Hansard, 1998-11-23

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 Davinder Singh15 Oct17 Oct 23 Nov30 Nov Prof S Jayakumar15 Oct18 Oct 13 Nov19 Nov Mr Zainul Abidin Rasheed18 Oct22 Oct 10 Nov12 Nov Mr Chew Heng Ching21 Oct23 Oct Mr Ibrahim bin Othman21 Oct25 Oct 25 Nov29 Nov NameFromTo 19981998 Mr Tang Guan Seng21 Oct29 Oct Dr Wan Soon Bee22 Oct25 Oct 4 Nov12 Nov Mr Lew Syn Pau23 Oct25 Oct 27 Oct29 Oct Mr Simon S C Tay23 Oct28 Oct 14 Nov16 Nov 27 Nov2 Dec Mr Mah Bow Tan27 Oct29 Oct 14 Nov22 Nov Mr Zulkifli Baharudin27 Oct3 Nov 8 Nov13 Nov Mr Lim Hng Kiang28 Oct3 Nov 16 Nov1 Dec Encik Sidek bin Saniff31 Oct5 Nov 10 Dec14 Dec Mr S Iswaran1 Nov3 Nov 9 Nov11 Nov 28 Nov3 Dec 6 Dec7 Dec Mr Chng Hee Kok2 Nov7 Nov 18 Nov27 Nov Mr David T E Lim5 Nov20 Nov Mr Charles Chong11 Nov14 Nov Mr Matthias Yao Chih11 Nov16 Nov 1 Dec5 Dec Dr Wang Kai Yuen13 Nov15 Nov 26 Nov2 Dec Mr Inderjit Singh13 Nov16 Nov 30 Nov1 Dec Mr Sin Boon Ann13 Nov16 Nov Mr Lee Yock Suan13 Nov20 Nov 26 Nov9 Dec 11 Dec18 Dec BG George Yong-Boon Yeo14 Nov24 Nov Mr Chan Soo Sen15 Nov18 Nov Mr Bernard Chen15 Nov21 Nov Mr Ong Kian Min15 Nov21 Nov Mr Lim Swee Say16 Nov20 Nov 29 Nov5 Dec Mr Chng Hee Kok18 Nov27 Nov Mr Yeo Cheow Tong18 Nov7 Dec NameFromTo 19981998 Mrs Yu-Foo Yee Shoon19 Nov21 Nov Mr Chay Wai Chuen20 Nov21 Nov 23 Nov27 Nov 30 Nov30 Nov Mr Tang Guan Seng22 Nov24 Nov Mr Lee Kuan Yew23 Nov24 Nov Dr Michael Lim Chun Leng24 Nov26 Nov 9 Dec10 Dec Mr Heng Chiang Meng24 Nov3 Dec Dr Ker Sin Tze25 Nov4 Dec Mr Peh Chin Hua26 Nov4 Dec Dr Yaacob Ibrahim27 Nov29 Nov Dr Ho Tat Kin27 Nov3 Dec Mr Yeo Guat Kwang28 Nov5 Dec Dr Teo Ho Pin29 Nov2 Dec RAdm Teo Chee Hean29 Nov2 Dec 6 Dec13 Dec Mr Ahmad Mohd Magad29 Nov7 Dec Mr Abdullah Tarmugi29 Nov13 Dec 17 Dec20 Dec Mr Koo Tsai Kee30 Nov1 Dec 11 Dec13 Dec Assoc Prof Low Seow Chay30 Nov5 Dec 11 Dec14 Dec Mr Othman Haron Eusofe30 Nov13 Dec Mrs Lim Hwee Hua1 Dec5 Dec Mr Seng Han Thong3 Dec5 Dec Mr Hawazi Daipi3 Dec6 Dec 10 Dec14 Dec 16 Dec25 Dec Mr Loh Meng See7 Dec12 Dec Mr Ang Mong Seng14 Dec19 Dec Assoc Prof Ho Peng Kee21 Dec31 Dec Dr Lee Boon Yang22 Dec2 Jan 99 TAN SOO KHOON Speaker Parliament of Singapore

The following Bills were assented to by the President of the Republic of Singapore on the date stated: 9 November 1998 (1) Constitution of the Republic of Singapore (Amendment No.2) Bill; (2) Post Office Savings Bank of Singapore (Transfer of Undertakings and Dissolution) Bill; (3) Employment of Foreign Workers (Amendment) Bill; (4) Parliament (Privileges, Immunities and Powers) (Amendment) Bill; (5) Companies (Amendment) Bill; and (6) Housing And Development (Amendment) Bill. TAN SOO KHOON Speaker Parliament of Singapore

The following Question stood in the name of Mr Chng Hee Kok - 1. To ask the Minister for National Development what is the number of applicants for Housing and Development Board flats on the waiting list and if there are any plans to change HDB's building programme.

Question No. 1, Sir. The Parliamentary Secretary to the Minister for National Development (Mr Koo Tsai Kee) (for the Minister for National Development): Mr Speaker, Sir, as at 31st August 1998, there were 108,500 applicants on the waiting list under the Registration for Flat System (RFS). Of these, 42% were first-timers and 58% upgraders. Compared with 145,700 applicants in June 1997, the waiting list has dropped by 26%. HDB reviewed its building programme in August this year. It will build 22,000 flats in non-mature estates in 1999 as the number of new applications has declined in recent months. Together with replacement flats for the Selective En-Bloc Redevelopment Scheme and studio apartments, HDB has planned for a building programme of 28,500 flats for 1999. HDB will continue to monitor the demand and adjust the building programme accordingly. It will also ensure that applicants are invited to book their flats within a reasonable time period.

asked the Minister for National Development whether the Housing and Development Board will revise the sale price of new HDB flats in view of (i) the drop in values of resale HDB flats and private properties, and (ii) the present economic conditions, in general.

Development): Mr Speaker, Sir, the Government is committed to provide affordable housing to Singapore citizens, especially first-timers and low-income families, despite the current economic conditions. HDB considers several factors in setting prices of new flats. The main one is affordability. HDB prices new flats such that 90% of Singaporean households can afford at least a 3-room flat, and 70% at least a 4-room flat. HDB also takes into account individual attributes of the flats such as location, proximity to MRT/LRT stations, the view from the flats, and special design features and finishes. New flats tend to have better designs and finishes, and are located in towns with better facilities and infrastructure. HDB does not consider the prices of private residential properties when it sets prices of new HDB flats. However, it does factor in current HDB resale market prices, because resale prices are an indication of how willing and able Singaporeans are to pay for HDB flats. Prices of new HDB flats are below the market values of equivalent flats. At present prices, new HDB flats continue to be heavily subsidized. The overall sales proceeds do not cover their total development costs. The loss incurred by HDB has to be funded by a Government grant.

Sir, in view of the drop in prices of resale flats, does the HDB take into consideration the so-called market subsidy in setting its price?

Sir, we have debated this before in the House. I have to remind the Member for Hougang that the prices of new flats are heavily subsidised compared to market prices of equivalent flats in the market today.

Sir, the Parliamentary Secretary - and we have heard this before - talks about heavily subsidising HDB flats. Does the HDB publish, every time they embark upon a construction, the cost to the HDB of the construction of that particular estate or block?

Sir, HDB has just released their Annual Report and the CEO of HDB conducted a press conference last weekend. May I refer Members to the financial review pages and they will get all the relevant statistics. In particular, may I refer the Member to the balance sheet and the income statement. The income statement shows quite clearly the losses incurred by the Government in the sale of new flats and this figure was also highlighted by the CEO of HDB. For the year 1997/98 it amounted to $591 million. This is something like 60% of the total deficit incurred by HDB, which was about $1 billion.

Mr Speaker, Sir, I was not asking for figures in the annual statement of the HDB. I am asking whether it would not be a good thing if the HDB publishes its cost for every development and say at what prices they are going to sell the apartments.

Sir, the development cost of each individual block is not published but if the Member wishes to know the development cost of a particular block or precinct, he is welcome to file a Question in Parliament. The reason why we do not publish these figures is that every precinct has different characteristics. New precincts have got markets and roads at different stages of construction. But the selling prices of new flats are published and made known to the people who are asked to select the flats. But these figures are not state secrets. If he wants to know the development cost we will let him know. But we incurred a great loss because of the total development cost. I think Members confuse development cost with construction cost. Over the last one year, construction cost has indeed gone down, but the land cost has not gone down that much. If you talk about flats built today, ie, ready for selection and to go in for occupation , they were bought by the Government several years back. At that time, the land cost was very expensive and the construction cost was equally high.

asked the Minister for National Development if he will review the levy imposed on various types of Housing and Development Board resale flats in view of the current economic situation.

Development): Mr Speaker, Sir, I would like to clarify that the resale levy is not imposed on HDB resale flats. If a person sells his first direct purchase HDB flat and buys a resale flat in the open market, he does not pay the resale levy. This is an important point. The resale levy is applicable only for lessees who have already enjoyed the first Government subsidy (either through the purchase of new HDB flats or the purchase of resale flats using the CPF housing grant) and intend to purchase another flat directly from HDB. In other words, he intends to take a second bite of the subsidy cherry. The objective of the resale levy is to ensure that the second housing subsidy is smaller than the first housing subsidy, which is something I am sure all Members will agree. The Government understands the needs of 3-room flat dwellers to upgrade to a bigger flat. Thus, it has structured the resale levy such that a lessee who sells a smaller flat, such as a 2-room or 3-room flat, pays a lower levy. Conversely, the levy imposed on the sale of a larger flat, like a 5-room or Executive flat, is higher than the 3-room or 4-room flat. The resale levy has effectively helped HDB to manage the demand for new flats from upgraders. As the objective to reduce the amount of subsidy for purchase of second flat from HDB is still valid, my Ministry does not see a need to review the resale levy now.

Is the Parliamentary Secretary not aware that all Government departments are reducing their fees? Can the same principle not be applied to the resale levy?

Sir, I think the Member did not hear me correctly. If you sell your first flat which you purchased from the HDB some years ago, at least five years ago, and now you want to buy a resale flat, you do not pay the resale levy. You only pay the resale levy when you queue up and buy the next flat direct from HDB. Resale flats have indeed fallen in prices. So as a percentage of the smaller selling price, the absolute amount of the resale levy is already smaller. Apart from that, people who are eligible to sell today have already occupied their flats for at least five years. For those who are eligible to apply for a second flat, they would have stayed in the flat for 10 years. In other words, they would have bought their flats either in 1988 or 1993. In 1993, the price of a 3-room flat from HDB was only $44,000. In 1988, the price of a 3-room flat from HDB was only $41,000. Today, the resale price of a 3-room flat is approximately between $150,000 and $180,000. If you do a simple sum, there is a sizable capital gain, ie, $150,000-$180,000 minus the $40,000-odd and multiply that by 20% resale levy, which he need not pay until he gets the new flat. Of course, if he chooses this option he has to pay a 5% interest annually. In other words, my short answer is that no, we are not going to lower the resale levy.

Sir, despite his explanation, I do not understand the logic behind his argument that the prices of new flats have also gone up. Is the Parliamentary Secretary not aware that HDB has also moved towards market pricing? Is that not the direction? If that is the case, what is the basis of still maintaining the levy as imposed?

Sir, because the selling prices of new HDB flats are still lower than the resale flats in the market today. Yes, resale prices have fallen by about 25% from the peak in 1996 and we have consequently adjusted the selling prices of new flats. But there is still a big gap between the price of a new flat and the price of an old flat. In view of the substantial market subsidy, the resale levy should stay.

Sir, in view of the relatively lower resale prices of 3-room flats and the relatively higher prices of 4-room flats, in comparison to the market price now, would the Parliamentary Secretary consider waiving the resale levy for 3-room flats and help those who apply directly to HDB to upgrade to 4-room HDB flats?

Sir, the resale levy for a 3-room flat is only 20%.

It is money.

Yes, correct, it is money and money is hard-earned. But maybe the Member for Hougang did not hear me. The resale price for a 3-room flat today is about $150,000-$180,000. The original selling price of a 3-room flat for those who are eligible to sell their flats today was only about $44,000. If you do a simple calculation, the capital gain is huge with over $100,000. Out of the $100,000 capital gain, which is tax free, you just pay 20% to the Government. You need not pay this amount until you get your new flat.

How about comparing the selling price of a 4-room HDB flat now and $40,000, as mentioned by you, 20 years ago?

Sir, I have the figures here too. For 4-room flats, in 1988, HDB sold them at $65,000. In 1993, 4-room flats were sold at $109,000. Today, in spite of the downturn, 4-room flats are still being snapped up - in fact, they are the most popular units in the market - at $250,000.

Sir, I am talking about those who sold their 3-room flats and bought 4-room flats. I am asking for waiver of the levy for 3-room flats.

Sir, I think we are going off tangent here. These are upgraders. Your sympathy should lie with the first-timers, should you not? If we encourage upgraders to upgrade all the time, then the first-timers will be left behind. So we are talking about people who have already taken the first bite of the subsidy cherry. Why are we crying for people who have got a big bite of the cherry already? When a 3-roomer sells his 3-room flat and applies for a 4-room flat, the 4-room is sold at a heavy subsidy too, but the subsidy is now smaller because of the 22.5% resale levy. I think he did not get his perspective right, Mr Speaker.

Despite all that, is the Parliamentary Secretary willing to review the levy charges if the resale prices drop further?

Mr Speaker, Sir, Government policies are never static. We always review policies as situations change. I thank the MP for Tanjong Pagar for his advice.

May I ask the Parliamentary Secretary, in view of what he has just said, is it the Government's policy now to discourage people from upgrading, people who want to move from a 3-room flat to a 4-room flat if they think that the 3-room flat is inadequate? Is that the policy now?

Sir, the word "discourage" is not quite right. We give preference to first-timers, people who have never had the first bite of the cherry. For people who are living in 3-room flats today and want to upgrade to 4-room flats, we understand their aspirations. That is the reason why 4-room flat prices are benchmarked very affordably.

asked the Minister for National Development if the Housing and Development Board (HDB) will step up the purchase of 3-room HDB flats under the Buy Back Scheme.

Development): Mr Speaker, Sir, the Selective Buy-Back of 3-room Flats Scheme was introduced on 19th May as one of the four measures taken by the Government to help low-income families own HDB flats. Eligible low-income families with household income not exceeding $1,500 per month can purchase the 3-room buy-back flats at heavily subsidised prices. In addition, some of these flats bought under the scheme are also offered for sale to lessees affected by SERS and tenants affected by Relocation Exercises, and for letting to rental applicants under the Transitional Rental Housing Scheme. HDB will continue to buy 3-room flats from the open market under the buy back scheme to cater to the demand from the low-income families and the housing needs under the other various schemes. Based on the current demand, there is no need to step up the purchase of such 3-room flats.

Sir, is it true that the HDB purposely refuses to buy back 3-room flats in opposition wards?

Mr Speaker, Sir, there is no truth in the allegation, as HDB actively buys back all good 3-room flats because we recognise that there is always a group of people who need 3-room flats even though their aspirations may be 4- or 5-room flats. So there is no truth in that statement.

Sir, what are the criteria for the HDB to decide whether to buy back a particular unit of 3-room flat from a particular area?

The first criterion will be price. If Mr Low Thia Khiang's residents are selling a 3-room flat for $250,000, then the answer is no straightaway. But if the price is reasonable, then the next criterion is whether the 3-room HDB flat would be of use to somebody else, because we cannot keep empty stocks of 3-room flats around. These are taxpayers' monies. So we must buy a flat which is reasonably in demand. But we give the benefit of the doubt to the future buyers. In other words, we think that there will be a demand for this particular unit bought back from the market.

Sir, is the Parliamentary Secretary willing to consider under the buy back scheme, particularly those cases that are upgrading, to enable them to move up to a 4-room flat?

There is a huge demand in the resale market. Members must have read in the newspapers that the resale demand for this year has shot up to about 50,000 units. So there is no shortage of demand. The cases that we hear of people having difficulty in selling their 3-room flats boils down to price and location. For location, we can always discount it and sell it at the right price. There is always a clearing price for everything. Does he not agree?

I do not think I can agree because it depends on what price you set. It depends on whether there is a willing buyer and willing seller. May I ask, if there are upgraders who are, in fact, stuck for more than a year and they need to upgrade to bigger flats, could HDB consider such cases?

Mr Speaker, Sir, if Dr Vasoo knows of such cases, could he please write to the Ministry and we will look at them carefully.

asked the Minister for Finance, in view of the fact that measures to reduce business costs will lead to a loss of revenue for the Government, whether he will ensure that (i) Central Provident Fund (CPF) money will not be used to finance any part of the budget deficit that may arise; and (ii) sufficient safeguards are in place to prevent such uses of CPF money.

Mr Speaker, Sir, I would like to assure Mr Ong that the Government has not and will not use CPF funds to finance budget deficits. Where it is necessary to incur operating budget deficits in order to pay for tax cuts and economic recovery expenditures, the deficits will be financed by drawing down from the pool of budget surpluses accumulated by the present Government.

asked the Minister for Home Affairs whether the Government will offer recently dismissed foreign workers who have overstayed in Singapore a period of amnesty to report for repatriation to their home countries.

Kee) (for the Minister for Home Affairs): Sir, foreigners whose work or visit passes have expired must leave Singapore and not stay on illegally here. Singapore is a small country with limited resources. We cannot afford to allow people to disregard our laws and stay on illegally, because such overstayers would impose a strain on our social system, leading to law and order problems. The Government has no intention to grant an amnesty to foreign workers who overstay. It would send the wrong signal to potential immigration offenders that they will be forgiven when they commit immigration offences in Singapore. This would erode the deterrent effect of our immigration laws and enforcement action, and lead to a more severe overstaying problem in the longer run.

Sir, if a work permit is now cancelled in this present economic downturn, is there any grace period allowed at all for the person who turns himself in?

Let me inform Mr Tay that since he filed the Question in July for the August sitting - I think there was a spate of publicity about workers whose employers no longer require them to work in Singapore and their work permits were cancelled; some of the workers did not know; they had accommodation problems and workers were on the streets - the Ministry of Manpower together with the Ministry of Home Affairs and other agencies have worked together to tighten up the procedures, so that the workflow is now better. If a worker is no longer needed in Singapore, steps are taken to repatriate him as expeditiously as possible.

Sir, has the Minister of State overlooked that the question relates to dismissed workers. I raised this sometime ago. What is the Government's policy when the workers are made illegal by the company dismissing them before their time is up and who have claims against the company for back pay or for other payments? Does the Government allow them to stay in Singapore to pursue their claims and recover what they can recover from the company or are they sent packing home?

Sir, this area has also been looked at. MOM has also looked into processing the claims more expeditiously. They have strengthened their conciliation processes, so that it now takes a shorter time for these claims to be considered. And if the workers are still not happy, they can go for adjudication before the Labour Court. In the event that the worker still wants to take his claim to the civil court, he will be given enough time to file his claim in Singapore and instruct counsel.

asked the Minister for Trade and Industry how the outcome of the Asia Pacific Economic Cooperation summit in Malaysia will affect the region's recovery and further development.

Mr Speaker, Sir, APEC has taken a useful step forward in Kuala Lumpur to revive the crisis-hit economies of East Asia. Leaders at the Summit committed to pursue a cooperative growth strategy to put the region back on a recovery path. They urged individual member economies to play their part by adopting growth-oriented, prudent macro economic policies. They supported on-going work to recapitalise and restructure the financial and corporate sectors, attract private capital back into the region, and strengthen the international financial architecture. Specifically, the Leaders agreed that an expanded G22 forum should co-ordinate efforts to strengthen the international financial system. They instructed their Finance Ministers to develop related proposals for implementation. They proposed a taskforce to examine the scope for strengthening prudential regulation of financial institutions, promoting safe and sustainable capital flows. They called for work on improving crisis management, including orderly debt workout arrangements with the private sector. The US$30 billion financial package proposed by Japan, the multi lateral initiative announced by Japan and the US in conjunction with the Asian Development Bank and the World Bank, the Australian Economic Governance capacity building initiative, and Singapore's initiative to provide technical assistance programmes at the IMF-Singapore Regional Training Institute will also contribute to the region's recovery. Looking ahead, the KL Summit also endorsed programmes to strengthen the basis for sustained growth of the region, in the areas of human resources development, small and medium-sized enterprises, electronic commerce, economic infrastructure, and science and technology industry cooperation. Overall, the Kuala Lumpur APEC Summit will contribute to the recovery of the region, and to building a prosperous and dynamic APEC community.

May I ask the Minister whether the failure to agree on the early voluntary liberalisation scheme would have a negative impact on the otherwise positive agenda he has given us?

I think that the signal to the market is that APEC is on track in terms of trade liberalisation. Granted there were difficulties in finally concluding this package of nine sectors because of political problems in Japan over the two sectors of fisheries and forestry, nevertheless, all the 16 participating economies have agreed that this is a package that they are willing to work on and this is to be then submitted to the WTO in Geneva to try and bring more economies on board, especially the European Community. Therefore, this is a good stepping stone to further trade liberalisation.

asked the Minister for Foreign Affairs what is the rationale for Singapore's opposition to the proposal that ASEAN member states should be free to express concern over any action of the government or people in other member states even if such action is taken or directed against its own people.

Mr Speaker, Sir, in reply to the Member, let me say that he is misinformed. Singapore has never opposed the right of any individual ASEAN member to express its views on events in another ASEAN member country. What we had opposed at the ASEAN Ministerial Meeting in Manila this year is the suggestion that ASEAN should abandon the principle of non-interference in the internal affairs of member states. That is an established principle of international law, enshrined in the United Nations Charter and which is also found in ASEAN's Treaty of Amity.

Mr Speaker, Sir, may I assure the Minister that I have not been misinformed. He says that it is ASEAN's policy of non-interference. May I ask him, if you are providing economic or humanitarian aid to another country, does it not also amount to involvement in the country's affairs?

If by Mr Jeyaretnam's suggested definition that it is intervention, I think all members of the UN are interfering in the internal affairs of everybody.

Is the Minister aware that the UN also interferes when there is a large scale suppression of human rights and even killings? Is he not aware of that?

Mr Speaker, Sir, I do not see the relevance of that question to the question he has asked.

Would the Minister answer the question? Is that interference or not, if the United Nations goes in to stop any violation of human rights?

Mr Speaker, Sir, we can have an esoteric debate on what the United Nations does, but I still ask how is that related to the question he has asked.

asked the Prime Minister whether he will elaborate on the win-win proposals in the recent negotiation with the Malaysian Government.

asked the Prime Minister (a) what were the specific requests made by the Malaysian Prime Minister to the Singapore Government to help the Malaysian economy; and (b) whether the meeting between the Prime Ministers and the request for greater help and co-operation reflect the change in the Malaysian government's attitude to restore and improve ties with Singapore.

asked the Prime Minister during his recent meeting with the Prime Minister of Malaysia in Kuala Lumpur, whether the question of water supply to Singapore was raised.

Mr Speaker, Sir, may I have your permission to take Questions 9, 10 and 11 together as they are related?

Yes.

Thank you. The essence of what Prime Minister Mahathir and I discussed has already been reported in the newspapers. Prime Minister Mahathir sought Singapore's co-operation to raise funds to help Malaysia meet its financial needs. Prime Minister Mahathir also reaffirmed Malaysia's commitment to provide water to Singapore beyond 2061 when the 1962 Water Agreement expires. At Malaysia's request, Singapore submitted its draft Agreement on Water to the Malaysians on 14th November 1998. Malaysia in turn sent its draft loan agreement to Singapore on 20th November 1998. Officials from both countries are now negotiating the two agreements. It is, therefore, premature to go into the details today. But as they are major agreements between two states, they will be tabled before our respective Parliaments for approval after Dr Mahathir and I have signed them. However, I must caution that negotiation is still in progress and we cannot assume yet that we will reach agreement on the details. The two proposals are win-win because Singapore will provide or raise funds for Malaysia on very favourable terms. These funds will help Malaysia meet its financial requirements and overcome its economic challenge. In turn, with the new water agreement, Singapore's long term supply of water will be secured. Water from Malaysia is also a cheaper alternative than desalination. The meeting between Dr Mahathir and I to discuss bilateral co-operation does represent a change in attitude on both sides towards restoring and improving bilateral ties. There is a greater chance now that such improvement in ties will be sustained, especially if we conclude the loan and water agreements.

Sir, may I ask the Prime Minister whether it is possible for him to disclose some broad outline of the nature of the two agreements that are being discussed, for example, the amount of loan that the Malaysian have now stated in their agreement and is there any proposed period in the water agreement that we would like to ask for?

Mr Speaker, Sir, as I have explained just now, negotiation is in progress. I do not think it is wise for me to go into details of the two agreements. The main point is that once the agreements are signed, they will be tabled for approval by Parliament.

I would like to ask the Prime Minister whether Singapore has been asked to provide funds directly or provide guarantees, or is it to be raised through private institutions, or whether we are also looking at the resolution of bigger issues like the CIQ and release of CPF funds belonging to West Malaysians. Is this part of the comprehensive agreement that we now have in place?

Mr Speaker, the exact nature of the financial assistance which we will give to Malaysia is being discussed. It can be a direct loan from the Singapore Government. It can be Singapore Government buying bonds from Malaysia. It could be a guarantee. These are matters being discussed at the moment. The CIQ issue is separate. It is not part of this discussion. We have decided, when I met Dr Mahathir, to defer discussion on the CIQ and the Points of Agreement to a later date.

From the reports, it was quite clear that the US is not very happy with Malaysia. It was also reported that the US is probably trying to block some loans to Malaysia because they said the loans would only be given to those IMF-backed countries.

Mr Chuang, could you ask your question?

Yes. I would like to ask the Prime Minister whether our help to Malaysia would jeopardise our relationship with USA, especially when they are not in favour of helping Malaysia.

Mr Speaker, Sir, I do not know how the US would react on this particular issue, but here we take into account our own national interest, and our interest in helping the Malaysians. I myself do not expect the US to object to our assistance to Malaysia in this particular case, because we are getting something in return, which is of tremendous importance to us over the longer term.

Sir, instead of providing loans to the Malaysian Government, if Malaysia is prepared to sell the piece of land at Tanjong Pagar Railway Station, would the Government consider buying the land from Malaysia and help them in terms of financial assistance?

Mr Speaker, Sir, if Malaysia is keen to sell that piece of land to Singapore, it has to put it on the market and interested buyers would have to tender for the piece of land. I do not know how much the land would fetch. It may or may not be sufficient to meet the needs of the Malaysian Government.

