby the cost of administration low. To single out items for exemption would complicate the entire GST system and increase the cost of administration of the tax. This has been the experience of other countries where such exemptions are allowed. It is also not an effective way to help the lower income households. A survey on the expenditure of households conducted prior to the introduction of GST showed that exempting food and other necessities from GST will benefit the more well-off much more than the lower income households. According to the study, exempting food as a whole from GST will benefit the high income households 3.5 times as much as from the lower income households, and exempting health expenses or education from GST will benefit high income households eight times as much as the lower income households. Mr Jeyaretnam also asked whether there was a need to continue with the water conservation tax now that there is no longer any threat that our water supply will be cut off. He also asked what the $2.3 billion of "Other Taxes" meant. Water is, and will always remain, an important strategic resource for Singapore. The water conservation tax was intended to promote water conservation and slow down the growth in water consumption. The objectives of the tax remain relevant and there is no reason to abolish it. The "Other Taxes" which Mr Jeyaretnam referred to is mainly foreign workers' levy. Mr Low Thia Khiang has said that rebates to individuals are not significant and that the assistance to businesses also did little to reduce their fixed operating costs. On personal income tax rebates to individuals, I would like to remind Mr Low that the 5% rebate given is at the same level of that which was given between the years 1990 and 1994. It was only in recent years that we have given a rebate of 10%. A 5% income tax rebate is not insignificant. And as I have said, the Government is prepared to increase the rebate if this was found to be necessary. Likewise, for assistance to companies, the Government will provide more relief measures, if these are needed. But Mr Low is correct that there are certain costs faced by companies over which the Government can do little. These include wage costs and interest costs which are determined by market forces. Mr Chiam See Tong has berated the Government for stopping transfers to Edusave and Medifund in this year's Budget. I would like to remind Mr Chiam that in FY97, the Government made its final contribution of $500 million to the Edusave Endowment Fund to reach the targeted fund total of $5 billion. Mr Chiam should congratulate the Government for the early fulfilment of its commitment. As for the Medical Endowment Fund, I have already informed the House in my Budget Statement that there is more than adequate income from this fund to meet projected disbursements in FY98. Hence, there will be no curtailment in disbursements from both the Edusave and Medical Endowment Funds this year for lack of funds. Mr Chiam has also suggested that the Government allow retrenched workers to draw parts of their CPF. Mr Chiam must be aware that the CPF savings are meant for members' retirement needs. Allowing withdrawals of CPF savings for short-term needs will severely affect the retirement needs of Singaporeans in the long run. Easy withdrawal of CPF may also undermine the incentive for workers to seek alternative employment or undergo training and upgrading in the event of unemployment. Mr Chiam has also accused the Government of not keeping to its electoral promise of continuing with the Main Upgrading Programme. I would also like to remind Mr Chiam that the Government has always said that the pace of the Main Upgrading Programme will be determined by the size of the budget surplus. With slower economic growth and lower budget surpluses, the MUP programmes have been adjusted downwards, but Mr Chiam should note that the Government will continue to spend a substantial $480 million for the Main and Interim Upgrading Programmes in this year's Budget. A few Members have also expressed concern that the Budget had not offered much assistance to the retail and tourism sectors, and that the reduction in personal income tax rebate to 5% would, in fact, withdraw greater liquidity and further dampen the retail sector. As I have said earlier, the personal income tax rebate is a reward for good economic performance. Moreover, given the current cautious consumer spending mood, I do not think that a higher income tax rebate would offer much help to the retail sector. Government already has various programmes in place which provide assistance in funding for both the retail and tourism sectors. For instance, Government has been enhancing retail infrastructure and providing upgrading in areas such as stock control, shop management and staff retraining to improve the competitiveness and resilience of our retailers. For the tourism sector, the Singapore Tourism Board also helps industry members to obtain financial and manpower training assistance from schemes such as the Innovation Development Scheme and Initiatives for New Technology (INTECH) Scheme. In addition, approved tourism projects can also qualify for Industrial Building Allowances, Investment Allowances on approved expenditure as well as property tax concessions. Mr Lim Swee Say has asked whether more funds could be allocated to the EDB and other economic agencies, to enable them to take the opportunity to attract more investments into Singapore. I would like to assure Mr Lim that the Government is always open to opportunities to attract