Hansard, 1998-11-24

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 (1998)(1998) Dr Wan Soon Bee 24 Nov24 Nov BG GeorgeYong-Boon Yeo28 Nov30 Nov Dr Ong Chit Chung6 Dec8 Dec Mr Lim Swee Say7 Dec27 Dec TAN SOO KHOON Speaker Parliament of Singapore

asked the Minister for the Environment how Singapore ranks in the emissions of carbon dioxide per capita, in comparison to other countries and what efforts are being made to reduce the emissions. The Senior Minister of State for the Environment (Encik Sidek bin Saniff) (for the Minister for the Environment): Mr Speaker, Sir, Singapore ranked 24th in the world in terms of per capita carbon dioxide emission in 1995, based on a comparison between our carbon dioxide emission figures and data compiled by a US-based agency. Our per capita emission is lower than countries such as the USA, Canada, Japan, Germany, Denmark, the UK as well as Australia. In Singapore, power generation accounts for half of the carbon dioxide emission, and industries and road transportation account for much of the remaining 50%. A wide range of measures taken over the years has helped to keep down carbon dioxide emissions from these sources. In power generation, new technology and greater efficiency in generation have meant more electricity being produced from the same unit of fossil fuel. As the use of natural gas in place of fuel oil can reduce carbon dioxide emission by up to 25%, we are planning to use more natural gas for power generation in the future. Much effort has also gone into improving energy use efficiency. The Public Works Department has laid down energy conservation standards aimed at promoting energy-saving building designs. The Public Utilities Board conducts regular educational programmes and training courses on energy conservation. It also conducts energy audits to help the industrial and commercial sectors identify oppor- tunities for energy efficiency improvements. My Ministry, together with the Ministry of Finance, has introduced a tax incentive scheme to encourage the corporate sector to replace energy-inefficient equipment and to invest in energy-efficient technologies. Thus far, nine companies have benefited from this scheme. In the land transport sector, our vehicle ownership policy, in combination with our very energy-efficient public transport system, has moderated fuel consumption by motor vehicles.

Sir, given that our Government's figures show a relatively lower emission per capita for Singapore, will our Government take steps to release these figures widely and the efforts we are making, especially to rebut those who believe Singapore emits a much higher figure?

Sir, the Ministry has been liaising with the national agency, which publishes carbon dioxide emission figures, to point out the inaccuracies in the figures for Singapore. We have likewise given the facts to our local media. I am quite sure the Member was referring to World Wide Fund (WWF) for Nature where they put down ours as about 35 tonnes per capita, whereas ours is only 8.2, almost as good as New Zealand. So we have corrected that part by using the standard accepted, ie, IPCC measurement. And IPCC measurement is a measurement recognised and accepted by all.

May I ask the Senior Minister of State, if Singapore is supportive of the Climate Change Convention, what is our position as regards adopting voluntary limits as a more advanced developed country?

Sir, Singapore supports the UN Framework Convention on Climate Change. The Kyoto Protocol, under the Convention, called for the industrialised countries to limit their emission. This does not include the industrialising country. Singapore, being a developing country, will see its emission grow as it develops and industrialises further. So my Ministry is of the opinion that it is not appropriate for Singapore to address the issue on voluntary limits when we have not arrived.

asked the Minister for Health if he will consider introducing legislation to amend the Medical Registration Act where the issue of a practising certificate and the compulsory voting at election of Singapore Medical Council members are coupled.

(for the Minister for Health): Mr Speaker, Sir, voting has been made compulsory at the elections of the Singapore Medical Council members under the Medical Registration Act 1997. This is because the Council, being the governing body of the medical practitioners, must represent the medical profession in Singapore. In the past, when voting was voluntary, only about 10% to 15% of the eligible doctors voted. Such a small turnout cannot represent the entire electorate among the medical profession. It has been made clear to all the doctors that those who are not able to vote with a valid reason need only to write in and inform the Council. The penalty for those who do not vote and who are unable to provide a valid reason is a fine of $500. I believe doctors are responsible professionals and we do not have to resort to imposing the penalty. In fact, during the recent election conducted from 28th October to 1st November 1998, more than 90% of the doctors voted. For those who did not vote, the main reason was that they were overseas. This is a valid reason and no further action will be taken against them. The Council will hold back the renewal of a doctor's practising certificate only when he does not vote without a valid reason and when he also fails to pay the penalty. There is no need to amend the Medical Registration Act on this matter.

May I ask the Senior Minister of State if it is not too severe to cut off the livelihood of doctors just because they do not participate in the voting for the few representatives to the Medical Council?

As I have explained to the Member, if a doctor did not vote, but he had a valid reason for not voting, he would not be subject to a penalty. If he did not have a valid reason, but he paid the fine of $500, then no further action would be taken against him. In my view, I think this is very reasonable. As I said, the doctors are responsible professionals. I think most of them would want to exercise the right to vote.

May I ask the Senior Minister of State if she would consider just meting out the monetary penalty alone being sufficient to compel all doctors to vote for the representatives to the Medical Council?

I think the monetary penalty is not the point. The point is that doctors should take the responsibility to vote. If you say the $500 is too severe or too heavy, then I would have to ask you: what would be a sufficient amount of fine in order to ensure doctors would vote?

Sir, does the Senior Minister of State think that it is equitable to deregister a medical practitioner if he does not vote and refuse to pay up the fine? Is our professional practice based on whether or not the doctor is committed to vote in the future? And is this tantamount to saying that if a citizen refuses to vote or has no valid reason not to participate in the voting, he might lose his citizenship as well? It looks as if it is going to be the same case.

Is it equitable? As I said, doctors in the past had felt that they needed to be represented adequately on the Medical Council and therefore they valued the vote. But the trouble is, in the past, when voting was not made compulsory, only 10% to 15% of them ever turned up to vote. In the end, they felt that the number of members elected did not represent them. So it is a chicken and egg question. So, we say, if you value the vote, you should all turn up to vote. And the way to make you come to vote is to tie that up with some penalty which is heavy enough that you feel there is a pinch. But the money is not the question. I must clarify that when a doctor fails to vote, his practising right is not revoked there and then. It is only when he renews his practising certificate, he may not be given the permission. So he can pay up the penalty.

Sir, I have no quarrel with compulsory voting. My question is whether or not it is fair to link the voting to the renewal of certificate. Can a doctor practise without renewing his practising certificate?

The linking of compulsory voting with the practising certificate is not limited to the medical profession alone. Even in health matters, for self-employed people, they are required to pay Medisave. If they do not pay up, then the renewal of their business licences could also be held up. So this rule is not peculiar to the medical profession.

Mr Speaker, Sir, this is exactly what I am objecting. Why should we be linking everything to a penalty which would affect a person's livelihood and professional practice? Is it equitable in the first place?

As I said, this is really an incentive for people to come and vote. So if the livelihood is so important to them, by all means pay the penalty if you cannot vote.

Mr Speaker, Sir, I am afraid this is only an administrative expediency. But the principle involved is whether it is equitable.

Mr Speaker, Sir, may I ask the Senior Minister of State whether any attempt has been made to find out why doctors have failed to vote in the past? Has any study or census been taken? They may have very good reasons. Maybe they think that the Medical Council is not effective enough for them.

Many of the doctors who failed to vote, when voting was not compulsory in the past, did so because they did not bother to.

Have you made any attempt to find out why they have not bothered? That is my question. Could you please try and answer the question?

My answer is yes, of course, we have attempted to find out.

This is becoming a fact of life in Singapore which is what we are against, and I support everything that has been said by my Party Member for Hougang.

What is your question, Mr Jeyaretnam?

The question is this: Singapore citizens seem to be living under one compulsion or another all their lives.

What is the question?

Is that desirable in a society where people should decide for themselves?

Mr Speaker, Sir, I do not see the relevance of this to the question asked by Dr Lily Neo.

The Senior Minister of State has my sympathies. I think the Medical Council has powers and therefore needs good officers and therefore responsible voting. May I ask the Senior Minister of State how many practitioners, in fact, have been knocked off and what serious obstacles, if any, are there to voting?

This is the first time that we are exercising this Act which requires compulsory voting. During the exercise in October, out of a total of 4,866 doctors eligible to vote, 90.2% turned up to vote. The majority of the 477 doctors who did not turn up to vote were overseas. There were also some doctors on medical leave. Therefore, so far, nobody has been struck off the register.

asked the Minister for Communications whether the Government has compensated those motorists who were charged accidentally in the test run of the Electronic Road Pricing System on 28th August 1998. The Parliamentary Secretary to the Minister for Communications (Dr Yaacob Ibrahim) (for the Minister for Communications): Sir, all of the 1,562 motorists, who were accidentally charged during the test run of the Electronic Road Pricing (ERP) gantries on 28th August 1998 have been sent a $10 CashCard.

Sir, what is the rationale for refunding the affected motorists a flat rate of $10 CashCard which has incurred a Government expenditure of $15,620 rather than just paying them back the collected amount of $1,659?

Sir, on the morning of that particular day, we deducted between 50 cents and $3 accidentally from 1,562 motorists. We could have chosen to refund the exact amount. However, as a gesture of goodwill and to compensate for the inconvenience and the confusion caused, we have decided to give each of them a $10 CashCard.

Sir, why did the Government give out goodwill? I would like to know who made the mistake and whether or not the taxpayers should bear the mistake of this goodwill, which was a mistake made by a civil servant.

Sir, we have conducted an internal inquiry into this incident and we have found that the party responsible is the ERP contractor and, as such, we would be claiming all costs incurred due to the incident from this ERP contractor. This would include the cost of the CashCard that we have sent out.

Sir, how did the LTA know who are the motorists who are overcharged and how were the CashCards sent to them? Were they sent to them or they came to collect them?

Sir, every in-vehicle unit (IU) has its own unit identity code which is indexed to the registration number of the vehicle. So when a vehicle with an IU passes under the ERP gantry, this unit identity code will form part of the normal ERP transaction. Usually, we will keep this ERP data for only 24 hours in order to allow LTA to settle with NETS. For that particular instance, we downloaded and retained the data for the express purpose of identifying the affected motorists so that the $10 CashCards could be sent to them.

Sir, since the system is capable of capturing the identity of the car through the gantries, my question is whether or not this system itself is also capable of monitoring the movement of motorists and thus infringe the privacy of motorists?

Sir, as I have said earlier, we only retain the data for a maximum of 24 hours to allow us to settle the transaction with NETS. After that the data is deleted.

Sir, is it possible to download the data and store it somewhere? Could you do that?

It is possible, but we do not do that.

Can the data not be downloaded and stored separately for future reference at all?

As I have said earlier, Sir, it is possible to download, but we do not do that except for those who have violated the ERP.

Sir, the question is whether you do that or you do not do that. The system is capable of doing that if you want to. In other words, if the Government wants to monitor the movement of motorists, they could have done that.

Sir, we do not do that, and the question is irrelevant.

Sir, this is relevant. I believe the LTA has completed its investigation. Is the LTA confident that such errors will not occur again in the future? And what other systems are in place to make sure that the same mistake will not occur again?

Sir, the system that we have in place is extremely reliable. Any errors that have occurred during the test run have already been rectified. Nonetheless, we will be very vigilant to prevent any mishap that could happen, be it human or otherwise, and we will continue with our vigilance, as we do daily in Singapore.

Sir, is the system capable of self-checking any errors that occur?

Sir, I do not have the exact answer. If the Member is interested, he could file a Question and I will answer at the next sitting.

asked the Minister for Communications whether the policy of requiring taxis to pay Central Business District and Electronic Road Pricing charges defeats the Government's purpose for introducing such charges.

Phun) (for the Minister for Communications): Mr Speaker, Sir, the primary objective of the Electronic Road Pricing (ERP) system is to bring about smooth traffic flow. With ERP, motorists are charged for their use of congested roads. This will make the cost of travelling more evident and encourage drivers to consciously plan their trips and consider alternative modes and times of travel. This is the rationale for the ERP system. This way, we can keep the crucial arterial roads and expressways relatively smooth flowing. For road pricing to work, it must apply to all vehicles in order to be fair and effective and to keep road pricing charges to the minimum. Taxi drivers and commuters would then decide on the best route to take, as well as the basis of cost-sharing for road pricing, in order to enjoy the benefit of faster travel on the roads. To help taxis and commercial vehicles, I would like to inform the Member that the ERP charges are phased over three to four years.

I am indebted to the Minister for his explanation. But the question still remains. As I understand the Minister, the purpose was to try and keep mainly users of private cars from roads which get congested in the mornings and evenings. But is it not the intention that they should switch to public service vehicles rather than use their cars, and are taxis not public service vehicles, no less than buses?

Sir, it is true that we want to encourage commuters to take public transport and we have spent a lot of resources and efforts in promoting public transport. But we must also recognise that public transport vehicles do compete for road space and contribute to traffic congestion. As ERP is a traffic management tool, it is not appropriate to exempt them or reduce the ERP rates for taxis relative to other vehicles. In fact, the buses are also paying the ERP charges depending on the size of the bus. It has a pcu (passenger car unit) of two, so the bus is actually paying two times the charges compared to private cars. But of course, we are phasing in over four years. And bus is a more efficient transport. Therefore, the cost per commuter will actually be very, very small. For taxis, it is different. Taxis provide a point-to-point personalised form of transport service with comfort levels comparable to that of cars and occupy the same road space as cars. So taxi commuters would therefore pay the same ERP rates as if they were using their cars. Nonetheless, in recognition of the role of taxis as a form of public transport, albeit a personalised one, the full ERP charges for taxis will be phased in over three years to help taxi drivers and commuters to adjust.

Is it not the Ministry's intention then to force people who can afford to pay taxi fares to travel on buses?

We will let the commuters decide what kind of service they want, what price they want to pay, and if you look at our public transport fares, whether it is MRT, bus or even taxis, and compare them to other countries, I think Singapore's public transport fares are very, very affordable.

We get this answer every time, Mr Speaker, Sir. The prices in Singapore are very, very affordable. But does the Ministry realise that even a small payment can be a burden on families which cannot even find enough to live on?

That is why we have a choice of a wide range of services and after all, Sir, I do not see the relevance of this question to the Question that he is asking about taxis.

asked the Minister for Information and the Arts what is the progress of installing cable TV network in Singapore for public and private buildings and when the exercise will be completed. The Senior Parliamentary Secretary to the Minister for Information and the Arts (Encik Yatiman Yusof) (for the Minister for Information and the Arts): Sir, as at 31st October 1998, the Singapore Cable Vision (SCV) has cabled up 90% of HDB flats, 57% of private high-rise and 33% of landed households in Singapore. This means that 82% of all households in Singapore have now been cabled up. The Singapore Cable Vision expects to complete the cable roll-out to all HDB, private high-rise and landed homes by September 1999.

As 90% of HDB flats and 57% of private high-rise households have already been cabled up, when will cabling of Hong Kah or the Jurong area be completed?

The latest date for public housing to be fully cabled will be March 1999. For the benefit of the Member, Jurong will be fully cabled by March 1999. As for the other areas, Bukit Timah will be cabled in December this year; Jalan Besar and Bendemeer, by January next year; Yio Chu Kang and Tanjong Pagar by March next year.

asked the Minister for Communications if he will outline the rationale for the Government's policy of not granting licences to individuals to operate taxis.

Communications): Sir, prior to 1975, taxi licences were issued to individuals to operate taxis. However, this arrangement was unsatisfactory. Taxis were poorly maintained. There were malpractices and abuses. And some owners of taxi licences were not driving but hiring out their taxis to others and simply collecting rental. Worse, syndicates emerged to control and exploit taxi drivers. The result was unreliable and unsafe taxi services. Commuters suffered. To upgrade taxi services, we have since 1975 issued new taxi licences only to bona fide taxi companies or organisations which have the resources and expertise to manage the pool of drivers and fleet of taxis. As a result of this policy, today the three taxi companies, namely, Comfort, CityCab and TIBS, operate a combined fleet of 15,900 taxis. Commuters enjoy a wide range of services, including Premiere Taxi Service, Mercedes Cabs, London Cabs, Airport Direct and even Cab-Pooling services. Under the new policy, anyone can obtain a taxi driver vocational licence from LTA and rent a taxi from one of the taxi companies. Nobody, I repeat, nobody has been stopped from earning a living as a taxi driver.

As I understand the Minister, there are two reasons underlying the Ministry's decision. One is that those to whom licences were issued, individuals, ie, to operate taxis, hire them out.

Mr Jeyaretnam, can you proceed with your question? It is not necessary to repeat the answer.

Is that not what the companies are doing? They are hiring the taxis to the drivers. Yes. Are the drivers not paying a hiring charge to the companies? So what is the difference? The second is, the Minister says the Ministry found out a syndicate was controlling and exploiting the drivers. Would you rather have the companies exploit the drivers? May I ask: is one of the reasons for not granting licences to individuals to try and stop taxi drivers from expressing their opinion about the Government because I have been told more than once that one of the NTUC rules is that they should stop criticising the Government?

Mr Speaker, Sir, the first question is about comparison between the syndicates and the public listed companies. There is no comparison. How can you compare them? The syndicates were out there to make profit and they did not care about the welfare of the drivers and the services that the commuters would get. It is precisely because of the experience that we have seen in the past that we have done away with individual licence as it will result in malpractices. But the companies are different. The companies today provide investments. For instance, they have spent a lot of money on the satellite system to enable radio booking and the taxi drivers actually receive the booking fee. Let me just give the Member an illustration of how taxi-drivers are being looked after by the companies. I take Comfort as an example. Today, Comfort has about 18,000 drivers, including relief drivers, and the average income of these drivers is about $1,800 per month. That means $32 million per month, and over a year it is $380 million. Do you know how much the company earns for its shareholders? $20 million over a year. That is about 7% of what the taxi-drivers are getting, not to mention all the services that they put in place to benefit the commuters and also the drivers, so that they can earn an easier living. Can a syndicate do such things? Obviously, it is out of the question. On his second question about taxi-drivers, they are responsible citizens. Of course, we have heard some of them, from personal experience, commenting on Government policies, but this is part and parcel of their right.

Sir, is there any plan by the Ministry to have more frequent dialogue sessions with the taxi-drivers so that they could air their views and criticise the policies of LTA?

Indeed, Sir. The Ministry supports the formation of the Taxi Operators Association and after its formation, we have had a number of dialogue sessions with them. We listen to their views and we continuously do our utmost to improve their working conditions and the services to commuters.

Was there any dialogue session between the Ministry and the taxi-drivers association on the ERP?

Yes. In fact, not just on ERP but on many issues that are of interest and relevance to the taxi-drivers.

I just heard that the taxi-drivers' average income is $1,800. I do not know whether the figure quoted is correct because I remember, some years ago, when the taxi diesel tax was raised, the then Minister for Communications, Dr Yeo Ning Hong, said that taxi-drivers earned as much as $3,000. Would the Minister of State like to clarify?

If you take the main hirer, the income is higher. But if you take the relief driver, the income is lower. But the average is about $1,800.

Since the Minister of State says that LTA now issues licence to bona fide taxi operators and the main complaint was that taxi-drivers did not take their licence very seriously, would the Ministry consider issuing taxi licence to bona fide taxi-drivers?

When I say "bona fide organisations and companies", it means that we assess the level of their quality of service and their ability to provide these services before we issue a licence to these companies. If we issue licences to individuals, as I mentioned, you open up all these possible abuses. We have done that in the past and I am telling the Member that if we do that, we are going back to those old days, and that is not acceptable.

Does the Ministry accept that a taxi-driver who is allowed to own his own taxi and to use it as he likes is running a road business of his own? He owns the taxi at the end. So what is wrong with that? Why is the Government so keen to kill all individual businesses that everyone should go into a company? Secondly, about these sessions that I have heard, are taxi-drivers allowed to attend public meetings and voice their grievances not only about their conditions but about the conditions that exist in Singapore for everyone?

Mr Speaker, Sir, I think Mr Jeyaretnam is repeating the question about why we would not allow individual taxi-drivers to own their licence and operate their business. As I said, if you were to compare the scenario that he proposed with what is present today, there is no comparison because we have seen that once you allow individuals to do that, there would be people who say, "You cannot afford the taxi, right? Because you need to pay upfront all the costs, I will finance you". Or, in fact, anybody could say, "Look, I will become the boss and take the taxi licence, and I will rent it to the taxi-drivers." The whole problem will re-emerge. Now, it is different, as we make sure that only the bona fide companies with a track record or with ability to run a good taxi service will be given the taxi licence. That is the difference. On his second question, the taxi company would have to manage its pool of taxi-drivers according to the company's policy. I cannot comment on that.

Sir, what sort of welfare does the taxi companies provide for their drivers?

I believe they provide training, recreational facilities and opportunities to earn a better living. For example, Comfort spent $30 million for a satellite system to enable phone booking. They actually give the booking fee to the taxi-drivers. In other words, if you call a Comfort taxi-driver, and you have to pay a booking fee, Comfort lets the taxi-driver keep a large part of the booking fee to encourage him to take phone booking. Companies can give these benefits but syndicates cannot .

In what way has the Ministry helped the taxi-drivers in topping up their Medisave account?

Order. I think we are straying away from the main question. Mr Chiam, do you have any relevant supplementary questions?

The Minister of State has said that the average earning of taxi-drivers is $1,800. How many hours does a taxi-driver need to work to earn this amount?

During good times, they work less hours and may even be able to earn more. But during an economic downturn, we hear that taxi-drivers are now driving longer hours. From the latest information, the earning is about $1,800. For a single shift, they can work 8-10 hours. It is up to them. They are either hirers or owner operators and if they decide to work longer hours, they will earn more money.

Order, order. I think we are straying away further and further from the question.

I have one last question, Sir.

All right. I will listen to your question first.

What evidence did the Ministry have about syndicates exploiting taxi-drivers, and if they do have that, would they make it public so that we can see it?

Mr Speaker, Sir, as I said, this happened in the 1960s and early 1970s. I do not know whether Mr Jeyaretnam remembers that in 1982 he asked the same question, and he is repeating the same question today. At that time we have already told him. At that time, probably his memory was better and he could remember there was this problem of syndicates exploiting taxi-drivers.

asked the Minister for Law if the Government will consider relocating the Subordinate Courts' Complex to the vicinity of the Supreme Court.