May I ask the Prime Minister, given that there is a possibility of obtaining water more cheaply than desalination, does this mean that if the deal is signed, desalination would not go ahead, and that pending negotiations, there will be no progress on desalination?

Mr Speaker, Sir, we have decided to go ahead with the desalination plant, and we will go ahead. This is a pilot plant which will yield about 30 million gallons per day and it is useful for us to have this plant so that we know how it works. As I cautioned just now, we do not know as yet whether the discussion now will lead to fruition.

asked the Deputy Prime Minister and Minister for Defence whether there is any apparent threat arising from recent statements by Malaysia that it will not compromise on any invasion of its air space and will take appropriate action if necessary; and (b) whether the Republic of Singapore Air Force has any safeguards in place should retaliatory actions take place.

(for the Deputy Prime Minister and Minister for Defence): Mr Speaker, Sir, I believe the hon. Member is referring to a number of statements over the past month made by the Malaysian Defence Minister, Datuk Syed Hamid Albar. On 26th October and again on 10th November this year, Datuk Syed Hamid told the Malaysian Parliament that the RMAF would mobilise its fighters "to take appropriate action" if there was any intrusion into Malaysia's airspace by the RSAF. Datuk Syed Hamid was also quoted by the Malaysian press as having said, on 2nd November, that although Malaysia had the right to fire missiles at aircraft which intruded into its airspace, it preferred to apply pressure through public opinion. He cited the case of a South Korean airliner that was shot down by a Soviet Union military aircraft after it strayed into Soviet airspace - an incident which resulted in a huge loss of innocent lives. Sir, Malaysia had, in official protests, alleged that there were seven intrusions by the RSAF since 18th September this year, when Malaysia revoked the arrangements and agreements which allowed the RSAF access to Malaysian airspace. No supporting information was provided to substantiate any of the allegations. Singapore categorically rejects all these allegations as being completely without basis. Our investigations showed that three of the cases involved aircraft of other countries. Two of them were transiting through Malaysian airspace with proper diplomatic clearance given by the Malaysian authorities while the third was a civil aircraft. In another three cases, there were no RSAF aircraft flying at the times and places stated in the Malaysian Third Person Note. The last case involved an RSAF Fokker 50 maritime patrol aircraft coming into Changi Air Base, but the aircraft did not overfly or circle over the Navy Recruit Training Base as alleged. Singapore has already responded officially to Malaysia to conclusively rebut the allegations. We have also asked for substantiating evidence if Malaysia insists that the intrusions did occur. It is not reasonable to keep on repeating the allegations without providing any details to substantiate them. Singapore recognises that Malaysia, like any other country, has the right to take actions to defend itself against hostile action and to protect its sovereignty. As I have explained, there were no intrusions by RSAF aircraft in the instances alleged by Malaysia. The RSAF is extremely careful about not intruding into the airspace of other countries. But it is not possible to guarantee that there will not be accidental infringements, especially when Singapore's airspace is so tight and we share a common border. Sometimes adverse weather conditions cause aircraft to stray off-course. And no air force in the world can guarantee that its pilots will never make navigational errors. Earlier this year, there was one instance when RSAF aircraft accidentally strayed into Malaysian airspace - and we apologised to Malaysia. Mr Speaker, Sir, threats to scramble RMAF aircraft to deal with RSAF intrusions and assertions of the right to shoot missiles to bring down intruding aircraft are, to say the least, most unfortunate - particularly when reference is made to a fighter of the former Soviet air force shooting down a civilian aircraft that had been misidentified. Such statements are especially unfortunate considering that Singapore and Malaysia are friendly neighbours interested in cooperation for mutual benefit as the two Prime Ministers have recently underscored. We should be trying to clear up any misunderstandings instead of making statements which raise tensions and increase the likelihood that a dangerous situation might arise. As Minister Syed Hamid himself has stated, it is dangerous to "play games" in defence matters as doing so could lead to a very dangerous consequence. Mr Speaker, Sir, let me reiterate that we would like to have good defence relations with Malaysia. We are ready to resume defence interactions when Malaysia is ready to do so and at a pace the Malaysians are comfortable with.

I would like to ask the Minister of State whether he would consider asking the Malaysian Government to withdraw, change or clarify its position with regard to the recent expression of better relationship. How can we go on with cooperative efforts when these threats are existing at the moment?

I think the Member has to raise this in the Malaysian Parliament, if he can.

asked the Minister for Manpower what is the progress of various retraining programmes and whether the participation rate of workers in need of upgrading their skills is satisfactory.

Mr Speaker, Sir, we have a wide range of retraining programmes to help different groups of workers to upgrade their knowledge and skill. The Skills Redevelopment Programme (SRP) is one of the key programmes to provide unskilled and low skilled workers with training leading to national skill certification. The focus of the SRP is on skill upgrading to enhance employability of the workers. SRP support is extended to companies that send their workers for the modular skill training programme by the ITE, which leads to the Certificate of Competency, NTC3 or NTC2 certification or for certificate programmes conducted by the polytechnics. Sir, as at end October, the total number of workers committed for training under the SRP stood at 10,500. This is more than half of the target of 20,000 workers that the NTUC aims to achieve by the next Labour Day. Of this number, over 2,800 workers have completed their training and another 3,300 workers are currently undergoing training. Participation of workers in the SRP has been boosted as a result of the sector-driven approach that has been recently adopted by the NTUC. In the hospitality sector, 59 hotels have signed up to retrain a total of 2,000 workers. These workers would have been vulnerable to retrenchment, but the SRP provided an opportunity for hotels to upgrade their skills at affordable cost during this lull period. The SRP for the marine sector was launched just this month, with 13 companies committing 500 workers to be trained. The SRP for a third sector, telecommunications sector, will be launched next month, and another 500 workers are expected to be retrained. The NTUC plans to launch the SRP in at least another 12 more sectors. As a result of the economic downturn, many companies have cut back on their training budgets. Despite this, the number of workers being scheduled for training under the SRP has been growing at an encouraging pace. This is an indication that the SRP is making good progress, and has contributed to preserving jobs and making workers more employable during these difficult times. An important feature of the SRP is that whenever possible, training plans are worked out with the participating companies for their workers. This is critical to the success of the SRP as many workers lack the basic secondary education, or even basic literacy and numeracy skills, to qualify for training leading to skills certification. For this group of workers, SRP support is extended for retraining programmes such as the Basic Education for Skills Training (BEST) and Worker Improvement through Secondary Education (WISE). Training under these programmes will continue to help workers to gain certifiable skills. The BEST and WISE programmes are important segments of our retraining effort. BEST was introduced in 1983 to equip workers without any formal qualifications to PSLE level in English and Mathematics. To-date, the programme has reached out to 216,000 workers. The 1998 enrolment figure is 22,000 which is about the same as the 1997 enrolment. WISE was launched in 1987 for workers to upgrade English and Mathematics to GCE `N' level. Since its launch, the programme has reached out to 130,000 workers. The 1998 enrolment figure is 16,000 which is over 1,000 more than in 1997. Sir, I would like to highlight the progress of worker training supported by the NTUC Education and Training Fund (N-ETF), which was launched on 1st October this year. The Government is providing a grant of $9 million to the NTUC to match funds of $3 million being raised by the labour movement. The NTUC Education and Training Fund supports the training of union members who may not be able to benefit from training support by their employers but are prepared to invest in their own skills upgrading. The target set by the NTUC was to train 10,000 workers in the first year. As at end-October 1998, NTUC has already received 2,600 applications. This is an indication that there is strong interest in retraining among the union members. Sir, in conclusion, there is a range of retraining programmes in place aimed at various segments of the workforce, including those who do not have any formal qualifications. Despite the economic downturn and reduction in companies' training budgets, the enrolment figures indicate that these programmes have continued to maintain a healthy level of participation. My Ministry will continue to encourage and support participation in these programmes as part of the initiatives to enhance the employability of our workers.

asked the Minister for Manpower (a) if a database of part-time jobs as well as home-based jobs is available for the benefit of those workers not seeking full-time jobs because of family commitments; (b) how part-time job seekers can have access to this information; and (c) how many persons have actually used the service and been successfully matched with the jobs that suit their circumstances.

Mr Speaker, Sir, in the June 1998 Labour Force Survey, 49,000 economically inactive persons indicated that they intended to seek work within the next two years. About one in two persons in this group indicated that they preferred part-time work for one reason or another. Sir, my Ministry's Employment Service Department (ESD) provides employment assistance to Singaporeans and Permanent Residents looking for jobs, whether it is for full-time jobs or part-time jobs. As at 31st October 1998, there were some 900 job seekers registered with the ESD, who were looking for part-time or flexible work. However, there were only 64 part-time positions posted with the Department as at that date. About 40 of these vacancies have since been taken up. Part-time employment is not prevalent in Singapore. The June 1998 Labour Force Survey reveals that only 3.1% of employed persons are working part-time. While many economically inactive persons such as housewives favour part-time work, employers are still not keen to recruit part-timers. The current economic downturn has resulted in loosening the labour market. This has made it more difficult to promote part-time and flexible work arrangements. Once the economy recovers and demand for labour picks up, employers will have to review their position and consider part-time workers as a valuable supplementary workforce to meet growing demand.

Sir, could I ask the Minister for the 900 job seekers, what kind of jobs were they looking for, please?

Mr Speaker, Sir, I do not have the specific details for all the 900 job seekers. But, in general, these were people who were looking for part-time jobs at the lower level. They were not highly-skilled workers. They want part-time jobs perhaps in the retail sector, restaurant, business or other commerce areas.

Could I have the assurance of the Minister that the Ministry will step up its efforts in identifying more of these part-time jobs and then publicise the information and job-matching services?

Mr Speaker, Sir, we will try our best to help those who want to look for part-time jobs. But, as I have said earlier on, during this economic downturn, with rising unemployment, very few employers are over-anxious about recruiting part-time workers to meet their requirements. In fact, they have a wide choice of full-time job seekers. So during this period, our focus will be, in fact, on the retrenched workers and those who want to seek full-time employment. As and when the economy recovers and the labour market tightens up again, I think employers will have to change their mindset and be more prepared to engage part-timers to supplement the full-time workforce.

asked the Minister for National Development if he will consider (i) reviewing the Housing and Development Board's rental policies for commercial and industrial premises to allow tenants greater flexibility to sub-divide and sublet their premises for compatible multi-purpose usage and cost saving purposes; and (ii) relaxing the rule on HDB shop-cum-dwelling units to allow owners and tenants of these units to use the dwelling space for compatible commercial purposes.

Development): Mr Speaker, Sir, HDB does provide flexibility to its tenants in the subletting of their commercial and industrial premises. At present, HDB allows its tenants to sublet up to 50% of their premises. The present rule is liberal enough and should be of help to tenants who have excess space. With regard to shop-cum-dwelling units (that means, shops on the ground floor, and another unit on the upper floor), HDB does not allow dwelling units to be used for other purposes as this is generally not catered for in the design of the units, and the surrounding infrastructure and facilities. It may also cause increased disamenity to the residents in the area.

asked the Minister for National Development if his Ministry will seriously consider waiving the 1999 rentals of premises under its charge which are occupied by voluntary organisations to ease their operation burdens so that staff and volunteers can focus on services to the needs of the vulnerable instead of spending their energy on raising funds to keep the operation going.

Development): Mr Speaker, Sir, HDB lets out void deck facilities at concessionary rentals to voluntary welfare organisations. The current rentals for these organisations are already low and below cost recovery. Instead of giving rental waiver for such facilities, the Government's policy is to provide explicit operating subsidies to voluntary welfare organisations to help ease their operation burden. The Government is already subsidising this at 50% of operating costs. Mr Speaker, Sir, the problem is not rent but salaries of professional workers in the VWOs.

asked the Minister for Community Development, for the next difficult 12 months, if his Ministry will (i) increase childcare and Before-and-After-School-Care subsidies for families who are faced with reduced income; and (ii) provide temporary financial support to vulnerable groups such as single parents who cannot work full-time, yet cannot earn sufficient money to upkeep their families and to families with main breadwinner imprisoned. The Minister for Community Development (Mr Abdullah Tarmugi): Mr Speaker, Sir, currently a subsidy of $150 per month is given to working mothers who have children in child-care centres. Normally they would lose their eligibility for these subsidies when they are no more working. But the Member may be pleased to know that our current practice now is to extend the child-care subsidy for a three-month grace period if the mother is looking for a job. In view of the difficulties in the job market now, my Ministry will review the 3-month extension period with a view to lengthening it. There are also other schemes to help families with young children needing child-care. For example, there is the Centre-based Financial Assistance for Child Care (CFAC) Scheme for low-income families administered by the National Council of Social Service. This scheme provides financial assistance of up to $200 per month depending on family income. This is in addition to the child-care subsidy provided by Government. Even if the mother is currently not employed, she is still eligible for the CFAC assistance as long as she is seeking employment. As for Before-and-after-school care centres, or BASCs, they are operated by voluntary welfare organisations (VWOs) which generally keep their fees at an affordable rate. Low-income families, ie, those with gross monthly household income of less than $2,500, are eligible for the Ministry's BASC fee subsidy of up to $150 a month on a sliding scale. A family, which is eligible for the maximum subsidy of $150, needs, in fact, to pay only about $52 in BASC fees, or about $42 if their child attends a school-based BASC. On the question of temporary financial support, as you know, MCD has a Public Assistance Scheme which can provide financial assistance to the family which has no means of support and no one they can turn to for help. A family, whose sole-breadwinner is temporarily incapacitated or has lost a job, can apply for interim financial assistance to tide the family over this very difficult period. Families, whose sole-breadwinners are unable to work full-time to earn enough for the family, can also be referred to other Government agencies or Voluntary Welfare Organisations for supplementary assistance such as waiver of school fees/medical charges, food rations or additional monetary assistance. I would like to assure the Member that there are a range of schemes to help needy families through this very difficult period and at all times. Adjustments to the schemes will be made, if necessary, in accordance with the prevailing economic circumstances.

May I clarify with the Minister: are you saying that single-parent households will also benefit from all these schemes, not just low-income families or vulnerable families?

Single-parent households, if they are low-income and if they need the assistance of the Ministry in any form, not only in terms of finance but also in terms of schooling for their children and others, would be given help.

asked the Minister for Education (a) what is the progress of his Ministry's efforts in revamping the education system; (b) whether his Ministry has been implementing this on a pilot basis in primary and secondary schools and, if so, whether there are any specific results; and (c) what is his assessment of the revamp in terms of preparing our students to confront the new challenges of a knowledge-based economy.

Wong) (for the Minister for Education): Mr Speaker, Sir, our education system has served us well over the years. Today, we have a fundamentally sound system where quality education is delivered to all our pupils, not just the best and the brightest. My Ministry therefore does not intend to revamp our whole system radically. What we seek to do is to re-position and refine the system to develop our young to meet future challenges. Three key trends have emerged for the future: globalisation, rapid technological change and transition to a knowledge based economy. Given these trends and the challenges facing Education, we have to realign the focus of our education system towards developing the full spectrum of talents and abilities of every child, and not just in terms of academic achievement. The re-positioning of the education system aims to put in place ways to identify and help each child to maximise his or her talents and abilities and harness their potential. As part of the process, we have identified six strategic areas of focus for the next five years. These are, first, designing a responsive education structure. We want to be able to identify the talents and abilities of our students early, --- 1.30 pm

Order. End of Question time. [Pursuant to Standing Order No. 21(3), Written Answer (See section, "Oral Answers to Questions Not Reached" (Cols. 1305-8)) to Question No. 18 is reproduced in the Appendix. Question Nos. 19 to 30 have been postponed to the sitting of Parliament on 24th November 1998.]

"to amend the Probate and Administration Act (Chapter 251 of the 1985 Revised Edition) and certain other written laws", presented by the Minister for Law (Prof. S. Jayakumar); read the First time; to be read a Second time on the next available sitting of Parliament, and to be printed.

"to provide for the protection of layout-designs of integrated circuits and to make a consequential amendment to the Copyright Act (Chapter 63 of the 1988 Revised Edition)", presented by Prof. S. Jayakumar; read the First time; to be read a Second time on the next available sitting of Parliament, and to be printed.

"to amend the Road Traffic Act (Chapter 276 of the 1997 Revised Edition)", presented by the Minister for Home Affairs (Mr Wong Kan Seng); read the First time; to be read a Second time on the next available sitting of Parliament, and to be printed.

"to regulate the slaughtering of animals and the processing, packing, inspection, import, distribution, sale, transhipment, and export of meat products and fish products and for matters connected therewith, and to repeal the Slaughterhouses and Meat Processing Factories Act (Chapter 307 of the 1985 Revised Edition) and to make related amendments to certain provisions of the Fisheries Act (Chapter 111 of the 1985 Revised Edition)", presented by the Parliamentary Secretary to the Minister for National Development (Mr Koo Tsai Kee); read the First time; to be read a Second time on the next available sitting of Parliament, and to be printed.

"to establish the Building and Construction Authority, to provide for its functions and powers, and for matters connected therewith, to repeal the Construction Industry Development Board Act (Chapter 51 of the 1985 Revised Edition) and the Land Improvement Act (Chapter 153 of the 1985 Revised Edition) and to make consequential amendments to certain other written laws", presented by Mr Koo Tsai Kee; read the First time; to be read a Second time on the next available sitting of Parliament, and to be printed.

"to amend the Town Councils Act (Chapter 329A of the 1997 Revised Edition)", presented by Mr Koo Tsai Kee; read the First time; to be read a Second time on the next available sitting of Parliament, and to be printed.

Mr Speaker, Sir, I beg to move: `That this House endorses the strategies and policies set out in the Report of the Committee on Singapore's Competitiveness, contained in Paper Misc. 3 of 1998, as the basis for strengthening Singapore's competitiveness.' In May last year, the Committee on Singapore's Competitiveness (CSC) was formed to critically assess Singapore's economic competitiveness over the next decade, taking into consideration global trends and development of existing and emerging competition. The CSC was tasked to identify problem areas and propose appropriate strategies and policies with a view to maintaining and strengthening Singapore's competitive position. The Committee has completed its work and released its Report on 11th November 1998. Copies of the Report have been circulated to hon. Members. When the CSC first began its work, the focus was on the next ten years. The onset of the regional economic crisis in July 1997 has, however, altered the economic landscape significantly. Given our open economy and significant linkages with the region, Singapore too has not been spared from the contagion despite our sound economic fundamentals. The sharp currency realignments have also weakened our competitiveness. The scope of the CSC Report was therefore expanded to propose measures to help the economy cope with the crisis. The Report hence includes both short- and long-term recommendations to improve our competitiveness. Short-term Measures Mr Speaker, Sir, the regional crisis has significantly impacted our economic performance. Between 1st July 1997 and 21st November 1998, the S$ to US$ exchange rate and the Singapore stock market have fallen by 12% and 30% respectively. The GDP growth rate year-on-year has slowed from 7.8% in 1997 to 6.2% and 1.8% respectively in the first and second quarter of 1998. Third quarter growth was -0.7%, the first decline since 1985. On a quarter-on-quarter basis, the economy has been shrinking for two successive quarters. For the whole of 1998, Singapore's GDP growth is expected to be around 1/2-1%. Businesses have been hit, some sectors more than others, and more than 20,000 workers have been retrenched in the first three quarters as a result. The seasonally-adjusted unemployment rate has risen sharply from 2.3% in June to 4.5% in September this year. The coming quarters will be difficult for Singapore. We will continue to face weaker demand for our goods and services from the region which is struggling to recover from the severe economic crisis. The slowing momentum in the US and the EU will dampen demand further. As external demand accounts for more than two-thirds of our total demand, 1999 economic growth is expected to remain weak. MTI's preliminary growth forecast for 1999 is between -1% and 1%. A key concern is that the sharp currency realignments have eroded our cost-competitiveness. Our relative unit labour cost (RULC) has been rising gradually but steadily over the years. When the region was prospering, our rising RULC was a concern but not a critical problem. Now economic conditions have changed drastically in the region and we are competing for a global economic pie that is growing more slowly. Feedback from EDB indicated that some companies were facing pressures to pare prices or relocate production to other countries because of the cost differentials between Singapore and the regional countries. Our total exports to the US have fallen by 8.2% in the first 9 months of this year while all the other regional countries still managed to register positive export growth to the US. This is due largely to the weak performance of our electronics industry. Our market share of electronics exports to the US has dropped from 9.3% in the second quarter of 1997 to 7.3% in September 1998. For the short term, the key concern for Singapore is how to restore our competitiveness, help our companies to tide over the crisis and minimise further job losses. We also need to continue attracting investments to create new jobs for Singaporeans. Besides raising productivity which takes time, there are two main approaches to restore cost competitiveness in the short term. One approach is through currency depreciation. While MAS has been managing the S$ more flexibly in view of the regional crisis, competitive devaluation is not recommended. A weak S$, in the context of an open economy heavily dependent on imports, will translate into larger imported inflation. This would in turn erode any competitive gains from a currency devaluation. A depreciating currency would also erode confidence in the S$ as a store of value, impact our position as a financial centre and diminish the value of S$-denominated assets held by Singaporeans. The other approach which the CSC has recommended is to reduce business costs directly. This addresses the cost competitiveness head-on, without the disadvantages brought about by competitive devaluation. The Government took the same approach to tackle the 1985 recession, with great effectiveness. In June the Government accepted the CSC's recommendation of a $2 billion package of off-budget measures which have been implemented. Since then the economic situation has deteriorated further and the contagion has spread to Russia and Brazil. The CSC has recommended that the Government should now implement a much larger cost and tax cutting package worth about $10 billion, equivalent to about 7% of our GDP, to help our companies compete during this difficult period. All the key components of business costs should be addressed, including wages, foreign worker levy, rentals, charges for services like electricity, telecommunications and port services, vehicle-related overhead costs, as well as Government taxes. Here I refer Members to pages 3 and 4 of the CSC Report which set out the details of these recommendations. These measures should be implemented expeditiously to regain our competitiveness, minimise further job losses and position our economy to face intense competition as regional competitors struggle to export their way out of their economic difficulties. Besides the cost-cutting package, the CSC has also recommended measures to improve credit availability, seek out markets beyond the region, attract more businesses to Singapore and build up our capabilities. Long-term Capability Building Measures At the same time, we must not lose sight of the need to address longer-term challenges and take steps now to strengthen our competitiveness beyond the crisis. We need to take into account the long-term global trends which will have an impact on Singapore. Continued economic liberalisation, globalisation and rapid technological change will shape the competitive economic environment of the future. These global forces will not wait for the economic crisis to blow over. We need to take cognisance of these changes and adjust our strategies and policies now to build up the capabilities to enable us to thrive in this future world. Our sound economic fundamentals, stability and cohesiveness will enable us to do so. We do not face the serious domestic structural problems that some other countries are preoccupied with. We have ample resources and our people are skilled and well-trained. We must therefore use this window of opportunity now to enhance our capabilities to widen the gap with our competitors. The CSC's vision is for Singapore to develop in the next ten years into an advanced and globally competitive knowledge economy, with manufacturing and services as the twin engines of growth. In a knowledge economy, the basis for competitiveness will be the capabilities and intellectual capital to absorb, process and apply knowledge. To realise this vision, we require to strengthen our capabilities while managing cost competitiveness. The CSC has identified eight strategic thrusts. These are promoting high value-added manufacturing and services as the twin engines of growth to serve global needs; strengthening and diversifying our external wing and incorporating a global dimension; building world-class companies; strengthening our small and medium-sized local enterprises; developing human and intellectual capital as a key competitive edge; leveraging on science, technology and innovation; optimising resource management; and facilitating by the Government to enhance our business environment. Mr Speaker, Sir, Singapore has managed to weather the crisis relatively well so far. This is the result of our consistent focus on getting our fundamentals right - a stable political environment, strong tripartite co-operation, fiscal prudence, careful financial supervision, investment in economic infrastructure, and a good education system. These are national assets which we must jealously guard and continually nurture. With our strong fundamentals and our steadfast adherence to an open-market philosophy, this crisis has in fact enhanced our international standing in contrast with the region. Nevertheless, the regional economic crisis has created serious immediate challenges, as well as added an urgent dimension to our efforts to transit to a knowledge economy. Regional economies will emerge leaner, fitter and more cost-competitive after they have restructured their economies. This means we have to accelerate the upgrading of our economy so that we are even more productive and ready to soar when the region recovers. The CSC had an extensive discussion of this problem over a year, with valuable inputs from hundreds of people, both in the public and the private sectors, both locals and foreigners, both practitioners and academics. I wish to thank all of them for their contributions. The proposed strategy and the specific recommendations of the CSC are comprehensive and mutually reinforcing, covering both the short term and the long term. I recommend them to the Government for adoption and prompt implementation. Mr Speaker, Sir, the acceptance of the CSC recommendations will require a united response from all Singaporeans to accept painful cuts in CPF and wages. The world is watching how Singapore is responding to the crisis. Let us give a clear and resounding signal that as a people we will do whatever is necessary to compete, thrive and emerge stronger than before. Sir, I beg to move. Question proposed.