investments into Singapore. In FY98, $176 million will be provided for EDAS grants, compared with $131 million in FY97, a 34% increase. We are prepared to increase the funding if this should prove necessary. Dr Vasoo has asked for rebates or concessions to be given to promote savings. As a general rule, we do not want to distinguish between different types of income for tax purposes, as it could otherwise result in economic distortions, for example, it could skew investment decisions if interest income was favoured over, say, dividend income. There is also the question of equity. Generally, those who derive the same income should pay the same amount of taxes. If we were to selectively exempt certain types of income, we could have an anomaly of high income earners paying very little taxes if their income is mainly from tax-exempt sources. Mr Leong Horn Kee and Mr Ravindran have suggested that we provide relief for mortgage loans, similar to what Hong Kong did in its FY98 budget. I should point out that in Hong Kong, most people live in privately owned housing which is very expensive. Because of Hong Kong dollar's peg to the US dollar, interest rates are also much higher than in Singapore. Hong Kong home owners, therefore, pay hefty mortgage rates, hence mortgage relief is needed. In the case of Singapore, more than 85% of our population live in HDB flats and they already enjoy subsidies, not only on the purchase price of their flats, but also on the low mortgage interest payments. Therefore, there is no need to provide further tax reliefs on mortgage loans. Mr Ahmad Magad has asked that a multi-tier corporate tax system, with lower tax rates for smaller companies, be adopted. This was raised in last year's Budget debate and I would like to reiterate that a multi-tier tax system will create opportunities for tax planning, such as a breaking-up of companies to pay less tax. To guard against these, elaborate tax rules would be needed, which will lead to higher tax compliance cost. Having a low tax rate may also not help smaller companies in their start-up phase anyway, since they will not be paying much taxes in the first place during their start-up phase. Dr Teo Ho Pin has asked why the property tax rebate was extended only to industrial and commercial properties, but not residential properties. The property tax rebate was granted to ease the cost of business. In the case of individuals and households, it is more meaningful to extend income tax rebate and rebates on service and conservancy charges and rental charges. Home owners are already taxed at a lower concessionary tax rate of 4% on the annual value of their properties. Further, with the property tax rebates given since 1994 to offset GST, currently the majority of HDB households living in 1- to 4-room flats do not pay any property tax. Dr Teo also spoke on the unhappiness of house owners in having to resolve disputes over their annual value of properties with IRAS. It is the duty of the Chief Assessor to ensure that the annual value conforms to the statutory definition of being the estimated annual rental that the property can fetch in the market. Home owners can object to any adjustments of their annual value within 21 days of the notice to adjust the value. Home owners simply need to complete a one-page form stating their grounds of objection. The Chief Assessor will review and adjust annual values accordingly if there are valid grounds of objection. If home owners disagree with the valuation, they can appeal to an independent Valuation Review Board. Mr Tay Beng Chuan and Dr Wang Kai Yuen expressed concern over the recent upward revision on the annual values of some properties. Since January this year, IRAS has been actively reviewing properties with a view to reducing their annual values, where warranted. To-date, IRAS has reviewed some 22,000 cases and reduced the annual rental values by more than $78 million. This reduction in annual values came from 37% of the cases reviewed. 63% had their annual values retained and only 1% of the cases had their annual values increased based on market evidence. IRAS will continue to further reduce the annual values where the market warrants it. Property owners who have reduced their rentals could also inform IRAS so that IRAS could initiate a review and reduce the annual values promptly and accordingly. Mr Inderjit Singh has commented that there is too much Government intervention in the property market. He commented that Government should just set the overall framework to guard against asset inflation and leave the market to just find its own level. Mr Singh, Mr Simon Tay and Mr Chuang Shaw Peng also echoed the sentiment that too much may have been given to developers which are still expected to make reasonable profits even after making loss provisions on unsold units. The Government's long-term strategy is to supply sufficient land at a steady pace to meet the aspirations of Singaporeans to own private residential properties. However, given the cyclical nature of the property market, it is inevitable that property prices will rise and fall. The Government will not intervene in the property market except when it is necessary to avoid excessive market volatility. This is because extreme ups and downs in the property market could have a severe and long lasting impact on the real economy. Hence, Government introduced anti-speculation measures in May 1996 to prick the speculative bubble and to cool down the residential property market. Similarly, in the present downturn, attributable to the regional economic