(for the Minister for Law): Sir, this matter was indeed being considered in consultation with the Judiciary. For some time, we had weighed the relative merits of the single site option where both Subordinate Courts and the Supreme Court are housed in one location. It is clear that there would be insufficient space at the Supreme Court/Colombo Court site or in the vicinity to accommodate the existing courtrooms of the Subordinate Courts. We also have to bear in mind projected future caseloads of the Subordinate Courts. The Subordinate Courts presently have 56 courtrooms and operate from two separate locations, namely, the Havelock Square campus and the Paterson Road campus. The Subordinate Courts' venue at Havelock Road will therefore be expanded to accommodate the increased caseload.

May I ask the Minister whether the needs for the next 10 years will be met if we transfer from Paterson Road to Havelock Road? Would it be sufficient to meet the Subordinate Courts' needs?

The Havelock Road campus is in fact ideal. It will be expanded so that all the venues would be housed on one campus and the needs of the courts for the next 10 years, at least, will be served.

May I ask the Minister of State whether the Ministry considers that rather than concentrating the courts in one area, it will serve the public if the Magistrates Courts are taken out to the various districts? Is he aware that way back in 1963 - and I know this personally as I was the Registrar of the Supreme Court then - there was this plan proposed that we should set up Magistrates Courts in the various districts so that the public are saved the trouble of having to come to Havelock Road or anywhere else to pay their fines or answer their charges?

We have the best of both worlds. Because in terms of the necessity for the courts to be on one site, I think the site must be central and dignified. The Havelock Road campus will have that. In terms of reaching out to the community, we have got various other outreaches like the Small Claims Tribunals and Community Mediation Centres which are being built. Indeed, even in terms of making it convenient for Singaporeans to pay fines, the ATOM system was introduced two years ago where you can now pay fines through a machine.

asked the Minister for Law why the Land Office did not give prior notice to the tenants of Colombo Court of its plan to acquire the property. The Minister for Law (Prof. S. Jayakumar): Mr Speaker, Sir, the procedures to be followed in any case of acquisition of land are set out in the Land Acquisition Act (Cap 152) and Government has to comply with the provisions of the law. Therefore, Government's consistent and established policy has been to give notice of an acquisition to everyone at the same time through a public notification in the Government Gazette. It would not be proper to notify any person or group of persons of proposed acquisition before such Gazette. This is because prior knowledge of acquisitions of land required for public projects can affect the prices of the properties to be acquired as well as adjoining ones depending on the nature of the public project. In a property transaction, it would not be equitable if one party has privileged information of the property's imminent acquisition which he could use to his advantage in the transaction.

Sir, many tenants of Colombo Court have requested that they be given some time. May I ask the Minister whether some time could be given to them, because 31st March is actually too short a period for them?

I believe the Member knows that in acquisition cases, the authority deals with the owner of the property acquired. On his specific question about the deadline of 31st March, my understanding is that this is contingent and dependent on the Supreme Court's own schedule for redevelopment of Colombo Court. So I cannot commit myself now as to whether there is flexibility to extend the 31st March deadline, but it is certainly a point that I will ask my officials to take up with the Supreme Court.

Sir, my question is on compensation. Many of the tenants there were not given ample notice of the acquisition. They went ahead and spent a lot of money on renovation of their premises. I have heard that tenants have spent up to $100,000. Will the Ministry consider giving them some kind of compensation?

Here again, I think the Member will appreciate that I cannot go into details or commit myself, because I understand that the Collector's inquiry has commenced but has not been concluded. I understand that the Collector has received the various claims but the proceedings have not been concluded and he has yet to determine the final award. Consistent with past practice, the Collector will take into account the various factors and considerations including claims from the individual tenants when making the final award.

Sir, I believe that a precedent has been set at Potong Pasir. One resident there did not know of the acquisition of his land and he went ahead to apply for renovation. And not long after, an acquisition was announced on his property. I believe the Ministry is willing to pay back the renovation cost in that case. This case is quite similar. No notice was given to the tenants that the building was going to be acquired. So they went ahead and spent money to renovate their shops in preparation for business. Will the Ministry consider compensating them with some money?

I am not sure whether the Member, when he cites a precedent, is talking of the acquisition in Potong Pasir with respect to an owner of the premises, whereas here I take it that the reference he and Mr Shriniwas Rai have made is to individual tenants who have leases in the building where the owner is the person who has been served with an acquisition notice. So it may not be exactly the same precedent but, in any case, I will ask my officials to look into it.

asked the Minister for Manpower whether the Government will consider cutting the rate of contributions or temporarily suspending contributions to the Medisave and Special Accounts of the Central Provident Fund. The Minister for Manpower (Dr Lee Boon Yang): Mr Speaker, Sir, the hon. Member has been waiting for quite sometime for an answer on this question, because he raised this question at the last sitting of Parliament. I am sorry I have to request that he wait a little longer because the substance of the reply to his question forms part of the Government's response to the recommendations of the Committee on Singapore's Competitiveness. The Deputy Prime Minister will deliver this response later today and he will get the full answer then.

asked the Minister for Home Affairs whether he will step up enforcement action against illegal parking along Mulberry Avenue, Jalan Wangi and Angsana Avenue in Sennett Estate.

Kee) (for the Minister for Home Affairs): Sir, there has been occasional illegal parking along these roads. Many of the offenders live or patronise the shops and eating places in the vicinity. Police has stepped up enforcement action against the offenders. From January to September 1998, Police issued 34 summons, as compared to 27 for the whole of last year. In the meantime, Police has been working with the Land Transport Authority to improve the situation.

Sir, does the Police realise that the cause of this illegal parking is due to the many eating shops there? Does the Police want to liaise with the Ministry of the Environment to try to limit the number of shops?

The shops are there and they are privately owned. So they cannot be relocated. But certainly, we will work with, for example, the grassroots leaders and LTA to ensure that the cars there are properly parked. I think these measures are being looked into.

Is his Ministry willing to open up more car parks in that area?

Yes, this is one of the proposals being studied.

Can he elaborate on this new car park that is going to be built?

As I said, the proposals are being looked at. For example, the possibility of locating some car park lots along the service road off MacPherson Road. It is quite nearby, so that the patrons who want to use the shops there will not clog up Jalan Wangi, Mulberry Avenue and Angsana Avenue area. It is a bit further away but it is still within walking distance to the shops.

Is the Minister aware that there is a disused building, which is the former Sennett Community Centre, and is he opening up that area for a car park?

This is the former grassroots' club which will be used, I believe, by the Potong Pasir CC temporarily for the next 1 1/2 -2 years. So it cannot be done for the moment.

Mr Chiam, would you like to ask the next question?

Question No.11, Sir.

asked the Minister for the Environment whether his Ministry will improve the sewerage system along Mulberry Avenue in Sennett Estate which frequently gets choked and causes toilet bowls in private houses to overflow.

Mr Speaker, Sir, the sewer along Mulberry Avenue does not need to be improved. The sewer chokes are caused by the oily/greasy waste discharged from the food shops. ENV will require food shops without grease traps to install them and those with grease traps to maintain them more frequently.

Does the Minister agree with me that this regular overflow from the sewer in that area is due to the fact that the sewer system is insufficient for the load in that area?

Sir, the answer is no. As Mr Chiam should know, there are residential premises and shophouses along MacPherson Road parallel to Mulberry Avenue. The shophouses include three eating establishments. Two of them already have these grease traps. Only one does not have. So we are asking this shop to install a grease trap and the other two shops to make sure that they clean the place. As far as the ENV is concerned, we will step up our efforts to make sure that the place is clean.

Does the Minister know that this problem has been going on for the last 10 years or even more? This is a regular complaint. Every month there is flooding of private residences' toilet facilities and they have to telephone the Ministry of the Environment. They are like the Fire Brigade. They come and try to solve the problem. Unless something more concrete is done, this problem will continue.

Our considered opinion is that it would not. Because these two food shops can maintain the cleanliness. The other food shop will install a grease trap. The ENV will step up its efforts to keep the place clean and that is that. If this shopowner does not follow our regulations, we will warn him. At the end of the day, we have to apply section 51(1) of the Water Pollution Control and Drainage Act to fine them. But I think my Ministry officers are very kindhearted. They try to explain and advise the shopowners. But, ultimately, if they do not follow the regulations, we have to fine them. But we always believe that at the end of the day, when we promulgate laws, it must be self organisation and self regulation. The individual must organise himself. Companies must organise themselves and regulate themselves. And that is the crux of all the measures taken by the Government.

Does the Ministry intend to solve this problem by either enlarging the sewer pipes there or reducing the load? And it is to close down these eating houses. I understand that one of them is a 24-hour eating house. I think the Ministry must take concrete steps either of enlarging the sewer pipes or you have to reduce the supply of the waste matter by closing down these eating houses, especially the 24-hour eating house.

I think Singapore has grown to a large extent, not only 24-hour eating houses but working also for 24 hours. We have to use computers, robots and so forth. The answer to this problem is for the two food shops to clean up their places and the other shop to install a grease trap. I can assure the Member that we will advise this particular shopowner to install the trap as soon as possible, and this will solve the problem. If it does not, I will ask the Member to put in a question again.

Sir, I am not happy with the Minister's answer. The problem is that the sewer system is insufficient.

Mr Chiam, could you ask your question? You are repeating yourself. Do you have any more questions?

Is his Ministry going to solve this problem?

Sir, the answer must be obvious.

Yes or no.

Obviously, yes.

Mr Chiam, would you like to ask your next question.

Question No. 12, Sir.

asked the Minister for National Development whether the Government will upgrade the children's playground at Butterfly Avenue in Sennett Estate. The Parliamentary Secretary to the Minister for National Development (Mr Koo Tsai Kee) (for the Minister for National Development): Mr Speaker, Sir, the playground at Butterfly Avenue which is currently being managed and maintained by National Parks, has the typical facilities of a playground of its size. The size is about 0.175 hectares. National Parks has, over the past three years, replaced damaged and worn out facilities in the playground. National Parks has also recently worked with the Ministry of the Environment on the reconstruction of the roadside drain adjacent to the playground and covered it with a footpath. This, I believe, has improved access to the playground. Sir, apart from the regular maintenance of the facilities in the playground, there are currently no plans to upgrade the playground further. Most of the facilities are in relatively good condition, and the provision of additional facilities will, I think, clutter the playground.

Sir, there is also another playground at Chempaka Avenue. Does his Ministry intend to do anything to improve this playground?

Sir, if Mr Chiam has any suggestion, we will be happy to look at it.

asked the Minister for Communications if he will consider lengthening the period for senior citizens' concessionary travel on public transport which is 10 am to 4 pm in the day time to 9 am to 5 pm.

Mr Speaker, Sir, concessionary travel for senior citizens is granted by the public transport operators to help senior citizens defray some of their transport cost. This concession is for travel during off-peak hours, buses and trains are usually crowded at peak hours, which makes travel for senior citizens more difficult. Any decision to change or extend the concession as suggested by the Member is a matter for the operators to make. They will need to study the implications of the request carefully. This is because the cost of such concessions is borne by other passengers who pay the full fare.

Order read for Resumption of Debate on Question [23rd November, 1998], "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.". - [Minister for Trade and Industry]. Question again proposed. 1.30 pm

Mr Speaker, Sir, I rise in support of the motion moved by the Minister for Trade and Industry to accept the recommendations contained in the Report of the Committee on Singapore's Competitiveness (CSC). It is significant that the CSC has examined not just short term concerns arising from the current regional economic crisis, but also long term issues to strengthen our ability to compete in the global market of the future. It was as recent as May/June last year that we as a nation were collectively seized with the competitive challenge posed by neighbouring and other economies. Indeed, it was such considerations that led to the formation of the CSC. Today, those thoughts seem rather remote as we and our neighbours grapple with the consequences of a profound economic downturn. The CSC report is a timely reminder that the fundamentals have not changed. As the Minister has mentioned, regional economies will emerge from the current economic crisis stronger, leaner and more cost-effective. Their labour, land and currencies will be cheaper. As the Committee has observed, it is not just cost, but also our capability that will underpin Singapore's long term competitiveness within such an environment. A key recommendation of the CSC is to reduce total wages by 15%. Although a painful recommendation, I fully endorse this recommendation. It is an essential step in restoring Singapore's cost competitiveness. This need is evident especially when we realise that even after this across-the-board reduction of costs, we will not fully offset the relative strengthening of the Singapore dollar against regional currencies over the last 18 months. It is also a signal to the international business community that we are different. It is a tribute to the strength of tripartism and labour-management relations in Singapore that this issue has been discussed extensively in recent months in a systematic, cool and rational manner. The CSC's recommendation and the reasoned response of organised labour in Singapore must surely have distinguished and differentiated Singapore in the eyes of global investors. By and large, Singaporeans accept the need for wage reduction. However, they feel that it should be done equitably and in tandem with the introduction of measures to ease the impact. For instance, the wage reduction will have a significant impact on the ability of many to service their home mortgages. More than 100,000 Singaporeans use their entire CPF for this purpose and many others use most of their CPF similarly. Homeowners are hopeful that Government will institute adequate measures to ease their burden. One means would be to allow them to use contributions to the Special Account for a limited period to service their housing loan. Another measure could be the establishment of a bridging loan facility to help Singaporeans, in both public and private housing, who are affected by the CPF cut to tide over this difficult period. Sir, there is also a view that the wage reduction should be progressive. The 15% figure should be taken as an average with high income earners taking a proportionately higher wage cut and a lower burden imposed on the rank and file. In this regard, many Singaporeans are looking to our political leaders to set the tone by taking a deeper cut than that recommended by the CSC. They readily concede that it is not necessarily an economically rational response since the resultant cost saving will be insignificant in the overall scheme of things. They also recognise that Ministers have already forgone wage increases due to them this year. However, it is an important emotional issue. Knowing that our leaders are showing the way might make it a little easier to swallow the bitter pill in these hard times. I would, therefore, urge the Government to consider a deeper cut in wages for the political leadership (including MPs) and the higher echelons of the public sector. Having said this, Sir, I wish to stress that wages in Singapore should not only be flexible downwards but also, when the time is right, upwards. This applies equally to workers, senior civil servants and Ministers. When times are better, employers should reinstate the wage cuts imposed on workers. Similarly, when the economic condition improves, the wage cuts taken by our Ministers and senior civil servants should be readily restored without question, both within this House and without. Just as we seek today a departure from the formula to determine the pay of Ministers and senior civil servants, we should be equally prepared to do so when the time comes to restore the cuts that they take voluntarily. An important recommendation of the CSC pertains to the need to review the tax treatment of ESOPs - Employee Stock Options. The purpose of ESOPs is to align employee's interests with that of the company. As the company grows and its value increases, so too will the value of its shares and the stock options held by its employees. Indeed, the longer employees hold their ESOPs, or their shares after the exercise of the options, the better for the company. It also has the advantage of diminishing the incentive to job hop. Indeed, Sir, this is not an uncommon practice in places such as Silicon Valley, where from the receptionist to the CEO hold stock options. Yet the current practice of taxing ESOPs at the point of exercise as "earned income", rather than waiting for the point at which the underlying shares are sold, creates a perverse incentive - the employee will probably sell his shares as soon as the option is exercised in order to realise his gains and pay his tax liability. As we move into a knowledge-based economy, intellectual resources, ie, our people, will become an even more important asset to companies. In that context, ESOPs will become an essential component of remuneration which today comprises mainly the basic salary, flexible components and bonuses. I would urge the Government to review the tax treatment of ESOPs to make it more compatible with the knowledge economy envisioned by the CSC. Sir, finally, a point from a social perspective. The recommendations of the CSC make compelling business and economic sense. Many big words like "competitiveness", "talent" and "capability" have been used. But these recommendations will have a profound impact on the lives of average Singaporeans, and also on the work of CDCs and VWOs that serve the disadvantaged within our community. We must address these social consequences especially because social cohesion is a key competitive advantage for Singapore. Families will find it difficult to pay the bill for childcare, before-and-after-school-care, and maids. Yet, two incomes have become an even more important issue in this economic climate. I would urge the Government to consider extending further assistance in this regard through grants, rebates and extending the reduction of the foreign worker levy to domestic maids, either as part of this exercise or in the forthcoming FY99/2000 Budget. CDCs and VWOs have also been hit by a double whammy. Their sources of funds, corporate and individual, are slowly drying up. Meanwhile, the demand for their services remains unchanged or even rising in some instances. This is especially the case for those serving the economically disadvantaged. I would urge the Government to consider extending additional financial assistance to VWOs and CDCs as a short term measure. One formula could be to increase the matching grant from Government, although this may not go far enough where even the basic seed money is hard to come by in the first instance. An alternative could be for the Government to set aside a fixed sum explicitly for this purpose. VWOs can then apply for additional grants and these can be assessed on the merits of each case. Sir, I conclude by thanking the Minister and his team for a very comprehensive Report and I think this will now be tested in the implementation and its speed of execution.

(In Mandarin): Mr Speaker, Sir, when the Committee on Singapore's Competitiveness (CSC) was established in May 1997, its original terms of reference was to map out a plan to enhance the competitiveness of Singapore in the face of intensifying competition from the neighbouring countries as well as the developed countries over the next 10 years. However, in July 1997, the regional economy began to deteriorate. Short-term measures to restore our competitiveness became most urgently required. As a result, when the CSC presented its Report, a major portion was devoted to solutions to resolve the imminent economic crisis, such as the reduction of wage cost by 15%, reduction in foreign worker levy, lowering of JTC/HDB rentals, electricity tariffs, telecommunications cost, port charges and vehicle taxes, etc. Property tax rebates and stamp duty exemption are to be continued. All these measures are very timely and worthy of our support. But the Report seems to overlook the two following areas: (1) the predicament of shopowners and stallholders in the HDB estates, and (2) the competitiveness of our retail industry. Let me deal with the first issue. The Report recommends a 15% reduction in the total wage cost. To big companies with many employees, this is an alleviation of their burden that may help to restore their competitiveness. But to the retail shops and small-time stallholders who employ just a very few employees, many of whom are their own family members, these cuts in employers' CPF contribution and bonuses will not significantly reduce their operational cost. Business is bad for these shop-owners and stallholders because of the economic downturn, and they cannot make ends meet. Then, when these wage-cut measures are fully implemented, the spending power of the general public will also shrink. This will affect their business even more. On the other hand, they have to pay for their overheads and service their loans. With less income, they will find it difficult even to survive. Not too long ago, a stallholder who could not service his loan was slapped with hefty interests by the finance company, and he was even taken to court. This is a glaring example. Therefore, helping these shop-owners and stall-holders by reviewing their cost to tide over these difficult times at the moment is of utmost importance. These small-time neighbourhood traders are mostly operating in the HDB estates. Many of them were encouraged by the Government's "Shop For Everyone" scheme to purchase their existing shops and stalls. The majority of them took loans from banks or finance companies to finance their purchases of these shops or stalls. Now, because of poor business, they are having problems with their cash-flows. They cannot keep up with the instalment payments or service their loans. As an adviser to the Federation of Merchants' Association, I would appeal to the Government to advise the banks and finance companies to reschedule the instalment plans by extending their repayment periods. This will help to lighten the burden of these people. The Housing and Development Board should also consider lowering the rentals so as to help these people to tide over their difficulties. The second issue is how to restore the competitiveness of our retail industry. The retail industry has been in the doldrums for quite a long time. With further deterioration of the regional economy, the retail industry has a very grim future. Thailand and Malaysia have devalued their currencies by huge margins. So to the tourists, it is better and cheaper to shop there. In comparison, Singapore's retail industry is finding it more and more difficult to attract tourists to come and shop here. This will affect our tourism industry directly. Since tourism is one of the main pillars of the service industry, which is one of the main items of concern in the CSC Report, how to help our retail industry and tourist industry reduce their business cost is therefore another important issue. To many departmental stores and supermarkets which employ large numbers of people, a cut of 15% of CPF and wage costs together will effectively cut down their operational costs. But to the small shopkeepers in the shopping complexes, the effect will not be very significant. Another recommendation of the CSC is that the Government should continue to grant the 55% property tax rebates. With its implementation, only owners of shopping centres and complexes will benefit. Some of them may pass on the savings to their tenants by reducing the rentals. But, the vast majority of property owners do not lower their rentals because they themselves are also facing financial problems. Another way to further help the owners of shopping centres is to adjust downwards the net annual value of the commercial properties. In recent years, because of bad times, the pressure to lower the shop rental is always there. But because the net annual value has not been lowered, they continue to pay very high property tax. So it is very difficult for them to lower their rental. I hope that the authority concerned will review the net annual value of all the commercial and industrial properties soon. If the property owners can have their burden alleviated, they will be in a position to lower their rental, and the tenants will also enjoy the benefit of some cost-cutting. In this way, they will be able to sell their goods or provide their services at cheaper prices, and hence enhance their competitiveness. Sir, I support the motion in the name of the Minister for Trade and Industry.