Mr Speaker, Sir, I rise in support of this motion tabled in the name of the Minister for Trade and Industry, Mr Lee Yock Suan. I am certain that this House will strongly endorse the strategies and policies set out in the Report of the Committee on Singapore's Competitiveness (CSC). I note with satisfaction that the CSC, except for the Chairman and Deputy Chairman (who are both Ministers for Trade and Industry), comprises mainly members who are from the private sector. Views were diligently collected from a wide segment of private sector members. I would like to commend the two Ministers for Trade and Industry and the Committee Members for preparing a comprehensive report that is brimming with new and creative ideas and suggestions. In order for our GPC for Finance, Trade and Industry to gather feedback from the ground and industry members, we held discussions with representatives of the Singapore International, Chinese and Indian Chambers of Commerce and Industry, and representatives from the Singapore Confederation of Industries, the Singapore Hoteliers Association and the Singapore Retailers Association. Our GPC members and I would like to thank them for their contributions. We shall relay some of their important comments to this House during the course of this debate. Sir, the Singapore's economy is officially in recession as we have negative growth for the third quarter 1998, and perhaps quite surely for the fourth quarter 1998. The CSC Report is timely as it sets out the key strategies for Singapore's survival in the immediate and long term. The question I would like to ask is: is this $10 billion rescue package that the CSC has proposed sufficient to pull us out of the recession? The Government has previously announced a $2 billion off-budget measures in June 1998. We know now that $2 billion is not enough. The new package is now $10 billion. This amount would be more effective than the earlier $2 billion but the question still remains: is it enough? The other key issue which I would like to pose is whether this package is in fact expansionary or deflationary. Central to the package are the wage and CPF cuts totalling $7 billion. This is the people's money that they are asked to contribute by tightening their belts and bear with CPF and wage cuts. Hence, while there is a $7 billion saving for the private sector, this is dampened by a similar $7 billion drop in consumer spending. Moreover, the impression is that Government's contribution to the $10 billion package is only the remaining $3 billion, which is 30%. The equation looks rather unbalanced as the people are bearing the main burden of 70% and the Government's share appears to be 30%. We feel that Government can do more, and use more of the reserves. The Government has total reserves amounting to about $120 billion. Since the start of the recession, many individuals have dipped into their own reserves to weather this "rainy period". Hence, we must accept that the Singapore economy is not only in the rainy period but perhaps in a storm. Many Ministers and Government leaders have said this is the worst economic crisis that they have ever seen. Hence, it is time to draw upon our national reserves. We have already decided that Singapore can spend $5 billion to help Indonesia and I do not know how much we would draw upon to help our neighbours like Malaysia. But what about helping ourselves? If the Government were to spend just 5% of the total reserves to help Singaporeans, the amount to be used would be at least $6 billion. If you want to be more generous and use 10% of the reserves, this would be a very large $12 billion. I feel it is time for Government to be bold and decisive. Having the correct measures and strategies, and using our reserves wisely, will be consistent with the effective, efficient and level-headed image of the PAP Government. Hence, I would like to urge the Government to be bold to draw more from our reserves to help Singaporeans now. The proposed CPF and wage cuts would take up about $7 billion from the local economy in the form of lower disposable income of the people. The $7 billion is about 5% of our annual GDP. Based on a simple arithmetical computation, that means that the GDP could well contract by 5%. If we add the ripple effects of the loss of $7 billion in consumer spending, the impact on the economy will have a higher multiplier effect. Assuming that the multiplier effect is double, then the GDP could even shrink by a total of 10%. If this deflationary effect is to take its full course, this could be quite worrisome. Hence, counter-stimulating measures must be taken. During a recession, the contractionary effect of the CPF and wage cuts is very undesirable. People will stop spending and the economy will contract. The local retail and commerce sectors are already facing bad business. The mood will be further depressed. It will cause the economy to spiral downwards much faster. Therefore, it is imperative that the Government should introduce concurrently economic boosting measures. One area is by introducing cuts in Government tax, rates and fees. The first objective is to substantially reduce business costs. The second objective is to put back money into the people's pockets to mitigate the drop in their disposable income due to their loss in wages. Hence, in theory, although $7 billion is taken out of circulation from the people's spending, it is hoped that the Government will put back $7 billion, if not more into stimulating the economy. This sum of course could in fact come from the savings of the employers in their business costs. It can also be a combination of other measures like government cuts in industrial rentals, port charges, utilities, taxes and levies as well as in the form of pump priming by the Government through projects such as infrastructure development, roads, schools, IT programmes and R&D spending. The public's expectation is that the Government should contribute an equivalent, if not more, or at least equal to the CPF and wage cuts, which is $7 billion of this total package. We are in difficult times. It is crucial that the Government, employers and employees work closely together, hand in hand to overcome this formidable economic crisis. Sir, I am generally in support of the proposed level of CPF cut of 10% and the 5-8% of wage cut. I feel any deeper level of cuts would have too severe a contradictory effect on the economy. As a word of caution, I would like to urge that employers in the private sector do their part in preserving jobs and not overdoing the pay cuts of their employees. Companies that are doing well and maintaining profitability should avoid that basic wage cuts or year-end bonus cuts. At the same time, employers should also avoid using this occasion to be opportunistic and thereby deliberately reducing too excessively their workers' annual pay package. To mitigate the effect of the proposed 10% CPF cut, I would like to suggest that a 5% cut can be applied to the Ordinary Account and the balance 5% be applied to the Special Account. This would alleviate by half the impact of the drop in available funds for homeowners with outstanding mortgages. A 5% cut in their CPF Ordinary Account will be more manageable. In any case, the Government should nevertheless introduce some measures to help those who are badly affected and unable to continue servicing their existing housing loan repayments arising from the drop in the CPF contributions. The schemes proposed should be able to help not only those who are HDB homeowners, but also those who are private residential owners. One scheme I would like to suggest is to allow taxpayers to claim for up to a certain amount, say, $10,000-$50,000 yearly, depending on how generous is the Government, as tax relief equivalent to the interest payable due to the outstanding housing mortgages. This tax relief has been introduced in Hong Kong. I suggest that, to be equitable, both HDB and private homeowners be allowed to enjoy this relief but only for loan mortgages taken for owner-occupied homes. Sir, I know it is taboo or sacred cow to suggest that Government allow Singaporeans to draw on their CPF savings before retirement. Many people are now in severe financial difficulties. Their CPF savings of course are meant to be used for old age or retirement. However, I feel that for special cases, only on a case-by-case basis, the Government can allow Singaporeans who are out of job because of severe medical problems and very desperate of funds with no savings left to draw from their CPF savings now. If need be, even to allow them to withdraw from the CPF savings of their immediate relatives if they are in such desperate straits. For the proposed wage cut, I feel that the lower level workers should not be made to suffer any basic wage cuts. There may be some cuts in their annual bonuses, depending on the performance of the respective companies. But for low wage earners, a cut of even $10 maybe very painful and difficult to manage as they are already living from hand to mouth. Hence, I support a graduated scale of 5% cut for the mid-level employees and a 7.5% cut for the senior and top executives. For the Ministers, as they have to lead by example, I consider a 10% cut, at least a 2.5% larger cut than the top civil servants, would be quite adequate. It may be hard on the Ministers but as national leaders, they have to lead by example. An hon. Member: MPs as well.

Yes, MPs as well. The amounts and rates of reduction in Government-related fees and charges have not been specified in the CSC Report. To be complete, it is necessary for the Government to also specify the targeted reduction in various rates and fees. In fact, so as to achieve the overall savings in business costs by 15%, the Government should set definite rates of cuts to be made by all statutory boards and departments, such as in port charges, industrial rentals, utilities and telecommunications. Without setting the desired quantum for each fee item, I feel we may find that the desired target of 15% cut in overall business costs may not be achieved. The CSC has also suggested that the foreign worker levies be reduced. It has proposed that the reduction be from $50 to $100. This amount, I feel, is too low. To be bold, I think that the Government should consider a 50% cut in the interim 2-year period for such foreign worker levies. Similarly, I also feel that the Government should allow a 50% cut in maid's levy for an interim 2-year period. This reduction will help many Singaporeans and companies, particularly the middle-income families who have maids, to have more disposable income, which will help them to offset their loss in CPF and wages. Mr Speaker, Sir, I would like to pick on an important issue raised at page 130 of the CSC Report. The CSC has proposed that group tax consolidation be allowed. This will encourage companies to grow through new ventures and ease cash flow constraints. During this economic downturn, many companies will encounter losses, including those incurred by their subsidiaries. This is particularly so for property developers but applicable to all companies. Under present income tax rules, holding companies are not allowed to offset the losses of their subsidiaries against their profitable ones, even though they are owned by the same group. This rule is particularly unfair for property developers as it is a Government requirement to impose on successful tenderers of Government land sales to form separate companies to own land sites purchased. Here, I wish to declare my interest as a director of a property development company. Because of losses incurred during this recession, companies are facing huge write-offs and provisions for losses. Yet, they cannot enjoy any tax offset against the profitable projects. Normally, if all the investments or projects (that is, both profitable and loss-making ones) are put into one company, they will enjoy the tax offsetting. The Government does not want to allow tax leakages by allowing group offsetting, especially for overseas projects. But I feel that for cases of definable local projects and investments, and also for new ventures in Singapore, R&D projects and other new investments that are likely to incur losses, the Government should consider allowing for group tax offsetting. Taxpayers are given a 5% tax rebate during this year's Budget announcement. This rebate we now see is too low. The Government can consider introducing reductions in corporate or personal income tax cuts. Otherwise, I would like to suggest that the Government consider allowing the tax rebates for Year of Assessment 1998 and 1999 to be higher, say, 15-20% for tax rebate. If we recall, Dr Mahathir, who is now the Finance Minister of Malaysia, has allowed a total tax relief for taxpayers in Malaysia in 1998. The idea of a larger tax rebate is to encourage our taxpayers and companies to have more disposable income. Hopefully, some of this money will flow back into the economy. Sir, the CSC Report has focused on the business sector. Rightly so, as we need to formulate plans for the immediate and long term, concepts and strategies for Singapore to survive this current recession and remain competitive. The CSC Report contains 168 pages. It is a very thorough and well-researched report. Many sections are devoted to long-term strategies, some of which my other GPC Members will comment on. I feel strongly that a total review should be done to help everyone in Singapore. There should be constant monitoring and feedback. Besides the business sector, we should not forget the individuals. The total economic rescue package should also include help for the individuals, especially for the poorer segments of the people. A comprehensive rescue package will help garner total support from the entire population. The chances of success will be enhanced. Let us take heart. With effective measures and determination in the implementation, let us work closely together to pull ourselves out of this recession.

Mr Speaker, Sir, let me, first, congratulate the CSC for the comprehensive way in which it prepared the Report, and also the rapid way in which they changed horses mid-stream to deal with the economic crisis at hand. The short-term packages, personally, I have no quarrel. In fact, the CPF wage cut has all been announced before the Report was published. But I only hope that the Government will also consider the assistance to be given to mortgage houseowners in order to alleviate the problem when the CPF is cut. And I also hope that Government Ministries and departments will respond equally fast to reduce charges in equal measure to keep tab with the wage reduction that the people will suffer in return. In fact, those of us in the private sector have already done so. Many of us have already cut the bonuses almost by 80%-90%, and some companies have already decreased wages by about 10-15%. As regards availability of capital, I do not think it is an issue. I think our banks have very sound fundamentals and if the projects are bankable, there will be no lack of finance. What I would like to comment today, rather than on the short-term measures which I think other Members will have a field day, is to comment on the future competitiveness section which the CSC Report has delved on at length. I think the three elements that were mentioned in the Report are very important. First of all, the strengthening of the external wing post-recession; second, the human and intellectual capital that we have got to build up; and, third, the optimal resource management that we must exercise. I think Singaporeans must realise that there is a basic shift in the economic climate in Singapore, and it is not just an economic crisis. This economic crisis, in fact, is a wake up call for us. Our competitiveness has been eroded since before the recession. It has progressively gone worse, but the regional crisis has brought it out into stark perspective, which therefore means that post-economic crisis the same issues will remain with us, that of competitiveness. If we at the end of this economic crisis are still as uncompetitive as before, then I think we will be in dire straits. Everyone of us Government, industries and our people must take this opportunity to make ourselves trimmer and leaner to prepare for the future. I was in Mexico last year and I found in Mexico most of the MNCs were there. They were there because Mexico was competitive and they have NAFTA which provides the market. So a lot of industries, especially electronic industries, some of them are from Singapore, have moved to Mexico. I just came back from Europe over the weekend. I visited Germany, France and Austria. Even in developed countries like Germany and France, they are taking very drastic measures to revamp the industries, to cut costs and they retrenched workers by the thousands. Why? Because they are facing competition from countries within Europe. In Austria, in fact, most of the big MNCs which have operations in Europe also have their plants there. Some of them even put their headquarters there. The reason is because the Austrians' wage levels are lower than most of Europe. The workforce is also intelligent and educated. This is not only to speak of Europe itself but Northern Ireland, for example, and Scotland. Scotland and Northern Ireland together account for 45% of export of electronic equipment to EC. So countries in Europe and the US have other alternatives, not in Asia, but in Europe and in their own continents. If we are to attract investments from these countries, then we must ourselves be more competitive than countries in these continents. Our response is not just Government, because the Government does not make up the country. The people make up the country. The Government can have all the policies but if the people do not respond, there is nothing the Government can do. My message to Singaporeans is that we must adjust our abilities to meet these challenges. We must acquire new knowledge and we must respond to the Government's call for retraining on new ways to do things. All the people in the rest of the world are doing this. If we are not doing that, we are in deep trouble. Secondly, we must also adjust our own living standards. We have been used to years of high growth and high wage increases, so much so that we do not know what bad times are. I think many people would not want to say this, but I will say this. I think we have got to have some pain. I think without pain, there can be no incentive to improve. I think we will be deluding ourselves if we think that this recession will pass and everyone of us will be better in the process. We are not. All of us will suffer. Some of us suffer less, some of us suffer more. The Government's duty is to help those who cannot help themselves and make their suffering a bit more bearable. What does this mean? It means that we probably have to eat into our savings that we accumulated over the good years. As the Prime Minister has said, instead of going to the US for a holiday, go to Bintan. It is one-fifth the cost. You still have a good holiday. You still got some money left for your children. I was very dismayed when I read in the New Paper two weeks ago that some children were saying, "I'm not going to take a cut in allowance, because there is no recession yet." This kind of attitude, I think, has to change, because without the pain, we are not likely to be galvanised into action. What is in our favour? I think we still have a hardworking workforce. There is no denial about it and that has been our selling point all these years. Our workforce has been ranked number one or two consistently. We have a fantastic infrastructure, equal to none. Our educational institutions are one of the best, if not the best, especially in the technological field. So we can do a lot of things to help ourselves. The question is whether we are prepared to avail ourselves of this. If our people can respond to the retraining, to the tightening of the belt and to live a frugal life instead of spending money on wasteful things and if we complement this with the good fundamentals that the Government has put out, I think we stand a very good chance in overcoming the recession. That is not the problem. The recession will be overcome but, more important, I think we should be able to face the future stronger because we are dealing with a very fundamental problem, that of surviving in the long term, not the short term. For the short term, all of us can do it. But in the long term, we have got to be fit and able and the Government's duty is to ensure that we can do that and I hope that the people of Singapore will come together with the Government, change their lifestyles and work towards the common good of bringing ourselves out of this recession, leaner, trimmer, hungrier and, of course, more productive.

Mr Speaker, Sir, the workers shall bear the brunt of the cost-cutting measures recommended by the Committee on Singapore's Competitiveness. The CSC has recommended a 15% wage cut from the 1997 level, 10% of which shall be from the employer's component of the CPF and the balance from the flexi-wage scheme part of the wages. On 12th November this year, the National Wages Council recommended a cut of 5-8% of the workers' wages. If the employers choose to cut workers' flexi-wage as high as 8%, then together with the 10% cut in the employer's component of CPF, the workers can lose up to 15% of wages a month. I urge the Government to be slow in implementing these recommendations. The workers already suffered once in 1985 when Singapore went into a recession. At that time, the workers' wages suffered a 15% drop when 15% of the employers' CPF were cut. It was reported in the local press that for the first nine months of the year, 20,000 workers were retrenched. But how many of these workers are foreign workers? I understand that MNCs are allowed to hire as many as four foreign workers to every one Singaporean worker the company employs. So the Minister should make sure that the number of Singapore workers who are retrenched is significant before implementing the recommended wage cut. At my meet-the-people sessions in my constituency so far, I do not have any resident coming to complain that he is out of job. Employers should not be encouraged to jump the gun and cut workers' wages prematurely, since there is so much talk of cutting workers' wages. The NTUC is in support of the 10% employers' CPF cut. Instead of just recommending that 10% of the employers' CPF be cut, the NTUC should also recommend that the employees' CPF be cut by an equivalent amount. With the 10% employees' CPF cut, the workers can have more take-home pay. This is particularly important to single breadwinners in the family. If there is only one spouse working in the family, that family often finds that it cannot make ends meet. The single bread earner has to take on a part-time additional job which he may not be able to hold continuously. The extra 10% cash in lieu of a CPF reduction shall come in very handy. Some will say that in such a case, that worker will not have enough CPF in the account to pay for his CPF monthly loan instalments. In such a case, I would say that the HDB as well as the Government should give a helping hand. The HDB could restructure the mortgage loan and work out a longer repayment period. If that does not help the workers, then the Government should step in and use its surpluses collected over the last 10 years to pay for the workers' HDB monthly loan instalments. The Government is reported to have accumulated $122 billion in surpluses. So setting aside $5 billion to help out our workers in time of need is not asking too much of the Government. I would say that the Government owes a duty to the nation's workers to tide them over the next one or two years when the recession takes its worst toll. The Government can charge a nominal interest rate of 2% and have the loans secured as a second mortgage after the HDB. I am certain a scheme like that can be worked out to help the workers since $5 billion is less than 5% of the amount of the Government's surpluses collected over the years. I wish the NTUC will support this suggestion. I note that the CSC has only recommended a reduction of the levy for both skilled and unskilled foreign workers in the manufacturing sector, but not for domestic maids. I would urge the Government to reduce the levy of all foreign workers, including domestic maids, by $100-$200 per month. By lowering the levy, employers shall pay less for foreign workers and this should be all right since foreign workers mostly work in jobs which local workers are not willing to do so, for example, in the construction industry, road works or MRT sites. Local workers shall thus not be deprived of their jobs. I agree that the charges for electricity, telecommunications and port services should be reduced. I would further suggest that Singapore Power stop collecting water conservation charges and also not to collect interest and penalties for late payments until the economic crisis is over. The reason is that electricity and water consumers have placed sufficient deposits with Singapore Power in their accounts. No interest is paid by Singapore Power to consumers for the use of their deposit money. Singapore Power can use the interest earned from the vast amount of deposits placed with them by account holders over the past years to offset the lost interest as a result of late payments. I agree with the CSC that rentals for Jurong Town Corporation and Housing and Development Board land and factory rentals should be reduced. I would further suggest that the sale price of new HDB flats should also be reduced, since prices of building materials and building costs have dropped significantly. I would also agree with the CSC that motor vehicle customs duty and petrol diesel duty be reduced, and the 55% property tax rebate be extended. I would also support the suspension of stamp duty on share transactions and to lower corporate and personal income tax. In these hard times, I would also call on the Prime Minister and his Ministers to voluntarily take at least a 25% pay cut. I understand that in the private sector, many workers are suffering a freeze on their salaries and others are taking a 20% cut on their pay. It is reported that company directors are taking a 50% cut on their directors' fees. Singapore Ministers are reputed to be the highest paid in the world. So a 25% cut on the Ministers' salary shall still leave them with a lot to live on comfortably. Ministers are top leaders of the country and a significant gesture on their part in these difficult times shall be a great boost to the morale of the whole country. The Ministers should take a pay cut at this point of time. An act like that shall jell the whole nation, as they can say that they lead by example. They really show solidarity with the workers. They have a genuine feel for the people. The Ministers have gone down to the NTUC and tell them, "United we stand." Such a pronouncement on the part of Ministers sounds hollow if they do not share the sufferings of the workers who are expected to take a 15% reduction in their monthly wage. Many people also are complaining about the 3% GST imposed on all goods and services. They want the Government to suspend GST for the time being until the financial crisis is over. I hope the Government can give a positive response. Now, I would like to comment on the CSC's vision for Singapore in the next decade. It wants Singapore to become an advanced globally competitive knowledge economy. I quote the CSC's Report: "We should be a knowledge economy where the basis for competitiveness will be the capabilities and intellectual capital to absorb, process and apply knowledge. We should have a strong technological capability and a vibrant entrepreneurial culture that thrives on creativity, nimbleness and good business sense. To develop into a knowledge economy, Singapore should be an open cosmopolitan society, attractive to global talent and connected with other global knowledge nodes. There should be a critical mass of Singaporeans who are risk-taking entrepreneurs, innovators and arbitrageurs. Together with the global talent, they will move Singapore ahead in the Information Age." I entirely agree with this vision. In Japan they had this similar vision, ie, to develop a knowledge economy in 1992. The problem in Japan which hindered the attainment of this vision was their culture of bureaucratic leadership. The bureaucratic civil servants run the country. It is said that in Japan the measures adopted under bureaucratic leadership were aimed not at development for the future, but maintenance of the status quo. Can Singapore attain a knowledge economy within the next decade? I personally think that we cannot do so. Singapore is worse than Japan. We do not only have a culture of bureaucratic leadership but we have in place a dominant one-party rule that is bent in perpetuating its rule. The organisation of the whole of Singapore is such that the leadership must come from the party or the top. In the CSC Report, at page 118, it is mentioned: "The World Competitiveness Yearbook indicated that Singapore has adopted a centralised, top-down decision-making approach in government." I doubt that the PAP will change its style or form of Government. It wants a firm control of the country. On the other hand, the CSC envisages that in a knowledge economy "there should be a critical mass of Singaporeans who are risk-taking entrepreneurs, innovators and arbitrageurs". In the first place, will the present PAP political system allow a group of Singaporeans a critical mass of leaders who can think independently and develop independently? I do not think so. I make this assessment after having been in politics in Singapore for 22 years and an elected MP for 14 years. Just look at all aspects of the Singapore society, whether it be in business, sports, culture or social activities, you see a PAP Minister, a PAP MP or a PAP man in charge. So nationally I cannot see a critical mass of Singaporeans who are risk-taking entrepreneurs, innovators and arbitrageurs to emerge unless, of course, we have a reformation, a material change in the political system. Instead of a one-party rule, we have democratic pluralism, maybe a two-party system and the Government of the day behaves in a more traditional way, ie, to collect taxes, maintain internal security, external defence, foreign policies and leave the commerce and business to its private citizens. It is only under such a system where Singaporeans are given more freedom can truly great, great business leaders emerge. I think the CSC Report has missed one important issue, and that is, our relationship with our closest neighbour, Malaysia. Malaysia is Singapore's most important trading partner. Our water supply is also from Malaysia. For the long term well-being of our economy, Singapore must enter into some kind of economic relationship with Malaysia which benefits both sides. I have suggested in this House that Singapore seek an economic union with Malaysia. The CSC Report has mentioned that "A limited domestic market poses a serious impediment to expansion and constrains investment in equipment, technology and modern management methods." If Singapore can bring about an economic union with Malaysia, the problem of our small size or limited domestic market can be solved. But the ultimate aim of our economic union must not only be for the benefit of Singapore, it must be for the mutual benefit of both countries. I call on the Government to strive for an economic union with Malaysia.

Mr Speaker, Sir, I recall a conversation I had 10 years ago with the Chief Executive Officer of a very huge Japanese multi-national because I wanted to understand the bottoms-up philosophy among the Japanese workers. And he told me, "It is not as simple as you think because normally workers will be told what their leaders want and they will know what to do." Mr Speaker, Sir, in these economic tough times, it is heartening to learn that Singaporeans understand and accept the need for painful wage cuts. Dr Yaacob Ibrahim summed up these sentiments very well in The New Paper of 18th November and I would like to quote him here: "The general feeling is that people understand and accept that there must be wage cuts. They are glad to have a job that pays less, than no job at all." Yes, isn't it better to have a job that pays less, than to have no job at all? But I would also like to stress that what is very important is that most Singaporeans today still hold their jobs. Fortunately for us, Mr Speaker, the prudent policies and financial foresight of our Government have spared us from an economic meltdown of Titanic proportions. We should be glad that our Government and people did not see our economy as the Titanic's captain, crew and passengers did their ship in 1912. It has happened, it will happen again if we are not careful. So, therefore, it is worthwhile to recall that voyage made by the Titanic and its maiden voyage that was filled with exhilaration. Spirits were high, the air was heavy with excitement and jubilation. The crew and the well-heeled passengers were fortified in their belief that they were on the safest ship ever built in the world. They all looked to the ship as unsinkable, just as many governments, corporations and people in this part of the world looked at their economies as though these economies were invulnerable. The celebratory mood among the passengers continued into the voyage and as the ship sailed towards its destination, the passengers wined and dined. They indulged in pleasures without a care in the world - just like some governments, some corporations and people around the world, especially this region, preoccupying themselves with mega-borrowings and spendings. The passengers on board the Titanic were enjoying themselves to the extent that they were blinded to the fact that the ship could be in danger. When warning signals became apparent and the captain was told of them, he dismissed those dangers as nothing more than nuisances, as he did not believe that the Titanic could be in trouble. As the danger became more and more apparent, the captain and the people on board still chose not to heed it but carried on with their preoccupations. Finally, because of their over-confidence and slowness to react, the Titanic went smack into real danger - just like what happened to many countries and many economies in this part of the world that were caught unawares by the quick rises and falls of the markets caused by the way money was transacted at lightning speeds around the world. Mr Speaker, Sir, amidst this current regional economic crisis, Singapore's economy has also been affected. While we have not emerged unharmed, fortunately, we have not been seen as badly hit as our neighbours. Hopefully, with the recommendations of the CSC, we will be able to avoid the worst and pick ourselves up again as quickly as possible, and be in the front of the race when others are still picking themselves up. While figures show that some 40,000 are expected to be retrenched by the end of the year, I think we are still relatively fortunate. The estimates are not very much higher. Meanwhile, the CDCs (Community Development Councils) will do all they can to find as many jobs as possible, to ferret them out, so that they will be able to find alternative jobs for those who lose their jobs or are being retrenched. For instance, in the case of Marine Parade district, last year, we helped 30 Singaporeans to find jobs; this year, in 1998 up to now, about 700 jobs. So who says that there is no one Singaporean that has lost his job? Thanks here to Ministry of Manpower, NTUC, ADECCO (ADECCO is a private international employment assistance company), and MDIS (Management Development Institute of Singapore). In fact, these two private organisations have done more than their fair share. What they have done actually is also to organise courses so that workers who choose not to go immediately into another employment can also choose to be trained or retrained. Mr Speaker, Sir, I said at the outset that the most important point is that the majority of Singaporeans are still having their jobs. And I think that this is a very important point, and I attribute this to the kiasu attitude of Singaporeans and the Government. Contrary to common perception, kiasuism need not necessarily be bad. Who says it is bad? It is bad only when it makes the Singaporeans ugly - when they become greedy, self-centred, selfish, envious, discourteous and unkind. Mr Speaker, Sir, we certainly do not want to be like what the economist, Mr E. F. Schumacher, said in his book, "Small is Beautiful". Allow me to quote him: "If human vices such as greed and envy are systematically cultivated, the inevitable result is nothing less than a collapse of intelligence. A man driven by greed or by envy loses the power of seeing things as they really are, of seeing things in their roundness and their wholeness, and his very successes become failures. If the whole society become infected by these vices, they may indeed achieve astonishing things but they become increasingly incapable of solving the most elementary problems of everyday existence." In short, we must not allow selfishness, greed, anger to take priority over more important and serious issues. The recommendations put up by the CSC, taken in the right attitude and casting self-interest aside, could, I believe, bring us out of troubled waters and help us weather whatever storms that come in future and ride them out confidently. Therefore, these recommendations can be seen as worthy kiasu measures to ensure our self-preservation and success. We should see the recommendations as something that is good for all Singaporeans. And so I would like to urge every Singaporean to see it in its big picture, because squabbling and quarrelling must be avoided at all costs. We should channel our energies into ensuring that we pull through these tough times and not wallow in them. Mr Speaker, Sir, so far we are all right. If we had been managed by a different band of less than capable people, then I think we would find ourselves in an entirely different position. Yes, we are small, and small is indeed beautiful, but only when it is properly managed. We have a combination of both. The beauty of being small in Singapore is that we can reach out to every corner of Singapore and be kept up-to- date with the latest goings-on. After all, we all do that, don't we? We walk our little corner of the island on weekends, we go from home to home talking to our residents, learning from them, listening to them, finding out what they want, what help they need or what help they don't need. So, in a situation like what we have today, we are able to confidently assess and describe how our people are doing and have our fingers on the pulse of the nation. For instance, take Mountbatten, we were concerned with how our people are faring in this economic crisis, because they all have been moved from rental flats into 4- or 5-room flats, new ones, expensive ones too. I guess we must have walked a few hundred homes over a couple of months and I am relieved to know that many of them are still able to maintain their homes, they are able to pay their SC&C charges, their monthly instalments, and so on. But this brings out a very important point. Most of these people who have moved into new flats, they are living in extended families. You have your grandmother, your grandfather, your father, your mother, your brothers, sisters, and so on, and when one person gets retrenched, the others chip in. The strength and virtue of the extended family is still very strong. But there is a present tendency for families to break out into nuclear families. Therefore, Mr Speaker, Sir, the challenge in the 21st century is to find ways and means to see how we can keep family support healthy and firmly in place, so that people will remain safe not only in times of crisis but also in better times as well.