turmoil, Government has adjusted its land sale programme to avoid exacerbating an over-supply situation. It is not the Government's intention to ensure that developers make a profit. Like any other businesses, they will have to assess business risks and face the consequences. Mr Sinnakaruppan has commented that many younger Singaporeans who are graduates find that they still cannot meet the 20% cash payment for the purchase of private property despite the falling property prices. He suggested that the Government should allow for a reduced 10% cash payment for first-time owners of private property. Mr Choo Wee Khiang and Mr Zulkifli both suggested allowing the use of CPF for the down-payment. The 80% limit on bank financing of property purchases is a prudential measure to ensure that the banking sector is not over-exposed to the property sector and that home owners are not heavily geared and hence vulnerable to a fall in property prices. In countries such as Hong Kong and Malaysia, even stricter limits are imposed on banks in financing property purchases. It would not be prudent to relax the 80% limit, even selectively for first-time buyers. To do so would reduce the buffer which banks have in the event of default where the pledged properties have to be disposed of at lower prices. CPF savings cannot be used as the buffer because they go back to the buyer's CPF account if the property is resold. Furthermore, any concession to be granted to only a select group of buyers could easily be subject to abuse. Home buyers should therefore consider their financial position carefully before purchasing a property. Mr Sin Boon Ann has commented that GLCs should be subject to greater accountability to make sure that public money invested in GLCs is well spent and that there should be greater disclosure on their investments as recommended by the Public Accounts Committee. Government is conscious that a considerable amount of public money has been invested in our GLCs. I would therefore like to assure Members of the House that our GLCs have been profitable and represent good investments of public money. Although some of the investments made by our GLCs have not turned out as expected, we should not over react. Many are public listed companies and their accounts are open to public scrutiny. Most of these have performed well over the years and have contributed substantially to public coffers. Dr Vasoo has asked whether greater efficiency has been achieved as a result of the corporatisation of Government agencies and whether the interest of the consumers have been protected. The objective of the corporatisation programme is to enable the service provider to operate as a business entity so that it will be efficient, bottom-line driven and be responsive to changes in a competitive environment and the demands of its customers. Towards this end, Government has been liberalising the telecommunication industry in a gradual manner and we have clearly seen and experienced the benefits in terms of more competitive pricing and greater consumer choice. However, in situations where there is a corporatised monopoly, as in the case of Singapore Power, the Government regulatory body, in this case, PUB, would play a critical role in regulating tariff charges to ensure that the charges are fair. I would like to assure Members of this House that our regulatory bodies are vigilant in ensuring that the interests of the consumers are safeguarded. During the transitory period between corporatisation and the introduction of competition, the regulator will monitor the situation closely to keep tab on charges and service quality. A few Members have asked whether Government would freeze utilities charges and other Government fees to reduce the burden on businesses and individuals. Government fees and charges are revised only to keep pace with cost increases. If cost had not increased, fees and charges would also not increase. Our policy has been to revise fees and charges regularly so that the increases can be kept small. The revisions ensure that the Government services are properly priced to guard against misallocation of resources. However, the Government will continue to monitor the situation closely and will review the fees and charges if there is a need to do so. Both Mr Leong Horn Kee and Mr Inderjit Singh have commented on the depreciation of regional currencies against the Singapore dollar and said that it is now an opportune time to escalate the pace of regionalisation and promote the establishment of manufacturing bases in the region. The recent devaluation of regional currencies relative to the Singapore dollar does provide opportunities for our companies to further invest in the region. Whilst the Government can give assistance to our companies by highlighting the opportunities that are available and facilitating the investments, ultimately the companies themselves must assess the risks involved and decide whether it is commercially viable for them to expand their activities in the region. For those who are willing and able to undertake further regional investments, there already exists a comprehensive range of tax and financial incentives to assist them. Incentives such as the Regionalisation Financing Scheme, Local Enterprise Finance Scheme, Overseas Enterprise Incentive and Overseas Investment Incentive have been used extensively. Mrs Yu-Foo Yee Shoon has asked whether Government would consider allowing workers to use a portion of their CPF savings for an unemployment benefits scheme as part of a crisis package to be invoked only when there