Mr Speaker, Sir, a great many of those who have spoken, particularly coming from the Government ranks, the PAP MPs, have all expressed immediately their support and enthusiasm for the Report of the Committee. The two Opposition Members who spoke yesterday were less enthusiastic. I must say that, speaking for myself and for the Party, we do not share the enthusiasm that has been shown for the Report of the Committee. We find this Report disappointing and discriminatory. Why do we say disappointing? There are several factors which prompt us to say that the Report is totally disappointing. One is the timing of this Report. As the Report mentions, the Prime Minister would appear to have announced his intention to appoint a committee way back in November 1996. Then it took him about six months to convene a Committee on Competitiveness in Singapore. That was in May 1997. And we have a Report from this Committee 17 months later - I understand the Deputy Prime Minister will be announcing the measures the Government will implement - but we have yet to hear what measures the Government will accept and implement. I should have thought, Mr Speaker, Sir, that these measures would have been announced before this debate, so that the Members in this House could then pronounce their views on the measures taken by the Government. That is what I thought was going to happen. But clearly that was not the intention. As the Party's Member for Hougang said in his speech yesterday, this recession was foreseen. I was talking to a bank official some days ago and he said that the danger signals were seen as early as 1996. He said it was quite evident to them that Singapore was going into a recession. And yet no measures were taken then to avert the crisis. The Government prides itself - and we have heard this so many times - that it does not wait for any crisis or problem to arise, it nips it in the bud. But, in this particular case, it does not appear to have shown the same enthusiasm as it has - of course, when it comes to political action. This lack of prompt action was mentioned by the Member for Hougang, as I said, yesterday and we heard from a PAP Member - or was it a Nominated Member - who did not seem to answer our point at all. He talked about chickens and the eggs. Again, as the Member for Hougang pointed out, we had conflicting statements from the Ministers about the crisis. I remember, when I was proposing a number of measures, as far back as February or the beginning of this year, the Minister for Finance and the others were saying that Singapore had not been badly affected and we would take the necessary measures when the crisis hit us. That is unlike, as I said, what the Government has done when it came to taking mainly political action. And, again, it was in February of this year on my motion for the Ministers to give up 25% of their salaries to show their identification with the people, when I said there were already indications that pay cuts were taking place. The Deputy Prime Minister, in his reply, which was quoted by the Member for Hougang, said that Singapore was still competitive. There was no problem about Singapore's competitiveness. And yet eight months later, we are told that Singapore is not competitive and we have got to take the measures. So were Ministers really not aware of what was happening in Singapore? Have they lost touch with the conditions prevailing in Singapore? Or were they just beaming with their own over-confidence? We heard the Deputy Prime Minister say in that speech how wonderful the Ministers had managed Singapore's economy and their efforts had been lauded by people outside. So our first point of dissatisfaction is the timing and the delay that has occurred in announcing the measures that would be taken. Secondly, as has been mentioned outside this House, the measures and the Report itself are not bold enough. There is nothing innovative. There is nothing radical about any of the measure. And may I say that it is more or less a repetition of what the Committee in 1985 or 1986 submitted, perhaps dressed up a bit more to meet the present situation. I wonder why that is so. One senses, reading the Report, that there was a concern in the Committee not to tread on government toes and try to be as placatory as possible to the Government in making their recommendations. Is that because we had two Cabinet Ministers sitting on top of the Members of the Committee listening to the deliberations and commenting on anything they had to say? Not only did we have two Cabinet Ministers, we had another Minister. Could the Committee not have been left entirely to the private sector, people who we say are experts in the field, instead of having a political control over it? This, again, is one of the facts of life in Singapore, as has been mentioned, that everything in Singapore has to have a political master overseeing whatever is being done, even when it comes to playing football. Is it not time that we trusted the private sector to do its own work without overseeing how they do it and what recommendations they will put up? So that is another point of our dissatisfaction - that it is not bold enough, nothing innovative. There is an assumption that our fundamentals are strong. This, of course, is what the Ministers have been saying - our fundamentals are strong, so there is nothing for us to worry. But are they? Is there any attempt made to question whether we have got the correct fundamentals for our economy? The Report suggests that perhaps we do not have the fundamentals, but they do not go far enough to point out what exactly is strong and what should be done about it. Mr Chiam referred to paragraph 29 of the Report, the Executive Summary, and I do not propose to read it. But the Committee stresses the need for Singapore to be an open cosmopolitan society and for the need for a critical mass of Singaporeans who are risk-taking entrepreneurs. They say about the need for Singapore to be an open cosmopolitan society. This is what we in the Workers' Party have been saying for many years that Singapore needs to be an open society. It is good for business. It is good for the economy of the country and it is good for our people. But are we an open society? The Committee does not appear to answer that question. They should have, and they should have suggested what was wrong with the society at the moment today. Do we have a critical mass of Singaporeans who are risk-taking entrepreneurs? Mr Speaker, Sir, if you want Singaporeans to be critical, it must follow quite clearly that you have got to encourage them to ask questions. They should be encouraged to enquire into what is happening in Singapore and get the answers to those questions. That is not happening in Singapore simply because we are not an open society. We take the attitude that the affairs of the country do not concern the people. It is only the concern of the Government and we should just trust them and they would deliver the goods. Some goods they have delivered. So clearly, we do not have an open society. Secondly, they talk about human intellectual capital being the key to competitiveness. It is in page 81 of the Report, paragraph 3.a., Mr Speaker, Sir. They say that human intellectual capital is the key competitive edge and they propose reviewing the education curriculum, examination and the school ranking systems to help foster creative thinking and an entrepreneurial spirit among the young. They continue with this question of the education in Singapore in page 86 of the Report, paragraph 11, where they say "The content of the education curriculum should help to prepare the young for the workplace of the 21st century." We, in the Workers' Party, - and I have to repeat this because I would suggest to the Ministers that they should read the Workers' Party's manifesto - have been urging a complete review of the education system in Singapore today. This was way back in 1988. I am glad to see that the Committee thinks that there should be a review. And further on, they talk about the content being reviewed and not teaching our children to be parrot-like and regurgitate what they have been told. We have to start, if you really mean to be economically progressive, with our young people who are going to take over and the spirit of enquiry must be started there. Do we have it? The answer is clearly no. The Committee has admitted that it should not be regurgitating what they have just been told. Moving on to the university level, do we encourage and actively urge an inquiring spirit among the university students? Or do we sit on them and confine their learning to just the subjects for which they have come to university to get their degree? So we do not have those fundamentals. There is also the cost of education. I see that in page 91, paragraph 35.b., in commenting on the need for foreign talent, the Committee recommends that the Government reduce the cost of children's education in Singapore by ensuring an adequate supply of land for international schools. Here, of course, they are talking about the children of the foreigners working in Singapore. But what about reducing the costs for our own children, something which we, in the Workers' Party, have been urging? It is a burden for families who are not earning enough to provide proper education. It is a burden for them to provide a proper education that their children need and the schools, which the curriculum and the content are not doing. So would the Government consider this? I will, at the end of my speech, put forward the Workers' Party's proposals and I will have something to say then. Another point of dissatisfaction is that there is really no evaluation of what went wrong in Singapore. We of course know that it was precipitated and perhaps aggravated by the regional crisis. But was there nothing wrong with the way that we were conducting or managing our economy? There was no attempt to examine in this Committee's Report the role of the GLCs and their management. We know that over the last few years, the GLCs have lost a lot of money that belongs to us, the taxpayers. And, yet, there has been no proper examination on accountability. The GLCs have not been made accountable to this House on the decisions that they have taken and why they have lost monies. And we are talking about public monies, not their own monies. So should we not rethink about the role of GLCs? And I have also heard that the GLCs, because of the fact that they are Government-linked, enjoy an unfair advantage. Should we continue with that? Are we providing an even field for the conduct of businesses in Singapore? Or are we giving an unfair advantage to the Government companies? But, more importantly, what is needed in Singapore more than anything else is openness and accountability and we are not getting that from the GLCs. If you go to the Registry of Companies to seek information, you are told, "Well, this is not public. You cannot look at it. If you tell us what good reasons you have we can perhaps consider it." The activities of the GLCs in their various businesses should be made public as much as possible and not kept a secret. Again, there is nothing about the Government policies that might have contributed to the recession. Why is no attempt made to examine whether the Government in its policies may have perhaps contributed to the recession? I mentioned, Mr Speaker, Sir, that this recession was foreseen way back in 1996 by people outside. The Government not only did not take any attempt to correct anything that was wrong, but it would appear that they were more interested in winning the elections that were going to come on over the next one year or after that. So, we heard a lot about the asset enhancement programme of the Government. That was their bonanza for the voters to vote in the PAP Members into Parliament so that the PAP would continue in power. And along with that, as part of the programme, there was the liberalisation for purchases of properties, particularly, HDB. What was the result of all that? It boosted prices, making land cost becoming more and more difficult for the companies and those who are doing businesses in Singapore. It boosted the rentals. Yet no attempt was made in this Report to point to that and, as I said, is it because we had Ministers sitting on the Committee. But I was glad to see, Mr Speaker, Sir, that after the Report was released, the manufacturing sub-committee in a press conference was a little bolder. This sub-committee said that they would like to see the Government contribute more than 30% of the package and they would like to see the Government use up the surpluses from the statutory boards to help overcome the recession. Maybe without the Ministers sitting next to them, they were bold enough to come up with those statements. Finally, another disappointing aspect of the Report is that there is not enough data, not enough information given in this Report on how they have arrived at their conclusions and recommendations. Mr Speaker, Sir, in an attempt to try and understand their recommendations and to make some suggestions here, I wrote to the Ministry of Finance and the Ministry of Manpower to ask for certain information. Did I get it? Not a word, I have not heard from them. Is this the open society that we are proclaiming ourselves to be? But what I am saying is that this Report does not contain the information and data on which they base their conclusions in making recommendations, particularly on the cost-cutting measures. There is the suggestion that there should be some cut in the utilities rates, electricity and telecommunications. They have not tried to answer the question or have they sought an answer to the question why in spite of fuel prices falling, electricity tariffs have not gone down. At one time, the reason given was that the Singapore dollar was weak and that offset the falling prices. But now, as I understand it, the Singapore dollar has strengthened against the US dollar.

Order. Your time is up, Mr Jeyaretnam. Your 30 minutes is up. Could you return to your seat?

May I just beg your permission to suggest the Party's proposals? Just give me three minutes.

I am sorry. You are allowed only 30 minutes like everybody else. Please return to your seat.

But I would beg you, Sir, because I have got the Party's proposals for this House to consider.

You should have made it within your 30 minutes. Could you return to your seat?

As it pleases you. But I am begging you to give me a little bit of time to put the Party's proposals.

There is no need for you to beg. 30 minutes is 30 minutes.

I am begging you, and I would ask the House to allow me to put the Party's proposals.

Could you return to your seat, Mr Jeyaretnam?

All right.

Mr Speaker, Sir, thank you for this opportunity to participate in this debate. I support the motion standing in the name of the Minister for Trade and Industry. Firstly, I would like to touch on the point on what this CSC Report is all about. Put in a very simple language, imagine two persons walking in a jungle and all of a sudden, they heard that the tiger is coming up on them. One of them bent down to tighten his shoelace. The other person says, "What are you trying to do?" He says, "Obvious. I am getting ready to run." This other person says, "You must be crazy. You think you can outrun the tiger?" The guy says, "No, I do not think so. But all I need to do is to outrun you." Mr Speaker, Sir, the point here is that we live in a world of jungle. Competition is everywhere and in this jungle, there are many tigers - the tiger of recession, the tiger of unemployment, and the tiger of retrenchment, and so on. Basically, what the CSC Report is all about is to get Singapore running faster than our competitors so that we do not have to be beaten up by these tigers around us. But it is not easy to start running because it is painful and stressful. Some would say, "Why run? I do not see any tiger, I do not see unemployment in Singapore." Then some will say, "Before we start running, we need to start fighting among ourselves first. Let us go for political reform so that we will all loosen up and could run even faster." It is obvious that all these suggestions are not constructive. Some would even ask, "Before we start running, we should ask ourselves how come we end up in the jungle. I think the Government is wrong because they should not have led us into the jungle." Worse still, they say, "This Government, how come they did not have the foresight to tell us in advance that there are tigers in the jungle." Let us put it this way. This is the worst crisis that this world has seen in the last 50 years. The world economic experts, up to today, no one dares to say that they could foresee the arrival of this recession. When the NCMP mentioned that a private banker told him in 1996 that he saw exactly what was coming, I was shocked. Perhaps the banker should come to the open to explain to the world how did he in 1996 foresee the regional crisis was coming and that Singapore was heading for recession in 1998. Because that could win him a Nobel Prize. Some would say that, "If we have to run, why not you run first because I am not convinced that we have to run." For example, if the Ministers do not take a pay cut, how can you expect us to take a pay cut? Again, we forget that the Ministers have been leading by example all these years. We forget that in 1997 when all of us were enjoying pay increase, the Ministers took a pay cut of 2.5%. We forget that in the first half of 1998, when the situation was still all right, when we were talking about wage restraint, when workers were getting 2% to 4% of wage increase, the Ministers took the lead for a wage freeze. Sir, none of us in the labour movement has stood up to urge the political leaders to take pay cut first because we have full faith and trust in this Government. We know that the Ministers would take the lead in taking a bigger pay cut, not because the opposition MPs have asked for it nor the labour movement has pressed for it but because our leaders know what to do. They always believe in doing the right things and we know they will never disappoint us. Therefore, there is no need for anyone of us to come up to claim credit should the Ministers decide to take a deeper pay cut because the recognition should be given to the Ministers for their leadership by example. On the point that Ministers have not been doing their job in looking ahead into the future, as a result, we have to take a wage cut today. The message seems to imply that the Government has not been doing the job well. Speaking as a member of the labour movement, we do not think so. Just think about it. Singapore's economy is one of the most open in the world. About 70% of our demand here is externally driven. By right, at a time like this, the Singapore economy should be worst hit than many other economies because we are so externally driven. And yet look at what has happened in Hong Kong -5% GDP (contraction), Malaysia, -5%; Korea, -6%; Thailand, -8%; and Indonesia, -13%. What about Singapore? This year, we are still talking about 0.5% to 1% growth. The reason why Singapore is able to be in such a good position today relative to all the other economies is because our Government has been able to look ahead and make sure good governance and public policies are always in place. As a result, our workers today do not have to suffer the kind of pain that many of our fellow workers in other countries and economies are suffering today. Therefore, as far as the labour movement is concerned, we believe that there is nothing fundamentally wrong in Singapore. There is nothing fundamentally wrong with our workers, companies or the Government. Let us accept that we want to run because we want to run faster than all other competitors so that we will be able to return to full employment in the nearest future and all our workers who are able and willing to work can continue to enjoy good employment. Having said that, I want to emphasise the point that the CSC Report is not just about cost-cutting. In the last few weeks, if you had listened to radio talkshows, it is not surprising that quite a number of the callers who called up the radio talkshows referred to the CSC as the "Cost Committee". In fact, CSC is being referred by many people as a "Cost Committee". It is not. The CSC is not a Cost Committee. It is a Committee on Competitiveness. The key word is "competitiveness". The CSC is not about making Singapore cheaper all the time. It is about making Singapore better all the time. Mr Jeyaretnam said that this Report is not bold enough. He says that we need to have more social reforms. Yesterday, Mr Chiam See Tong said that we should have political reform. The CSC is not about political or social reform, but about economic reform. Here we are talking about moving towards a knowledge economy. For anybody who knows something about economic development, he will recognise the boldness contained in this Report. In fact, many countries are amazed that Singapore is able to look 5 to 10 years ahead even at a time of economic downturn and aim to come up stronger and more competitive. In that regard, as Singaporeans, we can all be proud of this bold vision in the CSC report. But having said that CSC is a bold report on economic reform, I would like to highlight that we must be aware that we must not pursue economic competitiveness as an end in itself. It is important that as we pursue economic competitiveness, we do not achieve it at the expense of social cohesion. If I may relate another story. A group of people come together to build a housing estate and the leader told them, "Let us make this the best housing estate we have ever built. Give it our very best and make it an estate we can all be proud of." The workers were excited and everyone started to work. But along the way, a small group of people in the team decided that things were going too nicely and they should have some excitement. So they went around talking to the workers. They asked, "Why do you work so hard? We can build this to be the best housing estate. At the end of the day, it will fetch higher prices and the people who move in would enjoy a beautiful home. But what will happen to us? We will just move on to build another housing estate." Over time, the workers lost heart. The carpenter started to take it easy on the carpentry work. The one who laid the tiles took it easy and as a result, workmanship became very shoddy. By the time the housing estate was completed, the workers packed up and were ready to move on to the next housing estate project. The leader came with a bunch of keys in his hands. He asked the workers to line up and he gave each and everyone a key. The workers asked, "Boss, what is this all about?" The leader said, "Remember, when we first started this project, I urged you to give your very best to build the best housing estate that we have ever built. Why? Because this is going to be our home and everyone of you would be given a unit for free." It came as a shock to the workers. How they wished they had put in their very best in building this housing estate. Now, they have to live with whatever mistakes or lousy workmanship that they have put in. This is exactly the point here. We are talking about building Singapore as our home. When we talk about economic development and social cohesion, we must always remember that we are not building this home for anybody else. We are building this home for ourselves and our children. Therefore, it is with great disappointment, speaking as a Member of this House, to see some Members here adopting a partisan approach in debating this motion. This CSC Report is not a PAP report. It is a report formulated by Singaporeans and friends of Singapore. There are many foreigners who are not Singaporeans but they share the commitment and contributed their ideas and efforts. Why? Because as friends of Singapore, they want to see Singapore well. Many people work together very hard to come out with this Report. And to see a Member coming to this House to talk about PAP Government versus Workers' Party and so on, I think it is with great sadness that I have to hear what he has said. Sir, as Singaporeans, let us be aware that it is important for us to work together to sustain our economic competitiveness. But equally, if not more important, is that as we implement the recommendations of this Report, let us not weaken social cohesion. Therefore, as a Labour MP, I call on the employers to stop calling for more cuts, because a 15% cut in business costs is already a significant achievement that Singapore can achieve. Ask a businessman, in all the other countries, are they able to secure the support of Government of the labour movement to go for a 15% cut? Are they able to secure the to lower business costs by 15%? So be thankful for what we are able to achieve as a nation. Let us move on. As employers, do not ask whether 15% cut is enough, but rather ask yourself what more can we do so that we can be more productive, we can be more competitive. As it is today, there is already some sign of social tension between the local workers and the foreign workers, between young Singaporeans and older Singaporeans. There is even talk that maybe we should defer the extension of retirement age, so that the older Singaporeans can retire next year, instead of working beyond 60 so that their jobs can be taken by young Singaporeans. There is also talk about stopping foreign workers from coming so that the retrenched Singaporean workers can fill these jobs. Sir, if we allow these issues to be taken out of context, we are going to end up worse off all round, because two years from now, three years from now, yes, we may be able to regain our cost competitiveness, but in terms of social cohesion, we may have created the social tension that will take a long time for us to mend. Sir, the issue now must be to recognise that we are in a much better position than anybody else, but we do not wait for things to turn worse before we take action. There are enough opportunities for everyone. What is more important at a time like this is for us to work together, be consistent, send a clear message to all Singaporeans that there is no painless solution today. The severity of the crisis is that it is not possible now to look for painless solutions. So employers, give up the idea of a painless solution. No way can we cut wages by 30%, CPF by 25%. No way. Just accept it and let us put our minds together and move on. Likewise, our workers, do not pretend that life can go on as usual. As we move towards a knowledge economy, we must upgrade our skills. Likewise from the angle of the national economy, all Government agencies have to speed up their effort to reposition the economy. Basically, we are down to these three points: skill redevelopment for the workers, business re-engineering for the business enterprises and re-positioning of the economy towards a knowledge economy. If we can do that, then I think all of us can work together to create a better future, one that all Singaporeans can be proud of in the 21st century.