Order. I suspend the Sitting and will take the Chair again at 3.10 pm. Sitting accordingly suspended at 2.43 pm until 3.10 pm. Sitting resumed at 3.10 pm

Debate resumed.

(In Mandarin): Mr Speaker, Sir, I support the motion in the name of the Minister for Trade and Industry. On 31st August 1985, Mr Lim Boon Heng and I moved a motion in this House to discuss and debate the state of the economy at that time. 13 years later, we are once again debating the same kind of issues. This should serve as a reminder to Singaporeans that economic development and prosperity should not be taken for granted. First, let me speak generally on short-term measures and long-term strategies. In this region, the present economic crisis was sparked off by a financial turmoil. It is quite natural that everyone is concerned with how to manage, regulate and supervise over the short term capital flows. But in nature and concept, capital flows and trade flows are different. Measures on capital flows, especially on speculative short-term capital flows, should not derail long-term objectives of trade liberalisation. The plan for a free trade area, whether it is in the Asia-Pacific or in ASEAN, must be persistently pushed forward for implementation as planned. Similarly, in Singapore, the Committee on Singapore's Competitiveness (CSC) Report also covered both short-term measures and long-term strategies. But the two types of measures should not be confused and mixed together. The Straits Times editorial on 13th November mentioned that the long-term and short-term recommendations taken together may confuse the public. This is totally unnecessary. The Committee was established in May 1997 to review Singapore's economic competitiveness over the next 10 years. But two months later, in July 1997, the region was taken by surprise by a financial turmoil which turned into an economic crisis. Therefore, the CSC had to recommend short-term measures to deal with the impact of this crisis on Singapore's economy. To put it simply, even without the present regional economic crisis, we should also study and take stock of our economic achievements in the last 12 years, and understand our strengths and weaknesses so as to formulate our economic development strategy for the future. We should understand and realise that even before this crisis, the relative unit labour cost (RULC) has been rising, and we are gradually losing our competitive edge. On the short-term measures, we must first reflect on the problems, cope with the changes in order to tide over the crisis ( ). Economic competitiveness is decided by a number of factors, including (1) cost; (2) productivity; and (3) the exchange rate of the Singapore dollar against other currencies. Here, let me raise three issues: first, productivity and exchange rate. The Committee recommends cost-cutting and also emphasises on the need to develop human and intellectual capital, and leverage on science, technology and innovation. All these measures expand our capacity building and improve our productivity so as to strengthen our long-term competitiveness. However, the Committee has not clearly analysed and explained why the S$ depreciation is not a viable option to deal with the current economic crisis. Some academicians, businessmen and others still believe that S$ depreciation is the easiest way out. With depreciation of S$ currency, we may be able to avoid wage cut and other painful market adjustments. But we must also realise and face the consequences of S$ depreciation, for example, prices of imported goods and services from equipment, spare parts to food will increase; the value of our CPF savings and other assets in S$ terms will decline, and our position as a financial hub will also be adversely impacted. I am glad that the Minister for Trade and Industry had just mentioned this point in his speech. But when we talk to the community leaders, trade unionists and the people, we must reiterate the explanation of this issue on S$ depreciation. The second point is cost-cutting. In general, the unions have already accepted the recommendations of the Committee to cut wage cost. We should all remember that this is not the first time that the CPF is cut; and this is also not the first time that the employees suffer a pay-cut. The CSC has also recommended that the Government should cut down non-wage costs such as rentals, service charges on electricity and communication, and port charges. The private sector must take similar measures to cut cost. They should cut their rentals, interests, transport charges and other non-wage costs. In terms of wage cost, for companies which are not doing well, the management should make downward adjustment of the directors fees, and the pay and allowances of management staff. On the other hand, for companies which are doing well, they should continue to give their employees what they deserve. In this area, we should consider two concrete measures: (1) when we can cut down the variable component of wage and salary, the magnitude of the cut for the lower-income employees should be less than that of the managerial and executive staff; and (2) the Government should consider giving assistance package to the lower-income group, eg, in the form of rental, S&C charges, utilities rebates, etc. If the unions, business community, Government and Parliament unanimously accept these cost-cutting measures, this resolute decision will send a strong signal to the market and boost investors' confidence on Singapore. This will have a very positive and decisive effect on our economic recovery. Looking around the world, very few governments can propose reduction in wages and welfare benefits of the employees without causing a boycott and protest from the trade unions, or even causing a political turmoil. Our people of Singapore, especially the union members, understand the whole macro-economic situation of Singapore and the long term implications of our economy, and they have gallantly agreed to make the necessary adjustments and sacrifices. The union members should be commended. The current economic crisis has given rise to a sense of anxiety ( ), a sense of crisis, and the expectation of good Government leadership. If we can overcome the present difficulties within a short time, the cohesion among the people will be strengthened and the bond between the people and the Government will be further consolidated. A few years later, when we look back at the current economic crisis, we will say that when it comes to the crunch, we the common people have made the necessary adjustments and painful sacrifices, thereby enabling our economy to recover, and that our Government has once again led us out of the valley of economic recession. The third issue is tax cuts. The CSC has also recommended that the Government reduce tax rates or give rebates on the personal income tax, company tax and foreign worker levy. Tax cuts take place after economic returns and are below the bottom line, while cost cuts take place before economic returns and are above the bottom line. Tax cuts will help stimulate investments, encourage hard work and strengthen the propensity to save. Strictly speaking, tax cuts are not cost cutting measures. In tax cuts, some people, including Mr Chiam See Tong, seem to focus their attention on the GST ( ). They proposed that the Government should abolish GST or reduce the GST rate. In fact, GST is not part of business cost (apart from some administrative costs). Businessmen are only tax collection agents for the Government, and if their annual business turnover is less than $1 million, businesses need not collect GST, unless they volunteer to register as GST collection agents. Those who think that GST will add to business costs are wrong. The discussion on how GST would affect consumption expenditure is more relevant. But here, we must pay attention to a few points: Firstly, the import linkages, that is to say, most of our consumer goods from food to electrical home appliances are imported. Secondly, our domestic market is very small. Private consumption expenditure accounted for only 40% of total expenditure, whereas the Government consumption expenditure was only 9%. Mr Leong Horn Kee said that the proposed CPF and wage cuts of $7 billion would lead to a loss of $7 billion in consumption expenditure is incorrect. Further, the GST rate is only 3%. In Europe, the rate is between 13% and 25%. In Asian countries like Japan, Korea and Taiwan, their consumption tax rates are much higher than that of Singapore. The other point is that when GST was first introduced in 1994, the Government had cut income tax and property tax, and gave rebates on rentals, S&C charges for the lower-income families. The difference between GST revenue and revenue loss by the Government from the tax cuts and expenditure on the package of rebates is pretty narrow. In other words, GST is revenue-neutral or even negative. Based on these reasons, from the macro-economic perspective, the stimulative effect from a cut in GST on our consumption expenditure cannot be substantial. Mr Speaker, Sir, more attention must be given to our long-term economic strategies. The strategies should be to develop our full potential so as to launch into the next phase ( ). If we cannot maintain our competitiveness, and if we cannot catch up and deal with the market and technological changes, then the world will forge ahead and leave us behind. The CSC has recommended a twin-engine growth, ie, to develop our manufacturing and service industries together at the same time. It is a good and sound strategy. At the same time, we must also develop our own MNCs. We must help our promising SMEs. We must face one harsh reality that our economy is gradually transforming into a knowledge-based economy. The labour intensive, low-value added industries and activities will eventually be phased out. Jobs that are related to such industries and activities will also be lost in due course. Therefore, our employers, entrepreneurs, employees and indeed all Singaporeans must prepare to face this unavoidable economic restructuring. Mr Speaker, Sir, because of our economic structure, two-thirds of our demands are from external sector. The sharp fall in external demand is the main cause of our current economic recession. We must develop overseas markets, strengthen our regionalisation, and look out for new markets and new commercial opportunities to stimulate demand and diversify the demand. These measures are crucial and must be implemented. On the supply side, education, training, technology and innovation would expand and build up our capacity and upgrade our capability. I agree with the CSC's view that we should treasure our limited resources, especially land and talents, and ensure that they are put to optimum use. Finally, the Committee has also referred to the role of the Government. The Government should review its role in the production domain, whether the Government should only be a facilitator or should participate directly in production through the Government-linked companies (GLCs). The crucial point here is whether the GLCs or private enterprises can all withstand the test of the market by making profits and getting the targetted returns. As to who owns these companies, it is of secondary importance. I would like to side-track to comment on Mr Chiam See Tong's point made just now that the PAP has dominated virtually every field in Singapore so that people cannot think independently and cannot develop themselves. He was hinting that this could be one reason why we are not able to develop our entrepreneurs. This reminds me of two points. Firstly, let me point out to him that the CSC members, apart from two Ministers and one Minister of State, the others are not linked to the Government. Secondly, in Hong Kong, a very popular tabloid "Apple Daily" carried a report with a big headline on 13th November 1998: "Singapore is unable to produce a Li Ka Shing". However, the newspaper was at least fair in pointing out that Singapore and Hong Kong have their own advantages and weaknesses. Mr Speaker, Sir, whatever strategy we may select to develop our economy, our people, unions, business community and the Government should always stay together and move ahead in one heart ( ). As the Minister for Finance once mentioned, our collective organisational ability is our competitive edge. In this increasingly competitive world that we are living in, if we can maintain this competitive edge and keep one step ahead of our competitors, then our economy will continue to grow steadily, and our people will be able to enjoy a rising standard of living.

(In Mandarin): Mr Speaker, Sir, I support the motion. In June this year, the Government introduced a $2 billion off-Budget package to stimulate Singapore's economy. Now, the Committee of Singapore's Competitiveness (CSC) has again introduced a cost-reduction package with the hope that business costs in Singapore can be reduced by S$10 billion in the next year. In other words, since June this year, the Government has introduced altogether packages worth S$12 billion to help the businesses to deal with the imminent predicament they are facing, and to minimise further job losses. I personally feel that the CSC should be commended for being so resolute in making this recommendation to reduce our business cost so that we could have a proper direction for our economic development over the next 10 years and for giving us a series of strategies for our long-term development. The Committee does not recommend devaluation of the Singapore dollar to solve the problem. This is indeed a very wise decision. Mr Speaker, Sir, just now I heard Mr Chiam See Tong saying that despite the economic crisis, no resident in his constituency came to his meet-the-people session for assistance in getting a job. I believe in the present economic crisis, there is no lack of people who have lost their jobs, but they do not go to Mr Chiam See Tong because they do not believe Mr Chiam could help them to secure jobs. They would rather go straight to the Ministry of Manpower for help. This is a more practical thing for them to do. Just now Mr Chiam See Tong mentioned that the Government should not reduce the employer's CPF contribution. I do not agree with him. In his view, so long as we reduce Government taxes, our economic problem can be resolved. The problem is not that simple. If our workers do not take a cut in their CPF and wages, then it will give the foreigners the impression that our workers do not support the Government's effort to help the economy, and they will have no confidence in us. They will not come here to invest. The Government and the people should be united in one heart during this economic crisis and to send the correct signal to our foreign investors. So I believe what Mr Chiam said just now is not correct. It may be just a political stunt to please his Potong Pasir voters. Just now he said that there should be an economic alliance between Singapore and Malaysia. I do not think this is feasible because no matter how we unite with Malaysia, it would not be as effective as the larger regional forum such as APEC. I support the CSC Report but I have a few suggestions for the Government to consider. First of all, we should try to reduce more non-wage costs. The CSC has recommended reduction in some non-wage costs such as rentals, utilities, telephone bills and taxes, etc. But I hope that the Government departments and the private sector should try their best to reduce more non-wage costs including items which are not mentioned in the Report. When I received this Report from the CSC, the first thing I noticed was that the book was very beautifully printed and the paper quality is excellent. On the one hand, the Government is advocating reduction in business costs. On the other hand, they seem to have forgotten that they should also try to save cost in its operations. You may notice that for this 186-page Report, a thick paper of not less than 120 gm was used, with two-colour and four-colour printing and large font size, which are superior to the textbooks used by our secondary students. In my opinion, the production cost of this book can be easily reduced by at least 50%. Therefore, I feel that Government departments and the private enterprises should not spend so much money in producing fanciful annual reports. They should be made simple and extravagant high profile presentation should be avoided as it will increase their business cost. I would also suggest that when senior officers from the public and private sectors go on official trips abroad, they should travel by economy class instead of first class or business class. As for entertainment, I agree with Prof. Tommy Koh's view that the number of courses in our Chinese dinners should be reduced from eight dishes to six dishes. This will save cost. The whole package introduced by the CSC has been weighted towards helping the manufacturing and the retailing industries to reduce their business costs. However, there is one thing that I think the CSC has neglected, ie, the advertising cost. Many manufacturers and retailers have been using the television or newspapers to advertise their products and services. According to a survey conducted by the Temasek Polytechnic recently, more than 32% of male Singaporeans learnt of news about new products or services through advertisements in the newspapers and about 26% of female Singaporeans learnt about sales and special offers through newspapers. This clearly shows that it is very important for the manufacturers and retailers to advertise their products and services. I suggest that TCS and the newspapers should also reduce their advertising fees during these difficult times to help businesses cut their costs. When the businessmen calculate their costs, they naturally include the advertising cost into their business costs, and eventually it will be the consumers who are paying for it. Therefore, I suggest that for advertisements on sundry goods and essential daily goods by, say, NTUC FairPrice and other supermarkets, a discount shall be given in the advertising fees. The advertisers can then pass on their savings from the advertising cost to the consumers by offering these essential goods at cheaper prices. This will help to bring down the cost of living. Secondly, we should not cut the salaries or CPF contributions of the employees from the lower income group. The CSC suggests that the total wage cost be reduced by 15%, ie, 10% from employer's CPF contribution and 5-8% from wages. I feel that for the low-income employees, the reduction should be less. And for the executive and senior officers, their salaries can be reduced by a larger margin. For those who are living in 1- and 2-room flats, their average combined family income is only about S$800 per month. So if we are having an across-the-board percentage deduction in salary, these low-income families will suffer. The lower income ordinary citizens may not be able to enjoy some of the rebates on property tax, foreign worker levy, stamp duty for share transfers and petrol tax, etc, because these items do not involve them in the first place. Most of them do not pay any income tax anyway. I think for those families whose combined income is less than S$800, we should not reduce their CPF contribution. Thirdly, I propose that retrenched workers from the lower income families should be allowed to withdraw part of their CPF savings to tide over the difficult times. I think maybe we should consider allowing retrenched workers from families with combined income of less than $800 per month to withdraw, say, S$150 per month from their CPF account for a period of 12 months. In other words, the maximum they could withdraw is only S$1,800 but to them this may be the straw they can hold on to tide over the difficult times. Fourthly, we should reschedule the instalment payments of shopowners and hawker stallholders. Many existing tenants bought over their shops or stalls under the "Shop For Everyone" Scheme introduced by HDB some years ago. With business so bad now, they are having problems serving their loan instalments. I hope that the HDB would reschedule the loan repayment or maybe suspend their payment for one year so that they could continue to pay after the crisis is over. Many hawkers are also having the same predicament. I think the Government should also help them. I also suggest that the Government should consider reducing the rentals for the shops and hawker stalls in the HDB estates. Fifthly, we should provide capital assistance to our promising local enterprises which have the potential to go regional. The CSC has recommended eight major strategies. I am in particular agreement with three of them, ie, to strengthen the external wing, to build world-class local companies and to strengthen our base of small and medium local enterprises. From the perspective of long-term development, using foreign economies to supplement the growth of the domestic economy is a practical strategy. At the same time, while strengthening the local enterprises, it will also provide the Singapore economy with a new impetus for growth. I suggest that the Government consider granting some loans or financial assistance to local enterprises which have the potential to go regional. For example, we may allow them to use their company's shares as collateral for mortgage loans. Promising local enterprises may have the potential to go regional, but they may not be able to secure bank loans during this economic crisis. Many banks which have previously granted loans to companies or enterprises to invest in Malaysia and Indonesia are having problems recovering their loans. Once bitten twice shy. The banks are having this phobia whenever they hear that the companies are going regional. Nowadays, when you talk to the banks about regionalisation, they are simply not interested. So if the Government could give these companies a helping hand, it will help them to go regional earlier and faster, and will go a long way in building these local enterprises into world class companies. Sixthly, more business information should be provided to the businesses in Singapore at this time where prompt international business information is of utmost importance. I think MTI should be able to provide more ready information to our businesses. This is more effective than conducting overseas tours for our trade delegations. Finally, we should start to plan a second package to save our economy from future crisis. Some people are of the impression that the present package of $12 billion to help our local enterprises may not be enough to save our economy. However, if the international economic situation deteriorates rapidly, the future will be most unpredictable. If we wait for the worst to happen before planning for a second package to save our economy, it will be too late. I think we should prepare well in advance. I believe the CSC took more than a year to come out with this Report. Therefore, we should start now to plan a second package as a contingency plan against any future crisis.

Resolved, That the proceedings on the item of business under discussion be exempted at this day's sitting from the provisions of Standing Order No. 1. - [Mr Wong Kan Seng].

Debate resumed.

Sir, I wish to seek a clarification from the Member for Jalan Besar. Can he please let me know whether I heard him correctly? He said that I did not get people coming to see me at my meet-the-people session because I could not get jobs for them. Is my understanding of what he said correct?

(In Mandarin): Just now I was referring to Mr Chiam's remark that no retrenched worker had come to see him at his meet-the-people session for help to find another job.

I did not quite get his clarification. Can he please tell me whether my interpretation of what he said was correct?

Mr Peh has just explained to you.

That I could not get jobs for people who came to look for me. If that were true, then I would object to what he said. That would be alluding to me to be incompetent as I am unable to do things for my residents. I would like to remind Mr Peh that I am not a first-time MP. Residents there have elected me not once, twice or thrice, but four times. It shows that I have performed. So on what basis is he saying that I cannot get jobs for my residents if they come to me? I think he should withdraw that statement. It is a slur on my ability to help my constituents.

(In Mandarin): Mr Speaker, Sir, I know that Mr Chiam See Tong is a veteran MP. In fact, I respect him. Unfortunately, after all these years in Parliament, Mr Chiam's Chinese has not improved much. He did not understand what I said just now. Let me ask him very slowly. Mr Chiam See Tong, did you say that no retrenched worker had approached you at your meet-the-people session for help to find another job?

Of course, I did. I made a plain statement like that just to illustrate that the problem of unemployment is not so serious in Potong Pasir. There are no people coming in a rush to ask for help to get jobs. If they do come, and if there are complaints that I am unable to get them jobs, then it is fair for Mr Peh to say, "Look, they have come to look for jobs from you. They do not want to come again because every time you fail to get them jobs." I think that is fair enough. But before that happens, he comes to that conclusion, which is a slur on my competence to help my residents. He should take back what he has said.

(In Mandarin): Thank you for clarifying. Since the residents in Potong Pasir did not make any request to Mr Chiam See Tong as their Member of Parliament to look for a job when they are retrenched, the retrenchment problem is not very serious in Potong Pasir. As MP for Jalan Besar, every week I meet my people, and there are many constituents who come to me for help to look for a new job because of retrenchment. But the residents in Potong Pasir did not see him. Maybe these people went direct to the Ministry of Manpower to look for jobs.

Sir, I am a first-time MP, but I would like to make a reference to what Mr Chiam said earlier about wage cuts. He said that our workers would have to endure up to 18% cut in wages. Let me just correct him because quite a lot of information has been given out to our workers during the dialogue sessions and speeches. I think Mr Chiam might have confused between a 10 percentage cut in the employers' CPF contribution and a 10% wage cut. What we are going to have is a 10 percentage point cut in the CPF contribution, and that constitutes about 8.3% of wages. With the proposal of the NWC for a 5-8% cut in other forms of wages, we could have up to 16% cut in wages, but do not forget, we have to subtract from that figure a wage increase of between 2% and 4% that we have enjoyed at the beginning of the year. That is just to correct the wrong impression that might have been created by what Mr Chiam said earlier. So it is very important that we get our facts right even if you have all the good intentions so that we do not confuse the people. When the union leaders saw the trend of increasing retrenchments over the past one year or so, they asked themselves: Will it affect our members and, if so, when? What will be the impact on their families? And what can be done by the three social tripartite partners to buck the trend? I believe that during the economic downturn our employers in general asked: How to cut costs in order to regain competitiveness? When will we recover? How can the workers and Government help to achieve it? The Government on its part wants to ensure that the economy remains healthy, companies remain viable, unemployment is kept small, and hardship due to the loss of jobs is controlled and overcome. Two key points in the mind of the Government, I am sure, are that Singapore remains stable politically and investors' confidence towards Singapore is kept high and further enhanced. On the part of the union leaders and workers, I am glad that our workers are pragmatic and responsible enough to understand that they have to make short term sacrifices, for longer term gains. They have accepted the need for wage cuts in order to save their jobs. By accepting to make these sacrifices, our workers have shown that they are willing to play their part to help ensure that their companies do not need to close down and that Singapore remains an attractive investment destination in order to create more jobs for their children. This is a case of our workers showing their willingness to take a smaller share of the pie when the pie itself has become smaller. But, Sir, let me, if I may, recall and emphasise the purpose of the cost-cutting exercise. The objective is to help companies remain viable and competitive and not to make companies to profit from wage cuts, including CPF cut, per se. While the economic crisis affects the bottom line of employers, there will exist some companies which are not in the red, and which are still able to stay afloat and make profits even if there were no CPF cut. I urge these companies to pass a part of the savings from the CPF cut back to their workers. This can be done in a variety of ways, for example, through a one-off year-end bonus, or variable monthly payment, or simply by topping up their employees' CPF accounts. This will be a much needed boost for those who rely heavily on their CPF savings to pay for their housing. Alternatively, employers can pay a performance-related incentive to encourage further improvement in workers' productivity. However, Sir, I would like to caution that we should not resort to returning the savings to meet short-term objectives only. A larger part of the costs saved should be used to invest in skills training and retraining of their workers and in developing their capabilities to meet future competition and expansion. Investment in human capital can only rebound with positive results for employers. Over the medium to longer term, better trained workers will be more productive and more knowledgeable, which will enable them to contribute better to the companies. It is easy to take a short term view and think only of survival in these difficult times. However, I urge employers to take a long term view and help their workers transit smoothly to the knowledge-based economy. In fact, over and above the savings from CPF cuts and other wage cuts, the avenues and funds for skills training and upgrading are all there. It is for employers to take advantage and to make full use of such funds. So both employers and employees have no excuse not to take part in it. There are, unfortunately, those companies which continue to face financial difficulties despite wage and CPF cuts. I urge these employers to consider retrenching workers only as a last resort. Why not use other innovative ways to cut non-wage costs? For instance, employers can institute a shorter work week, or mandate a compulsory clearing of annual leave. Sometimes, all it takes is a little bit of creative thinking. Like the example of the Safe Superstore in Sims Drive, which was quoted in The New Paper last Friday, 20th November 1998, by NTUC Secretary-General and Minister-without-Portfolio, Mr Lim Boon Heng. By doing some simple research on customer traffic at certain hours, the store managed to cut down from two shifts to one. This reduced manpower and utilities costs. There is an increasing number of companies in Singapore which have been relooking into the operation and business processes. There have been many examples of QCs and Work Improvement Teams which have helped save their companies more than a million dollars. So it is good for companies to look into these areas to cut costs without first resorting to further wage cut or retrenchment. Sir, to put it bluntly, by agreeing to the CPF and other wage cuts, our workers have actually agreed to give part of their income to their employers. The Government's plan to reduce charges is also transferring the public's money to companies. These decisions have been made in good faith and for our common good - the workers, the people, employers and the state. The money saved should thus be used to enhance the workers' well-being - especially their future employability - and improve the companies' capability and competitiveness. The main thrust of my speech today is that we are in this together, and each of us - the worker, employer and the Government - must play our part to help our country's economy to recover. While wage cuts are inevitable, it will not be fair to let workers shoulder the burden alone. Employers can and should make that extra effort to do what they can to lessen the pain of wage and CPF cuts on our workers. Now that we have agreed to cut costs, let us not forget that human touch; that small act of kindness and that gesture of consideration. Let us take that extra step to make each other's journey a kinder and gentler passage. We must think beyond this recession and for the longer run, I think we will have to take a re-look at our cost structure and fine-tune our wage system, worker training system and pre-employment training system in order to ensure that Singapore remain competitive. When we work together even closer, we will not only be able to overcome the current economic crisis, but we will make Singapore society even stronger.