is a severe economic downturn. There are no plans to set up such a scheme at present. The proposal has to be carefully considered in view of the long-term implications on the labour market and costs of employment. In times of economic recession, the best way to help workers is to help them get jobs and upgrade their skills so that they remain employable. Currently, there are more than 450,000 foreign workers in Singapore. In an extreme situation, we can adjust the dependency ratio to reduce the influx of foreign workers and to assist our own retrenched workers to find alternative employment. These measures would help our workers cope without having to establish an unemployment benefits scheme as a basic safety net. Experience in other countries serves to remind us that the best security net for Singaporeans is not unemployment or welfare benefits but constant growth and manpower development. Mrs Yu-Foo has also commented that as manpower development is critical, the Government should allocate sufficient resources to the new Ministry of Manpower (MOM). As part of the effort to build up Singapore's global competitiveness, Government has decided to place all manpower planning, development and management issues under the charge of a single Ministry. As a central agency, the new Ministry will be in a better position to coordinate all critical manpower planning and management issues. The new Ministry will also put greater emphasis on collaboration with its partners, which include the private sector, the unions and Government agencies, so that it will be able to align the efforts of all stakeholders to our national manpower vision. Government is committed to the development of manpower and will ensure that sufficient financial resources are made available to MOM. If additional funds are required, my Ministry is prepared to consider such requests. Mdm Claire Chiang has noted that MCD had the second lowest budget and had urged the Government to allocate a larger budget for the community services sector. She further observed that MCD's budget was even lower than that of the Police Division under MHA. Instead of allocating a huge budget to MHA whose focus is on remedial action, resources should be shifted to preventive action undertaken by MCD. But I would like to point out that MCD's budget alone is not representative of the Government's spending on community development. Besides Community Development, Government's spending on Education, Health, Information and the Arts, Environment as well as Public Housing all contribute to the social and community well-being of Singapore. Total Government's spending on social and community services, which include these six named areas, will amount to $10.3 billion or 37.6% of FY1998 Budget. The community and social services sector in fact will receive the highest allocation of resources in FY1998. Further, it is incorrect to say that MCD's focus is on taking preventive action while that of MHA is on remedial action. A very significant proportion of the Ministry of Home Affairs' resources has always been devoted to preventive programmes, such as crime prevention, fire safety and drug education. We should see spending in these programmes as complementary to the other programmes in the social and community services sector. Mdm Chiang would also be pleased to know that MCD would be embarking on a national study on the state of our families and another on the impact of maids on childcare. In addition, MCD has increased the number of neighbourhood centres which include childcare centres, youth drop-in programmes and centres for elderly services. MCD will also be looking into the manpower needs for the social service sector and will be working closely with the voluntary organisations in this area. Mr Simon Tay has urged the Government not to neglect building up the softer aspects of life through involvement in charity and the arts, and has suggested that Government maintain its commitment in these areas during these hard times. I would like to assure the Member that sufficient funds have been provided to arts and culture and community development and that there is no cut-back on Government's commitment in these two areas. For the voluntary welfare organisations (VWOs) of the Ministry of Health and the Ministry of Community Development, Government is providing $140 million of grants in FY1998 as compared to $96 million provided in FY1997. As for the Ministry of Information and the Arts, the FY1998 budget is $381 million as compared to $318 million in FY1997. In the past two days of debate, several Members have spoken on the subject of bond-breaking by public sector scholars. I do not propose to comment on this issue. However, DPM BG Lee will be making a Ministerial Statement on this subject tomorrow after Question Time. Mr Speaker, Sir, let me sum up by emphasising to Members of this House that the Government is fully aware of the extent of the economic slowdown and is carefully monitoring its impact on the population and the different sectors of the economy. The crisis has not run its full course and we must maintain a cool head to anticipate and deal with developments as yet unknown. In this respect, I thank the Members of this House for signposting possible areas of concern. At the same time, we should use the opportunity to improve our competitive weaknesses and position ourselves for the impending recovery of the region. Together, I am confident that we will weather the storm and learn valuable lessons which will stand us in good stead for the challenges of the future. [Applause.]