Mr Speaker, Sir, I rise to support the Report of the Committee on Singapore's Competitiveness. The strategies and policies proposed are timely and much needed as we can now capitalise on our strengths, review our weaknesses so as to ride out the economic storm and emerge leaner, stronger and better positioned to engage the global economy on a higher platform. Sir, it has been argued that the proposed reductions in our costs may not go far enough to offset the impact of currency realignments that have taken place since the onset of the economic crisis. Between June 1997 and November this year, the Singapore Dollar has depreciated by about 15%. This compares with a devaluation of 72% of the Indonesian Rupiah, 36% of the Thai Baht and 35% of the Malaysian Ringgit. It is worthwhile to note that Singapore does not need to close this currency gap completely to remain competitive. We have superior qualitative advantages and strengths that far outweigh the absolute cost differences with our competitors. Indeed, we have just been ranked No. 1 Business City in Asia by Fortune magazine, above Taiwan and Hong Kong and have received consistent top ranking by PERC (Political Economic Risk Consultancy). Hence, in this mammoth exercise to review our competitiveness, we should not only focus on the quantitative aspects. We should also take steps to remind ourselves and reinforce the qualitative aspects that contribute to Singapore's competitiveness. These aspects include the benefits of a stable political environment, non-corrupt government, a positive business climate, excellent infrastructure, highly educated and skilled workforce, conducive industrial relations, racial and religious harmony and social cohesion. This year, we have been confronted with the images of rioting, mass rapes, destruction of property, with a disturbing racially motivated slant to violence amongst our neighbours. Sunday's religious clashes in Jakarta serve as a grim reminder. These are some of the results of endemic corruption which have accentuated inequality and poverty, and precipitated the social and political instability that is plaguing many countries now. The results are a loss of life and the destruction to property, elimination of decades of economic growth and wealth creation. I see it therefore necessary that in this exercise, we should remind ourselves of the need for political stability, non-corrupt government, racial and religious harmony and social cohesion. We cannot afford to be complacent. Indeed, a pre-requisite to our economic achievements in the future must be the need to strengthen these institutions institutions that are fundamental to these intangible qualities in our effort to make Singapore more competitive and attractive to investors. These include, amongst others, our transparent and efficient legal and political system, a pro-business environment led by Government agencies like the EDB, and our meritocracy, compared with corruption, cronyism and nepotism which characterise some of our competitors. The development and evolution of intermediate civil institutions like the Community Development Councils (CDCs) and more public forum such as the Singapore 21 Committee and other feedback mechanisms would also serve to forge unity, nationhood and consensus. This process of consensus and consultation must continue to be a fundamental part of our strategy and policy for the next millennium. Sir, unique to our success is the close cooperation between our unions, the employers and the Government which is a remarkable competitive strength and advantage. In the next millennium, we must strive to further strengthen this tripartite relationship which has presented Singapore as a stable, pragmatic country with an efficient workforce to attract global MNCs and investors. Sir, I would like to touch on some of the qualitative competitive aspects of our workforce. We have mainly been looking at costs and skills, which I consider to be hardware items. Critical to a competitive workforce are the software items as well. We should take the opportunity in this downturn to address the work attitude of Singaporeans which is critical for us to succeed in the future. It is high time that we considered reducing our dependence on foreign labour, as in reality not all Singaporeans will be able to climb the skill ladder. Some foreign workers, particularly unskilled ones, contribute to numerous social problems. It is therefore in our interest to encourage more and more Singaporeans to undertake jobs that are shunned by the majority of Singaporeans, as being "low-class" jobs. Jobs like maids, conservancy cleaners, construction workers, etc. We must change the work attitude of Singaporeans to take on these jobs as we have to cater to those workers in the 40-60 age group who simply cannot be upgraded as they have less than basic education. There are other aspects in our workforce which can be improved. Singaporeans have to be nurtured to be more tolerant of failure and be less risk averse. The ability to accept failure and take risks is critical in forming our attitudes in society towards the perception of jobs and towards alternative careers. Sir, we should shift from a more materialistic evaluation of work to a standard where the pursuit of unconventional careers, new business, or even what is perceived to be a less than desirable job choice, becomes acceptable and even commendable in our society. We should focus not just only on earning a good income but on the right job match and an improvement in the overall quality of life. The Singaporean worker has to change his attitude from being a functionary in the system for a fixed salary, to one that genuinely takes an interest and pride in the work he produces. This has an important bearing on labour productivity and will enable the Singapore worker to gain a significant competitive edge, which wage cuts and skills upgrading alone cannot address completely. We need to emphasise this qualitative aspect that is fundamental to our competitiveness as well. And it is for this reason that I strongly support the call for employees to be treated as stakeholders of companies and for the employee share option scheme to be liberalised to encourage more Singaporeans to be shareholders of the companies in which they work. Sir, I would like to caution that in our haste to cut costs, we have to also consider adequate compensating factors to offset the corresponding declines in disposable income. This is to avoid a self-fulfilling deepening of the economic downturn as consumption shrinks, affecting our domestic economic activities and asset values, as families adjust to wage cuts. The perils of deflation are quite evident in the Japanese economy, for instance, where the government has had to embark on radical steps to stimulate consumption after a prolonged stagnation, as even negative real interest rates failed to generate demand. I therefore urge the Government, as we implement the cost cutting exercise, to consider and implement corresponding measures that may prevent a severe recession that would result if consumption falls. We should have adequate additional, either on-budget or off-budget, measures to boost confidence and to avoid by default a deflationary spiral in asset values and domestic business activities, as Singaporeans in the next few months tighten their belts whether out of sheer need or kiasuness. The savings that the Government has from a reduction in the wage bill for the public sector should be passed on to generate economic activities and to boost domestic demand. As our workers accept the bold step of wage cuts, the Government could equally be bold in cutting costs to the individuals as well, such as lower transportation costs, lower petrol taxes, higher income tax rebates, amongst others. Similarly, in line with the call by the Feedback Unit, I would like to urge that private sector companies, corporations and employers pass whatever savings they have arising from wage cuts to consumers by way of lower prices of their goods and services. Here, I would like to commend the big local financial institutions in taking the lead by rescheduling mortgage loans and lowering interest costs and the NTUC Fairprice by lowering prices of essential food items. More corporate bodies should follow the example. This is necessary so that the real impact of wage cuts can be mitigated, and we can move down to a more cost competitive economic structure without necessitating a real decline in disposable income and threatening a deflationary spiral. Sir, this Report has given us directions to remain competitive, or to be more competitive in the next millennium. But we must not be complacent. It does not mean that it will get us out of the current recession immediately. There are still too many variables outside our control. Prospects for next year remain uncertain. I would like to paint an extremely gloomy but still probable scenario, and that is the devaluation of the Chinese renminbi coupled by failures to revive the Japanese economy and a recession in Latin America and its consequential impact on Europe and the United States. The Chinese economy is undergoing severe stresses since the onset of the economic crisis. Indeed, the Chinese have undershot their growth target of 8% for the first nine months of this year, and even the 7.2% GDP growth figure is estimated to be an overstatement of the real economy which is plagued by weak financial institutions and huge excess capacity. The financial crisis that is now destabilising Japan and Latin America may knock on the doors of Europe and the United States, plunge the world economy into a severe recession, precipitated by a devaluation of the Chinese renminbi next year. In this scenario, Sir, it would appear that the direct cost cuts recommended by the CSC may not be enough to offset the adverse effects of another round of currency devaluations by our competitors. Overnight, the proposed 15% cost cuts may be lost in the midst of such a scenario, further dragging down our economy. If such a scenario occurs, we may have to further review and cut our costs. Sir, I do not mean to be unduly pessimistic or gloomy. The scenario I have just painted appears a likely one, as recent as two to three months ago. But events that have occurred recently have changed the scenario a bit and the outlook today looks less pessimistic. It is still not optimistic. But we should not be complacent. We should continue to prepare for the worst and hope for the best. Finally, Sir, not every country can have the foresight and the cohesiveness to be able to implement a comprehensive cost cutting programme that involves $10 billion in savings to businesses with the majority of 70% coming from wage-related costs. I am proud that we are going forward in biting the bullet upfront, so as to secure our long term economic interests. Singaporeans have shown that they have the unity and the pragmatism in banding together in the past to ride out storms in the global economy. I have confidence that Singaporeans will have this unity and the pragmatism today to overcome this storm. We have to continue to reinforce our qualitative competitive strengths and distinguish ourselves with our honesty, integrity, stability, unity and resolve, whilst upgrading our efficiency and managing costs. I am confident that with this ambitious plan at hand, we can emerge leaner, stronger and more cohesive as a workforce, as a people and as a nation to face the challenges in the next millennium.

Mr Speaker, Sir, at first glance, the CSC Report in the form of a press release appears to repeat what has been reported in the mass media in the past few months. One tends to be disappointed and believes that nothing substantial was forthcoming to save a recessionary economy and the jobs. However, I must confess, after going through 186 pages of the Report, I was quite impressed by the work of the Committee. The CSC Report is comprehensive, bold, in-depth and professionally written. It has addressed most of the key issues concerning our economy at present and how competitiveness can be enhanced in the future. Its completeness leaves me with only a few areas to criticise, particularly many of the requests made by myself and numerous Members of this House have already appeared in this Report. To name a few, many Members have asked for cuts in wages, rents, petrol tax, promotion of venture capital, investment in human capital, more training for workers, etc. In general, I find it hard to fault the contents, except for the following comments. First, the CSC Report should have been split into two parts. Part I on cost cutting could have been completed and announced earlier. I concur with several hon. Members of this House that the cost cutting should have been part of the off-Budget measures implemented in June this year. Like a morphine jab for a patient in great pain, earlier cost cutting would have helped the affected companies gain their competitiveness earlier and confidence in our economy would have been regained earlier. However, Mr Speaker, Sir, I am not here to cry over spilled milk. What is more important is for the employers, workers and investors to recognise that our Government has the political will to exert its leadership and has once again performed the impossible to rally its people around them to make the economy competitive again. In other countries, the 15% CPF wage cut would have led to massive strikes and protests. Our Government has put forward a very convincing reason why cost cutting is very necessary for our economy to chug along, to save jobs and to prosper in the future. However, what is not clear in the Report is, and I share the same sentiments with many who spoke before me, how much of the $10 billion is borne by the Government. Mr Leong Horn Kee has mentioned earlier that with the 10% cut in CPF and 5% cut in wages, that would amount to $7 billion. It is expected that the money supply to the economy would dwindle substantially. Though the banks may help in increasing the money supply through extending more credit to the home buyers, the net effect can still be contractionary. Hence, I wonder if the Government's economists have worked out the appropriate amount to cut from the non-wage parts such as utilities rate, JTC/HDB rentals, etc. to offset the reduction in consumption power and avoid a further slump in domestic demand. If it is not sufficient, the Government should introduce more expansionary policies to avoid a deflation. The September figures already showed large drops in retail and food consumption. This shows that the consumers could have started slowing down their consumption before the wage and CPF cut. This must have contributed to part of our negative growth in the last quarter. If there is no immediate positive stimulus in the pipeline, the market perception is still that in the short term businesses may not pick up much. I urge the Government to stimulate the economy more, even though some may have leakages and the effect of stimulation cannot be 100%, but as Members have pointed out earlier, the Government has plenty of reserves which I was made to understand are getting good return. My guess is that we should have an additional $3-$5 billion a year from the return on investment of reserves, if we can convince ourselves that for one or two years, our return on reserves can be lower, or even zero. Is there anything wrong with that? Any investment, be it private, mutual fund, hedge fund, can have some bad years. I suggest that we can use some of the profits on the investment to stimulate the economy and keep the principal untouched. Next, let me go back to the non-wage cuts. The cuts in these areas will not make the Government the only loser because the cuts in CPF and bonus of the civil servants plus the much reduced tender prices of Government projects will have resulted in a lot of savings for the Government in the first place. I hereby urge the Government to be more aggressive in cutting utilities rates, MRT rates, rentals, etc. After all, the corresponding rates of return from Singapore Power, MRTC, JTC and HDB factories depend very much on how much the fixed assets were valued. Just to give an example. Singapore Power could have inherited high land cost because its incorporation took place at the height of the property boom. Like private companeis that have to make provision for losses due to a drop in land values, entities such as Singapore Power should be allowed to write down its land value so that even after it cuts its utilities rates, the return on investment would not be substantially affected. This is a logical step for our utilities company to benchmark against those in the region whose competitiveness has been enhanced by the drop in currency and land values. For the time being, to the employers, the 15% cut in business cost as suggested by the CSC come as a great relief. Before this, many were wondering how their firms will survive with our high cost structure. This matter has been brought up in this Chamber by many Members of this House throughout the year. Many firms depend on domestic demand, which is one-third of our total demand. Many of those who export also depend to some extent on domestic demand as a base business. If the CSC's recommendations result in a reduction in domestic demand or diminishing capabilities of the local firms, I can say that the net result may not be desirable. The NTUC, after convincing the workers to be prepared for the CPF and wage cut, has called on employers to increase revenue. But, with the economies in the region in a slump, this is not an easy task for most employers. At this juncture, we should perhaps re-examine our Government procurement system to see whether the local companies are given fair opportunities to conduct business. Particularly, in the area of construction, which is one of the few areas that Government can pump-prime, the rules do not necessarily create a level playing field for the local and foreign firms to participate. Mr Speaker, Sir, I hereby declare my interest in a construction company. To draw a pictorial description of our tender system, I would like to describe our Government procurement system as a convex, tinted, one-way mirror. A local firm standing in front of the mirror will find itself smaller, darker than the real one. A foreign firm standing behind can see through the system to gauge the size of our companies and take full advantage of such transparency. Mr Speaker, Sir, for years, foreign firms, particularly in construction, have been dumping their products and services here. They have been practising marginal pricing, transferring costs to generate revenue to stimulate their own economy and reducing their fixed overheads. The local firms are just like a lightweight boxer challenging a heavyweight boxer. They probably do not appear as solid and impressive as the heavyweight. But if the job requires only a lightweighter, why must we choose a heavyweighter? Or, can we hire a foreign trainer, I emphasise foreign, under our wing and build our fighters into a world-class heavyweight? There have been many examples where our tender system itself excludes our own firms. Some of the conditions ask for track records which could not be found previously in our republic. In the world of construction, many countries try hard to use their procurement power to build their own capability. But it did not seem so here. Mr Speaker, Sir, I am not advocating protectionism. I am suggesting that the competition should be fair. Dumping should be strongly discouraged. Otherwise, the local firms will always face an uphill battle to acquire knowledge and to build capability. Without the projects, the local firms cannot have the chance to hire foreign talents to build up their knowledge and experience base. This is similar to building a national soccer team. If we import every player, including the captain from overseas, we do not really have a national team. This team can easily go away and we end up with no players at all. In other words, in economic terms, our economy has hollowed out. But if we have foreign talent to be part of our team, to be our sparring partners, then our players will eventually emerge to be as good as any foreign player. I think CSC should find a way to ensure that the playing field is level for everyone, and our supporters will cheer for our home team. The present situation whereby our own crowd cheers the foreign teams and boo the local team does not have the right spirit to build our competitiveness to become world class companies. I have so far cited examples in construction which I know very intimately, but the general public sentiment is that the same applies to other sectors. How are we going to build world class companies if we have no confidence in our own people? May I quote a famous Chinese proverb from the "Tactics of War: (Sun Zi Ping Fa) - Yi ren bu yong, yong ren bu yi [ ]. It means that we should not suspect the person we wish to engage and we do not engage those we suspect. That leads me to the next recommendation on the building of world class companies. It is a natural and good thing to have GLCs to kick start the development of world class companies. This is partly because the Government knows the GLCs' capability and has trust in them. But such trust should not be extended in such a way that the GLC grows in an indiscriminate manner and becomes a monster. In the world of business, people talk about core competence to excel. The GLCs should stick to their core business and try not to encroach on areas which the local companies can do equally well. The financial clout of GLCs should be exploited to do those businesses such as launching satellites, telecommunications, airlines, large-scale engineering, etc, but not businesses such as restaurants, golf courses and real estate. Temasek Holdings, as the overall guardian, should examine and evaluate the business plan of GLCs carefully to ensure that they will not pose unfair competitive advantage over local firms. Let us be mindful that it is the world trend to stay away from being too diversified. There are many case studies on this. IT&T, the Korean chaebols, are vivid examples of what we should avoid in building our world class companies. On the other hand, Nokia, Ericsson are the good positive examples cited by CSC on how they succeed by finding a niche market in technology. In my conversation with friends, colleagues and foreigners, one question that often pops out is the accountability of the management of GLCs. Will they be subject to the same level of scrutiny by the public and the investors as any other public company? I think if GLCs are to grow into world class companies, the management must be held accountable for the performance of the company. If they are good, they should be handsomely rewarded. If not, appropriate accountability should ensue. The second aspect of building GLCs into world class companies, as recommended by the Report, is that it gives the reader the impression that GLCs are the only likely candidates. I beg to argue that GLCs should stick to their core business and let other SMEs be nurtured and built into world class companies in areas that GLCs have no obvious competence. There is no guarantee that GLCs would succeed. By letting some SMEs to grow is a logical way to diversify our economy to have more breadth and depth. The CSC Report touches on the introduction of more incentives such as employees' stock option plan, tax reduction for foreigners who work in Singapore, etc. Yes, I support this market oriented approach in management. After all, one of the key measures of success is the amount of money one makes. ESOP, the employees' stock option plan, makes a lot of sense. But, Mr Speaker, Sir, I beg the Government to look beyond implementing just those few suggested measures. Singapore has always been quoted as a "fine" country. And that is to say, we have used more sticks than carrots. In the earlier development of our nation, perhaps it took more sticks than carrots to accelerate the climbing of the value-added ladder. Some of the sticks are increased rents; increased wages; and imposition of quotas and levies. But the world is quite different now, especially in the aftermath of Asia's economic crisis. The carrot method, such as ESOP, will perhaps work better. So far, similar policies, such as levy differential, construction quality score, PSB's grant for R&D, have worked out very well. They have achieved good results. Hence, I urge the Government to deploy more carrot methods to stimulate the growth of the economy. And I believe such incentive methods will let the Government get back more, in the form of taxes and other benefits, than what they give away as incentives. Another area where the CSC Report is not clear is that as the business facilitator, how would Government act as the regulator and promoter at the same time? There is bound to be some conflict of interest. The CSC Report mentioned the receipt of feedback that the approval process remained opaque and hence suggested greater transparency and accountability within the civil service. Yes, this is very good. But, quite often, the system itself does not work out this way. I want to give an example, again, in the construction industry. When a project is delayed due to changes in design or client's requirement, the supervising officer may impose liquidated damages on the contractor to establish a bargaining power to negotiate for waiver of claim from the contractor. Clearly, this is a conflict of interest. The very person who causes the delay is given the discretionary power to mete out the penalty. So in order not to jeopardise his career, the tendency will be to take the easy way out. Outside the construction industry, I believe, similar examples exist. I hence suggest that in addition to the CSC's recommendations in the chapter on Government as business facilitator, closer attention should be paid to modify and improve the civil service structure so that their efficiency will be in line with the private sector and no wastages and losses will be passed on to the private sector unnecessarily. May I now quote another example about conflict of interest. The Government and the construction industry have been trying to promote the upgrading of skills and engagement of skilled workers. So the levy differential policy was perceived and implemented. However, in the early stages of implementation, the industry has fed to the Government that the policy, which has stark results in promoting skills upgrading, also has side effects, such as giving a particular country, such as China, an unfair advantage on the cost. Most of the skilled workers who enjoy a low levy of $100 today come from China. But it is a known fact that Chinese workers are very difficult to control and only Chinese companies can control them through their home connections. Therefore, the policy actually opens the door wide open to the Chinese construction firms who now outbid everybody because of the low levies. In other words, the policy creates an uneven playing field. If the policy is not remedied through the diversification of sources of workers, the construction industry will hollow out. There will be no other but Chinese construction companies. Then, how will local firms compete and generate revenue to keep the workers, engineers, architects and foremen employed? How are we going to build capability? Mr Speaker, Sir, to sum up, the CSC Report provides a great vision. It is, in fact, a dream for most nations. But can we get there in 10 years? You need a lot of change in mindset, politically and socially, to change from the current status to that vision in 10 years. Many of our people, our industries, our entrepreneurs, our civil servants are perhaps not ready for the goals envisaged by the CSC whose members constitute the most successful, forward-looking, dynamic individuals. The job now for the Government is to convert the wonderful ideas of CSC into reality. This is not an easy task. But if our Government is able to persuade our people to take pay cuts, I do not see why it cannot realise the vision. Mr Speaker, Sir, I support the motion.

Order. I suspend the Sitting and will take the Chair again at 3.35 pm. Sitting accordingly suspended at 3.10 pm until 3.35 pm. Sitting resumed at 3.35 pm

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.

Mr Speaker, Sir, I support the Minister's motion. Recently, most international magazines have commented on the regional financial crisis. Nearly all of them have concluded that Singapore with its good governance, sound fundamentals and preparedness to take quick and decisive measures will be able to weather the storm and place herself in the best position to surge forward when the region recovers. I suggest that the MP for Hougang and the NCMP, Mr J. B. Jeyaretnam, read this report. Maybe then, they would not be taking cheap shots so freely at the Government and the Ministers for being not good enough to handle the recent financial crisis. What is comforting to know is that Singapore can indeed be considered the oasis of the region. Nevertheless, the fact remains that we have felt the full impact of the current crisis and that we have to take appropriate action to deal with the difficult times in front of us. On hindsight, the two tasks of addressing the present economic crisis and the question of competitiveness in Singapore, the future Singapore, I feel that they should have been taken up separately. The task of addressing the current crisis should have been taken up earlier. Because, as early as the 1998 Budget was presented, it was obvious that the economic crisis would deteriorate very rapidly. And if we had taken these recommended measures earlier, it would bring much relief to many companies and businesses and perhaps even lessen the number of workers being retrenched. I have no doubt that the recommendations by the CSC Report on the reduction of business costs, if followed, would definitely be effective, although the extent of the reduction cannot be fully ascertained as items such as reduction or rebate on Government taxes or charges have not been fully determined. Many Members have expressed that the Government should be more generous in this area, especially in the reduction of foreign worker levy. They should be more drastic than that being recommended and it should also be extended to foreign maids. I would like to add that, in considering reducing PUB, telecommunications and transportation charges, the Government departments and statutory boards should discard this notion that they have to be revenue positive, especially some of these statutory boards should not be bogged down by the fact that they have been or are in the process of being privatised and therefore they have to be profit-orientated. It is crucial to change the mindset for at least this critical period and take a more long-term outlook. Many Members in this House fear that the reduction in business costs will invariably bring hardship to the employees, especially to the blue collar workers. Therefore, it is important for the Government to take appropriate action to ensure that the cost of living should be reduced simultaneously. It is of utmost importance because it will help to cushion the reduction of wages and CPF. While the CSC recommended such costs to be reduced by 15%, in the private sector especially, this may not be possible. For in good times, the wage increase in the private sector normally goes beyond that of NWC recommendation and during this difficult time, in certain sectors, wages might have to go well below the NWC recommended level in order to avoid more severe retrenchments. And a reduction in the cost of living is the only way to lessen the pain created by the loss of income in the average Singaporean household. We should also consider other charges like the town council's conservancy charges, transportation charges, and even education charges like school fees should be reduced. By the logic that all wages and other charges are reduced, these costs would definitely be lower and it should be passed on to the workers. However, even if we can achieve the objective of cutting business cost and lowering the cost of living, we will not be able to address the sharp economic slowdown completely. Our economy must be given a boost. I know that tampering with our national reserves is a very sensitive issue. Personally, I am most reluctant to suggest touching our reserves under any normal circumstances. Having said that, in a situation like now, it would be necessary for the Government to look into ways to make available a certain amount of our reserves to stimulate the economy. If one believes that one of the reasons for accumulating a healthy reserve is to prepare for a rainy day, now is the time that we need the umbrella very badly. So it would be prudent for the Government to have a well-established plan to apportion some of our reserves in order to undertake projects that can stimulate our economy provided of course that we should have plans to replace such reserves or have the confidence to add on to it when our economy is on track again. This I have no doubt that we are able to do so, because from our track record, the Government and people have year after year been able to achieve a surplus to add to our reserves. Mr Speaker, Sir, on the long-term strategy, the Committee has rightly identified the manufacturing and services sector as the twin engines of growth in the future, and that it is important to build world-class companies as well as strengthening our base for small and medium enterprises. It further identified that the Government should continue to play an active role in supporting and facilitating the private sector. One of Singapore's success is its ability to attract MNCs to set up businesses in Singapore. This not only brings in the economic benefit but, more importantly, it helps Singapore companies to benefit from the latest technological advancement and be the forerunner of our own R&D development in the region. As we are a small economy, most of our enterprises are small and medium in size and the GLCs have always provided the leadership in establishing the model for world-class companies, for example, SIA, Singapore Technologies, Sembcorp and PSA, etc. However, in order to realise the objectives of strengthening our own local enterprises and at the same time build world-class companies, GLCs and local SMEs should work in tandem and not against each other. Therefore, the GLCs should stay focused by sticking to their core business as much as possible and maximise their strength in having vast resources both in finance and talent. If diversification is required, one should confine to areas which can provide synergy to the core business. They should not be distracted by short-term gains and diversify into unrelated small businesses in competition with our local companies. They have a different role to play. I understand from some of the local businessmen that they are puzzled as to why some GLCs started to do business which is totally unrelated to their core business and begin to compete in the very limited market with the local businessmen. Although time and again, they have assured that the GLCs would do business on a level playing field, they think it is a case where the playing field may be level, but the distance between the goal posts may vary because these GLCs have their own network and connections, and therefore render the competition a little bit skewed. It may be a perception. It is important that if we have to strengthen our base of the SMEs, we have to give them space and opportunity. We must assure them that they have the full support of the Government. I believe that the SMEs, GLCs and MNCs can work together with each other and benefit from each other's strengths and weaknesses, just as we need to nurture the talented and experienced CEOs like Walt Disney's, Michael Eisner to help run multi-million dollar corporations. We also need entrepreneurs like Bill Gates who can build a business empire out of nothing. While the corporate CEOs and the private entrepreneurs are very much different in their approach and ways of conducting business, their contributions are of equal importance and one cannot totally displace the other. Now that the Committee has identified all the steps we have to take in order to achieve the objective of making Singapore one of the most competitive and vibrant business centres in the world, it is important that a detailed plan be drawn up for implementation. We can make a vision statement and set objectives, but if we cannot stay focused and have definite plans and programmes for the realisation of this vision, and all participating parties do not follow certain parameters set out in the Report, it will remain as an academic study and not an effective and dynamic document to get us into the next millennium.