Mr Speaker, I fully support the recommendations of the Committee on Singapore's Competitiveness, and I would like to add to some of the points that have been discussed in the Report. Firstly, the development of entreprenuers. Many businessmen say that we lack the entrepreneurship spirit seen in Hong Kong. It is timely for Government to create the right environment to enable the development of an entrepreneurial culture. This would have to be instilled early in the life of our young children. We should encourage and nurture them in school by teaching them to be creative and understand that there is more than one way to approach problems. We must teach them not to fear mistakes but to learn from mistakes. More importantly, both the employers of the public and private sectors must change the present working environment and stereotyped mindsets for more open environment where free flow of ideas are expressed and exchanged among all levels of the hierarchy. We must not be too quick to penalise those who make mistakes which are not due to carelessness, negligence or ill-intentions. In the business world, businessmen have commented that the GLCs have moved beyond their core businesses and have diversified into other businesses to the extent they are found in almost every trade. Because of their sheer size or, at times, monopoly, entrepreneurs feel stifled and are sometimes unable to compete not because they do not have a better product or skill but because they do not have the financial muscle to compete with GLCs when GLCs enter into the fray. Instead of stifling competition, GLCs should work with good entrepreneurs and provide the environment for them to succeed on a win-win formula. Instead of competing with each other, GLCs should link up with some of these local enterprises to compete in the international market. Secondly, on world-class companies, I support the move to make our GLCs into world-class companies. In trying to recruit foreign talents to increase our skilled manpower resources, it is important that we attract foreigners who are truly talented and not people of second or third echelons but top echelon to serve these companies. Some have said that in many countries there is political cronyism. But in Singapore there is no political cronyism but there is public cronyism. GLCs are favoured. I think we must dispel this notion. This is all the more important during the process of making our GLCs into world-class companies. We must be able to show them that it is a level-playing field and dispel that misperception. Thirdly, managing our limited resources. As our manufacturing industry grows and as our economy continues to expand, the use of water will continue to increase. We have already planned for desalination plants and there are occasional campaigns to save water. But it is time that more forceful steps need to be taken. We should inculcate water saving habits in the young children in schools. They must be reminded that water is a scarce resource and perhaps we should teach them to use water as if they were living in a desert community, so that their generation will learn to appreciate the importance of water. Fourthly, reduction of wage cost to increase our competitiveness. Mr Chiam has proposed that Ministers' pay be cut by 25%. Yes, I think Ministers' pay should be cut as an example for others to follow. However, even if you were to cut the pay by 25%, I could not see how it could help to increase the competitiveness of the Singapore economy. I think he has forgotten that the main aim of wage reduction is to increase our competitiveness. The performance of our Government leaders in this economic crisis has been sterling. They have helped Singapore gain an impeccable reputation. I think they deserve better. Yes, Ministers and top civil servants should lead by example. The wage cut that will be advocated for the public sector, I think for Ministers and civil servants, they should be at the top of the range. But it does not serve any purpose if we cut their pay excessively without any good reason. It is also important that the effect of wage cut be cushioned for those from the lower-income group. We have to understand their needs and ensure that they have a safety net, so that their families will not suffer excessively. Yes, we need to focus on the bigger picture to stimulate the economy. However, we must also remember that there are many families out there who will face increasing financial hardship. Government bodies should make downward adjustment costs selectively, for example, decreasing transport cost. Perhaps bus companies may want to consider decreasing the cost of bus stamps for school-going children. These are measures that will help the lower-income families. Perhaps when rebates are given to hawker centres and food courts, there might be a mechanism for these to be passed back to the consumers. We do not want a situation where the families face so much hardship and are unable to get assistance that their spirit gets broken because of these setbacks. For example, I have a family in my constituency who has gone without utilities for months, and when they came to my attention and we made several efforts to approach them, and when we said that we would help them get their utilities (water and electricity) connected, the first response was, "No, please don't do that, because I cannot afford that." It has come to a stage where they feel that there is no avenue for assistance. I think we do not want them to reach to that extent. What we want to do is to help them regain their confidence and overcome their difficulties. The Government should consider increasing funding to CDCs so that they will be in a better position to help these families tide over their difficulties. CDCs can become focal points and one-stop assistance centres for families who are faced with a barrage of unpaid bills and arrears from different agencies. As we undertake these measures to improve the competitiveness of our economy, we must let Singaporeans know that while we have to look at the big picture, we have not forgotten the individuals who face hardship. Instead, we will help them overcome their difficulties. Together, we will work towards building a stronger and more resilient Singapore.

Mr Speaker, Sir, this Report is a result of a lengthy deliberation involving the best and the brightest minds in Singapore. In terms of the depth of analysis and the rationale of its recommendations, there is actually not much one could add to it. If we remove the emotional cobwebs surrounding the issue, the basic fact is that the cost of doing business in Singapore has gone up dramatically versus our competitor nations. Yes, our infrastructure, our management expertise, our stable Government, the skills of our workforce, etc, will allow us to charge a premium, but only so much. Therefore, we must reduce the cost to render ourselves more attractive to foreign investors. There are only two ways of doing it. One way is through self-engineered currency devaluation. At first glance, this apparently is a painless approach. Dr Ow Chin Hock, in his speech, earlier has already touched on much of the pitfalls of doing this. So I would not go into it in detail. I just want to say that in so doing, the cost of living inflation resulting in a weaker Singapore dollar will have its greatest impact on retirees who are living on their savings - people who have contributed greatly to the prosperity of Singapore in the past. The second approach is through cost-cutting measures, as recommended by the CSC. It is heartening to say that the Singapore Government has decided to take the correct but politically more demanding route of reducing our wage cost and Government fees. This reflects the long-term perspective of the Government. Cutting wages of the wage-earners is always very painful. This requires political courage as well as a well-informed and responsible population who understands the needs of these drastic measures. I am glad to say that Singaporeans are responding positively to these Government policies through the various feedback we have obtained. The Feedback Unit has conducted two sessions, one in English chaired by myself, the second in Mandarin, chaired by Mr Ang Mong Seng, the Member for Bukit Gombak. In the English Language session, around 50 CEOs of small and medium enterprises and multi-national companies attended. From the comments, I could easily classify those comments into two major categories, based on the perspective of the participants. The first group comprises those who are concerned with the external demand of Singapore's goods and services, and the second group involves businessmen serving the domestic economy. Not surprisingly, their perspectives and comments differ dramatically. For those faced with external demand and external competition, almost everyone lauded the effort by the Government in recommending this package as appropriate and timely. In fact, the foreign CEOs were especially impressed by the ability of the Government to put forward such a comprehensive package. In fact, they lamented that such packages and measures are unlikely to be successful or even contemplated in their own countries. These participants were convinced that those measures recommended in the Report would help their business overcome the current crisis over the next two years. They said that while Singapore does not suddenly become more attractive to foreign investors, at least the push factor of business migrating away from Singapore has been reduced or eliminated. In fact, they looked towards the long term and expressed concern that cost containment should not be a once off or ad hoc process but should be an on-going process, because Singapore is no longer competing with under-developed countries but with developed countries. They expressed the worry whether Singapore will revert to the past practice or behaviour of cost escalation once the current crisis is over. For those CEOs who are in Singapore for their OHQ operation, they expressed concern about other costs, other than wage cost. For instance, one key factor is the high telecommunications cost. If Singapore wants to evolve into a IT society or knowledge society, or develop into e-commerce, they felt that our telecommunications cost is pretty high. And those with major manufacturing operations also expressed concerns of high energy cost, especially electrical utilities costs. Being CEOs, they all concluded that the major driving force of escalating costs in Singapore, besides wages, is actually the land cost in Singapore. Therefore, these CEOs would like to understand what is the Government's plan as far as land cost containment is concerned. How do we contain land cost in Singapore such that the two factors I mentioned, telecommunications and electrical power utilities, will not escalate out of reach? In the second category that I mentioned earlier, those CEOs who deal with domestic demand are basically from the retail businesses. In fact, they are very concerned about the diminishing purchasing power of Singaporeans after the proposed 15% manpower cost reduction. In light of the reduced disposable income, they expressed concerns about how the lower income group would weather the wage reduction. Many proposed a reduction of GST by 1% to 2% or even the complete suspension of GST to stimulate domestic demand. When we pointed out to them that 3% is a very small number and whether a $3 charge, based on a $100 purchase, would influence the decision to spend or not to spend, their response is that it is not a matter of money but a matter of confidence. So despite many clarifications on GST by the Minister for Finance in the past, most still asked for the major reasons why the Government is so reluctant to consider a reduction of GST. Perhaps, the Minister should address this issue again. Several participants commented that since manpower cost constitutes 75% of this package while Government fee reduction constitutes only 25% of the package, it would seem that wage-earners, including workers as well as high-income earners, are being asked to shoulder a high proportion of the `sacrifice'. Many would like to see that the Government shoulder a higher proportion of this `sacrifice'. In fact, a number commented that maybe there should be a 50%/50% contribution, ie, 50% from the wage-earners, 50% from the Government. The participants seem to be unaware that wage cost is close to 40% of the GDP while the various charges by the Government only amount to 10%. So in fact, they are unaware that the proposed 15% reduction, amounting to $25 billion, is actually more than the 15% recommended by the Government. It is actually coming up to 20%. So if we were to approach an equal proportion of 50/50, it would mean that Government fees and other levies would have to be reduced by a whopping 60% or more in order to achieve this goal. Surely, there is no way to do so. On the other hand, having said so, this particular message needs to be repeated by the Ministers. In conclusion, Sir, I think the concerns of plunging domestic demand is actually a very serious matter. Many retail businesses, small and large, might be forced into difficulties as the disposable income of individuals is reduced. I understand that the CSC Report touches on the possibility of reducing company tax or personal income tax. Much as I am personally against unnecessary consumption, I think the current belt-tightening by Singaporeans have actually been overboard. So I would like to advocate a stimulative measure of personal income tax to counteract the reduced disposable income. Hopefully, the Minister can propose a reduction in personal income tax even before the March 1999 Budget debate. Mr Speaker, Sir, the $10 billion package, or US$6 billion package, is equivalent to a cash injection into the Singapore economy. It is very hard for individuals to visualise what is US$6 billion and how large is that number. But if we consider that in the recent report, the United States, Japan and the World Bank will come together and propose a US$5 billion package for the ailing Thai, Korean and Indonesian economies, perhaps we can put that in a proper perspective. Singapore is a small country with 3.5 million population, and yet we are going to inject close to $10 billion a year into the economy for the next, hopefully, two or more years. So in that respect, I am very confident that our economy will turn around quickly in a V-shaped recovery after these particular measures. The call of sacrifice by the Government to the people will be readily heeded if we can seize the opportunity while the sense of crisis is still very much heightened. The sense of crisis was at this highest point several months back when the Straits Times Index fell to about 800 points. However, as interest rate eases and stock market prices recovered slowly to the current 1,300 points, I believe the sense of crisis amongst Singaporeans is slowly dissipating even though much work is yet to be done. Therefore, grasping the timing is very important. If we can get the present generation of young Singaporeans who are facing their first major crisis to take this pain together with the Government, this would definitely strengthen the bond between our emerging leaders and this generation of Singaporeans. And this bond will serve us well as we ride out this crisis and move confidently forward to claim our rightful place in the history in the 21st Century. On this note, Sir, I would like to congratulate the Minister for a very comprehensive policy package. I support the recommendations of the CSC.

Mr Speaker, Sir, I would like to congratulate the CSC on its Report. It is attractive in more ways than one. It is well written, pragmatic and comprehensive. There are six proposals to deal with the crisis and eight proposals to sustain competitiveness in the longer term. As they make sound economic sense, I agree with most of them. I would like to highlight four main points. First, I would like to discuss the cost-cutting measures; second, the long run vision; third, the process of crisis management in Singapore; and fourth, balancing the wage and CPF cuts with relief measures. First, the cost-cutting measures. The economic crisis represents for us in Singapore a severe external demand shock. The CSC advocates essentially four cost-cutting measures - labour costs, exchange rate, land prices and taxes and levies. The key issues, I believe, are, first, the magnitude of the cost-cutting measures; second, the balance of the various components of the package; and third, the timing of the measures. Please allow me to discuss each of these in turn.

4.23 pm First, the magnitude of the package. The key cost-cutting measure is the reduction of labour costs by 15%. The objective, as stated in the CSC Report, is to bring our relative unit labour cost (RULC) back to 1994 levels. While I agree that labour cost reduction is a drastic measure for a drastic situation, it would have been good if there was more explanation of why the Committee thought that 15% is the appropriate measure. First, RULC measures only unit labour cost in manufacturing vis-a-vis that of the Asian NIEs. However, unit labour cost in the overall economy has increased even faster than that of unit labour cost in manufacturing. For example, while unit labour cost in manufacturing has risen by 27% since the index was first compiled in 1988, unit labour cost for the entire economy has risen by much more, 43%. It would therefore have been appropriate if the Committee had compared the overall unit labour cost and not just the unit labour cost of manufacturing to that of other countries. In addition, the comparison is to the other Asian NIEs. However, are they our main competitors these days? In what sectors? And what weightage was given to each of the other three Asian NIEs so that only one graph was obtained and presented in the Report? In short, while I agree with the fact that labour costs need to be cut, I wish that more explanation were given as to why the Committee thought that 15% was the appropriate figure. If the real reason is that 15% was the figure achieved via the process of bargaining and compromise between business and labour, with the 15% reduction in business cost in electronics sector as the benchmark, then I accept that it is actually a political compromise. I realise that, ultimately, the practice of policy is an art, not a science. Nevertheless, since it is stated in the Report that it is to bring wage competitiveness back to the 1994 levels and the RULC was used specifically, then I think that one should endeavour to be as rigorous as possible, when possible. Regarding the exchange rate, I agree with the Committee that the main target of exchange rate management should be price stability. Having said that, I believe that there is room for some flexibility in the management of exchange rate on three counts. First, there is no risk today in the global economy of inflation. In fact, it is the very opposite. In Singapore, we have been experiencing not a positive inflation rate, but in fact a negative inflation rate for four months since June. Second, while we are a very open economy and import most of our intermediate products, there is still a domestic component to costs, and an exchange rate depreciation would lower the cost of the domestic component in foreign currency terms. For example, it has often been cited that our imported components constitute a large proportion of our total output. That is true. For example, materials constitute 63% of total output in manufacturing in 1997, but it is 63%. Value added comprise 23.5%. So therefore even though it is true that the domestic component in terms of the intermediate inputs do actually comprise a large percentage there is still room to effect a real exchange rate depreciation. Third, to the extent that a nominal depreciation is not entirely wiped out by inflation and wage increases in the other affected countries, then for them, a real exchange rate depreciation in fact has been effected, thus increasing their competitiveness. I am not suggesting that we engage in competitive devaluation vis-a-vis these other countries. I agree that this would prove counter-productive in the long run. However, I think that it is time and appropriate to adopt a more nuanced approach. In other words, I agree with the CSC's view that a delicate balance needs to be maintained between facilitating recovery of the domestic economy on the one hand and maintaining confidence in the Singapore dollar on the other. I would therefore echo the call of the CSC itself for greater flexibility and a wider band in the management of the exchange rate. I now come to the issue of optimising resource management and the pricing of land in Singapore. This is a policy too because the JTC and HDB are major lessees of industrial land and zoning, plot ratios, usage and other regulations are important determinants of land price. In land scarce Singapore, property prices and rentals constitute one of the main reasons for cost escalation in the 1990s. This was pointed out by Dr Wang Kai Yuen in his speech. I therefore agree that land rentals should be reduced. I also support the CSC's call for an MTI-led multi-agency task force to develop competitive land pricing and zoning policies for our hub services. However, I would go one step further and ask that the terms of reference of this proposed task force to examine land pricing policy in Singapore be expanded to include not just hub services but all other sectors as well. The last cost-cutting measure advocated is that of Government taxes and levies. It is here that I believe there is room for manoeuvring and some flexibility. And this, I think is the nub of the issue: is $10 billion enough? There is room to do more, if needed. I believe that budget considerations should not be the main consideration in this regard. After all, the budget surplus in fiscal year 1997 alone was $4.2 billion. On the other hand, in terms of the June cost-cutting measures, the estimated budget deficit was only $0.8 billion. In other words, there is room for much more expansion in this regard even without touching Government's reserves accumulated during pervious Governments. I believe also that there is limited room for pump priming. And I believe that this should be seriously looked into particularly since the wage cuts will result in a decreased demand. I know that two-thirds of demand is actually externally driven. But if we look at some figures, in terms of the Input and Output Tables of 1990 - I realise that they are outdated but this is the most recent that we have - the 1990 Singapore Input-Output Table states that for every dollar increase in final demand, the value-added multiplier for commerce is 81 cents; for transport and communication, 67 cents; for seaport and related services, 61 cents; for financial services, 89 cents; business services, 88 cents. For manufacturing, it is very low and that is 40 cents out of every dollar of final demand for non-oil manufacturing. In other words, the pump priming measures that can be implemented should be seriously examined, particularly since there is anticipated fall in domestic demand because of the wage cuts. What about the timing? Is the timing appropriate? The question here is whether the cut should actually be implemented sooner than early next year. The reason why I say this is recently, both the IMF and OECD have come out to forecast that positive growth is expected in most of the affected Asian emerging economies by the second half of next year. If that is indeed the case, then it could be true that again, maybe by the second half or the later half of next year, we could also have positive growth in the economy. If anything else, I think the depth of the recession in Singapore would be for the last quarter, this quarter and the first two quarters or maybe the third quarter of next year, provided there is nothing more serious in terms of a fall in demand or a global deflation or recession in the economy, for example, if Japan fails to recover or China devalues and a whole lot of other reasons. The global economy is very uncertain. Having said that, it is of course difficult to convince workers to accept a wage cut if the economy were not in recession and I can imagine that it will be difficult to think of wage cut earlier than now because of the fact that we have to wait for the third quarter result of -0.7%. Therefore, I believe that now that we are considering all these cost-cutting measures, it is better to implement them as soon as possible in order that they can kick in as early as possible in order to save jobs. My second point is regarding the long run vision. I suspect the CSC Report will be remembered for advocating the 15% cut in labour cost more than for its articulation of a vision for Singapore for the next 10 years or so. While the immediate survival is understandably the paramount issue, we should not lose sight of the longer term issues. It would be desirable to re-visit this vision again when the economy recovers and immediate concerns become less critical. Any vision, once formulated, needs to be disseminated. There needs to be a buy-in and greater ownership by the relevant parties, in this case, the business community and labour. In future, Singapore's economy would need greater and not less participation by the relevant sectors, namely, business and labour. A case in point is the objective of developing a vibrant, entrepreneurial culture and developing world-class companies that we can call our own. How can we forge a better partnership between GLCs and local companies? How can flexi-work hours be implemented which will help working mothers and the aged? These are all issues which can be deliberated in greater detail in the framework of a public sector business-labour partnership. I would therefore like to propose that the CSC organise a conference on the long-term vision for the business community and labour sometime next year in order to extend the buy-in and ownership of the vision. Some brief comments about the vision itself. One may ask: what is new about the vision? I believe that more than being a completely new paradigm, the vision is a useful articulation of a continuing trend towards greater technological sophistication and stronger capabilities. I believe that one of the main highlights of the vision is the fact that it articulates manufacturing and services as twin engines of growth for the economy and, for the first time, we see services coming to the fore in terms of the pro-planning approach of the Government. This is exactly in line with Singapore's likely future cost and capabilities profile. I therefore agree with this emphasis on manufacturing and services as twin engines of growth. My third point is regarding the process of crisis management. The economic crisis has revealed the importance of fundamentals, not merely economic fundamentals but political and social fundamentals. In this time of crisis, social capital and the legitimacy of the political leadership are crucial. We in Singapore are fortunate that at a time of crisis such as this, the trade unions and politicians can gain support for a wage cut and maintain social cohesion so that racial and ethnic fissures do not appear. There is no policy indecisiveness, no dithering, no stalemate, as we see, for example, in some of the other countries around us. Instead, not only has there been the ability to garner the support necessary for the short-term measures, we have also been able to plan ahead and be pro-active and take measures necessary to sustain our future competitiveness. Here, we see, in some ways, good governance in Singapore in action and I believe that good governance must surely be one of Singapore's most precious assets. My fourth and last point is regarding compassion. I would urge the Government to help ease the burden of the wage and CPF cuts. Although interest rates have fallen in recent months from their high early this year, many households would face difficulties in meeting housing loans, and the wage cuts would mean a consumption squeeze for many families. I hope that the Government would adopt a compassionate approach by accompanying the labour cost reductions with measures, including schemes to ease or defer mortgage payments and an increase in educational bursaries and textbook allowances for school children for families with financial difficulties. I would also argue for an income tax rebate to help alleviate the squeeze on disposable incomes. One alternative to the proposed differentiated CPF cut that has been advocated by my Parliamentary colleagues is to find ways to reduce the financial burden of the lower income group, for example, in terms of rebate for S&C charges, and so on. The private sector can play its part. Banks, in particular, can also help by providing bridging loans for those who bought private properties. In conclusion, I would like to state that the CSC's Report is indeed a well-conceived Report that not only provides for immediate relief but also for a long-term vision. I salute the Committee for being able to complement each of them by the other and include them in one Report. I support the motion.