Mr Speaker, Sir, thank you for allowing me to participate in this debate on the motion proposed by the Minister for Trade and Industry. Since last year's Budget debate in July, many Members have made numerous calls in this House to address issues related to the cost of doing business in Singapore. In the light of the then deteriorating economic backdrop, Members have echoed the expectations and the hopes of the business community that the issue of competitiveness be addressed in the Budget and, in particular, to offer some relief to the high costs of doing business in Singapore. Regrettably, the Budget fell short of addressing this main concern of preservation and enhancement of our competitiveness vis-a-vis our neighbours. While the Government announced a $2 billion package in off-budget measures in June to control costs, many businesses also felt that there is hardly any positive impact on them. The perception remains that the effort to closely monitor the powers of the business community, especially of the small and medium-sized businesses, is lacking and that the Government continues to rely on not so current statistics to steer the economy. As we debate the motion on endorsing the CSC Report over these two days, I believe the Government realises the extreme anxiousness of our business community and the man-in-the-street about the current state of affairs and their expectation of an integrated and an action-oriented Government approach in swiftly dealing with the issue of our competitiveness. Since the debate began yesterday, much has already been said and many suggestions made by fellow MPs in terms of what more could be done over and above the recommendations of the CSC. Allow me to offer some of my own thoughts. First, I think the Government should not hesitate to adopt a radical paradigm shift in fundamental assumptions upon which many policies today are predicated. I believe many of these policies have been formulated based upon a mix of Government controls and free market forces. It is time that some of the past premises employed to formulate existing policies be critically reviewed in the context of their relevance to the current economic conditions. Much has changed in recent months, let alone years. On concerns of the business community, while the SMEs are generally quite happy with the cost reduction measures recommended, there is still concern that the Government's share of $2.5 billion or so is disproportionate to the amount to be shouldered by the business community and the working populace. There is room for the Government to more clearly explain this. It is understandable that wages are manifold more than Government's charges, but there is a strong feeling that the Government could and need to do more in absorbing more Government-related cost components such as reduction of land costs, property taxes, port and telecommunication charges and giving income tax rebates. This could go a long way in enhancing the much needed confidence and stimulating spending and reinvestments. Much of these have been touched upon by others who have spoken earlier. Some SMEs continue to express disappointment with the much beefed-up Local Enterprises Financing Scheme (LEFS). They felt that their eligibility to take advantage of the scheme is left entirely to the banks. The latter decides solely whether or not the applicants are eligible for the loan applications. While I fully subscribe to the fact that the scheme should not support clearly hopeless cases, I am concerned about borderline cases which may become victims of the crisis if not appropriately helped. There should be an appeal channel for such cases. I would like to suggest the formation of a Committee comprising members from the Singapore Productivity and Standards Board and banks to review borderline but worthy cases in deciding financial assistance eligibility for such cases. ERP charges for business vehicles was also a hot topic when the GPC for Finance and Trade and Industry, of which I am a member, met with various business groups. Many strongly felt that ERP charges for goods vehicles (pick-up trucks, lorries and others) used for purely business reasons should be temporarily exempted from ERP charges during the current economic downturn. Most of such vehicles make multiple entries into the CBD and the ERP charges certainly add up to business costs. Suspending such charges will certainly help at a time when every dollar saved contributes to the lowering of business costs. One important sector that has long been suffering is the retail sector. This has seen a decline over the years and, more recently, hefty double digit declines. They are suffering not only as a result of consumers being more cautious in their spending, but also in the slowdown of the tourism industry since last year. With tourist arrivals not within our control, the retail sector will have to look up more to domestic consumer spending. The wage and bonus cuts undoubtedly will have further negative impact on spending as consumers' purchasing power becomes more diminished. This strongly supports the argument for further tax rebates to stimulate the already weak demand, as echoed by many MPs earlier. A temporary suspension of GST on essential goods and supplies such as clothing and food will also go a long way in not only enhancing demand but also help alleviate the burden of the people affected by wage and CPF cuts. Such tax exemptions on the essential goods are common in many states of the USA to dampen the cost of living impact on the working class. Retailers are also hopeful of rental reductions relative to the fall in the retail sales. They are heavily counting on the Singapore Tourism Board, working doubly hard to boost visitor arrivals through more active tourist promotions, especially in countries not affected by recession such as the European countries, the United States, China, Taiwan and perhaps India. They also felt that bringing more exhibitions and conventions and staging world-class events such as the performing arts, musical and sports events will not only enhance Singapore's competitiveness but also help position Singapore as the Broadway of ASEAN, if not Asia. We have the world-class infrastructure to support this objective. Let me now turn to the social concerns. Singaporeans deserve special salute for having shown understanding and willingness to move ahead with the CPF and wage cuts. The coordinated efforts by the Government and the unions to explain the important need for immediate business cost reductions, the rationale behind the need for CPF and wage cost cuts and the prospect of massive job losses if these measures are not undertaken, have generally gone down well with the working populace. However, anxieties are still abound, especially the effect of these cost-cutting measures in the ability to continue servicing their mortgage loans. While the Government has said that it will help HDB dwellers, nothing appears to be in store for the lower middle income earners who, especially over the last two years, have upgraded to private properties. Some of them have lost their jobs as a result of the crisis. As an interim measure, I would like to propose that the Government consider the relaxation of CPF usage to allow for pooling of CPF resources among immediate family members to help those in trouble tide over their mortgage repayments during the crisis period. Working parents, children or siblings could assist the family member or members in trouble by temporarily allowing them usage of their CPF savings to pay for the monthly mortgage payments subject to certain regulations. Once the troubled family member becomes gainfully employed and overcomes his problem, the assistance should cease and the amount borrowed should be returned back progressively to the lenders. Savings in the Special Account of the CPF should also be temporarily freed up for such purposes and should similarly be returned upon employment stability and recovery of the economy. As a regulatory measure to assist troubled first-time private property purchasers, the Government, through perhaps the Monetary Authority of Singapore, could assist in pacing financial institutions involved in lending money for such purposes to help them reschedule loan repayments wherever feasible. HDB policy and guidelines employed to assist HDB flatowners could be used as a basis to regulate this. The Ministry of Manpower should also seriously consider the temporary reduction of the domestic worker levy. A reduction of 30-50% will go a long way in helping struggling dual income families affected by the CPF and wage cuts, but yet could not do away with the services of a maid to look after their children and/or aged. For businesses that are doing well and are benefiting positively from the cost reduction exercise, they should also shoulder some social responsibility in these tough economic times to correspondingly lower their product prices or service charges to help cushion the impact of wage cuts taken by the people. If the overall intention is to bring wages down to 1994 level, it is imperative that every constituent of the land, ie, the Government, the corporate citizens and the people, do their collective part to also bring down our cost of living as well as we can to 1994 standard. Only then will some form of equilibrium be achieved. Sir, in conclusion, allow me to applaud the CSC for their effort and boldness in making several important recommendations, both for the short and long term which, I believe, will have far-reaching implications for Singapore when implemented. Looking on the horizon, it is my hope to see the Government put in place a regular ongoing competitiveness monitoring and benchmarking mechanism to prevent us as far as possible from again being caught off guard. While it is fair to note that the currency crisis leading to significant depreciation of regional currencies, which is also a major cause of the erosion of our competitiveness was hard to predict, there were many tell tale signs pointing to the escalating cost of doing business in Singapore, which the Government and statutory boards have influence in moderating without having to undermine the free market mechanism. This includes, as I have mentioned earlier on, land pricing and rental regulations, a major business cost component, port, utilities and communication charges. Ways must also be found to further refine our flexible wage and compensation system to prevent the need for the CPF mechanism from being continually relied upon in the future to adjust cost and address competitiveness issues. The unusually long growth period in Asia, including here in Singapore, has made us forgotten that crises, bubbles and crashes are an inevitable part of economic business cycles. We should now brace ourselves to be better prepared for future ups and downs. Sir, having an efficient competitiveness barometer will go a long way in regularly checking where we stand in comparison to regional as well as industrialised and developed countries. Such indicators will enable prompt regulatory actions to be taken that will enable us to sustain our competitiveness on a real time basis and, hopefully, do away with the need for off-Budget measures and jolting the lives of Singaporeans with CPF and wage cuts. Such an approach will increase Singapore's and the business community's resilience in weathering the current and future storms. Sir, I support the motion.

Mr Speaker, Sir, exceptional times require boldness of vision and action. It calls for a common understanding and purpose by the people to collectively meet the challenges. These are exceptional times. Since the release of the Report by the Committee on Singapore's Competitiveness and the reconvened National Wages Council, I had met up with my grassroots leaders and residents. They expressed understanding and support of the two Reports. Let me make two general remarks before I comment on the measures proposed. In a crisis, we are pressured to find quick answers. Yet, in our evolving history, the present crisis will only be a blip. We must be careful not to pursue quick solutions inconsistent with sound principles, which underpin our long-term interests and survival. Short-term solutions must by its definition be exceptions that can be dismantled after the crisis. These solutions cannot and should not be allowed to adversely change the long-term course of the nation. Mr Speaker, Sir, it is one thing to accept the rationality and relevance of the recommendations themselves, and yet another the pains faced upon implementation. The people want and expect the Government and employers to convince and show openly that they understand and appreciate the pains suffered and sacrifices made by the people. I call upon our employers to declare that they will share fairly the profits in good times as they now desire workers to make sacrifices for the company. When the good times return, the cuts should not only be restored but profits be shared through bonus and other benefits. Let me now turn to the short-term specific measures to deal with the crisis. The need for short-term specific measures arises from our sudden loss of competitiveness. A major reason for this loss of competitiveness is the relative appreciation of the Singapore dollar to the currencies of our competitors. Some hence feel that allowing the Singapore dollar to depreciate is a less painful answer to cutting cost. It would be helpful for the Government to make more efforts to explain why cutting cost is the better alternative. Let me look at the short-term measures from both the company's viewpoint and the worker's viewpoint. I will start with the company. The cut in business cost is not only for external competition, but also internally to help our companies survive. There is thus strong support for the specific measures proposed by the Committee, particularly the following: Foreign Worker Levy The foreign worker levy should be reduced. This will bring much relief to those companies with high dependence on such workers. These workers do not pay CPF and a cut in the latter does not lighten the cost burden. Affected sectors include the food and beverage, and construction. The amount of cut in the levy should provide as good a relief as the CPF cut. Cut in Land/Factory Rent The rent of industrial land, factory and commercial properties should be further reduced. The proposal to return to the 1990 rent level is much welcomed. HDB and JTC, being the largest landlords of such properties, should take the lead. Private owners will follow. The short-term help is obvious. There is also a long-term impact as companies can remain in Singapore. Singapore will also be more attractive to foreign investors. HDB and JTC should also be more willing to rent out vacant land on TOL. I have been told that Singaporeans have been forced to go overseas to grow turf grass for import to Singapore even though vacant lands are available for this purpose here. It is also difficult and expensive to obtain the use of such land. There were also calls for the following: Training Subsidies To encourage companies to train their workers, the subsidies given should be increased. This will encourage and make it easier for companies to retain the workers for retraining. Training fees should also be kept low. These fees have been escalating much too quickly. Medisave Rate for the Self-Employed To assist the self-employed, the increase in the Medisave contribution planned for next year should be deferred. In fact, the Government should consider reducing it during this period of crisis. Parking Charges Parking charges for commercial and heavy vehicles should be reduced. Banking Charges The various banking charges like the opening of letters of credit should be reduced. Let me now turn to the workers. As wages form a large part of the cost to companies, cost cutting means cutting wages. This is painful for the people. Hence, at the same time, efforts must be made to provide relief to the people. Some of the reliefs that were sought include: Housing Loans Repayment Help should be given for the repayment of housing loans. A major concern with the CPF cut is the worker's ability to finance the monthly repayment of his housing loan. As most people own HDB flats, I hope the Government will announce schemes to help owners of HDB flats. HDB has constantly assured flat owners that they will be assisted. They must continue to reassure the people. I am happy that several banks are also offering alternative repayment schemes to lower the monthly repayment. The recent decline in interest rates has helped to reduce the monthly instalments of housing loans substantially. But interest rates are capricious. We should not be lulled into complacency by this development. It is necessary to set in place schemes to help with the housing loan repayment. Maid Levy The levy should be reduced. This will bring much relief to families who desperately need the assistance of maids such as families with very young children and old parents to look after and both spouses are working. Cut in Fees and Charges During this period, every bit of cut to the cost of living is a help to the people. There were calls for reduction in fees and charges and for increase in rebates: School fees at all levels from kindergarten to university be reduced. Utility charges including telephone charges be reduced. Transport charges like bus and taxi fares be reduced. Service and conservancy charges by Town Councils be reduced. Government should also give more service and conservancy rebates, especially to the lower income group. In this period of crisis, the rebate should be extended to 5-room and Executive flats. Government should give more income tax rebates. Medical charges should be reduced. The number of Class C beds should be increased. Companies and hawkers should reduce prices. Particular concerns were expressed for the low income group. Questions were asked if this group of people could be spared the cuts, or alternatively be provided with additional reliefs. Keen interests were expressed on the restoration of the wage and CPF cuts. Residents were keen to know when the cuts will be restored. They would like the NWC to review the situation regularly so that the cuts can be quickly restored when the crisis blows over. Now let me turn to the long-term measures to Singapore's competitiveness. While we seek to develop new strategies, it is important not to forget, but to renew and revitalise existing core strengths. Let me share the following: We have enjoyed rapid growth for over 30 years. Parents who had gone through hard times try to make sure that their children are never in want of anything. This is understandable. But we also run the risk of our young not understanding poverty and what it means to be resilient. We need to always compete with the world for our existence. This requires hard work, commitment, a fighting spirit and constantly to remind our young of the need to be competitive. If we lack this motivation, we are doomed. After having it so good for so long, is our mental and physical capability still strong? We must stress national values and priorities. The regional countries have been ravaged by the economic storm. They are chastened. Their systems will now be leaner. We must take this opportunity to learn and emerge wiser from the crisis. We must remind our people that they cannot take things for granted, that our rosy future is not preordained. While we enjoy during the good times, we must also prepare for and set aside something for bad times. The future of Singapore is in our hands. We decide and make the future. If we learn this lesson and emerge from the crisis stronger as a people and a nation, the pains will not be in vain. Here, I would like to add a word of caution. As we plan for the future, we must not give the impression to the people that this will guarantee us against future economic difficulties. We must remind the people that whatever we do difficult moments can surface. There are too many factors and imponderables in the real world. What we can do and must do is to constantly anticipate and prepare for them. We must not be lulled into complacency. We must be better motivated and committed to our work and companies. Several employers told me that they have difficulties hiring people, or if they do manage to hire, some workers do not stay on long, even during this difficult period. Our workers are fussy. If the work is demanding, they do not stay long. They hop from one job to another for pay increases, even small amounts. They do not like to go for training. If they accept training, they are not happy with their bonds. Those who are trained often do not stay long, lured away by higher salary elsewhere, feeling no obligations to the companies which train them. I have personally encountered others who during this crisis would rather stay unemployed at home than to take up a lower paid job, or a job that is "too far" away from their home. We are indeed lucky to have painstakingly cultivated tripartism. We had shared both the bounty in good times and the privation during bad times. This has built trust, consensus and understanding among the Government, employers and employees. Many foreigners have expressed disbelief that our workers agreed to have their salaries cut. In some countries, the very suggestion itself will already cause an uproar. For this, we must indeed be proud as a nation. This is an element of long term strength and competitiveness. We must ensure that tripartism endures. While the present cost cutting proposals cut down the value of the resources, the actual resources used do not decrease. In view of the scarcity of many resources, we should make an effort to use less of them. We should call upon our people and companies to cut down waste by using these resources more efficiently. They must be constantly aware of the importance of conserving resources. If necessary, we should consider campaigns to remind and encourage people to use water and electricity more carefully, to be more productive in our work, to help keep our environment clean, to protect our facilities so that less maintenance and repair expenses are needed. This is an element of enduring competitiveness. To conclude, I call upon our people to stand united during this time of crisis, to make painful sacrifices for the nation. We must support the cost cutting measures to help our companies and hence ourselves to ride out the storm. This is in the interest of the nation and for the collective good. Meanwhile, the Government and employers must show understanding of the pains incurred and provide unstinting help to alleviate them. On a longer term, we must remember that vicissitudes are part and parcel of the economic life of a nation. We must remember this when the good times return. We must never take the good times for granted. We must always prepare for lean times in times of plenty. Our existing strategy has done us proud as we have braced the current crisis much better than our neighbours. We must forge an even more robust strategy and a national cohesiveness that will anchor the country against future uncertainties. On this note, Sir, I support the motion.

Mr Speaker, Sir, I rise in full support of the motion by the Minister for Trade and Industry. Sir, there is wide consensus that the Committee on Singapore's Competitiveness has carried out a comprehensive analysis and made well constructed recommendations. Many of my colleagues have dwelt at length on the strategic issues. So I will confine my comments to the short term measures. Feedback by the various industry groups that the GPC spoke to highlighted two observations. Firstly, there is a sense that many of the recommended interim measures are weighted towards manufacturing and construction. Secondly, sectors such as retail and food and beverage are worried that the proposed reduction in wages will dampen consumption, which will more than overwhelm the benefits from a reduction in operating costs. Generally, companies, especially the smaller operators in trading and services, are seeking help as they face a cash flow crunch in the short term and would like to better position themselves after the downturn. Sir, I would like now to propose specific recommendations to achieve the following two objectives: Firstly, to help improve the cashflow for companies and, secondly, to mitigate against the inevitable dampening effect on consumption. Improve cashflow for companies Firstly, in the interim, in order to provide maximum impact, as well as send a strong message to private sector landlords, can the proposed reduction in rentals be extended beyond the JTC and HDB to all statutory boards and wholly-owned Government-linked companies? Secondly, various statistics have pointed to much lower commercial property values. For property tax purposes, can these benefits be felt in a more timely fashion by reducing the lag in pegging valuation levels? Thirdly, although various assistance schemes such as LEFS have been widened to benefit more companies, many non-manufacturing concerns, such as trading companies, still do not qualify. They seek the availability of some form of Government-assisted trade financing scheme to help offset reduced credit lines by banks. Fourthly, whilst many applaud the emphasis on training and upgrading, companies would like existing schemes to be more generously applied to executive, managerial and general training. This will allow for smoother progression into managerial roles within the same organisation or industry. Fifthly, most companies realise the importance of technology and are willing to invest in spite of the high capital costs. However, they usually find maintenance to be a very heavy burden to bear, especially during this period of slowing, if not contracting, revenues. Can the Minister for Finance consider allowing deductions for maintenance costs, for tax purposes? Mitigate against dampening effect on consumption Sir, many of my colleagues have commented on the dampening effect on consumption of wage reduction. There is recognition by retailers that consumption is closely linked to disposable income, confidence and consumer psychology. As much as we can wish that the media would not be overly negative or pessimistic, I would like to suggest the following as well: Firstly, can some temporary relief be provided for individuals, for example, as has been raised by several Members, by reducing the foreign maid levy by, say, $100 per month, in response to the impending reduction in household income, but with the Ministry of Manpower still maintaining control administratively? Secondly, can the Minister for Finance consider granting a bigger personal tax rebate? Thirdly, can Electronic Road Pricing, especially into the Central Business District, be temporarily suspended on Saturdays to give the retail sector a boost? Sir, there has been a lot of debate over how much Government should bear, whether it should be an equal burden or in equitable proportions. Unlike other countries, we at least have the luxury of such a debate. It is a luxury that did not happen by accident, but one that has resulted from strong fundamentals and good Government. Although both arguments are equally compelling, I think we should refrain from distorting the cost structure too much in order to gain more moral authority. We all understand that wage and CPF cuts are hard to stomach, but we all recognise that unless companies can survive, jobs cannot be preserved. On that note, I would like to urge the Government to consider the additional recommendations outlined above and to implement the CSC proposals as soon as possible.

Mr Speaker, Sir, the Report of the Committee on Singapore's Competitiveness is comprehensive. If only we had the benefit of the findings and recommendations two years ago. For a long time now we have heard grumbling about the high cost of operating in Singapore. I have often heard disbelief expressed over the BERI's Report. For a long time now employers have grumbled about rapidly rising labour costs unmatched by an increase in productivity, disloyalty of labour, poor attitudes of new entries to the labour market. In this current economic downturn, some employers have expressed their hope that people's expectations will be moderated, more realistic. The Committee has done an excellent job of identifying the issue and I am generally in agreement with its recommendations. My concern is with the details, the implementation of the recommendations that, if mishandled, can cause much pain without providing the cure. I share many of the areas brought up by earlier speakers and I shall not repeat them. I shall focus on a couple of areas that I feel have not been raised. We must realign our wage structure to be competitive. The question has been raised as to whether the targeted 15% cut in wage cost is enough. Concern has been raised on the impact of such a cut on the lower paid wage earners and there has been a call to make a bigger cut for higher wages to help the lower paid workers. I would like to caution that higher paid workers may not necessarily have such a large advantage over the lower paid workers. Many do not benefit from large housing subsidies or other subsidies. Many are heavily mortgaged on their home. These people will not have a benevolent Town Council with patience over late payments of conservancy charges. I fear that, without care, suspicion may arise that one party or the other is not bearing a fair share of the pain, and this will have an impact on social cohesion. Our enterprises will have to carry on the best they can. There will always be a need to supplement our workforce with skilled foreign workers. There is an urgent need to reduce the levy for skilled foreign workers substantially. I do, however, question the appropriateness of reducing the levy on unskilled foreign workers. We should not encourage the import of unskilled foreign workers. Jobs, usually filled by such workers, should be kept for Singaporean workers who, due to the lack of appropriate skills, have to be retrained and are temporarily requiring a job, any job, to survive. As for the foreign workers, we should require employers to hire from among the pool of retrenched foreign workers, instead of forcing them to be repatriated. Many of these foreign workers cannot and do not want to return home because of the heavy debt that they incur in getting to Singapore. It would be a humanitarian policy which will also help see the continuing need for foreign workers without resulting in an increase in their numbers. To help our enterprises seek new markets and establish offices overseas, we should set up Singapore Trade Centres in the cities where business opportunities exist. These centres should offer a one-stop business support service where Singapore businessmen can rent temporary office facilities at low cost and obtain help to transcend language and cultural barriers. In conclusion, I support the recommendations made by the Committee on Singapore's Competitiveness. It is now essential to ensure proper implementation of the recommendations and to continue monitoring our competitiveness and fine-tune the system as Singapore regains its footing and get back on track for continuing economic growth.