Mr Deputy Speaker, Sir, I support the motion as proposed by the Minister for Trade and Industry. Before I go into the details, I would like to congratulate the Government, the workers and the business leaders in Singapore for working as a team to tackle a very tough problem that they are facing by delivering this very comprehensive Report. We have seen many examples of how a seemingly good infrastructure breaks down in times of crisis. If we look around us in Asia, in all the countries affected by the economic crisis, there has either been a leadership change in the country affected or the countries are in turmoil with political and social reforms taking place. It takes a very stable Government with strong leadership to be willing to take bold steps that have been suggested by the CSC. It also takes a committed and responsible business community and citizens to work hand in hand with the Government to implement some very tough measures that we are talking about. Sir, I am glad that we in Singapore are sending a very strong and clear signal to the rest of the world that Singapore consists of a strong team of partners from the public, private and people sectors who can work in synergy to solve our problems despite the difficulties that we face. While we have identified the solutions, they would only be effective in resolving our competitiveness problems if we implement them fast and decisively. We have done a lot of planning and talking in the past one year. We have to very quickly set the actions in motion. So I hope we would implement the measures that we have identified immediately. I would like to recall that early this year when we were debating the Budget for the year 1998/1999, many of us highlighted the perception gap between the way the Government and the private sector perceived the state of the economy. Many of us had projected a rapid decline in our economy while the Minister for Finance had in his speech talked about the recovery and growth, especially in electronics and manufacturing sectors. Based on how the Government viewed the economy, we implemented a number of conservative measures at that time. Then we came in with off-budget measures about four months later because things turned out to be different as planned. However, things again deteriorated and the off-budget measures, being very conservative, did not do much to revive the economy. Sir, let us look at the facts. While our economy is still in a much better position if we compare ourselves to our neighbours, nonetheless, we have slipped into a recession as many of us had predicted early this year. The worrying issue is not just the recession but is also the rate of decline from 6.1% growth in the first quarter to 1.6% growth in the second quarter, and to a negative 0.7% in the third quarter. The rate of decline is quite fast. Sir, my point in bringing this out is that the mechanisms we have in place are not accurately addressing the real problems seen by the business community. Many of us have asked for bolder measures from the Government, as far back as July 1997 during the 1997/1998 Budget debate. Unfortunately, the outcome was otherwise. This time round, it is a little difficult to assess the impact of the measures that we have identified because we do not have the details of the actions from the Government. However, I hope they will take our request into serious consideration, since we have not been very far off in the last one and a half years. The Government must be more aggressive and not rely on small steps or piecemeal measures, like the $2 billion off-budget measures that we announced earlier this year. That $2 billion in my opinion did not move the economy even a little bit. We must learn from Japan's struggle for the last two years. Japan also tried to take many piecemeal actions and it resulted in wasted efforts and wasted money with Japan's economy still in trouble today. So I hope this time we do not waste our efforts and money and I hope we will be more aggressive. Sir, in my opinion, the Government's share of the $10 billion reduction proposed is not sufficient. While I can understand that wages make up a large proportion of total business cost, I feel that the reduction in Government charges, levies, utilities and so on needs to be higher than the 15%. Frankly, the 15% reduction in business cost falls short of the business community's expectation of 20-25%. In fact, even the 20-25% is not a cooked-up number. In fact, I did a calculation. For the manufacturing sector, based on the real increases that have gone on in the last three to four years, and based on the currency depreciation in our neighbours we really needed about 25-30% of reduction to be competitive. So 15% falls short of our expectation. However, I feel that the $7 billion wage reduction is sufficient. But the Government's portion needs to be much more and I am suggesting 30-40% reduction in all the areas that I have just mentioned. While I understand that the real Government charges form a very small component of the total business cost, but really, there are many "hidden costs" in our system of governance in Singapore. Some of these are the COEs, the ERP, petrol tax, GST, worker levies, and many more. So although our official income tax is among the lowest in the world, the net effect of all the indirect taxes and charges is significant to the bottomline of businesses. Our approach of autonomous agencies in the Government departments and statutory boards while, in principle, looks good, has resulted in `micro-managing' of our economy where all of them either want to make surpluses or profits individually. Collectively, the impact on businesses can be very high. So if we look at the charges from all these agencies, the net contribution to the business cost is more than what we officially classify as business charges. I feel that we may have to make sacrifices in certain agencies where they must be allowed to have deficits or losses, as long as the collective result to the Government's budget is positive, if that is what we aim for every year. Sir, I suggest that the Government spend between $5 billion and $7 billion to boost the economy, not just the $3 billion. Of course, we have seen numbers that if we go for $5-$7 billion that would mean a 50-60% reduction in Government charges which may not be realistic. So, what we are asking for down here is that part of it should come in real reduction in charges and levies, and the rest of it could come in the form of pumping in some liquidity to boost local consumption, which also contributes to about 30% of our economy. These can be in terms of more generous tax rebates. I also suggest that we temporarily bring down the GST charges from 3% to 1%. I am not suggesting a complete suspension of GST, as many business leaders have suggested to us, because I believe that we still have the right system in place and we should keep the machinery of the system going. If we completely suspend the GST, putting in the mechanism in place again in the future will be troublesome. Sir, I believe that the $3 billion or so that the Government plans to reduce in terms of costs will come from our current account. I would like to suggest that we take this opportunity now to dip into our reserves. Since we were willing to do so for our neighbours like Thailand, Indonesia and Malaysia, the Government should seriously consider giving some of the surpluses and the reserves back to Singaporeans who badly need it now. It is the time to help stimulate domestic consumption. Sir, as we are looking forward to substantial reduction in rentals by JTC and HDB for industrial and commercial properties, these reductions should not be in the form of rebates. They should be permanent reductions if we really want to build long-term investor confidence in Singapore. Rebates will go away after some time and do not give a feeling of long-term thinking on the Government's part. Given how much our land and property cost has gone up compared to our neighbours in the last few years, we need drastic reductions in rental, again to the tune of 30-40% reduction. Sir, foreign workers form an important part of our economy. We know we cannot do without them. While I understand and support the need to bring in mainly skilled workers, however we already have a large pool of unskilled workers in Singapore. It will take some time to either replace them or train them to become skilled workers. Since they are already here, I urge the Government to reduce the levies by 50% for both skilled and unskilled workers. For skilled workers, the cut should be permanent. For the unskilled workers, we can issue a time table of increases back to the original levels over a period of three years. In this way, we will help many companies survive this downturn while we compel them to make long-term plans to train their workers. Sir, many of our small and medium enterprises (SMEs) are affected by cash flow problems. While the Government has enhanced the Local Enterprise Financing Scheme (LEFS) to be broader based and pumped in more money to it, unfortunately, the banks are still the deciding bodies. Given the ultra-conservative stance of our banks in this environment in Singapore, many companies are still finding it very difficult to take advantage of the scheme. I would like to suggest that PSB or some other Government body take a direct approach in financing some of our viable companies, because they are finding it very difficult convincing the banks. Sir, traders also contribute substantially to our economy. However, due to credit squeeze from our ultra-conservative banks in Singapore, they are not able to take advantage of the still attractive trades that exist in South Asia, China, Africa and Europe. I have heard of a number of big traders who are planning to move and relocate out of Singapore to countries like Hong Kong and Thailand to carry out their trading activities because of lack of credit facilities in Singapore. I would like to suggest some form of Government supported trade financing scheme, quite similar to the LEFS. Sir, with a better trade financing scheme, we can avoid the drain of expertise out of Singapore or even prevent the collapse of some still viable traders who are located here. Sir, so far, I have focused on the immediate cost competitiveness issues and the short-term action plan proposed by the Minister for Trade and Industry through the CSC Report. I would now like to touch on the long-term strategies. In my opinion, the strategies spelt out by the Committee are excellent and will without doubt get the whole nation mobilised to work towards achieving the plans that we have set up. Sir, for the longer term, I see the economic recovery coming in a few stages. First, we will have to focus on our immediate cost competitiveness issues which I believe we are very well focused on. The second stage will be to build upon investor confidence in Singapore and also in investor confidence in the region. This is because a lot of investors, especially those from the West, look at the stability of the region as a whole and they do not just look at Singapore as a country. So if we can bring stability and confidence in the region faster, funds will flow in even faster. The issue of confidence building is an urgent issue and I hope that the Singapore leaders can take a lead to get ASEAN organised to speed up the recovery process. The third stage of recovery will have to be in finding new markets and boosting demand. We cannot rely on our traditional markets. We have learnt this lesson very well. So both the Government and the private sector can play an important role by exploring new markets and regions. I believe this has already been set in motion. Sir, on the issue of strategic land pricing, I am glad that the CSC has recommended a new way to price industrial land and properties and to benchmark increases to the increases in countries that are competing with us, as opposed to increases according to the market rates in Singapore. I call on the Government to learn from its past mistake in this area by putting in place measures that will prevent land prices from escalating so drastically in a short span of time, as we experienced in the last few years. Sir, land prices do make a big impact when it comes to selecting an investment site for a manufacturing facility, although we have heard leaders saying that it forms a very small component of total operating cost. But when it comes to deciding a location to site a factory, it plays a major role. In fact, in the last few years, I have experienced two occasions when we were trying to select a new manufacturing facility. On one occasion, the land cost played a major role in causing my company to select Thailand as the site rather than in Singapore. On entrepreneurism, I fully support the strategy because I believe that if we have to compete as a global player, we need to have more knowledge-based industries and we cannot continue to rely on an asset based economy as we have done in the past. We need to create an environment in Singapore that promotes business risk taking and to encourage more technopreneurs to emerge. In my opinion, the Government agencies that we have today are very entrenched in just supporting the MNCs, while the infrastructure to support local technopreneurs is not well developed. We need mindset changes among those involved in these agencies. Local start-ups and people who are involved in these start-ups feel discouraged by the lack of support given to them and their projects. We also need to develop a culture of tolerance to failures and to give people second chances. Sir, success should not be measured by straight 'As' alone. How we classify and label people at such an early stage through practices like early streaming in schools affects our children's self esteem and many will end up giving up and not willing to try again, as they go along in life. Society and Government's attitude towards those without academic excellence needs to change and we must have a broader definition of "success" that goes beyond material, economic and academic measures. Sir, another area that needs to be looked at is the help for entrepreneurs who need to raise funds necessary for their projects. I call on the Government to further liberalise rules on how funds can be raised for start-up companies and unlisted companies. Singaporean venture capitalists are highly conservative just as our banks are and we need more foreign ones to set up funds here in Singapore, so that they can create an environment similar to the one in Silicon Valley in USA and the Hsinchu based Science Park in Taiwan. The goal of developing more world class companies is excellent. We need many more companies like Creative Technology who are global players. Sir, being small is not an excuse for the lack of such world class companies. We can learn from the small European countries like Finland and Switzerland who have many world class global companies like Ericcson and Nokia. I fully support the suggestion that the Government acts as a business facilitator. The Government should indeed only play a supporting role and create space for the private sector and entrepreneurs to move in. So far, the Government has been crowding some parts of the business environment. Similarly, Government-linked companies (GLCs) should not compete with local private companies in the domestic market. Instead, because of their size and access to substantial funds, GLCs should bring their competition to outside Singapore and in addition, bring along with them some SMEs by getting them to do parts of a big overseas project. This initiative has not been fully explored by our local GLCs. Sir, in conclusion, I am happy that the Government is willing to react fast to tackle the problem of our declining economy. I hope that the measures implemented will be bold and I hope everyone will seriously implement them fast. I applaud the workers for their understanding for the wage cuts. The employers and the Government need to play their part and take their fair share of actions so that together we will emerge as a strong economy and as a country. Sir, I support the motion. 4.56 pm

(In Mandarin): Mr Speaker, Sir, under the impact of the regional economic crisis, many companies in Singapore are in danger of having to close down, and more and more people are losing their jobs. This has forced the Government to admit that the business cost in Singapore is much too high, and that Singapore has lost its competitiveness in the international market. The Committee on Singapore's Competitiveness (CSC) Report points out that even before the currency crisis broke out, Singapore could no longer compete on the basis of business costs alone. The PAP Government's policy has all along been to adhere to the so-called "market economy" principle, and to allow the various business costs to soar unchecked. This has not only made business cost heavier, but has also caused the people's burden in life to be getting heavier and heavier. When the market conditions suddenly turn bad, the businesses which are already overloaded with very heavy business cost will immediately find it unbearable and face the danger of having to close down. Eventually, the workers will become unemployed, and their burden in life will be made even heavier. In fact, over the years, many businessmen have been complaining of high business costs. I have, on numerous occasions, pointed out in this House that with the Government continously increasing the burden of the people, once the economy unfortunately turns bad, the people will find their burden in life unbearable. But the Government just would not listen to me. Prime Minister Goh said, "Because our business cost is too high, we are losing our share in the United States' electronics import market. Before the start of the regional crisis, in the second quarter of 1997, Singapore's share in the US electronics import market was 9.3%. In August this year, it has dropped to 7.4%". In comparison, during the same period, Malaysia's share in the US electronics import market rose from 7.1% to 8.2%. For China it rose from 7.2% to 10.1%. However, during this period of time, the renminbi did not suffer a huge devaluation like the ringgit and baht. China has become more competitive, while our competitiveness has substantially diminished. Had the Government made preparation for the people and the businesses during good times, and exercised some restraint in its act to prosper the coffers by increasing the business cost here, today we may not have to face such drastic wage-reduction measures. The CSC Report recommends a total wage-cost reduction of 15% and to set back the wages to that of the 1994 level. The Government immediately takes the cue and indicates that it is accepting the CSC's recommendation by proceeding to cut the employers' CPF contribution by 10%. The National Wages Council (NWC) immediately responded by announcing that wages should be cut by 5% to 8%. I am puzzled with the CSC's recommendation of 15% cut in the total wage-cost to set back wages to that of the 1994 level. First, the Report does not give a clear explanation as to why it came to the conclusion that the total wage-cost should be reduced by 15%. Neither did the Report list out the cost structures of the various sectors in the economy nor produce convincing data to prove that the recommendation for wage cut is necessary and cannot be avoided. Secondly, although the CSC Report mentions that the currencies of the other countries in the region have devalued substantially since July 1997, resulting in Singapore further losing its competitiveness, DPM Lee did not seem to think so. On 19th February 1998, he said in Parliament, I quote : (In English): "Luckily, we are competitive. Our costs are not out of line. If you measure exchange rates against the US dollar, the baht, the ringgit, the rupiah and the won have all gone down much more than the Singapore dollar. This has made these countries cheaper than us, in a way, more competitive than us. But the effect is smaller than these numbers suggest." Then he went on to explain why he said so, and he concludes: "So overall, although the exchange rate of the Singapore dollar has gone down much less than our neighbour's, I am still confident that our exporters can compete. They have problems if they are working in the region. They have problems if they are in difficult businesses like disk drives. But it is not because we are out of line and uncompetitive." That is what DPM Lee said. (In Mandarin): That being the case, why has the Government suddenly decided to cut the wages of the workers because our competitiveness is in trouble? Thirdly, although some people are worried that many companies may close down and result in serious unemployment if our workers do not accept a wage cut, the Secretary-General of NTUC, Minister Lim Boon Heng, did not feel that we should worry about this problem. He was reported in the Straits Times of 16th November 1998 as saying that Singapore had enough jobs for every Singaporean and no one would starve because of this economic recession. Sir, if DPM Lee is confident that even when other countries' currencies have been devalued, our exporters can still compete and the Cabinet Ministers are not worried about unemployment, then why do we need to reduce our workers' wages and employers' CPF contribution? The CSC Report has recommended that the total wage cost be reduced by 15%-10% reduction in the employers' CPF contribution and 5% from the wages. The whole cost-reduction package is worth $10 billion, of which $7 billion will come from the wage-cost and $3 billion from non-wage cost. Just now, some MPs mentioned that it was fair. Is this really fair? The Chairman of the NWC announced that labour, management and the Government should be in the same boat to share the same happiness and troubles. But now we can see that when there is trouble, the workers are the first to bear the brunt. They have to shoulder 70% of the sacrifice. But when times are good, do the workers enjoy the profit on a 7:3 ratio? Or do they just get 3:7? I shall leave it to everyone to make his own judgement. I feel that, in the present circumstances, to reduce the workers' wages and to ask the workers to bear 70% of the cost-reduction burden is very unfair. As of March 1998, the Government's actual gross revenue was $27 billion, which was some $550 million more than the projected revenue. The Government should take the lead to substantially reduce its charges and rentals and not reduce the workers' wages and subject them to much hardship. The CSC Report has recommended that the wage level be reduced to that of the 1994 level. This is a regressive step. The cost of living now is significantly higher than in 1994. But amazingly, the Government accepted this recommendation. The Government seems to have forgotten that it has promised to bring our standard of living to that of the Swiss. According to newspaper reports, the taxation experts are of the view that there is nothing new in this Report. The Executive Director of the International Chamber of Commerce and Industry seems to want to see some meat left on the bone. He pointed out that although the report recommended a total reduction in the wage-cost, it did not give any specific suggestion on how to execute it, apart from the CPF cut. I am not an economist, but I must point out that this Report has failed to give adequate grounds and data to prove that the total wage-cost must be reduced by 15%. We are asking the workers to accept 1994 wages to pay for 1998 cost of living. I feel that the Government should not mandate a 10% cut in the employers' CPF contribution, or for that matter, the amount of wages to be reduced. With the economy turning bad, many workers are already suffering a loss of income. I feel that wages of the workers will be automatically adjusted according to the market situation, and the profits or losses of the companies. What the Government should do is to reduce contribution rate to the Special Account and Medisave Accounts of the workers. And also it should reduce the employees' CPF contribution so that they could have higher take-home pay to tide over the difficult times. Although wage-cost takes up a bigger part of our total business cost, I feel that by reducing other non-wage business costs would also help to achieve the target of reducing the total business cost. According to information given by the Ministry of Trade and Industry, in the the manufacturing sector, 51% of its business cost came from service cost, including transportation and communications, utilities and rentals, and other indirect taxes such as GST, import duty, property tax, etc. Among the labour costs, apart from salaries, there is also the foreign worker levy, SDF, training and welfare funds, etc. During this time of economic depression, the Government should take the lead and make use of the reserves accumulated over the years to help reduce business cost by cutting the various charges and taxes, in order that Singapore would regain its international competitiveness. In fact, the most important thing to do is to help our companies look for and penetrate into new markets. At the same time, stimulate consumption in the domestic market, so that our products may be marketed, and there will be capital to roll over. If a company has no business, its products cannot sell, then even if business cost is reduced, wages of the workers are cut, the company will eventually have to close down, and the workers will lose their jobs.

(In Mandarin): I remember when I was a little boy, I used to venture into the compound of a certain house in the kampong where I lived. This family reared a few hens and a pig. I particularly enjoyed watching the hens laying their eggs. What amused me was the rate at which different hens laid their eggs. Some laid a lot of eggs while some laid not as many. One day I asked the master of the house, who was a respected kampong elder, why it was so. He smiled and told me, "The healthier hens, those well nourished and better fed ones, naturally are more productive and can lay more eggs. The under-nourished and sickly ones, of course, cannot lay as many eggs. But, If I were to slaughter these weaker ones, then I would not even get one single egg from them. " This is like what the Chinese say, "If there is no soil, there are no flowers." Without hens, how do we get eggs? It is the same with our workers today. They have answered the call for a wage reduction. They are prepared to accept a wage cut, not that they derive any pleasure in doing so, but because they know that this is a bitter pill they have to swallow in order to help their employers tide over the difficult times ahead. If the company can survive, they can keep their jobs, and they can then have take home pay to support the families. We should not slaughter the hens to get their eggs. Therefore, our opposition party members and their employers should understand the plight and intention of the workers. Our workers have made short term sacrifices and we hope that the employers will respond in kind. They should manage their companies well so that the workers' sacrifices will not be in vain. The 10% cut in CPF is painful but cannot be avoided. We must prepare well in advance. If we are not prepared, Mr Low would ask why we did not see it fit to be prepared. When we are prepared, he asked why should we do so. We do so in order to ensure that our workers would keep their jobs. Our workers have shown guts and determination. They are prepared to take a wage cut. However, the higher-income executives should make even bigger sacrifices by accepting a deeper pay-cut. If possible, the lower-income workers should be spared the wage cut. As the biggest employer, the Government should take the lead. I believe our Government will do so. Sir, today, our workers have manifested such determination and spirit of unity and their sacrifice deserves our applause. They must not be forgotten when the good times return. The employer should do the same. We should not act like the Opposition Members. We should not add more troubles to our workers. If we are pragmatic, adjust our measures, we can still live a comfortable life in Singapore. Our market economy, according to Mr Low, is without restraint. Our economy develops without restraint. Therefore, we are in this plight. However, what I learnt from the various reports, I see quite a different picture. Many economists agree that because the Government has made proper policies to guide our economy, therefore, we are not like other countries in this region who suffer gravely during the economic and financial turmoil. He said we are unreasonable in asking our workers to meet the 1998 cost of living with 1994 level of wages. If we look at the figures carefully, we will find that various types of daily necessities have fallen in prices. The NTUC FairPrice has benefited from the off-budget measures and these benefits are passed on to the consumers. We hope other businessmen should not find any pretext not to do so. Whatever savings they get, they should pass them on to the consumers. I would like to make another suggestion that our public transport cost be lowered. According to estimates, out of the total cost in operating public transport, 50% comes from the workers' wages. So, with a 10% cut in the employers' CPF contri-Column: 1280 bution, the operational cost should be reduced by at least 4%. I suggest that the public transport operators give a 5% rebate to passengers who purchase farecards. For every $10 farecard purchased, a 50 cent rebate should be given. The NTUC cooperatives have also announced a series of measures to help the workers. For example, NTUC FairPrice has announced price reduction to some of the sundry and daily essential goods in its outlets. This will help to lower the cost of living of the ordinary workers. We hope all these well-intentioned measures will receive similar response from merchants and supermarket operators to see how prices can be lowered. When we are facing an economic crisis, we need to have a spirit of unity. We should look for the root causes of our malaise to find out how the employers, Government and workers can unite and work together to solve the problems. If we take a short cut, as what our neighbouring countries have done, to devalue our currency or to make use of our financial surpluses and reserve to tide us over the crisis, we will bring more troubles and pains to our economy, although these measures may appear to be painless and superficially effective. Therefore, we should think of pragmatic measures. We should bear some pain. However, as long as we believe all these efforts and sacrifices are for a better tomorrow, then I think we are in the right direction.

Clarification from the Member, Sir.

Yes.

(In Mandarin): Just now the Member mentioned the hen-and-egg dilemma. In his speech, he said that the wage cut was to prepare for a rainy day. If what he said was indeed true, then I shall question the motive of the cuts in employers' CPF contribution rate and wages. Are the cuts necessary now? Or is there a political motive over the proposed cuts? You cut the wages and CPF contribution now and then just before the next General Election in the year 2002, the PAP Government will increase the workers' wages to show that this Government is better than those in the other countries. When we were at the outset of the economic crisis, many of our leaders said that our economy was very strong and our fundamentals were firm and sound. However, these fundamentals seem to be pretty shaky now. If the Government has been very effective, then our workers will not have to face this drastic wage cut now. This is like two athletes taking part in a 400-metre race. Athlete A fell down at the 200-metre mark, while Athlete B continued running but collapsed at the 300-metre mark. Although both athletes did not complete the race, Athlete B turned to Athlete A and said, "Look, I ran 100 metres more than you did. Therefore, I am the winner."

(In Mandarin): I was not going into the argument of whether we have hens first or eggs first. The example I quoted was to illustrate the point that we must have a healthy hen in order to get good eggs. The recommended measures are meant to prepare us for the worst. Just now Mr Low remarked that in February this year, DPM Lee had claimed that our economy was quite all right. I do not know whether our Opposition Members are in the habit of not reading the newspapers. The economy changes every week, every day! Today's situation is very much different from what it was six months ago. As a matter of fact, even in the second quarter of this year, we still had a positive growth. But, by the third quarter of this year, we began to have negative growth. From the various economic reports, we can see that certain countries were not seriously affected by the financial crisis in the beginning. However, they are in a significantly different situation now. For example, a worker told me that at the beginning of the crisis, people called it the "tongyam effect", because it originated in Thailand. Soon after that, other countries in the region were affected, and it became the "Asian flu". With the troubles in Russia and Latin America, this crisis is going globalised. It has become a global economic crisis. The world of economics is dynamic. It is not static. Therefore, we say that the across-the-board wage cut is necessary. No doubt, some companies are still making good profit. To them, I say, "Please do not take these wage-cut measures rigidly." They can reduce the price of their services or goods to help the workers. Therefore, we should look at the situation as a whole. If we look at the situation from some small micro-perspectives, then it will enhance our workers' anxiety, as they do not know what to expect next. We should be united, work as a team, be pragmatic, and then we will have a better tomorrow.

Clarification, Sir. (In Mandarin): We often hear that the Singapore political leaders are far-sighted, having good judgement, and that they have "helicopter views". Therefore, they should be paid very high salaries. According to Mr Yeo, things change every day. Our leaders' judgement is also changing all the time. How could they lead us if their views and judgements are changing all the time? They have taken pride in their extraordinary quality - their helicopter view. How do you explain these frequent changes in judgement? Can we rely on them to make the right judgement to lead us out of doom? If their judgements are changing all the time, they are no different from people who play shares at the stock market.

(In Mandarin): Mr Low does not understand the expediency of "suiting measures to the time and local conditions". We should make decisions according to the situation here and now, to look for the most effective measures to tackle our problems head-on. This is exactly where we are different from the other governments.

(In Mandarin): Mr Speaker, Sir, I think if the judgements were to be changed every three months, I do not know how the Government formulates its policies. When we want to take a long-term view, how are we going to say that we should be expedient and make changes whenever necessary?

(In Mandarin): I do not understand why the Opposition Member holds the view that for one to be capable, one has to set rules and stick to them in spite of changing circumstances, without making the relevant adjustments. For example, if you are driving a car along a certain route, there is a puddle of mud ahead of you, do you drive straight on irrespective of the conditions of the road, or would you swerve to a side and go round the puddle? What we should do is to make accurate judgement with regard to the situation before us. Identifying the problem is important. But just identifying the problem is not enough. We must look for solutions to the problems. We cannot tell the people that the economic situation has changed and then stay on with the past policies and measures to deal with the present situation. Can we do that?

(In Mandarin): I am talking about farsightedness, long-range view. You cannot say that you can see things only for the next two months. Otherwise, how can anyone say that our leaders are farsighted? The question is how you make your judgement, and whether your judgement is correct or not.

(In Mandarin): If our Government's judgement is not sound, if they are not capable, then today how do we have a Singapore which is least affected by the economic turmoil?

(In Mandarin): I support Mr Yeo's views. As in the game of Chinese chess, whenever you make a move, you have to take the latest development on the board into consideration. One wrong move, and the whole game is lost. Therefore, we look at it as a whole. If we want to win the whole game, then we must make every move correctly and at the correct time. I am confident that the PAP will win the game.

(In Mandarin): When the economy is good, the PAP Government will claim that they have won because they have a capable leadership. But when economy is in a bad shape, they blame it on external forces. Now, you win the chess game. Is it because you are clever or because your opponent falls sick?

(In Mandarin): The important thing is whether the standard of living of the people of Singapore, including the Member for Hougang, is getting better and better.

(In Mandarin): Mr Speaker, Sir, of course, I want to have a better standard of living. But the PAP keeps saying more good years. But now what I see is that it is not getting better every year even though it is under the leadership of the PAP. When the external situation is bad, it will still be bad for Singapore. So it is not more good years.

You are going into a debate within a debate.

(In Mandarin): Do I have to sum up? I do not understand what was the main point of Mr Low's intervention. What I know for sure is that 90% of our Singaporeans own their flats and we have a manageable unemployment rate although everyone says that the regional economic situation is very bad. But we are considered not bad. On the Internet, someone remarked that in Singapore, the acronym IMF stand for "I am fine."

Mr Deputy Speaker, Sir, the effects of this severe recession are well known and keenly felt in all sectors of the economy. Companies have borne the brunt of falling businesses, rising unemployment, increases the anxieties of the consumers. In turn, the contraction of demand sets off another cycle of business downturn. Some have criticised the Government for responding too slowly to the recession. On the other hand, the Government has earned high marks both internationally and from a majority of Singaporeans for her steady and measured response. On a macro level, we are progressing well to address the problems thrown up. The Government has instituted steps to prepare and persuade our people to accept the bitter medicine. It has to be taken at this juncture. This is but the first step. The economic situation is regional but could be global soon, if Japan does not stimulate its economy. We also know that the American demand is already flagging as is evident by the latest report on non-oil domestic exports. We should not be gloomy and just wait for changes in the region to benefit us. We know this will not be in the near future. Even then, things will not be the same again and we, the people of Singapore, must stand together to define and achieve relevant new roles in the future millennium. Cost-cutting measure is a temporary step to help business survive and save jobs. Doing this alone cannot ensure our success in the new environment of a global economy. Continual long-term development towards a creative and knowledge-based economy has to be pursued vigorously. The Committee on Singapore's Competitiveness has recommended six strategic responses to the crisis and recommended five specific measures to deal with immediate challenges posed by the regional crisis. I do not propose to read out what is clearly stated in pages 2 to 5 of the Report. I think the one item that has made the headline is item 20.a. of the Report and I quote: `Reduce total wage costs (including contributions to the Central Provident Fund (CPF) by 15% from 1997 level to bring our wage competitiveness, as measured by RULC, [that is the relative unit labour cost] back to the level of 1994. To achieve this, the employers' CPF contribution rate should be reduced by 10% points. The rest of the cost reduction should be achieved through the flexi-wage scheme, by a reduction in the annual and monthly variable components of wages. The public sector should take the lead in this;' Mr Deputy Speaker, Sir, I support this recommendation. It will affect all individuals with CPF accounts. It will affect their housing loans and mortgage payments. And it will affect their overall old age savings. It will mean that they will suffer a drop in their take-home pay if there is a further cut in the variable wage component. All these will have a tremendous effect on Singaporeans, especially the middle and lower-income group. Added to this is the fear of job loss or retrenchment. The CSC's recommendation had been hotly debated by many. Some good and useful suggestions have been made. But one thing is for sure, people are agreeable fundamentally to the various tough measures recommended. They differ only in the sharing of the burden over the three sectors - the employees, Government and the private business. Although it has been explained that the employee's share is in line with its proportion in the total cost, I think that there is a case for the Government to take on a bit more of the burden. It is not that the Government has not done anything. It has already given property tax rebates and taken other steps to alleviate various sectors in the $2 billion off-Budget package. On the other hand, the labour movement, through NTUC union leaders' alertness and tireless work, not only persuaded successfully workers' acceptance of wage cuts but work speedily to come out with a package to help reduce the pain. The various steps taken by NTUC to help is commendable and should be highlighted. The NTUC should be praised for taking steps like cutting the prices of groceries, 122 items had about 9% cut, childcare centres, NTUC pharmacies, Denticare, and providing about $2 million loan grant scheme for students who need textbooks, and food outlets. In addition, I learn that NTUC is using $12 million to help NTUC Income policy holders and borrowers to pay premiums and housing loans. These measures worth $23 million will help to soften the effect of CPF and wage cut to lower-income Singaporeans. Singaporeans, on the whole, as I said, should be thankful that NTUC has come out to provide this safety net for some of the domestic costs. For those who lost their jobs, there are many agencies trying to find alternative jobs for them. These include our Community Development Councils, the Ministry of Manpower and, again, NTUC. Workers who need jobs should not be too fussy. They should take up the jobs given to them. We have always depended on foreign workers to clean the tables at our hawker centres, domestic help and construction work. I think the time has come for Singaporeans to do some of these tasks and be less dependent on foreign workers. Attitudes must change to accept these jobs as an honest and respectable way to earn a living. I have come across many retrenched workers who are unable to meet payments in utilities and conservancy charges. Yet, they are reluctant to accept lower paying jobs. There are twin problems facing them. One is in the area of utilities and conservancy charges. The other one is to meet the daily household needs. I have therefore proposed to my Bukit Timah CDC to help pay part of their arrears in utilities and conservancy charges provided they first accept available jobs and show a commitment to stay employed. This will go a long way to ease their worries on overhanging debts. Businesses have also responded. Banks lower interest rates and reschedule loans. Rentals are falling everywhere and in every sector, although my feedback is that the largest property players are not responding in a significant way to the tenants' cries for help. I hope this perception is wrong. The people at the business sector are stretched. But the Government still has substantial reserves and this is the time to stretch that hand and use that umbrella for a while. Limit to a quantum we can afford without seriously undermining the economic foundation. I ask the Government to look into this because a fair number of Singaporeans cannot reconcile the fact that they have to take cuts on their wages and CPF, and yet the Government is prepared to give billions of dollars of loans to our neighbouring countries. Retrenchment and wage cuts are a real blow to many Singaporeans. There are a few categories. (1) Those who have been retrenched and cannot find another job easily. Many are sole breadwinners of the family. (2) Young couples have problems with their 20% cash payment for the new HDB flats. Perhaps, we should reduce this to 10% on a case-by-case basis. (3) Those whose CPF are fully committed to housing loans but have no disposable income left to make up for the shortfall of the 10% cut. The present unemployment figure of 20,000 and above will be growing. Unlike in 1985, this economic downturn is going to be more prolonged and its effects will be worse, primarily because of heavier loan mortgages and a higher cost of living. In 1985, housing was not so expensive and people's commitments were less. The longer term issue is how are we to compete with our neighbours when recovery comes as costs of doing business in the neighbouring countries are very much lower. This is one big challenge we face: how to convince investors to want to come here and set up business and thus create jobs for our people despite our higher costs. Our strong Singapore dollar compared to the devalued baht, rupiah and ringgit is an obvious factor. But we have no intention to devalue our currency. The Prime Minister, Deputy Prime Minister and the Minister for Trade and Industry have many a time explained why and I do not think I can do any better except that I support this view that our imports are obviously cheaper with a stronger Singapore dollar. Our measures to bring down costs will definitely help. But I think it is still not enough to counter the much lower business costs in Thailand, Malaysia, Indonesia and Korea. Either we move our business to the region, as some are doing, or we stay and find niche businesses that the others are not able to compete with us. It is easier said than done. But we hope the EDB team will scout the globe and come back with businesses that will capitalise on our country's manpower and skills. The CSC has made recommendations on the strategies for the future competitiveness. In particular, emphasis is in the manufacturing and services sectors as its twin engines of growth and these are correct strategies. We must avoid being a property economy as it is very unproductive. The emphasis on hub services is a good move in the right direction. We should build Singapore as a premier service hub in Asia, emphasising our existing hub services where we have achieved international repute, for example, financial services, international trading, transport and logistics, exhibition management and tourism, and of course develop new high growth hub services in health care, education, media communication and information technology services, e-commerce and direct marketing. All these are in the Report, and they are good. To achieve these recommendations by the CSC, page 118 of the Report calls on the Government to review Government regulations and bureaucratic red tape. Page 118 of the Report, item 12.b., lays down how to minimise the costs of compliance incurred by businesses, and I quote: `We should consider setting up an Inter-Ministry Committee to coordinate the formulation and implementation of all rules and regulations to ensure that there is no conflict or overlap. This Committee should be an extension of the SIU. Government agencies can further increase their cooperation so as to improve efficiency;' I was reminded, Mr Deputy Speaker, Sir, when I was the Chairman of the Feedback Unit, there was a call for the setting up of an Inter-Ministry Committee. Many similar calls were made by the private sector then to see whether we could coordinate many of the issues that involve different Ministries and the setting up of an Inter-Ministry Committee was called upon. It never took off. Now that the Committee has made such a call, I do hope it will be implemented. And I guess one reason for the Ministry in not setting up this Inter-Ministry Committee is that most Ministries guard their turfs very jealously. I think the Prime Minister's Office should take the lead in establishing this Inter-Ministry Committee. What we lose out in labour cost, we must make up through a highly-skilled, well-trained, disciplined and agile workforce, able to master new technologies, especially information technology and new skills. We must always be prepared for change. I agree with the Deputy Prime Minister when he said, "Change will affect not just individuals, but also entire sectors of the economy." The way forward, Mr Deputy Speaker, Sir, is to strengthen our key success factors, that is, to build on our strength, good infrastructure, good communication links, good services, clean Government and, of course, very important, political stability. An investor wants to make sure he gets returns for his capital investment as quickly as possible. Through today's debate on the CSC's Report and other sub-committees' reports, we have shown the world that Singapore is determined to better the investment climate. This will be a clear signal that we will adapt change to meet the new business climate and Singaporeans will be seen as a unique people, ready to accept even pay cuts at a tremendous personal sacrifice to meet this challenge, a gesture that shocked my friends in the West and in Australia. Mr Deputy Speaker, Sir, this is not the first time nor will it be a one-off affair. We did it in 1985 and I am sure we will do it again, if need be. Those who are watching how we manage the recession will marvel at our people's sacrifice. They know that we are a tough people, that we tackle our difficult problems head on and that Singaporeans work and fight as a team when the going gets tough. I support the recommendations.

(In Mandarin): Mr Deputy Speaker, Sir, after much deliberation for more than a year, the Committee on Singapore's Competitiveness (CSC) presented this Report and its contents are down-to-earth and has touched a wide spectrum of issues. It has comprehensively reviewed the long-term competitiveness of Singapore in the international market and put forward many truly feasible recommendations. This can well be said to be the compass to guide Singapore's economy in maintaining its competitive edge to face challenges in the future. This Report comprises two main components: short-term measures and long-term strategies. As a Nominated MP speaking in this solemn forum on national affairs as a representative of the industrial and commercial sector, I would like to present our views and raise some supplementary suggestions from the angle of the industrial and commercial sector. This is my obligation, as well as my duty. Mr Deputy Speaker, Sir, first of all, let me reflect to this House the views of the industrial and commercial sector on the short-term measures as recommended in this Report. The CSC Report has recommended certain measures such as wage-cuts, reduction in foreign worker levies, land and factory rentals, Government charges, etc. As a representative of the industrial and commercial sector, I am most concerned with business cost and therefore I will spend some time on this aspect. Our industrial and commercial sector, particularly the SMEs, is facing unprecedented operational difficulties. At this critical moment of life and death for companies and enterprises in Singapore, the suggested package of $10 billion or 15% reduction in business cost is like sending a pot of red-hot charcoal in a snowy weather, something deserving our support. However, we feel that in order to assist our local enterprises effectively, particularly the SMEs, to continue to survive in this economic crisis, the business cost should be reduced by at least 20%. Only then can we maintain our competitiveness. Under the present economic situation, particularly at a time when our currency is much higher than the other countries in this region, we feel that a 15% reduction in the total business cost may not be enough to enhance our competitiveness in the international market. In fact, as early as the beginning of this year, based on feedback from our members and businessmen in the industrial and commercial sector, the Chinese Chamber of Commerce and Industry has recommended some cost-saving measures such as a reduction on total wage-cost, Government taxes, foreign worker levies, land and factory rentals, etc. In a recent interview with Lianhe Zaobao, the Chairman of the National Wages Council (NWC) Prof. Lim Chong Yah, said that in order for Singapore to be competitive, business cost should be reduced by at least 20%. Prof. Lim is a very serious economist and since he holds such a view, I feel that our request for a 20% reduction in our business cost is a reasonable one. Although the CSC Report has recommended an annual 15% reduction on the total business cost in five areas, namely, wage-cut, reduction in foreign worker levies, lowering of land and factory rentals and lowering of Government charges, and tax-cuts, apart from recommending a 10% reduction in the employers' CPF contribution rate and the foreign worker levies to be reduced by $50-$100, there is no specific suggestion on the other areas. It is indeed a pity! According to the figures released by the National Wages Council, the 10% cut in employers' CPF contribution would reduce the wage cost by $4 billion. By reducing 5% to 8% in the total wage-cost, there will be a further reduction of $2.5 billion to $4 billion. By combining these two measures, the wage-cost can be reduced by a total of $6.5 billion to $8 billion or 13% to 16% of the employee's national total income. Mr Deputy Speaker, Sir, when announcing these guidelines, the NWC has also urged the employers to consider a smaller cut for employees in the lower income group and a bigger cut for higher pay senior executives in cutting the wage costs. Mr Stephen Lee, President of the Singapore National Employers' Federation and Mr Wee Cho Yao, Chairman of the Singapore Federation of Chinese Clans Association, also appealed to the CEOs and senior managerial staff, including company shareholders and directors, to lead in taking bigger cuts in their remuneration. We welcome this appeal and pledge to give it our full support. At the same time, we hope that Government leaders and senior civil servants would also take the lead in having a bigger wage cut to show they are prepared to sacrifice along with the people of Singapore. According to a comment in the latest issue of the NTUC News, the cost-reduction package, recommended by CSC, totalling $10 billion is made up of 15% reduction each from the wage cost and non-wage cost components in the total business cost. Although in percentage terms, they are 15% each, in real terms the wage-cost reduction amounts to $7.5 billion but the non-wage cost reduction is only $2.5 billion. All the time, we have been emphasising the close tripartite relationship and cooperation of workers, employers and Government. DPM Lee has also pointed out recently that this is a unique feature in our economy that gives us our competitive edge. We feel that this very close tripartite relationship should not be undermined. What we are worried is that this lopsided arrangement, with the workers taking the bulk of the cut, may cause them to be unhappy, thereby weakening our such strong tripartite relationship. We are however relieved to note the clarifications by the leadership of the NTUC that the wage cost and non-wage cost reductions are of equal magnitude and there is no question of unfairness. The question is: does the reduction of wage cost and non-wage cost components have to be the same? Should the workers' sacrifice and the Government's cost-saving offers be matched? We are of the view that the Government being the national resource controller and mobiliser should bear a larger burden of social responsibility. So long as it is within its means, the Government should make bigger sacrifices than the workers. The non-wage cost reduction should be bigger than the wage cost reduction, and it should not be a 50-50 ratio between the two. In the past few years, when the Singapore economy was performing well, like the private sector, Government agencies have been making profits or at least not operating at a loss, and they have therefore accumulated lots of assets for the Government and the people. However, when the country is facing an economic downturn, the Government should change its strategies and make expedient plans to save the situation. It should reduce service charges and taxes so as to create a better environment for the business, and ensure that companies in Singapore continue to survive and the workers' rice-bowls are protected. This would also help to attract more foreign investments to Singapore, thereby creating more job opportunities for our people. There is a Chinese proverb which says, "Store your grains to provide for the lean years". In the ancient agricultural society, whenever there was a bumper harvest, the authority would store the grains in the warehouse, so that when there was a lean year and when you faced famine, the local government would open the warehouses and use the stored grains to feed the people. Now that the Singapore economy is encountering a lean year, should not the Government consider taking out part of its accumulated budget surpluses to help the people? When the other countries in this region, such as Japan and Malaysia, proposed their packages to save their economies, they did not ask their people to accept wage-cuts. But in Singapore, we are asking our people to make such a big sacrifice and the Government is only matching it with an equal percentage of reduction in non-wage costs. I think this is not convincing. In its Report, the CSC made some recommendations for non-wage cost reductions. Basically, we agree with these recommendations but we feel that the non-wage cost reductions can be more substantive. Mr Deputy Speaker, Sir, we suggest that the rebate given by JTC on land rents be raised to 30%, and the factory rentals be reduced by 25%. We also request the HDB to reduce the commercial and industrial property rental prices to that of the 1990 level, and we hope that Singapore Power could pass its savings in operational cost to the consumers by reducing the electricity tariffs. We also suggest that the property tax rebates for industrial and commercial properties be raised from 55% to 65%, and the rebates be extended to cover residential properties as well. This will help to stimulate the property market. The Government should also review the annual value of these properties quickly to reflect the current market value. Corporate income tax should be reduced from 26% to 25%. Petrol duties should be reduced by 30%, and road tax should be further reduced by 30%. Port charges should be reduced by 20%. We commend the CSC for suggesting that the foreign worker levy be reduced between $50 and $100. But, we feel that it should be reduced by at least $200. At the same time, the Government should cut the foreign maid levy down from $345 to $200. We also suggest that the ERP charges should be capped at a maximum of $5 per day. We feel that the LTA should further reduce the ERP charges so as to reduce the transportation cost to help particularly the commercial sector, and also to stimulate growth in the retail industry. We would, once again, urge the Government to reduce the GST by 2% so that we pay only 1% GST. This will stimulate consumption. Singapore Telecom should reduce the charges for commercial telephone lines by 30% and the residential lines by 20%. For mobile phones, the air-time charges should be reduced to 10 cents per call and the changes should only be levied on outgoing calls. We are of the view that Singapore Telecom should use the cost savings from wage cuts to reduce its entire telecommunication charges. However, all the costs mentioned above are tangible costs. Apart from all these, there are also the intangible costs, eg, time cost. What is time cost? Time cost is something that is caused by the bureaucracy in the Government departments. In some companies, some officers have been deployed specifically to deal with correspondence with ministries, statutory boards and Government agencies. These are very complicated and time-consuming matters. Sometimes, you have to wait one to two months for a simple application to be processed and approved by the relevant authorities. Mr Deputy Speaker, Sir, to the businessmen, time is money. If the processing procedure of official documents takes such a long time, it is not in line with the PS21 spirit of high efficiency, particularly in application processing. DPM Lee Hsien Loong has recently made an illustration to describe the difference between Singapore and Hong Kong. He said, "In Hong Kong, if there is no law to say specifically that you cannot do a certain thing, then you can just go ahead and do it. But in Singapore, if the law does not specifically provide for you to do it, then you are not allowed to do it!" Mr Deputy Speaker, Sir, we are about to enter the 21st century. This is going to be a brand new era. It will be a sorry state of affair if Singaporeans are still stuck in the backward mentality of "no law to say you can do it, then you cannot do it". This certainly does not encourage creativity. Of course, we should not be like Hong Kong where "so long as the law does not say you cannot do, then you can do it". We do not want to have that! However, we should find a point of balance between these two extremes. I feel that if the Government can change old mindset and to be more open-minded, a lot of unnecessary bureaucracy can be done away, and its efficiency can be greatly enhanced. According to a survey conducted on the 3rd November by the Singapore Chinese Chamber of Commerce and Industry, among the 101 people who responded to the survey, 28% indicated that they were prepared to use the savings from the cost-reduction package to discharge the company's outstanding debts. 44% said that they would use the money to seek and open new markets. 38% said they would strengthen their marketing activities to stimulate sales and 62% said that they would use the savings from cost-reduction to keep their existing employees in employment. 36% said that they would pass on the savings to their customers by reducing the prices of their products and services. 26% said that they would use the money to invest in new plants and equipment. If the Government can make bigger reductions in non-wage cost, I believe that the companies would be more active in responding to the appeal of the Government and the NTUC to make greater efforts in the interest of their own survival and development to improve on their operations, explore new source of income, reduce wasteful expenditure and endeavour to reduce the prices of their products and services. By so doing, their productivity will go up, their sales will pick up, and confidence will be restored to the market, thereby assuring workers of their job security and career advancement prospects. Mr Deputy Speaker, Sir, I would like to take this opportunity to call upon all the businessmen to lower the prices of their products and services by making use of the savings from the cost-reduction measures, and thereby alleviating the burden of our people. As regards the other five short-term strategies recommended by the CSC, that is, to prevent a credit crunch, to sustain the confidence of our investors, to restructure our economy, to open new markets, and to look for new regional opportunities. We totally agree with the recommendations but the question is whether they are feasible or not. For example, the CSC has recommended a strategy to prevent a credit crunch by saying that we should expand our Local Enterprise Assistance schemes to our SMEs, so as to give our promising companies more liquidity in their capital. This is good. But the banks are now very cautious and have tightened their credit facilities. They do not want to commit themselves in providing more assistance to our SMEs. This may contradict the recommendation of the CSC and warrant our attention. Sir, the CSC Report has also proposed eight major strategies in the long-term development of Singapore economy. Let me give my view on these strategies. The CSC believes that, for the next 10 years, manufacturing and services should continue to be emphasised as the twin engines of growth to develop Singapore into an advanced knowledge-based economy with global competitiveness. Such a vision is undoubtedly wonderful, and very attractive. If realised, it would certainly make Singapore a paradise. The specific recommendation by the Committee is that our manufacturing industry, including our local enterprises and the MNCs, should work together to produce high value-added products and to provide a base for related services in this region. As for the service industry, it should develop its present areas of service, to cultivate new areas and to develop Singapore into Asia's No. 1 service hub. The Committee also suggests that the Government should appoint a lead economic promotion agency to review and champion the developments of each service industry with the support of other Government agencies as a total approach. We are fully appreciative of the CSC for this specific recommendation, particularly the part that calls for a review of the existing policies and the departments which provide the regulatory framework. We feel that the Government should immediately establish an inter-Ministry task-force, preferably to be led by the Prime Minister's Office, to conduct a comprehensive review on the bye-laws and regulations of the various Government departments. All those which are no longer relevant, not conducive to business operations, or unnecessary over-lapping should be repealed and removed as soon as possible. Secondly, strengthening our external wing. We agree that we should help our companies to go regional because the Singapore domestic market is much too small. Opening of oversea markets will beneft our local enterprises. However, we hope that the Government could set up an Overseas Investment Risk Fund. In this way, when our investments in the overseas markets were to encounter unfavourable situations, such as the political turmoil in Indonesia, then we would at least have some basic protection and we would not lose every cent of our investment. The third long-term strategy is to build up world-class local companies. Our Government-linked companies are very strong in resources. They are in the best position to take the lead in developing our local skills, venturing overseas, and eventually evolving into our very own MNCs. But the question is: is there any part where our SMEs can play in the process? We hope that Singapore will emulate the companies in Japan or Italy, such as Toyota or Fiat. They go to various countries in the world to open their markets and their local SMEs were able to hitch-hike on their successes. The Government-linked companies should provide opportunities for SMEs to participate in providing peripheral services. They should not be completely profit-orientated and go for the kill in all their endeavours, such as speculating in the property market. It was said that recently a Government-linked company even wanted to venture into the roast duck business. Of course, there are many avenues for investment. But if you are using a cannon to hunt for sparrows, then you are wasting your talents and resources on petty undertakings. Fourthly, strengthening our base of SMEs. The report recommended that we should help the SMEs to give full play to their potential so that they could be strengthened and eventually developed into our future MNCs. But there are no specific recommendations on how to go about doing it. We feel that the Government should grant more concessions to our SMEs on taxes, skill development opportunities and on the distribution of resources, so that they will not be stagnated at its present stage. We fully agree with the fifth long-term strategy on having human and intellectual capital as a key competitive edge. On the sixth strategy of leveraging on science and technology and innovation, we feel that it is a very good suggestion. The question is whether or not our business administration concept can catch up with the express train of information era, for example, whether or not we can accept the concept of having our employees working from home, using computer network and other information technology equipment. Then, they will not need to go to office to work. If we can let 30% of our employees operate from their homes, then we would be able to save a lot of office space, which means savings on office rents as well as transport expenses. The employees will save a lot of time travelling to and from office. Of course, LTA may lose some revenue as the number of vehicles passing through the ERP gantry points during peak hours will be significantly reduced. In any event, if Singapore is really going to leverage on the cutting edge of information technology, the most important thing is to change from our outdated industrial age business administration concept to fit into the various policies based on the latest information technology. The seventh strategy is to optimise resource management. Yes, we agree that we should make full use of our land resources and to have better management of our water resources. We support the recommendation to set up a committee or agency to look into our land distribution and pricing policy. We should also proceed to have the desalination plant as planned so that we can make full use of the abundant water resources from the ocean around us. I suggest that the relevant authority should perhaps learn from the Chinese scientists and try to introduce the Chinese technology of desalination to Singapore. We fully agree with the eighth long-term strategy ---

Mr Tay, your time is up.

Mr Deputy Speaker, Sir, today we meet under difficult circumstances. Our economy is technically in recession. Many of my fellow workers have been retrenched. More will lose their jobs, not because they are incompetent or because the companies are badly run. It is because we are victims of the regional economic crisis. But we will fight to regain our competitiveness. That is why we have accepted an overall wage reduction. We in the labour movement fully support the measures recommended by the Committee on Singapore's Competitiveness. The CSC has not only proposed wage cuts, but it has charted a more durable future for Singapore. It is a future where the fortunes of one sector of the economy will not have too great an impact on the development of our economy as a whole. Yes, diversification is the in-thing. Over the years, our unions have secured better wages and more fringe benefits for our members. Despite this, we have been able to attract more foreign investments. Why? Because we have shown to be capable and productive workers. Regrettably, the currency of our neighbours depreciated to a larger extent than ours in relation to the US dollar. This has eroded our competitiveness. As an employee in the electronics industry, I can sense the sharp downturn. It is difficult to have to tell workers, "Sorry, you have to go on shorter work week or you have to stay away from work for a while." This means not only the disappearance of overtime, but also a pay cut in basic salary. It is even more heart-rending when you have to tell the workers, "Very sorry, you are retrenched." Many of those retrenched workers have given the best years of their lives to the company. I must acknowledge here that it is equally painful for management to part with loyal and hardworking employees. To their credit, some managements have gone all the way out to work with unions to help these workers marked for retrenchment. They give us advance notice so that we can do two things: to arrange for training of these workers and find alternative jobs for them. Other companies have also been just as helpful. They take these retrenched workers on board, send them for training under the Skills Redevelopment Programme and give them every encouragement to do well, sometimes entirely in the new work environment. Without such caring employers, our workers would have to face even more trying times. But this is not to say that all managements are reasonable. Some have behaved disgracefully and treated workers with little or no compassion. But by and large, our managements are an enlightened lot. Let me now address the problems faced by retrenched workers. Those with families to look after and housing loans to service are the ones who need to get jobs quickly. But what kind of jobs are available in the market? Sometimes these retrenched workers, especially the older ones, face particular difficulties. It is not because they want to pick and choose. Please let me explain. A factory operator may have a low education. But if he is laid off, can he find another similar post? In the past, yes. Today, it is not that easy. His low education, his low level of skills, his age - these all become barriers. Of course, we can tell him to go for training to acquire new skills but this is easier said than done. If he cannot upgrade his skills, does it mean that he will face structural unemployment? The answer is yes, unless he can change his mindset and accept any job open to him. Again, this is easier said than done. Yes, we have 600,000 foreign workers in our midst. So even if 20,000 or 30,000 Singaporeans lose their jobs, we should not have any problems finding jobs for them. No, we are not asking for every retrenched Singaporean we should get a foreigner to make way for a Singaporean. This is not the way things work and this is not the way we do it. Foreign workers are here because we need them. Just because we run into a serious economic crisis does not mean that we have to send them back just like that. The point I am making is that there are jobs for those who are retrenched and they can apply for them. But these may not be the kind of job that they want. That is why our retrenched workers should reconsider the options. Is it the pay that is a deterrent? Is it the distance from home? Is it the conditions of work? Whatever it is, we must solve this problem, otherwise we will be stuck with structural unemployment. Of course, employers can help by not turning people down for work simply on account of age. Allow me to raise the case of a man. He is 52 years old and who used to work as a storekeeper in a fashion house. He was retrenched. He applied for many jobs but was turned down. He thinks it was because of his age. Even when he applied for a job in a Government Ministry, the first question he was asked was to state his age. The man could not understand why his age was so critical when he was applying for the post of an office attendant. By the way, the man remains jobless, worried sick and he has to support his family. We are no longer an economy with full employment. The unemployment rate has risen to 4.5% in September, but I am confident that we can have what it takes to overcome our present difficulties. Tripartism in Singapore is not a slogan. It is a reality. So there is no need for us to be despondent. We can and we will emerge from the crisis stronger and more resilient. In conclusion, in the past, in good times when NWC announced the guidelines, food prices, especially cooked food, coffee prices and transport charges went up. I hope today in this difficult situation, when NWC has already announced a wage cost reduction, the hawkers, the coffeeshop owners and the bus operators are sympathetic enough to reduce their prices.

Resolved, "That the Debate be now adjourned." - [Mr Wong Kan Seng].

Debate to be continued on what day, Mr Lee?

Tomorrow, Sir.

So be it.

Resolved, "That Parliament do now adjourn." - [Mr Wong Kan Seng]. Adjourned accordingly at Twenty-nine Minutes to Seven o'clock pm.

asked the Minister for Education (a) what is the progress of his Ministry's efforts in revamping the education system; (b) whether his Ministry has been implementing this on a pilot basis in primary and secondary schools and, if so, whether there are any specific results; and (c) what is his assessment of the revamp in terms of preparing our students to confront the new challenges of a knowledge-based economy.

Our education system has served us well over the years. Today, we have a fundamentally sound system where quality education is delivered to all our pupils, not just the best and the brightest. MOE thus does not intend to revamp our whole system radically. What we seek to do is to re-position and refine the system to develop our young to meet future challenges. Three key trends have emerged for the future: globalisation, rapid technological change and transition to a knowledge based economy. Given these trends and the challenges facing Education, we have to re-align the focus of our education system towards developing the full spectrum of talents and abilities of every child, and not just in terms of academic achievement. The re-positioning of the education system aims to put in place ways to identify and help every child maximise his or her talents and abilities and harness their potential. As part of the process, we have identified six strategic areas of focus for the next five years. These are: First, designing a responsive education structure. We want to be able to identify the talents and abilities of our students early, and to design educational programmes to cater to their different needs. We want to customise, as much as possible and within limits of our resources, the education being delivered to each child; Second, inculcate values and nurture thinking skills through the formal and informal curricula. The three big initiatives that we have embarked on, namely National Education, Nurturing Thinking Skills, and Masterplan for IT in Education, are part of overall efforts to achieve this; Third, creating a leaner-centred school environment. This encompasses MOE's management of schools, our philosophy and principles, school leadership, school appraisal and ranking, the role of the community in schools, and of schools in the community, and school infrastructural programmes; Fourth, building a quality teaching service. The teacher is key to everything we do in Education. We need to equip and continually develop the teacher, to whom we entrust the heavy responsibility of moulding the lives of our young; and Fifth, developing Singapore into an Education Hub. As a critical part of Singapore's transition towards a knowledge-based economy, we need to position ourselves as a talent and knowledge capital. MOE's role is to develop Singapore into an education hub through a two-prong approach: first, developing and hosting institutions that can provide an excellent education for Singaporeans, and second, to attract quality talent, both local and foreign to these institutions. Last but not least, MOE will provide excellent administrative support to our schools and institutions. We have embarked on the new initiatives in recent years. After some initial adjustment problems, schools are embracing National Education and the introduction of IT. Education is an investment for the long-term. We see encouraging signs of enthusiasm and change. The real benefits will come only in the long-term, when our economy remains resilient and competitive, and when our society remains cohesive and vibrant.

asked the Prime Minister if he will furnish statistics on the rates of increases/decreases in respect of civil servants' pay from 1988 to 1997.