Mr Speaker, Sir, I applaud the Committee on Singapore's Competitiveness (CSC) for its calls to cut wages, electricity and telecommunication charges, port service charges, extend property tax and income tax rebates, reduce income and road taxes, offer infrastructural support for working mothers who need child care facilities, adjust industrial land prices to international benchmarks, and adjust downwards the cost of owning cars through reducing customs and petrol duties. Sir, there are many "goodies" in the package for businesses, but I want to highlight the plight of the consumer and the help that we too sorely need. I ask the Government, in accepting the CSC's Report, to spare a thought for the consumers, please. Specifically, I have a few proposals, but I would not repeat the proposals like the maid levy and GST cut which my colleagues have raised in this House and which I fully support. First, I want to speak against the CSC's recommendation to reduce the $200 GST exemption for day trippers who have shopped overseas. Much as I wish Singaporeans would have a greater sense of dignity and solidarity in the face of abusive and hostile treatment from those they buy from, I realise that the savings are significant and there are some who need the savings badly enough to face shoddy treatment. If Singapore retailers want to increase their customer base, they must really work to bring back the customers and not take the path of least resistance by preventing Singaporeans from shopping overseas. They must take heart from the experiences of good retailers like Borders, Robinsons and NTUC Fairprice. I am concerned too that once the call to reduce or remove GST exemption is heeded, we would open the floodgates for more calls to prevent "GST leakage". Such a call will have an impact on the numerous small transactions that will be made by consumers on the Internet. Are we going to say that GST is being leaked there too and so retailers should be protected through the diligent collection of GST from such individuals? If so, I fear efforts in promoting e-commerce will be greatly hampered. If retailers are hurting from competition, whether from Johor, Batam or cyberspace - surely the answer is in themselves. I urge Government to further consider easing the burden of the average consumer by, for example, making sure that not only those who earn below $1,200 be spared the wage cut, but, in addition, Government should continue to give rebates for service and conservancy charges in respect of 1- to 3-room flat dwellers and town councils. As my colleague, Mr Gerard Ee, has mentioned, we should have the compassion to allow for those who have financial difficulties to pay their charges in instalments in easy payment schemes. The HDB also provides a benchmark for property prices, in that the price ceiling of the HDB market is a convenient base on which to prop up the floor of the private property market. With the distance between top end HDB flats and low end private flats as little as they are at present (and almost non-existent between the Executive Condominiums and entry level private condominiums) - surely the HDB could lower their sale prices. If this means a larger subsidy from the Government, is this not the right time to do it? Similarly, HDB mortgage rates could be lowered to provide flat owners some relief. If necessary, such a measure could just be limited to the owners of 1- to 4-room flats, so as to free the disposable income currently frozen into the property market. I turn now to businesses. Landlords, especially the GLCs, HDB and JTC, must reduce their rental; retailers must cut the prices of at least the basic necessities, as NTUC Fairprice has done; insurance companies must ease up on their collection of premiums or provide easy payment schemes, as NTUC Income has done; and professionals such as doctors and pharmacists must charge lower fees so healthcare becomes more affordable. Restaurant owners must take their heads out of the sand and work at charging less, and accept that they must not insist on a flat 10% service charge in all circumstances. If they could reduce their service charge to only 5%, I suspect the rise in clientele would more than make up for the loss! Nevertheless, I call on the Government to be easy on the SMEs who scramble to pay the Government charges, levies and CPF contributions on time - but fail. A little more understanding on the part of civil servants could go a long way towards putting a human face on the efficient bureaucratic machine we have. Otherwise, the added burden of heavy penalties will drive the SMEs under and more people will lose their jobs. In the spirit of tripartism, cost cutting is not just for workers and Government. The employers who are business owners must also contribute their share. In all this, the Consumers' Association of Singapore (CASE) too has a part. CASE's mission is to inform, educate and protect consumers. We have embarked on a campaign to identify cheap places and inform consumers on businesses which will give them value for money - whether they be hawker centres, shops, supermarkets, restaurants, or other businesses. We will be conducting seminars and printing booklets to educate and help consumers to stretch their dollar and to understand their rights when, for example, their hire purchase companies foreclose in on them. We will protect consumers and campaign to expose profiteers, opportunists, those identified with the help of our "eyes and ears" all over Singapore - our 600,000 members, union members and members of the public. We also call on consumers not to patronise food establishments which impose a mandatory 10% service charge (especially if this is on top of a compulsory pickle or peanut charge) without giving real service in return. We will publish the names of these institutions that do not charge the way that we advocate and we will channel more customers to those who are easy on the customers. We hope, of course, that the Government will show its concern for consumers and give us a grant to work on this project. CASE calls on all consumers to work with us to make our dollars go a long way through this dark storm ahead. Sir, I support the motion.

(In Mandarin): Mr Speaker, Sir, the Committee on Singapore's Competitiveness has recently made two sets of recommendations. One is on how to deal with the current economic crisis, while the other is on how to prepare our economy to face the future challenges. In the short-term, our workers and the trade unions have to accept pay cuts to help the companies regain competitiveness and, in the process, to save our jobs. In the long term, we have to equip ourselves with new skills to operate in a knowledge-based economic environment. We, in the labour movement, support both sets of recommendations because we are convinced that they are in the best interests of our workers. During our debate in Parliament yesterday, I was surprised to hear one MP saying that the 15% wage cut is not enough. He suggested a 30% cut. The question is: during the last few months when we were debating on these issues, why did the employers and companies not put forward the reasons for the 30% wage cut? They should list out the cost structure in the various sectors in the business community to present their case. In fact, over the last few months, they have remained silent. So, after we have explained to our workers why we should agree to take a 15% wage cut, they accepted it. Now, the employers are saying that it is not enough. Furthermore, the said MP is a member of the National Wages Council (NWC) which recommended the 15% wage cut. Why is he now questioning the 15% cut? Since he sat in the NWC, he should be in the best position to know why the reduction should be 15%. From yesterday's debate, we can sense how difficult it is for us in the trade unions to explain to our workers such complicated economic matters. Here, I would like to thank our workers for being so understanding and for supporting this recommendation to reduce 15% of their employers' wage cost. Today, with the economic downturn, grassroots leaders and unionists have asked whether we have the means to help those in financial hardship as a result of wage cuts and job losses. Do we have a social security net to meet their needs? When our workers are retrenched or have suffered a wage cut, do we have a social security net to help them? In some developed countries, the jobless can look to unemployment benefits. So some people are questioning why we do not have social security in Singapore. Does it mean that because we do not have unemployment benefits, we do not really have social security? Are they correct in their accusation? I do not think so. I do not think we should look at the issue so narrowly - that just because we do not provide unemployment benefits, there is no social security in Singapore. In fact, what are the basic needs of the people? First, jobs; second, housing; third, medical care; fourth, education. In fact, all of these have been provided for in our social system but very often we take them for granted, and we forget that they are part of our social security system. Take jobs, for example. We have made job creation our top priority. Over the years, we have brought in many foreign investments to Singapore. Many jobs have been created. Our preference is on quality investments because they are the ones that can afford to pay higher wages. Over the past 10 years, our real wages have gone up by an average of 5% per year. This is better than what has been secured even in many developed industrialised countries. Our philosophy is to train people for life-long employability. This is like teaching people to fish rather than merely giving them fish to eat. So, in this economic downturn, our top priority must be to find new jobs for the retrenched workers. A job with a steady income is anytime better than any form of unemployment benefit. The NTUC has joined hands with the Ministry of Manpower and the SNEF to develop a job bank to match those who are retrenched or unemployed with the vacancies available. At the moment, when we accept this 15% reduction in our total wage cost, we are appealing to the companies to retain the workers in this period of crisis, and retrench only as a last resort. In Singapore, housing is not a problem. We must thank HDB and its "Home Ownership" scheme. Since as many as 90% of our people own their own homes, even in this time of economic crisis, they do not have to worry that they may be thrown out of their homes by unscrupulous landlords when they default in paying their rents. But in many other countries, like Korea, for example, the workers live in quarters provided by their employers. The moment they lose their jobs, they lose their shelters over their heads too. In fact, in most developed countries, home ownership is about 60% (40% of them are living in rented properties). Once they lose their jobs, they will be thrown out of their house. So to them, unemployment benefit is of paramount importance. Despite that, in many of these so-called welfare states, many people are sleeping in the streets. In Singapore, our situation is different. We have different schemes to help our people. Therefore, I feel that our model is a better one. Another social security is medical benefits. We all know that our workers in Singapore are adequately provided with medical benefits. They have the Medisave accounts and they have MediShield. For those who genuinely cannot afford to pay their medical fees, there is Medifund to stake them out. Prime Minister Goh Chok Tong has stated on more than one occasion that no one in Singapore will be deprived of medical benefits just because he has no money. Another social security is education. In Singapore, there are places for all school-going children. The quality of our education is good. Government has set up an Edusave Fund to help meet the educational needs of every child aged between 6 and 16. Workers can use their CPF to pay for their own and their children's tertiary education. For university students, if they are in difficulty, they can apply for loans. About 25% of our students receive some form of bursary or scholarship. In other countries, if workers lose their jobs, their children have to stop going to school because they cannot afford the fees. There is a report in the newspapers that half of the Indonesian children have stopped going to school. Such a report may be exaggerated but it is true that many parents can no longer afford to send their children to school. This will result in a loss in one generation, with very serious consequences. In Singapore, every effort is made to help children from families in financial hardship to remain in school and to receive education, and bursaries are offered by NTUC, the grassroots organisations and various organisations. We have a comprehensive system of in-employment training. The Skills Development Fund subsidises the training cost. The NTUC-initiated Skills Redevelopment Programme is aimed at upgrading the skills of workers, especially the older and less-educated ones. In the SRP and CREST alone, the Government has committed $240 million. This is the best welfare because it helps workers to acquire the necessary skills to stay employed. But in the training programme for workers, we would like to request the Government to set up a task force to study the needs of older and the less educated workers. This task force should provide the workers with information on vacancies and types of skills required in the market and educate them to change their attitudes so that they will be prepared to accept jobs which they were previously rejecting. At the same time, the task force can educate the employers so that they will not discriminate against the employment of older workers. Some people may ask: "Since Singapore is not a welfare state, where can the retrenched workers turn to?" Although, Singapore is not a welfare state, we have all sorts of schemes which are even better than the welfare state system to help those who really need help. For those who are in difficulties, they often seek help from their MPs. Some of them say that they cannot pay their utilities bills, S&C charges, rentals, etc. As MPs, we know where to turn to for assistance to these people. Many grassroots organisations like the CDCs and self-help groups are ready to extend a helping hand. In extreme cases, there is of course the public assistance scheme, the bridging loan scheme, Small Families Improvement Scheme, Rental and Utilities Assistance Scheme, Edufund and the assistance schemes established by the various community self-help groups. So long as they accept our recommendations, they will be looked after under any of these schemes that are relevant to their needs. As for those workers who were retrenched, and are unionized, the unions will negotiate with the employers. Many are paid an average of two weeks' wages for every year of service rendered, and some get as much as 12 to 24 months of salaries in terms of retrenchment benefits. Not too long ago, I had the opportunity to find out from an officer from a developed country that there is a cap of 12 months' salaries as unemployment benefits. So actually our retrenchment benefits compare favourably with the welfare states. As for those who are not unionized and are not in a position to negotiate with their employers, I urge them to quickly organise themselves and register as members of the NTUC so that we can help them. Although our social security network is good, there is still room for improvement. For example, we need to look at how we can simply find procedures for applications for various schemes to help workers in distress. Perhaps, we can also see how we can improve on the level of support, especially for those who remain unemployed for a long time. I also urge the Government to set up a one-stop agency which could coordinate the various financial schemes. In fact, the CDC is well placed to be the focal point of all assistance schemes. In other words, if an unemployed person goes to the CDC, he can seek not only financial assistance but also help in finding an alternative job through the Internet network or through other means which can be coordinated by the CDC. In this way, the CDC will be able to help the unemployed persons get all the relevant assistance under one roof, including matching up of training courses and job vacancies available. In addition, counselling can also be provided to help the worried unemployed persons cope with stress and learn how to manage family expenses and job expectations. Mr Speaker, Sir, there is a necessity for us to enlighten the people in Singapore on our social network and to let them know how to seek assistance from these schemes, if necessary. We, in the NTUC, firmly believe that if we go along with the recommendations of the CSC, and if we are in one heart and one mind as a nation, we will get out of this crisis, emerging stronger. So long as we stay united, we are confident that we can have the power to face and conquer whatever challenges that we may encounter in the future.

Mr Speaker, Sir, may I seek your consent and the general assent of Members present to move that the proceedings on the item under discussion be exempted from the provisions of Standing Order No. 45 in respect of the speech to be made by the Deputy Prime Minister, BG Lee Hsien Loong? Sir, DPM BG Lee will be giving the Government's full and comprehensive response to the Report of the Committee on Singapore's Competitiveness afterwards. In order that he will be able to speak unaffected by the time, I propose to move this motion.

I give my consent. Is it the pleasure of hon. Members that the motion be moved by the Leader of the House? Hon. Members indicated assent. With the consent of Mr Speaker, and the general assent of Members present,

Question put, and agreed to. Resolved, That the proceedings on the item under discussion be exempted from the time limit for speeches laid down in paragraph (8)(a) of Standing Order 45 in respect of the speech to be made by the Deputy Prime Minister, BG Lee Hsien Loong. - [Mr Wong Kan Seng].

Order. I suspend the Sitting and will take the Chair again at 5.00 pm. Sitting accordingly suspended at 4.52 pm until 5.00 pm. Sitting resumed at 5.00 pm

Debate resumed.

Mr Speaker, Sir, Singapore is facing its gravest challenge since independence. As the regional crisis has deepened and spread, we have been drawn in. Our economy does not have the problems of the other countries in difficulty. Our banking system is sound. Our companies have not borrowed excessively, especially from abroad. Neither has the Government. Government finances are strong, with adequate reserves built up over many years. Nevertheless, the collapse of regional demand, and the change in the business climate has caused our economy to slow sharply, from 6.2% in the 1st Quarter 1998 to -0.7% in the 3rd Quarter 1998. We have now had two quarters of negative quarter-on-quarter growth, and are technically in recession. The Government implemented a $2 billion package of cost reduction measures in June. These were not intended as the final package. We could not take drastic measures, such as a CPF cut, lightly. We needed time to assess how events would develop and we used the time to develop the consensus necessary for stronger measures. Committee on Singapore's Competitiveness Through the Committee on Singapore's Competitiveness (CSC), the Government has over the last 18 months tapped a wide range of private sector views on ways to strengthen the economy. The CSC has recommended both long-term and short-term measures to improve Singapore's competitiveness. The long term measures are a comprehensive strategy for Singapore to invest in its human resources and infrastructure, to build up manufacturing and services, and to continue to grow and develop. The emphasis is on building new capabilities and new areas of business. The short term measures focus on reducing business costs, to help companies to survive the crisis, and to preserve jobs. The proposal is to reduce wage costs significantly, through a cut in the employer's CPF contribution rate and in flexi-wages, and also to reduce non-wage costs to make an overall package of $10 billion, or 7% of GDP. The Government accepts the CSC Report and the thrust of the CSC recommendations. They will not only help Singapore to overcome the present problems, but also lay the foundations for sustained growth. The CSC has made some 300 specific proposals. We will study them individually to decide how to implement each one. In some cases we have already acted, for example, with the recommendations to further develop the financial services sector, and the June package of off-budget measures. We will implement the long term measures progressively. However, the short term recommendations call for an immediate response. The Government has worked out a substantial cost reduction package covering the key elements of business costs, as proposed by the CSC. Wage Costs Let me begin with wages. Labour cost is a key component of business costs. The CSC has proposed that Singapore reduce overall wage costs by 15% from the 1997 level. This will bring our relative unit labour cost back to the position in 1994, and will substantially improve our international competitiveness. The CSC has recommended that part of this 15% should be achieved through a 10% point reduction in employer's CPF contribution rate, from 20% to 10%. This represents some 8% reduction in overall wage costs. The National Wages Council (NWC) has endorsed the CSC proposal, and recommended that wages be reduced by 5% to 8% from 1997 levels. Together with the 10% point CPF cut, this will be sufficient to achieve the target of 15% reduction in overall wage costs. The wage reduction should be implemented through the flexible wage system, ie, by cutting variable components of wages such as bonuses. The NWC urged employers to moderate the wage cut for lower income employees by implementing a proportionately deeper cut for the higher income executives. CPF Reduction The Government accepts the CSC's recommendation to reduce the employer's CPF contributions by 10% points. Of this, 6% points will come from the Ordinary Account, and 4% points will come from the Special Account. In effect, contributions to the Special Account will be suspended for the time being. For older workers whose CPF contribution rates are less than 40%, and for pensionable civil servants receiving partial CPF, the reduction in their employer's CPF contributions will be pro-rated. The CPF cut will take effect from 1st January 1999. It will remain in place for 2 years. Thereafter, the Government will review the situation. The Government agrees with the NWC that the rate of employer's contribution should be adjusted upwards when the economy recovers. The CPF cut will reduce costs by about $3.9 billion per year. Government Accepts NWC Recommendations The Government accepts all of the NWC's recommendations, including the recommendation to reduce wages by 5% to 8%. We urge companies to follow the NWC guidelines in their wage negotiations and decisions on bonuses. Companies which completed their wage negotiations earlier should review their plans if their previous assumptions about the economic environment are no longer valid. The 5% to 8% reduction in wages is estimated to cut costs by about $3.6 billion per year. NWC Award for Civil Servants As a major employer, the Government will take the lead in implementing the NWC's revised wage recommendations for civil servants. First, the Government will reduce the Annual Variable Component (AVC) to be paid in December. Last year, civil servants received two months of AVC: 3/4 month in July and 1 1/4 month in December. This year in July, the Government paid 1/2 month, a reduction of 1/4 month. In December, the Government will pay 1/4 month's AVC, which is one month less than last year. This means a total reduction of 1 1/4 months in AVC payment for the year. However, the usual Annual Wage Supplement or 13th month payment will be paid in full. For next year, the Government will decide on civil service annual variable payments after the NWC has published its proposals for 1999, which it usually does in May. Second, the Government will reduce the variable component of monthly salaries of officers in Division II and above. The cut will be in the Non-Pensionable Variable Payment (NPVP) that is paid monthly, and will be graduated. It will be 1% of monthly salaries for Division II officers, 2% for Division I timescale officers, 3% for Superscale officers, and 5% for Staff Grade officers. There will be no cut for junior staff at the Division III and IV levels and daily-rated employees. This reduction will take effect from 1st January 1999. These cuts in NPVP will be for one year, and will be reviewed at the end of 1999. Third, the Government will suspend the normal annual adjustments to salaries of Ministers and top civil servants for a second year in 1999. The Government had followed the private sector down in 1997 when the benchmark of private sector salaries had declined by 8%, but it did not follow back up this year when the benchmark rose by 13%. For next year, the benchmark for Staff Grade I has increased by 19%, and that for Superscale G by 12%. I do not believe these large increases reflect current conditions in the private sector. The mismatch arises because of the long time lag: the 1999 benchmark is based on private sector earnings in 1997, before Singapore felt the impact of the regional crisis. The Government will study ways to reduce this time lag, in order to make public sector salaries reflect private sector conditions in a more timely and responsive manner. All these measures will apply to both civil servants and political appointment holders. They will reduce the total civil service wage bill by $176 million, or 6.2%. The combined effect of reductions in monthly and annual variable salary components will result in higher level officers accepting steeper wage cuts than more junior officers, in line with the NWC's recommendation. In terms of annual pay, the cuts range from 5% for Division III and IV officers, to 10% for Staff Grade officers, including Ministers and this is separate from the CPF cuts, which naturally also apply to civil servants. Assistance Schemes For Mortgages The wage and CPF reductions will affect many Singaporeans who have committed to mortgages, especially those who planned to repay their mortgages out of their CPF contributions. The Ministry of Manpower and the Housing and Development Board have studied the problem. After the CPF cut, 18% of CPF members will have insufficient monthly CPF contributions to their Ordinary Account to pay for their housing instalments. But despite this, HDB has found that most HDB borrowers have been prudent, and have not over-extended themselves. They should have little problem continuing to service their loans as long as they remain employed. The recent falls in interest rates will help to cushion the impact of the CPF cut on borrowers. Singapore banks have also stated their willingness to help customers who face problems repaying their mortgage loans, for example, by rescheduling their loan repayments. Nevertheless, the Government will implement supporting measures to help Singaporeans cope with these difficulties, as we did in 1986. Use of CPF Special Account For CPF members whose reduced Ordinary Account contributions will now be insufficient to pay their mortgages, the Government will allow them to use the balances in their Special Accounts to meet the shortfall in repayment caused by the CPF cut. Bridging Loan Scheme The Government will also introduce a Bridging Loan Scheme for members who have depleted the savings in both their Ordinary and Special Accounts for their monthly repayments. The loan will be at a concessionary rate of the CPF interest rate plus 0.1%. The scheme will apply to private property mortgages, as well as HDB flat owners paying HDB market interest rates, ie, Credit POSB housing loan interest rates, for their mortgages. HDB Schemes Most HDB lessees are already paying the concessionary interest rate of the CPF rate plus 0.1% for their mortgages. The HDB will take several measures to help them. For example, they may include more working family members as joint owners, in order to draw upon their CPF monies. They can reduce their monthly instalments, lengthen the term of their mortgage loan, or defer mortgage payments. Those in arrears may pay the outstanding sum by instalments. HDB will also assist applicants taking possession of new flats who are affected. Taxes The Government will give substantial tax rebates as part of this package. Unlike in the previous recession in 1985, we are giving rebates rather than reducing the tax rates. This is because we have progressively and significantly reduced our major tax rates since 1985. For example, the corporate tax rate was 40% in 1985, but is now only 26%, close to our long-term target of 25%. The property tax rate was 23%, but is now only 12%. Our tax rates are now generally competitive internationally. No major changes are immediately necessary. The Government will go as far as possible to help businesses during this difficult period. However, any tax concessions to meet the present problem should be broadly consistent with our long term taxation policies, and should not erode the Government's tax base after the crisis has passed. Rebate on Corporate Tax To signal our commitment to help businesses, a corporate tax rebate of 10% will apply to corporate income for Year of Assessment 1999, excluding Singapore dividends. This will cost $450 million. Extension of Property Tax Rebate and Stamp Duty Exemption The June off-Budget measures included a 55% property tax rebate on commercial and industrial properties for the year commencing 1st July 1998. This 55% rebate will be extended by another year to 30th June 2000. HDB and JTC will pass the rebates on to their tenants and lessees. Landlords in the private sector are also urged to pass on the rebates. The exemption of property tax for land under development, which was announced in the FY98 Budget Statement, will also continue. These measures will cost the Government $680 million. The suspension of stamp duty on contract notes for share transactions, which started on 30th June 1998, will be extended for another year. This will cost the Government $70 million. GST Many MPs have asked for the GST rate to be reduced from 3%. However, this would be the wrong approach. First, a reduction of the GST rate to 2% or 1% would cost the Government a large amount of revenue. The GST was introduced in order to achieve a better balance between direct taxes like the corporate tax, and indirect taxes like GST. When GST was introduced, both corporate and personal income taxes were cut substantially. The overall package was revenue neutral; in fact, in the short term, revenue negative. The GST is therefore an integral part of our revenue structure, and not something optional which we can lightly give up. Second, from the economic point of view, the GST is a "good" tax. I know from the taxpayers' point of view, there is no such thing, but, economically, this is a good tax. It is a tax on consumption, not income. Its incidence is widely and evenly distributed across all types of economic activity. So for the same amount of revenue collected, the burden of the GST is felt less heavily than other taxes. It is better to give rebates on other taxes, such as property tax, which levy a higher rate on a narrower range of activities. Third, there is a comprehensive package of rebates for lower income households to offset the impact of the GST, which are still in effect. If our concern is the impact of the crisis on lower income households, then it is far more precise and effective to extend the GST offsets package, than to change the GST rate itself. The CSC did not recommend changing the GST rate. However, it did propose one minor refinement to our GST scheme. It observed that the current exemption limits on Goods and Services tax for Singaporeans returning from abroad are rather generous. For travellers who are out of the country for more than 48 hours, the exemption limit is $400 for adults and $200 for children below 18 years old. For travel less than 48 hours, the limit is $200 for adults and $100 for children. This has resulted in a significant leakage of retail business to neighbouring countries, as Singaporean day-trippers shop abroad. The CSC recommended tightening the exemption limits in order to help the domestic retail trade, which is facing a protracted downturn. The Government accepts this recommendation. The new limits will be as follows: For travellers away for more than 48 hours, $300 for adults and $100 for children; For travellers away between 24 and 48 hours, $150 for adults and $50 for children; For travellers away for less than 24 hours, $50 for adults with no exemption for children. These will take effect tomorrow, 25th November 1998. You can have a final fling tonight. Foreign Worker Levy Many companies depend heavily on foreign workers, especially manufacturing companies. While the Government uses the Foreign Worker Levy (FWL) to regulate demand for foreign workers, to the companies the FWL is a significant cost burden. The reduction in CPF contributions for citizens allows us to reduce the foreign worker levy while maintaining the relative wage costs between Singaporean and foreign workers, and therefore without creating an incentive for companies to employ foreign workers and displace Singaporean workers. The Government will reduce the foreign worker levy for both skilled and unskilled foreign workers. a. The levy for skilled workers in all sectors will be reduced from $100 to $30 across the board. This is the second round of reductions this year, as we had reduced the levy for skilled workers in April from $200 to $100. b. The levy for unskilled foreign workers will be reduced by $90 for companies in the manufacturing, marine and services sectors. These sectors are more prone to competition, regionally and internationally. c. The levy for unskilled construction workers will remain unchanged, as we need to continue to upgrade the construction industry to use more skilled labour and improve productivity. The levy for domestic maids will also remain unchanged, as it is not a cost burden on businesses, and working mothers are already allowed to claim double tax deduction on the cost of the maid levy from their income tax assessments. I know this will disappoint many MPs including Mr Chiam who asked for it, but then he asked for everything. So I have asked my colleague, Dr Lee Boon Yang, to give him a fuller and, I hope, a more satisfying explanation tomorrow. The reductions will take effect from 1st January 1999. They will yield cost savings of about $204 million per year. Foreign Talent I can understand that at such difficult times, some Singaporeans feel that we should do the opposite, ie. raise the foreign worker levy and exclude foreign workers, in an attempt to preserve jobs for Singaporeans. But this would be counter-productive. Compelling companies to recruit Singaporeans at higher cost than foreign workers or professionals can only work in the short term. But in the longer-term the companies may relocate elsewhere, or simply close down if this makes them not viable. The best way to preserve jobs for Singaporeans is to allow firms the flexibility to employ some foreign workers, and at the same time to upgrade and retrain Singaporean workers to make them productive and employable. For the longer term, it is vital for us to continue attracting talent, because international competition will be based on the knowledge, expertise, creativity and entrepreneurship of our people. The Government has formed a multi-Ministry committee, called the Singapore Talent and Recruitment (STAR) Committee, with BG George Yeo as Chairman and Dr Lee Boon Yang as Deputy Chairman, to oversee this strategic effort. Its mandate covers all aspects of international talent attraction and retention, in order to make Singapore a hub for international talent, while retaining our social cohesiveness and national resilience. Industrial Land Our high land cost is conspicuous to investors and is a major handicap in investment promotion. The industrial property market has softened considerably. It has fallen by about 30% since last year. And recent URA tenders of industrial land have confirmed this. JTC Therefore, Jurong Town Corporation (JTC) will reduce its posted land rentals to reflect current market conditions. Posted rentals for industrial land will come down by an average of 24% for outlying areas and 40% for urban and suburban areas, depending on locations. Rentals for flatted and standard factories will come down by 20 - 30%. The lower rates will take effect on 1st January 1999. These will be permanent reductions, and not temporary rebates. The revised posted rents will form a lower base for subsequent rental adjustments. In addition, for lessees paying rentals at posted rates, there will be no rental escalation for two years, in 1999 and 2000. Thereafter, their rentals will be subject to a maximum annual increase of 5.5%, reduced from the present cap of 7.6%. This does not mean that JTC will automatically raise rents by 5.5% every year. The actual adjustment will vary from year to year, depending on business conditions. Nevertheless, for lessees who prefer certainty, JTC will offer the alternative of a fixed rate of increase of 4% per annum throughout the lease duration, regardless of market conditions. Existing JTC lessees and tenants who are paying rentals above the revised rate will have their contractual rent reduced to the revised rates. Those paying below the revised posted rates will continue to enjoy their current rebates up to end-1999. JTC's rental reductions are estimated to yield savings in business costs of $230 million. HDB HDB will make similar adjustments. HDB will reduce rentals for industrial land lessees, and rents of commercial and industrial tenancies which exceed the new posted rates, through contractual rent revision or rent rebates. For commercial and industrial tenants paying above posted rates, the rebates will be subject to an overall rebate cap of 20%. For land lessees and tenants of industrial factories, workshops and commercial properties who are paying below the new posted rates, HDB will continue their existing rebates until December 1999. HDB's reductions will contribute savings of $76 million. Transport and Communications Transport and communications are a vital sector of our economy, and form an important component of business costs. We will reduce a broad range of costs in this sector, spanning air, land and sea transport as well as telecommunications, in support of the efforts to bring down overall business costs. The reductions will amount to $790 million. Land Transport The Government's measures to restrain ownership of vehicles have been effective in controlling congestion. But ownership measures have been a blunt instrument, which cannot distinguish between those who add to congestion and those that do not. The high ownership charges that are necessary have added to business costs. With Electronic Road Pricing (ERP), we are able to shift emphasis from ownership to usage management measures. And this should enable us to achieve the same effect in terms of controlling congestion, but using lower taxes and charges. Therefore the Government will not be slowing down the implementation of the ERP system, or giving any rebates on ERP charges. It will press on to expand the ERP system to better manage traffic flow. This will allow us to reduce ownership charges and thus the overall cost of operating vehicles. However, reduction of ownership charges, especially upfront costs such as the customs duty and ARF, cannot be done too suddenly, as this would affect the asset value of existing vehicles. For now, the Government will reduce the customs duty on cars from 41% of OMV to 31% of OMV. The customs duty for new taxis will similarly be reduced from 17% to 7% OMV. This will take effect tomorrow, 25th November 1998. For the first phase of ERP, the Government gave a rebate on road tax of $200 per PCU. For the second year, the Government plans to grant a larger road tax rebate of $250 per PCU. This will take effect from 1st September 1999, in tandem with the expansion of the Electronic Road Pricing system under Phase 2. Excise duties on petrol and diesel are revenue items, but they are also a traffic management tool, albeit a blunt one, that helps to discourage excessive use of cars and to promote greater use of public transport. Excise duty on high-speed diesel is 7.4 cents per litre. Petrol excise duty is currently 46% of pump price, subject to floor rates which vary for the different grades of petrol. With the ERP, we will completely remove the excise duty on high-speed diesel. We will also reduce petrol excise duties rate from 46% to 40%, and cut the floor rates by 7 cents per litre. Since at present petrol prices at the floor rates are effective for most grades of petrol, the overall result is to reduce pump prices by at least 7 cents per litre. This will take effect from tomorrow, 25th November 1998. The Government expects the oil companies to pass on the savings arising from the reduction of excise duty fully and promptly to motorists. These reductions in land transport costs should yield savings of $320 million per year. Sea and Air Transport The Maritime and Port Authority will extend a 20% port dues concession for container ships, and give a similar concession for harbour craft, with effect from 1st January 1999. PSA, now a corporatised entity, has also agreed to give a one time 10% rebate on lift-on/lift-off charges, local container store rents, Keppel Distripark rents, office properties rents, commercial warehouses rents, wharf handling and local store rents at the Multi-Purpose Terminal, all with effect from 1st January 1999. These are estimated to yield business savings of $32 million per year. The Civil Aviation Authority of Singapore (CAAS) will be giving a 10% rebate on landing fees for airlines with effect from 1st January 1999. It will also extend rebates currently enjoyed by airport retailers for another 12 months beyond June 1999. These are estimated to yield business savings of some $57 million per year. Telecommunications Telecommunications form a significant component of business costs, especially for information-intensive activities like finance and banking. Telecommunication tariffs have been falling steadily in Singapore, as in many other countries, as a result of rapid technological advances, more liberal regulation and greater competition. However, there is still scope for them to decline further. TAS will reduce the licence fee for mobile radio-communications stations with effect from 1st January 1999. This will mean business savings of $2 million. Singapore Telecom has informed the Government that it will be implementing a tariff reduction package of $340 million, starting 1st January 1999. This comprises two components: first, rate reductions amounting to $90 million under the price control framework administered by TAS. Second, additional rate reductions, new calling plans, volume discounts and other schemes amounting to $250 million. These are part of SingTel's continued improvements in its tariff scheme in view of intensifying competition. SingTel is a publicly-listed for-profit entity. It is making these changes in order to respond to the current economic conditions and impending competition, and to contribute to Singapore's overall competitiveness which will in turn benefit SingTel's business. Utilities - Electricity The regional currency realignments have made our electricity tariffs less competitive. The June off-budget package included a rebate of 0.3 cts/kWh or a 2.6% reduction in the average electricity tariff. With effect from 1st January 1999, Singapore Power will increase the rebate on electricity tariffs from 0.3 cts/kWh to an average of 1.3 cts/kWh, for a period of two years. However, part of this rebate will be used to compensate the higher fuel costs incurred by Singapore Power, so the net rebate to consumers will average 0.9 cts/kWh, or a reduction of 7.7% in electricity tariffs. The net rebate will vary somewhat between different consumers, because PowerGrid will be unbundling the charges for the use of the electricity grid, to reflect actual costs incurred by the different categories - Extra High Tension, High Tension, and Low Tension. Singapore Power will announce the details later. Government will also remove the 2% Government tax levied on household utilities bills with effect from 1st January 1999. The electricity tariff rebate and the removal of the Government tax will yield cost savings of $372 million per year. Other rates and fees The Government levies a multitude of rates and fees. We will not freeze or reduce them across the board. Each of these levies has its own rationale and purpose. To freeze all of them regardless of their merits will hinder the Government from making adjustments that become necessary from time to time. It will create rigidities and distortions which will impair the efficiency of our public services. Nevertheless, the Government will review critically all its rates and fees, and lower those where there is justification. It has identified $8 million of other fees and charges to be reduced in this package. These include rental concessions by various ministries to tenants, generally in the form of 10% rebates for one year. One of these is the concession to hawkers paying market rents. Environment will extend the current one year rental rebate given to these hawkers in July 1998 for a further six months to December 1999. If despite this rebate their rental still exceeds the January 1999 market rates, Environment will give them an additional rebate of up to 10% for 12 months from January 1999. In effect, many hawkers paying market rents will get up to 20% off what they were paying before July 1998. Other short-term measures At the same time as we cut costs, we must also encourage businesses to expand. The economic agencies will work with companies to support their promotion and marketing efforts. To spur more investments in both manufacturing and services, the Government will reintroduce the Liberalised Investment Allowance Scheme, which it used in the 1985 recession. Investment allowance of 30% will be liberally granted for investments in productive equipment used for qualifying activities. These activities include manufacturing, engineering and computer related services, as well as a wide range of other specified services. For investments which meet more stringent requirements like contribution to value added, a higher allowance of 50% will be considered. Rebates for individuals and households The reductions in CPF and bonuses will cause a drop in the standard of living that Singaporeans have become used to. This cannot be avoided, because it is through this sacrifice that we will reduce our costs and strengthen our competitiveness. This will be painful to Singaporeans, as we have grown accustomed to many years of steady growth and wage increases. But because inflation is zero and even negative, actual standards of living have fallen by less than earnings. Retrenchments and unemployment have risen, but jobs are still available, provided workers are willing to be flexible. Flights out of Singapore over the Deepavali long weekend and during the December school holidays were and are fully booked. Many Singaporeans are still going overseas for holidays, maybe bringing their maids along, though perhaps to nearer destinations. Of course, not everybody goes on overseas holidays. MPs have all noticed an increase in cases at their meet-the-people sessions of people asking for help to find a new job, or wanting to change their HDB booking to a smaller flat type. The Government can and will assist lower income Singaporeans, to help them avoid undue hardship as a result of the package. For this purpose, it will take the following measures. GST Offsets To further assist lower income groups, we will extend the package of rebates for HDB rentals and town council service and conservancy charges, introduced in 1994, to offset the impact of GST. These rebates were transitional measures meant to help 1-, 2-, and 3-room HDB households, and were due to expire by March 1999. The Government will now extend them for a further two years. This will cost the Government $22 million per year. Utilities In 1997 and 1998, the Government gave a set of utilities and service and conservancy rebates to HDB 1-4 room households to offset the increase in electricity and water tariffs. The utilities rebates are $100 for 1-, 2-, and 3-room HDB flats and $50 for 4-room HDB flats. There are also monthly grants in service and conservancy charges to these 1-, 2-, 3- and 4-room HDB flats. The Government will now extend these rebates for a further two years. This will cost $72 million per year. Public transport One area of public concern is the cost of basic necessities, especially public transport fees and hospital charges. Grassroots and union leaders have fed back to the Government the hope that transport companies and hospitals will pass on to the public their savings from the wage cuts, since wage costs form a substantial part of the business costs for both. These are reasonable requests. The Government has discussed this with the public transport companies. They have agreed to pass on their savings to commuters. With effect from 1st January 1999, a 50 cents fare rebate will be given and added for every $10 topped up into farecards. Concession card holders will be given a 5% discount on the value of their monthly concession stamps. The concession will be for 12 months. The total cost to SBS, TIBS and SMRT will be $40 million over a year. Transitlink will announce the details in a few days. Hospital charges Government and restructured hospitals will review their charges to pass on the cost reductions to Singaporeans. However, the actual reduction in hospital charges will depend on individual hospitals and the class of ward. Different classes of wards have different cost recovery targets. Some hospitals have been under-recovering their costs, particularly for class A and B1 patients. Our newer hospitals are in deficit. The hospitals will be working out the impact of the cost reduction measures on their own business costs. They will give emphasis to reducing charges for class B2 and C patients, who can expect on average reductions in hospital bills of 5-10%. The reductions will be implemented in January 1999. We already have an effective medical safety net in place with our system of different ward classes, plus Medisave and Medifund. Patients should choose the class of ward which they can afford. Those using Medisave should not have any difficulties, because we have deliberately not reduced the Medisave component of CPF contributions. Furthermore, the bill size in class C is already very low. Those who still cannot afford to pay their Class C bills can apply for help from Medifund. The Ministry of Health has advised Hospital Medifund Committees to be more sympathetic towards those who have been adversely affected by the economic downturn. General relief measures The Government will also implement general relief measures for Singaporeans, such as personal tax rebates, rebates on service and conservancy charges and rentals for HDB dwellers. However, I shall not announce these today. These are being worked out as part of the Budget proposals for the next Financial Year. They will be tabled in the Budget Speech next February. Conclusion Companies Must Also Cut Non-Wage Costs Mr Speaker, Sir, can I ask the Clerk to distribute a table (Cols. 1479 - 1482) of the total package of the cost-cutting measures which summarises the position and shows that the total package adds up to $10.5 billion over one year, more than what the CSC recommended? [Copies of table distributed to hon. Members.] This will substantially strengthen our competitiveness. It will help workers to keep their jobs, and companies to stay viable. table (Cols. 1479 - 1482) However, companies must not depend on cuts in wage costs and Government charges alone to solve their problems. Their managements should also take the initiative to look for savings from their non-wage costs. Most of these are internal to the companies. For example, they should study how they can use capital more efficiently, improve sales, streamline processes, or reduce inventories. However efficiently a company may think it is run, there is always room to do better. Companies which succeed in trimming their non-wage costs get to keep the savings. Every dollar saved this way is a dollar added to their bottom line, just as much as a dollar saved from paying lower CPF or smaller bonuses. This will give companies more scope either to increase their earnings and avoid making a loss, or to reduce prices and increase sales, especially exports. Balance of cost cuts Three quarters of this cost saving package - $7.5 billion worth - comprises wage costs, through the CPF reduction and the NWC recommendations to reduce wages. In the public discussion of the CSC Report and also here over the last two days, the question has often been asked whether wages are bearing too large a share of the burden, and whether the Government can do more. Some have even suggested that the Government match the reduction in wage costs dollar for dollar. This is not possible. To understand why, we need to examine the composition of our GDP. We can think of GDP as the sum of all the incomes generated for the domestic production of goods and services. You add up all the money earned from productive effort and that is our output for the year. If you use this "income approach" to GDP, then you can divide GDP into three components: (1) Wages (including salaries and CPF) which make up 43% of GDP. (2) Indirect taxes (e.g. GST, ARF of cars) making up 10%. (3) The remaining 47% of the GDP is gross operating surplus, ie. earnings of companies and statutory boards, including depreciation. So wages, 43%; indirect taxes 10%; and the balance, gross operating surplus, 47%. So any cost reduction package will have to come out of either wages, indirect taxes, or essentially company earnings (companies meaning, including statutory boards). The economic crisis is already squeezing company earnings. Our aim is to help companies improve their bottom lines. Getting companies to bear a large share of this cost reduction would defeat this objective. So most of the cost reduction must come from the other two components of GDP, ie, wage costs and Government levies. Since total wage costs are much larger than Government charges, wages must inevitably account for a large part of the total cost reduction package. Of course companies doing well may pass on their cost savings to consumers, or invest them in business expansion or worker training. This includes, of course, statutory boards and Government-linked companies, such as JTC and Singapore Telecom. However, statutory boards and GLCs cannot simply run a deficit in order to give money away. Santa Claus has not come to town. They must operate as efficiently as possible so as to keep costs to a minimum. They also have a responsibility to operate commercially, just like any other company. Even hospitals must run efficiently and break even, given the cost recovery targets for the different classes. Once we deviate from this cardinal principle, and our statutory boards and GLCs ignore their bottom lines to operate contrary to commercial and economic logic, they will lose discipline, and become bloated and inefficient. Service will deteriorate. Eventually they must either go bankrupt and close down, or else the Government must bail them out, and raise taxes to pay for their deficits . This is exactly what has happened in many other countries. The $3 billion reduction in Government taxes and charges in this package is substantial, especially coming on top of the $2 billion announced in June, which was completely borne by the Government and which, judging by the debate over these last two days, has been largely forgotten. We already expect a budget deficit of 1% of GDP this year. Ministry of Finance estimates the deficit to grow to 3% to 4% of GDP next year. This is a sharp contrast from our usual surplus budgets. We are in a position to run this temporary deficit, only because we have been prudently maintaining budget surpluses and building up our reserves for many years. MPs and others have suggested that we should dip more deeply into the reserves, in order to minimise the hardship to Singaporeans. Some have even calculated how just a few percent of our reserves would mean many billions of dollars to spend. My reservation is not with the arithmetic, but the psychology. It is like high-living heirs who cannot wait to divide up their wealthy grandfather's estate. If we did this, we would change from being a nation of savers accumulating wealth to a nation of spenders depleting it. Poh Say Teck ( ) wrote a piece in the Lianhe Zaobao today, and as he said, this would send out all the wrong signals. First, that our situation is so grave that we have no choice but to use the reserves, and second, that we have a low threshold of pain, and cannot bear austerity and hardship. It is an excellent piece. It shows he understands, and there are Singaporeans who understand, and I commend it to you. His title is Zhen yao dong yong lao ben ma? [ ], loosely translated: "Do we really want to eat our seed corn?" So I asked Dr Ow Chin Hock, what does lao ben mean? He says it is very difficult to translate. It really means the money you keep for your old age. Some people call it guan cai ben [ ]. It is something you keep for a last resort, not spend at the first opportunity. This crisis is far from over. We must husband our reserves, because we cannot tell what the future may bring. We must not spend them at the first sign of trouble, to generate a false sense of prosperity and well-being. If we did, the reserves would soon be gone. And the next time we run into rough weather, which will happen sooner or later, we would have no more safety net, no more rabbits to pull out of the hat. We must therefore get back to prudent, balanced budgets as soon as possible. Confidence Singaporeans are worried about what is happening. They have followed events in the countries around us, and seen how these have affected us. They know retrenchments are higher, bonuses are smaller, and prospects are highly uncertain. They want to know what we can do to help ourselves. But to judge by the recent TCS survey, they also know that we must cut business costs to stay competitive (83% thought so). They think that the Government has been effective in responding to the crisis (82% thought so), and they believe that Singapore will be the first country in Asia to recover (76% thought so). These are substantial majorities, almost enough to cause the Opposition to lose their deposits. We have reason for confidence. Since the crisis began last year, Singapore has shown that it is different from the other countries. Not only is our economy sounder, but the way Singaporeans have responded to this crisis has shown that we understand this problem, we know where our interests lie, and we are quietly working together to tackle this challenge. Few other countries are in a position to implement a package like this, or to persuade the workers to support such austerity measures as being in their own long term interests. Foreign investors and analysts have noted this, as have ratings agencies. Standard & Poor's has just reaffirmed Singapore's AAA rating. Fitch IBCA has rated us AA+, just one notch below AAA, and equal to their rating for Japan. As Fitch IBCA commented when they made this assessment: "Singapore stands head and shoulders above most of its East Asian neighbours. It has a well-diversified, open economy; a strong external financial position; and a sound, well-regulated financial system. Deep-rooted economic fundamentals, matched by sound economic policies have limited the fall of the Singapore dollar and should enhance Singapore's position as a leading regional financial centre, vis-a-vis Hong Kong and Japan." Outlook This package will help to make Singapore companies, and the economy as a whole, more competitive, to reduce retrenchments and unemployment, to attract new investments and business, and to lay the basis for long term prosperity. However, we cannot be certain that as a result of this package, the economy will recover quickly. That depends on developments in the region and the broader international economy that we can neither predict nor control. At present the prospects are that Indonesia will take an extended period to stabilise and recover, while the situation in Malaysia following their imposition of exchange controls and the dismissal of former Deputy Prime Minister Anwar Ibrahim has not yet clarified. It is safest to assume that we will have at least one more year of difficult conditions. MTI has forecast growth of between -1% and +1% for 1999. With this package, we hope growth will be at the upper end of the range. This crisis is not just an economic challenge. It is a challenge to our social cohesion and national resilience. Tough times put our mettle to the test. The tougher the times, the more we must bond together, strengthened by our shared experience of adversity and struggle. Whatever happens externally over the next few years, we have the resources, and the resilience, to weather the storm. Let us maintain our cohesion and sense of common purpose, and then we will preserve our high international standing, and emerge stronger, more competitive, and set to thrive for many more years. [Applause.]