The average increase in the wage bill for civil servants for the period 1987 to 1998 is 4.2% per year. Details are given in the table below. Year Wage Bill % change over (million) previous year 1988 $ 1,840 - 1989 $ 1,935 5.2% 1990 $ 2,065 6.7% 1991 $ 2,069 0.2% 1992 $ 1,925 -7.0% 1993 $ 1,969 2.3% 1994 $ 2,244 14.0% 1995 $ 2,252 0.4% 1996 $ 2,487 10.4% 1997 $ 2,629 5.7% Average 4.2% The change in the wage bill is a function of many factors such as the size and structure of the Service. For example, the proportion of Division I officers in the Service has doubled, from 17% of the total population in 1988 to 34% in 1997 while the percentage of Division III officers has dropped from 31% to 25%, and Division IV officers, from 19% to 10%, over the same period. The large increase in 1994 (14.0%) was due to a major salary revision exercise in that year. The salary revision was introduced in conjunction with the introduction of co-payment of medical expenses. Civil Servants who accepted the new medical schemes which required them to co-pay medical expenses were given salary revisions averaging about 7%. The increase in 1996 (10.4%) was also larger than normal because of the relatively bigger NWC wage adjustment (6.5%) in that year. In addition, there was also an increase in the number of Division I officers in 1996 by 16.5%, which is significantly higher than the average increase of 9.3% per year for the period 1988 to 1997. The increase of Division I officers in 1996 was largely due to an increase in the recruitment of teachers.

asked the Prime Minister what is the progress from August 1998 to October 1998 in recruiting graduates to fill vacancies in the civil service.

The Civil Service recruited 359 graduate officers from Aug-Oct 98. There were a total of 1,024 vacancies during this period. The new recruits were mainly for the Ministry of Education and the Uniformed Services in the Ministry of Home Affairs. A breakdown of the number of graduate officers recruited by the various Ministries is tabulated below: MINISTRY Number Recruited Number of Vacancies Aug 98 Sep 98 Oct 98 Total Ministry of 0 1 1 2 4 Communications Ministry of 6 0 0 6 15 Community Development Ministry of 3 6 1 10 60 Defence Ministry of 2 0 1 3 7 Environment Ministry of 87 116 1 204 758 Education Ministry of 1 0 1 2 10 Foreign Affairs Ministry of 0 0 5 5 15 Finance (Budget) Ministry of 2 18 1 21 21 Finance (Revenue) Ministry of 19 40 4 63 69 Home Affairs Ministry of 0 13 2 15 17 Health Ministry of 3 0 0 3 3 Information and The Arts Ministry of 2 1 2 5 7 Law Ministry of 4 2 2 8 8 Manpower Ministry of 0 3 0 3 10 National Development Ministry of 2 1 1 4 5 Trade and Industry Public 5 0 0 5 15 Service Division Total 136 201 22 359 1,024

asked the Minister for Foreign Affairs what is the total amount of official development assistance given by Singapore to each of the ASEAN members from May 1997 to October 1998, whether as training grants or in other forms.

For the period May 1997 to October 1998, Singapore offered a total of S$11.5 million worth of technical assistance to ASEAN countries under the Singapore Co-operation Programme (SCP), which is managed by the Ministry of Foreign Affairs. The areas in which ASEAN nationals have been trained under the SCP included English language, trade and investment promotion, civil aviation, port management, productivity, community policing and search and rescue. Other Singapore ministries and agencies have also separately provided training awards and scholarships to ASEAN nationals.

asked the Minister for Law (a) from January 1997 to October 1998, how many ex-husbands have evaded Court Order Maintenance; (b) what enforcement measures are in place to make sure ex-husbands pay up their dues; and (c) if his Ministry will request the Central Provident Fund Board to release the funds which the ex-husbands have and pay the ex-wives and children what they are legally entitled to.

From January 1997 to October 1998, how many ex-husbands have evaded Court Order Maintenance? Evasion of Court Maintenance Order is taken to mean non-payment of maintenance orders in part or in whole when the payments become due. The number of applications for the enforcement of maintenance orders from January 1997 to October 1998 is 5833. This figure also includes applications filed by guardians who are not wives against the parent(s) of children as there is no separate categorisation of applications filed by ex-husbands. (b) What enforcement measures are in place to make sure ex-husbands pay up their dues? Under section 71 and Part IX of the Women's Charter, when a person who has been ordered to pay maintenance fails to do so, the court may make one of the following orders: (i) impose a term of imprisonment not exceeding 1 month for each month of maintenance arrears; (ii) issue a warrant to levy; (iii) make a garnishee order against monies due or owing to the respondent; or (iv) make an attachment order against the salary or income of the respondent. (c) If his Ministry will request the Central Provident Fund Board to release the funds which the ex-husbands have and pay the ex-wives and children what they are legally entitled to. Presently, CPF savings can only be withdrawn when a member satisfies the conditions for CPF withdrawal (eg. when he reaches age 55 after setting aside his Minimum Sum and Medisave retention sum). Under section 24 of the CPF Act, CPF savings are protected against any claims and debts as such savings are meant to meet members' old age and medical needs. Hence, CPF savings cannot be released to meet the ex-husband's financial obligations including his monthly Court Order Maintenance. However, where the Court confers in favour of the ex-wife a proprietory interest in the ex-husband's CPF savings and a charge is imposed to secure that proprietory interest, the ex-wife will be entitled to the portion charged when her ex-husband is eligible to withdraw his CPF savings.

asked the Minister for Finance whether the Government and Government-linked companies have invested in any hedge fund and, if so, whether he will disclose details of such investments.

Government of Singapore Investment Corporation (GIC), which manages the Government's reserves, has not invested Government's reserves in any hedge fund. The Government-linked companies (GLCs) make their own decisions on the investment of their surplus funds. They do not report their investments to the Ministry of Finance.

asked the Minister for Trade and Industry if he will furnish statistics on the rates of increases/decreases in respect of public utilities charges and Jurong Town Corporation rentals from 1988 to 1997.

The statistics on the rates of increases/decreases in respect of public utilities charges and Jurong Town Corporation rentals from 1988 to 1997 are as follows: Electricity Year Average Unit Change Price cents/kWh cents/kWh % 1988 12.2 -1.2 -9 1989 12.1 -0.1 -1 1990 12.5 0.4 3 1991 12.7 0.2 2 1992 11.5 -1.2 -9 1993 11.4 -0.1 -1 1994 11.4 0.0 0 1995 11.7 0.3 3 1996 12.3 0.6 5 1997 12.6 0.3 2 Water Year Average Unit Change Price cents/cu m cents/cu m % 1988 74.6 3.0 4 1989 75.4 0.8 1 1990 74.4 -1.0 -1 1991 72.1 -2.3 -3 1992 72.4 0.3 0 1993 77.0 4.6 6 1994 79.5 2.5 3 1995 79.0 -0.5 -1 1996 80.5 1.5 2 1997 85.0 4.5 6 Gas Year Average Unit Change Price cents/unit Cents/unit % 1988 7.6 -0.5 -6 1989 7.8 0.2 3 1990 8.4 0.6 8 1991 8.9 0.5 6 1992 9.0 0.1 1 1993 8.9 -0.1 -1 1994 9.3 0.4 4 1995 10.2 0.9 10 1996 11.0 0.8 8 1997 11.7 0.7 6 JTC Rentals Year Land Flatted Factory Standard Factory % Change 1988 -5 12 -37 1989 10 10 8 1990 25 9 19 1991 7 14 16 1992 7 15 14 1993 4 -2 0 1994 4 -2 0 1995 10 4 10 1996 20 0 13 1997 0 0 0

asked the Minister for the Environment whether the Government will repair the drains in Sennett Estate, Potong Pasir, as they collect stagnant water and breed mosquitoes.

The Drainage Department of Ministry of the Environment has repaired 2.5 km of damaged drains in Sennett Estate since 1997 as part of its on-going island wide drainage maintenance programme. The observation by ENV officers is that stagnant water in the drains is often due to litter in the drains. Mr Chiam can help to reduce this problem by encouraging members of the public in the area to refrain from littering. Mr Chiam can also inform ENV directly should he be aware of any damaged drain in Sennett Estate that needs repairing.

asked the Minister for the Environment if he will appeal to stallholders in hawker centres to reduce their price in view of the Government's recent measures to cut costs.

Rental rebates for hawker stalls are only given to those hawkers who are paying market rates. These are the hawkers who were allocated stalls at market rates or obtained their stalls through the public tendering system. They represent about 9% of the total hawker population in the Government hawker centres. Those who are paying rents below market rates are not given any rental rebates. Food prices are best left to the hawkers individually to set. Hawkers are, however, required to display price tags and sell their food according to the prices indicated. I am sure hawkers will be prudent in setting their prices; otherwise they may end up pricing themselves out of business, especially under the present economic situation.

asked the Minister for Manpower if he will give an update on the number of persons who are over 45 and who have been retrenched; and what mechanism, training programmes and types of job placement opportunities are in place to enable these older persons to participate in the economy.

More than one third (36%) of the retrenched local workers in the first half of 1998 were aged 45 and above. Nearly one-fifth (19%) were aged 50 or older. In a softening labour market, older workers affected by retrenchment would experience more difficulty finding new jobs compared to their younger counterparts. The Ministry is concerned over this group of job seekers. We have been urging employers to refrain from discriminating against older workers. As far as employment assistance is concerned, the Ministry of Manpower's Employment Service Department (ESD) provides employment assistance to Singaporeans and Permanent Residents regardless of their age. All the nine Community Development Councils (CDCs) and other self-help and voluntary welfare organisations also have employment assistance schemes to help their residents/members look for jobs. They are linked to ESD's JOB System through the Ministry's LabourNet, which allows on-line registration and job matching for job seekers. The Ministry has also formed an Employment Facilitation Team (EFT) to proactively reach out to displaced workers and companies still recruiting workers. The EFT keeps in contact with industries and companies that have the potential to offer new employment opportunities. EFT officers meet with industry and company personnel to assess their employment requirements. The EFT visits companies that have decided to carry out retrenchments so as to determine the assistance needed by affected workers to obtain alternative employment, and provide any necessary counselling. The EFT also organises industry job fairs, often in cooperation with the CDCs, in order to bring together job seekers and prospective employers at a convenient location. With regard to training programmes, the older and less-educated workers who are forty years old and above are a target group of the Skills Redevelopment Programme (SRP). The SRP was launched in December 1996 by the National Trades Union Congress as a tripartite initiative to enhance the employability of the local workforce by encouraging employers to undertake skills upgrading for their employees. In promoting training among the older workers, the aim is to extend their employability by 10 to 15 years in their current companies, or for suitable jobs in other companies. Of the 6,115 workers who either have completed training or are currently being trained under the SRP, more than 2,800 workers or 46% are aged forty years and above.

asked the Minister for Manpower if he will furnish statistics on the rates of increases/decreases in respect of foreign worker levy and foreign maid levy from 1988 to 1997.

The foreign worker levy was introduced in 1982 as a pricing mechanism to moderate demand for foreign workers. To ensure that this objective is met, the levy rates are varied for different sectors and are revised periodically to ensure effectiveness. The rates from 1988 are as follows: Effective Domestic Construction Marine Manufacturing Service Date 1 Apr 88 $120 $200 $170 $170 $170 1 Jan 89 $160 $220 $220 $220 $220 1 Jul 89 $200 $250 $250 $250 $250 1 Feb 90 $230 $280 $280 $280 $280 1 Aug 90 $250 $300 $300 $300 $300 1 Jan 91 $250 Skilled: $300 $300 $300 $250 Unskilled: $350 1 Apr 91 $250 Skilled: $350 $300 $300 $250 Unskilled: $350 1 Jul 91 $250 Skilled: Skilled: $300 $300 $250 $250 Unskilled: Unskilled: $350 $350 1 Jan 92 $250 Skilled: Skilled: #DL <=35%: $300 $250 $250 $300 Unskilled: Unskilled: DL from >35% $350 $350 to 45%: $450 1 Apr 92 $300 Skilled: Skilled: DL <= 35%: $300 $250 $250 $300 Unskilled: Unskilled: DL from >35% $350 $350 to 45%: $450 1 Jul 92 $300 Skilled: Skilled: DL <= 35%: $300 $250 $250 $300 Unskilled: Unskilled: DL from >35% $400 $350 to 45%: $450 1 Apr 95 $330 Skilled: Skilled: DL <= 35%: $330 $200 $200 $330 Unskilled: Unskilled: DL from >35% $440 $385 to 50%: $450 1 May 96 $330 Skilled: Skilled: Skilled: Skilled: $200 $200 $200 $200 Unskilled: Unskilled: Unskilled: Unskilled: $440 $385 DL <= 35%: $330 $330 DL from >35% to 50%: $450 1 Jun 97 $330 Skilled: Skilled: Skilled: Skilled: $200 $200 $200 $200 Unskilled: Unskilled: Unskilled: Unskilled: $440 $385 DL <= 40%: $330 $330 DL from >40% to 50%: $400 1 Apr 98 $345 Skilled: Skilled: Skilled: Skilled: $100 $100 $100 $100 Unskilled: Unskilled: Unskilled: Unskilled: $470 $385 DL <= 40%: $330 $330 DL from >40% to 50%: $400 # DL stands for foreign worker Dependency Level, ie, no. of foreign workers as a percentage of total number of workers in the company.

asked the Minister for Manpower (a) what is the ranking of Singapore's wage costs in the Asia Pacific region and in the world; (b) what benchmark is applied in Singapore to determine whether wages are high, medium or low; (c) what is the percentage that high wages occupy in Singapore's total wage costs; and (d) what is the percentage of highly-paid executives in Singapore's labour force.

Singapore's wage costs are generally higher than other Southeast Asian economies and the NIEs, but lower than developed economies such as Japan, USA and European economies. According to the World Competitiveness Report 1998, the hourly compensation for manufacturing workers is US$6.70 in Singapore, higher than US$5.60 in Taiwan, much higher than US$0.90 in Malaysia, but lower than US$17 in Japan and US, and US$26 in Germany. The picture in the services sector is roughly similar. The annual gross salary of a bank credit clerk is US$15,500 in Singapore, higher than US$7,300 in Malaysia, comparable to US$16,400 in Hong Kong, but lower than US$33,975 in US. For top management, the salary gap between Singapore and developed economies is however smaller. The annual gross salary of a CEO is US$178,000 in Singapore, higher than US$96,000 in Malaysia, marginally higher than US$167,000 in Taiwan, and comparable to US$173,000 in US. Please see tables 1, 2 and 3. To determine whether wages in Singapore are high, low or medium, one way is to compare wages of people in equivalent occupations with other countries. Within the domestic economy, we should also benchmark the growth in wages against output, that is, whether productivity growth has been in tandem with wage growth. In recent years, productivity growth lagged behind real earnings growth in Singapore. While real earnings increased by around 4-5% annually over the past 5 years, productivity growth lagged, at 1-2% in 1996 and 1997. In contrast, in Taiwan, productivity growth outstripped earnings growth substantially. In developed economies, although productivity growth rates were lower, real earnings growth was even more subdued. We have hence correspondingly seen Singapore's relative unit labour cost rising gradually but steadily over the years. It has worsened further since July 1997 as the depreciation in regional currencies was not fully offset by a rise in their nominal wages. (Please see table 4a, table 4b and chart 4). On the questions regarding the proportion of high income earners, 7% of full-time workers in Singapore earn income of more than $6,000 per month, based on MOM's Labour Force Survey 1998. The income share of this group of high wage earners was 27% of total income earned by full-time workers.

GDP per worker and total hourly compensation for manufacturing workers in US$ Levels, US$ Indices (Singapore =100) Productivity Compensation Productivity Compensation Countries (value-added Cost (value-added Cost per worker) (per hour) per worker) (per hour) Norway 99,671 21.59 174 323 Switzerland 78,850 23.74 137 355 Japan 77,108 17.51 134 262 US 67,228 17.70 117 265 Singapore 57,400 6.69 100 100 Korea 41,045 3.87 72 58 Hong Kong 28,426 5.13 50 77 Taiwan 28,234 5.57 49 83 Malaysia 14,431 0.9 25 13 Thailand 9,622 0.76 17 11 Indonesia 4,919 0.06 9 1 China 3,024 0.27 5 4 Notes: 1) The productivity data for Hong Kong refer to 1994 as the data for 1997 is not available. 2) Hourly compensation is defined as (i) all payments made directly to the worker before payroll deductions of any kind, and (ii) employer contributions to legally required insurance programs, and contractual and private benefits plans. 3) Jan 98 exchange rate used. Source : The World Competitiveness Yearbook, 1998

Gross annual income including supplements such as additional salaries, bonuses, vacation money, share of profits and children's allowances, in US$ Country Bank Department Primary Secretary credit manager school clerk teacher China 4,800 3,600 1,450 2,700 Philippines 5,300 10,600 5,500 3,200 Indonesia 6,800 11,100 1,650 6,300 Thailand 13,200 30,700 7,500 8,700 Malaysia 7,300 40,000 6,200 14,000 Singapore 15,500 33,100 15,300 16,200 Taiwan 20,900 34,100 18,800 17,900 Hong Kong 16,400 45,900 24,500 15,500 Korea 25,700 40,300 22,800 20,600 USA 33,975 64,625 38,250 30,775 Japan 75,100 84,100 37,400 28,300 Note : Jan 98 exchange rate used. Source : The World Competitiveness Yearbook, 1998

Annual gross salary in US$ Country CEO Engineer Director, HR Manufactur Director ing China 42,823 15,561 24,367 22,799 Indonesia 73,720 31,482 51,882 46,408 Malaysia 95,983 34,838 61,500 54,390 Thailand 109,361 37,942 52,640 51,173 Korea 107,042 38,923 64,584 57,446 Philippines 171,185 39,734 64,097 51,610 Taiwan 166,707 56,545 88,458 79,365 Singapore 178,451 63,973 100,337 88,215 Hong Kong 200,852 69,491 103,462 100,232 USA 173,000 70,000 105,000 96,000 Japan 225,473 104,951 137,160 123,952 Note : Jan 98 exchange rate used. Source : The World Competitiveness Yearbook, 1998

US$ medians in each level Senior Managers Middle Managers Junior Managers 1997 1998 1997 1998 1997 1998 Singapore 119,137 101,577 61,382 52,320 31,626 26,949 Hong Kong 141,524 146,304 73,723 77,386 40,104 40,932 Tokyo 141,345 134,484 87,766 85,724 54,495 54,642 Seoul 115,903 59,908 64,585 34,981 35,989 20,426 Taipei 111,541 101,406 62,664 55,031 35,140 29,864 Kuala Lumpur 80,541 42,630 36,148 20,284 16,296 9,651 Bangkok 73,202 43,396 31,834 18,195 13,844 7,629 Jakarta 72,141 21,271 28,342 8,068 11,135 3,060 Shanghai 32,340 42,521 12,154 21,981 6,798 11,350 Notes : 1) Survey does not cover expatriate pay. 2) Feb 98 exchange rate used. Source : World Executive Digest, April 98

Percentage Points Year 1993 1994 1995 1996 1997 Singapore 2.9 0.2 -0.9 -3.6 -2.0 Hong Kong -0.3 -1.4 1.7 -3.3 n.a. Korea -3.3 -1.1 -0.6 -1.9 n.a. Taiwan 0.7 2.3 4.5 5.5 n.a. Note : A positive figure means that the growth in productivity exceeds the growth in real earnings. A negative figure means that the growth in productivity lags behind the growth in real earnings. Source :Various sources

Per Cent Year 1993 1994 1995 1996 1997 Changes in 4.0 5.6 4.5 4.3 3.6 Real Earnings Real Basic 5.5 5.2 5.1 5.3 3.8 Wage Increase Productivity 7.0 5.7 3.5 0.6 1.6 Source: Earnings data are obtained from CPF Board Wage data are obtained from the Survey on Annual Wage Changes Productivity data are obtained from MTI Chart 4: SINGAPORE'S RELATIVE UNIT LABOUR COST In Manufacturing Sector Against other NIEs (in US$ terms)

asked the Minister forCommunications if he will furnish statistics on the rates of increases/decreases in respect of public transport costs and tariff by the Port of Singapore Authority from 1988 to 1997.

Public Transport From 1988 to 1997, two major revisions were made to bus and MRT fares. The first revision took place in 1990 when fares were revised after remaining unchanged for more than 6 years. The second fare revision was 7 years later in 1997.There were also two minor adjustments, in 1994 and 1995, when the maximum fare was raised by one fare stage. Increase in bus and MRT fares over this period kept pace with the general increase in consumer prices, and were way below the increase in wage levels. (See Table 1 below). Taxi fares have increased faster than MRT and bus fares. However, although taxi fare increases exceeded that of the increases in the CPI, taxis remain affordable because the increase in taxi fare is significantly lower than the increase in average wage levels. PSA For PSA terminals, local stevedorage is the single largest charge paid by container shipping lines for the handling of local containers, forming up to 70% of total port charges. From 1988 to 1997, PSA has reduced local stevedorage charges from $160 to $150 for a 20 ft. container, and from $228 to $215 for a 40 ft. container. Discounts on local stevedorage have also been given by PSA through customised agreements. Our local importers and exporters do not pay local stevedorage; they pay freight rates and terminal handling charges which are charged by shipping lines. Both charges bear little correlation to PSA's local charges and are determined primarily by the supply and demand of shipping capacity calling at the port. Importers and exporters currently enjoy more competitive freight rates than regional shippers because Singapore offers a wider choice of shipping lines.

1988 1997 Increase over 1988 Public Transport Fares (average 8-km farecard journey) Non airconditioned bus services $0.60 $0.75 25% Airconditioned bus services $1.00 $1.00 0% (note:1) MRT services $0.80 $1.00 25% Taxis (note:2) $3.96 $5.32 34% CPI Index 87.8 109 24% Average Monthly Earnings $1,273 $2,480 95% Average Monthly Earnings in $1,373 $2,581 88% the Transport, Storage and Communication Industry Note: (1) Airconditioned bus fare stages were introduced in 1990 and the fares have remained constant at $1.00. (2) Average 8-km journey, exclude surcharges.

asked the Minister for National Development if he will furnish statistics on the rates of increases/decreases in respect of public housing cost from 1988 to 1997.

The rates of change of public housing cost from 1987 to 1997 are shown in the table below. Year Total Development Cost Index (including cost of improvement) 1987 90 1988 91 1989 93 1990 120 1991 163 1992 167 1993 182 1994 198 1995 204 1996 228 1997 234 Average annual % increase 1987-1997 10.0 % The average rate of increase for the unit development cost is about 10% p.a. (compounded) between 1987 and 1997.

asked the Minister for Community Development and Minister-in-charge of Muslim Affairs whether the Government has any plan (i) to restore the Nagore Durgha; and (ii) to change the name to its proper spelling of Nagore Dargah as the name presently spelt causes confusion.

The Nagore Durgha is a national monument. MUIS has plans to restore the Nagore Durgha to a state of good repair and correct the spelling to Nagore Dargah.

asked the Minister for Education (a) whether the National University of Singapore and the Nanyang Technological University have given due emphasis to research and development activities; (b) how much has been allocated to research and development endeavours in the budgets of both universities; and (c) to what extent these research and development efforts have been translated into commercialised products.

NUS and NTU are both committed to the promotion of research and development activities. They believe that the reputation of a university rests not only on teaching but also on its research excellence, and that a strong research standing attracts good academic staff and students. The universities have generally focused their research efforts on niche areas, including multi-disciplinary research, in which they can make an impact and which are of strategic relevance to Singapore and the region. In FY97, MOE allocated the universities a budget of $94.5 million to be used on research activities, including the purchase of equipment and recruitment of supporting manpower. This is almost 9% of the total budget allocated to the universities, and does not include the salaries of the academic staff which are covered under the universities' normal allocations. The universities also have access to research funding from other sources, eg NSTB, MOH, MINDEF, various foundations, and the industry. In total, they obtained another $68.8 million. There are some 19 national research institutes and research centres hosted by our universities. These institutions focus mainly on research that has high national relevance. NUS and NTU also have faculty-based research centres which nurture new niche areas in research. As part of our vision for Singapore to be a centre of excellence in education, our universities, together with various Government agencies, have recently initiated international collaborations at an institutional level. Cooperative arrangements have been formed with top institutions like MIT and Johns Hopkins. These seek to uplift the quality of research and teaching at our universities and to help them reach world-class status. At the individual level, the researchers in our universities have fostered strong links with industry and Government agencies. There are also numerous projects conducted jointly with researchers from top institutions around the world, eg Stanford University, University of Cambridge, Tsinghua University. The number of postgraduate research students has more than doubled in the past 5 years from 1551 in 1994 to 3956 this year. This is due to the aggressive recruitment drives undertaken by the universities to bring in the best students from Singapore and around the world. Selected undergraduates are also exposed to research work through specially tailored programmes in order to cultivate their interest in research at an early stage. The universities have made concerted efforts to ensure that their R&D works are commercially viable or academically relevant. Both have institutional outfits that promote commercialisation and technology transfer, namely the Industry and Technology Relations Office in NUS and the Innovation Centre in NTU. Over the past 3 years, they have been granted 65 patents and have set up 20 spin-off companies. Successes in commercialising staff research cover a broad range of areas from waste water treatment to orthopaedic implant products to sensor systems. Beyond commercially oriented research, there is also a significant level of basic research which encompasses the breaking of new frontiers in knowledge and innovation.

asked the Minister for Education (a) if his Ministry has set up a mechanism during this economic downturn to identify needy children who cannot afford to pay for school fees, new textbooks and uniforms in 1999; (b) whether provision has been made to help out such students and, if not, where can parents find help; and (c) whether such information is made known to all schools.

The Ministry of Education gives free textbooks and school fee subsidies to students who need financial assistance. Application forms for the Financial Assistance Scheme can be obtained from schools. Schools also provide additional assistance from their School Advisory Committee or School Management Committee funds on a need basis. MOE publicises our Financial Assistance Scheme widely through the schools. Principals also refer needy pupils to welfare organisations for other assistance, bursaries or scholarships as necessary. Further, information on where to get financial help has been widely publicised in the press. The Straits Times on 17 November 1998, for example, carried an article summarising the help given by MOE and other organisations, together with information on the application procedure for assistance. MOE and our schools will continue to provide help to students who need assistance.