Some Members may want to seek clarification on the points raised by the DPM. Although Members are not allowed to make a speech a second time, if there is any point to clarify, DPM is happy to take the questions.

Mr Speaker, Sir, I compliment the DPM for the cost reduction package. I want to seek one clarification. It appears from the Table, that has just been circulated, that Government will incur a saving of about $7.5 billion in wage cost, and Government will forgo a revenue of about $3 billion. If my interpretation of this Table is correct, there is a net saving of $4 billion to the Government. There is a net saving of $7.5 billion in labour costs to the Government.

Mr Speaker, Sir, not all the savings in labour costs accrue to the Government. Many employers are not the Government, contrary to popular perception. And I do not think that they are going to pay the Government what they save. So most of the $7.5 billion accrues not to the Government. The Government will be substantially out of pocket as a result of this. And I have said, we are expecting a deficit of 3% to 4% of GDP next year.

My question to the Government is that figures notwithstanding, whether the Government will also consider pump priming the economy at the moment.

Sir, I would also like to join my colleague to thank the Deputy Prime Minister for the excellent speech covering many points. But I just like to ask one question. Can he explain why is it that it is not necessary for the Government to actually look into measures like income tax rebate for the personal level at this point in time, but leave it only to the Budget debate later in March next year?

Mr Speaker, Sir, may I ask the DPM what is the rationale for not allowing reduction of the maid levy?

Mr Speaker, Sir, yes, we do consider pump-priming measures. Our June package did include some pump-priming measures. They are still in effect and we will consider whether we need to do some more next year. I think we have to consider this carefully because pump-priming measures are not the same as cost-cutting measures. They stimulate different parts of the economy. We need to help the manufacturing sector, the export services sector, maybe even the financial and banking sector, telecommunications, transport. These will not directly be helped by pump priming. Because if we pump prime, most of the money will go into infrastructure, that means construction, and we cannot have the rest of the economy minus 5% and construction plus 50%, and claim that we have a balanced economy. We will be out of kilter. So we will pump prime but the projects have to be justified. We cannot build white elephant monuments. We will identify worthwhile projects which make sense for the long term. If we have some more, they will be done in next year's budget. Income tax rebate, why not now? The answer is that you are not paying tax now. You have already paid tax for last year in Year of Assessment 1998 and the tax for Year of Assessment 1999 is not yet due. We will announce the income tax rebate in good time for that purpose during the Budget because it is really a Budget item. And again, it is not a cost item. On the maid levy, as Mr Rai has asked, we have promised a full and satisfying explanation tomorrow.

May I ask the DPM why he has not been generous, in terms of rebates, for the 1-, 2- and 3-room families? The other issue is on the prolonged unemployment for older workers. Are there any contingency measures to deal with the problem, particularly, those aged between 48 and below 55 years?

Mr Speaker, Sir, there are rebates for 1- to 3-room families. Firstly, because of the GST offsets, and secondly, because of the utilities offsets. And on the service and conservancy charges and rental rebates, which I think Dr Vasoo is specifically asking for, there is already a set, which was announced in the last Budget, which is still running. And I think the next Budget will be a good time to announce an updated set for next year. But you can be sure that we have not neglected them because our focus should be on padding the impact on the lower income groups. What should we do about prolonged unemployment, particularly, for the older workers? I think NTUC has been working very hard at this - retraining them, reskilling them, also encouraging them to be more flexible in their expectations and their approach, what sort of job they are looking for, where the job is, what they are expecting to be paid for it. NTUC's experience is, if they are willing to be flexible, the jobs are available. The difficulty arises when they have very specific desires and we are unable to accommodate them. I think that as long as there are jobs available in the economy, we should be very slow to think of touching the CPF or other structural measures which, once done, cannot be undone and will change us into a different kind of society, one heavily dependent on safety nets rather than self-reliance.

I would like to ask the DPM, with the reduction in the allowances for shopping overseas, how much GST does he hope to recover? And does he expect the Causeway jams to increase as a result?

I would like to seek the following clarification from the DPM. Firstly, I quoted DPM Lee's Parliamentary speech yesterday in my speech and I would like him to clarify what has happened to his assessment made in February 1998 and why, despite his assessment, he now says we need such a deep cut. The second clarification is why is there a need for the Government to mandate the cut in wages. I believe in response to the economic situation, the workers are already taking a cut and every individual company has a different profit and loss situation. Why do we want to set a percentage of reduction across the board? Why cannot we leave it to individual companies to decide? I believe they know what to do. Thirdly, I am not very convinced about the explanation on the percentage on the component of wages, the profit of companies as well as the Government charges, vis-a-vis GDP. BG Lee has explained that wages are a major component. But based on the cost of a company, and this was published by the Trade and Development Board, about 51% of the business cost comprises service costs as well as indirect Government tax. Can the Government not help the companies to reduce costs by first cutting the part on non-wages costs? And then we assess the situation again to see whether there is a need for a wage cut because I think it is quite a painful decision.

I wish to ask the Deputy Prime Minister whether he will consider giving greater financial assistance or rebate for workers who may take this opportunity to go for further training and to improve their skills in order to prepare them for the next upturn in the economy.

I would like to ask the Deputy Prime Minister to clarify his point about statutory boards. I can understand why GLCs must try to make a profit. But I am not sure why statutory boards must be inclined to generate surpluses. Surely, you can benchmark them to best practices rather than most profits. Secondly, I would like to ask the Deputy Prime Minister about the performance of GLCs and their reductions, especially those which are monopolies or quasi-monopolies, especially as regards telecommunications, water and electricity. Can the Deputy Prime Minister reassure us that the cuts they are agreeing to are the deepest they can cut, given that monopolies tend to extract excessive profits?

Mr Speaker, Sir, Mr Lew Syn Pau asked how much GST we will be collecting from the tighter limits. My answer is, I really do not know. It depends how much less frequently he shops overseas. But I imagine it will be a few million dollars a year. Will it cause a reappearance of the Causeway jam? I hope not, because our Customs will be doing their best in order to clear the cases efficiently. Mr Low Thia Khiang has asked several very pertinent questions. First, what has changed since February when I said our costs were in line and we did not need a wage cut, unlike in 1985. I think the answer is, the world has changed. The whole situation has changed. In February, we did not see so many clouds on the horizon. Since February, Indonesia has had a revolution and there is still a political transition in process and riots from time to time, and no signs of being completed yet. In Malaysia, in February, the news was that the banking system was sound, the companies were sound, a few needed marginal top-ups in capital really as a voluntary, discretionary gesture. But there was no basic problem and the whole system had been stress-tested and it was all right. But, today, in Malaysia, it is in a different situation. They have Danamodal to recapitalise the banks. They have Danaharta to take over the bad loans and they are looking for large amounts of money to be raised overseas. They have imposed exchange controls. The Deputy Prime Minister, who was also Finance Minister, has been dismissed and arrested, and the situation is quite a lot more complicated than it used to be. We did not foresee all this. On a broader landscape what used to be an Asian problem and was still an Asian problem in February, became an emerging markets problem. In August, Russia defaulted and a chill went through financial markets. Dow Jones dropped drastically. Then people focused attention on Brazil and countries have now scrambled and cobbled together a $41 billion package to rescue Brazil. Brazil has promised on oath to adhere to fiscal austerity and not to spend money which they have not earned and to bring their budget in balance. Even then, people are not sure whether this is going to solve the Brazilian problem. Because if the Brazilian problem does not get solved, then the impact on Europe and America will be very substantial. In America, and around the world, as a result of this, there has been a tremendous shrinking back of investors. They call it flight to quality, that means they only want to invest their money in the very safest and most liquid assets like US treasury bills and even then, the most current US treasury bills, and away from emerging markets. So the emerging markets spread has gone up. If a developing country wants to borrow money, it is T+. At one stage, it was T+15%. "T" means the treasury bills interest rate, plus 15 percentage points. That means it may cost you 20% to borrow. It is even more than sepuluh dua. So now, it is T+9. But there is a tremendous shrinking back of willingness to venture for funds. The whole landscape has changed. We are an emerging market trying to persuade investors that we are different from other emerging markets, and that is why we must have one package, not little items, non-wage components first, let us give it a try, does not work, another little bit of component. We have taken some time to sit together, assemble our ammunition and one bang. And now we will have to see how the medicine works. You cannot do these things by little trickles here and there, and hope by fine-tuning to avoid hard decisions, that is disastrous. The Japanese have tried that. Little bangs every now and again. They have had seven or eight fiscal stimulation packages. They just had another big one, and the Nikkei dropped because people have lost confidence in the Japanese government. The Japanese people have lost confidence in their own government. So if we are going to have a decisive measure, let us decide what needs to be done, and do it. And that is what we have done. As to why the Government needs to mandate the cut in wages, that is also a good question from Mr Low. For many years now, we have moved away from that in the NWC recommendations and given qualitative recommendations. In other words, we just make an assessment of the situation, give a sense of how tight or slack the market is, but leave maximum room for companies to discuss and to settle on their own without constraining them with a guideline. But this is the first time the NWC has to come out with the recommendation to tighten wages rather than to increase wages. We are working this because of our flexi-wage scheme which we have operated since the last recession. Are you sure that if we left it to companies and unions to say, "Please do your best and if need be, cut wages." they will be able to resolve the matter quickly and expeditiously? I doubt. Because every union leader will feel under pressure from his members to do the best he can for them at the negotiating table. If we have this NWC guideline, it does not constrain the company to have to go between 5% and 8%. But it sets expectations and therefore I think makes it easier for the two sides to converge on a solution which would take into account the conditions in the company. Some will be making money and want to have bigger bonuses. Some already have got formulas by which bonuses go up and down with business and they should stick to those formulas. Some may be making greater losses than this and may need to make even deeper cuts. Those flexibilities, we allow. But I think it is useful to set a clear signal nationally that this is a general direction, and around that thrust, we allow some freedom of manoeuvre. Mr Sin Boon Ann asked about rebates for worker training. I think there is a recommendation in the CSC Report for Skillsave. It is one of the recommendations which we will be studying. It is an area which we are sympathetic to. The problem is not finding the money really. The problem is making sure that the projects are viable and effective. And we have already given $100 million this year for the Skills Redevelopment Programme. If that is not sufficient, we will look for more. Mr Simon Tay asked about statutory boards and whether they need to make profits. The answer is, it depends on which statutory boards. A statutory board fulfilling an economic function has to function on economic principles. JTC cannot give its land away for free because there is a value to the land and it has to price the land properly, not just to protect the reserves and satisfy the Elected President, but because if you misprice the land, you will have misallocation of resources and all sorts of industries built here which should not be here. Other statutory boards like EDB and NPB, of course you will have to develop other measures. Because if EDB decides to make money, we will get no investments. It is a cost centre. NPB should break even because we want to know that the training skills and projects they are doing are viable, and there is a demand for it. It varies from company to company and statutory board to statutory board. But I think where there is an economic function, then we must take that into account. It is not just an arbitrary matter of dividing numbers by two. As for monopoly of GLCs, he mentioned telecommunications, water and electricity. Are we sure that it has gone far enough? We have to separate them into different categories. Water is not a matter of reducing prices in order to match costs. In fact, we are raising water rates. We did this year, and we will do it again next year. It is for strategic reasons, and we are not going to change that because we have to encourage Singaporeans to conserve water and to realise that the cost of that incremental drop of water is not just collecting it from the sky. We have already collected all we can. But distilling it that is very expensive. Water is a different matter. As for electricity, it is not yet a competitive market but it will be a competitive market with Tuas Power coming on-line. But, already, even within Singapore Power, there is competition between Seraya and Senoko because we set up two companies with non-overlapping boards and independent directors, and they compete against each other. If you look at electricity tariffs, the cost of electricity now varies by about a factor of two between the day time and night time. For some of that, we are going to reflect to consumers in this package so that the consumers will have the right incentives to operate, for example, three shifts, do more at night, and pay electricity at a lower price. As for telecommunications, it is still a monopoly, but the monopoly is running out because we have decided that come April 2000, a second operator is going to provide basic telephony services, fixed line including IDD, and that prospect of competition is a strong reason why Telecom is now bringing their prices down. There is some further distance to go compared to what prices will prevail in a completely competitive telecommunications market. We have to respect Telecom's monopoly until April 2000 because this was the undertaking we gave when we corportised and privatised the company and we have to honour and live up to our bargain with the Telecom shareholders, which include people other than the Government.

Further clarification, Sir. I now understand that the Government has failed to foresee the rapid development in this economic crisis. But I understand that recently, there were some favourable assessments by international agencies that economic conditions may improve in 1999. I do not know whether the Government has foreseen this happening before deciding on the package presented in Parliament. The second clarification is that with the current package, are we confident that we will garner the necessary foreign direct investment (FDI) into Singapore as targeted. The DPM also mentioned why we cannot leave the companies alone to do the cost-cutting measures and wage reduction. I thought we wanted to project our workforce to the world as well as to investors. If our workforce is rational, they will respond to our current economic situation and be prepared for the wage cuts proposed by companies which are not making money or in the red, rather than losing their jobs. I thought NTUC has been very powerful in garnering the support of the workers to respond to the economic environment. So I am quite surprised that DPM says that it may be difficult to do if we leave it to the companies to negotiate the wage cuts.

Mr Speaker, Sir, we failed to foresee what happened in the last six months. I fear that Mr Low Thia Khiang probably also failed to foresee that. Nobody expected it to happen and in fact it is impossible to know, not because you cannot make the calculations, but because they depend on human decisions of leaders, investors, populations, and that cannot be computed. Similarly, they ask me whether next year will be better. Some analysts think so. Maybe if we just project economic charts it looks like that. But can you tell how the political situation will develop? What new turns of the kaleidoscope may happen? What totally new landscapes may emerge? Nobody can tell. We were reluctant to move earlier because the situation had not yet worsened and I think if we had made such a package before the situation had worsened, it might have shaken confidence and been not very well accepted by the public. Because they would have said, "Why?" I am sure that Mr Low would be the first to stand up to say, "Why? The situation is not so grave. We do not need to do this yet. Keep it till later on." We have to make a judgment. We made this move. If next year, things turn favourable, well, that is good. We can adjust our policy thereafter. But if we do not make this adjustment and next year things do not turn out good, then it may be too late for us to take the steps by next year. Are we confident of getting the FDI? I think the numbers will go down this year. But if this package gets clear support from the population and from political leaders and MPs, then it will be a very strong selling point when EDB knocks on doors and tell people, "Look, I am able to do this. Other people cannot." We can encourage workers to accept a wage reduction. Can other countries do that? Even in the freest economies in the world, economists will tell you that wages are sticky downwards, ie, when things are good, they go up and when things are bad, they are very slow to come down. That is the way human beings are. We have to accept that and we have to find a way to encourage Singaporeans, to nudge them into a direction which they will eventually do on their own, but which may take longer. On their own, yes, they will take wage cuts if the company is about to go bust. But what we are trying to achieve is an across-the-board general shift in their wage level, not every company, but a general shift, and even companies which are not yet on the verge of disaster, we are saying, "Better make this adjustment now. I am already cutting CPF for everybody. And I think it is wise, if you are not performing exceptionally brilliantly, to be cautious and also to make some adjustment on your bonuses. After all, that is what they were built up for." If next year, things are better, well, good for you. Certainly, if there is no need for companies to cut bonuses, there is no need to touch reserves. But the same Member has been asking us why do we not touch reserves earlier. I think he may want to re-examine his position.

I would appreciate it very much if DPM could include the reduction of education fees especially for higher learning institutes. So far, the Report does not mention it.

From the package of measures that DPM has announced, it is not so obvious whether all the Government charges, levies and taxes that we have been talking about, including rentals, telecommunications and utilities, have they all come down to the 1994 levels, as we are targeting the wages to come down. Secondly, on property tax, the 55% tax rebate is of course welcomed. But is anything going to be done to speed up the re-assessment of property values because the net effect of that 55% and the failure to assess the recent property values, which have gone down by 40% to 50%, negate the impact of that 55% rebate. Thirdly, I would like to ask whether for tenants of JTC and HDB industrial land, for those who are paying rentals slightly below the posted values, would they also see some reduction in rentals?

The question on whether the rates are back at the 1994 levels, the answer is that it varies. In the case of industrial land, which is probably the most important of them, they will be back there. In the case of telecommunications charges, it is not only at 1994 levels but considerably below that because in the last few years, in fact, telecommunications charges have been coming down. The reassessment of property tax is in progress and I know people have been receiving property tax reassessment notices and for once, the figures have become smaller rather than larger. I am not sure whether this is good news, generally, but those who have received them have welcomed them. For JTC and HDB tenants who are paying below the posted prices, as I said, they will have certain rebates given to them which will hold until December 1999. Mr Harun Ghani asked about higher learning institutions. I will have to ask the Minister for Education to look into this. What he told me is that generally he thinks that the fees do not need adjustment, except for one or two specific areas where there are problems. But he will look into the matter.

Further clarification, Sir. In view of the current situation where there are more people being retrenched, what is the view of DPM Lee on the need to set up a fund to help those who are sole breadwinners of the family who have been retrenched. Secondly, he has announced certain percentage cut on the salaries of top civil servants. What would be the estimated percentage cut that would be applicable to Ministers and MPs?

As I have explained, the way to help the retrenched people is to help them find a new job and if, in fact, despite all their efforts, they have not been able to find new jobs, there are a variety of people they can turn to for help, including the CDCs, unions, and the MPs who would put them in touch with the right agencies. If MPs have any specific problems, they should get in touch with the Ministry of Community Development or the Ministry of Manpower, and they would be able to assist. What is the cut of Ministers and MPs? As I have explained, they will follow the same as the civil servants. For Ministers, their cut is 10% per year in the annual wage bill and for MPs, probably something less than that. For the rank and file civil servants (Divisions III, IV and DREs) it is 5% of total annual wages.

Does DPM Lee think it is sufficient to project political leadership by just taking a 10% cut?

Mr Speaker, Sir, nothing will be sufficient to persuade Mr Low Thia Khiang that it is sufficient. So from that starting point, we have to judge what is the right number which makes sense and allows us to fulfill the principle of the NWC, which is, the higher levels, will have a deeper cut than the working rank and file, and also to maintain the principle that we really pay people for their job. And we have set Ministers' salaries and civil servants' salaries at levels which we think are sensible and justifiable and are right to get the sort of people we want for the jobs which we are looking to fill. And especially at times like this, I think we would be looking for good Ministers rather than cheap Ministers.

Sir, it is quite strange that Mr Low Thia Khiang has made the accusation that the Government has failed to foresee these economic difficulties. I am not sure whether he heard his Secretary-General, Mr Jeyaretnam, a few hours ago in this House relating a story about a banker friend of his who told him that way back in 1996, he already knew that we would face this problem. Had Mr Low been informed by Mr Jeyaretnam about that story he heard from his banker friend and raised it in this House, then today he would have been proclaimed a prophet. Unfortunately, his Secretary-General, when he first stepped into this House in 1997, also did not raise this subject of his conversation with his banker friend and thereby depriving him of the opportunity of making a political point against this Government for failing to foresee this serious crisis. But I think Members, having heard 13 MPs who have spoken today and the statement by the DPM and all the clarifications that have been asked this evening, would think that it is enough already for the day. So we will call it a day.

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

Debate to be resumed on what day, Mr Lee?

Tomorrow, Sir.

So be it.

Resolved, "That Parliament do now adjourn." [Mr Wong Kan Seng].

Adjourned accordingly at half-past Six o'clock pm. table (Cols. 1479 - 1482)