Hansard, 1998-11-25

asked the Minister for Communications (a) how has the pilot project allowing traffic to turn left on red at some of the traffic lights been progressing; and (b) whether his Ministry will consider extending it to more or all traffic lights.

Mr Speaker, Sir, the Left Turn On Red scheme has been successful in reducing the delay of left-turning traffic at the junctions where it is implemented. On average, more than half of these vehicles are able to clear the junction during the red light period. The scheme has been extended to a total of 58 locations island-wide. The scheme requires motorists to come to a complete stop to look out for any pedestrian or vehicle before proceeding with the left turn. However, there have been instances where motorists failed to do so. I would like to take this opportunity to remind motorists to take due care and make the left turn on red only when it is safe to do so. LTA will monitor the practices of motorists in this regard before extending the scheme to other junctions.

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.

Mr Speaker, Sir, I am sure for the last few days, you have listened to many colourful speeches. There will be 18 more after me and I hope you will be able to have a keen ear in terms of what would be expressed. I am sure, Mr Speaker, you will be able to write a thesis after that! Sir, I would like, first of all, to commend the members of the Committee on Singapore's Competitiveness for mapping out a very good comprehensive strategy to meet Singapore's economic and future challenges. The Report sets out the direction and we have got various inputs. The members have indeed done a significant job in compiling a very comprehensive report. What I would like to also commend is the very effective and immediate measures taken by the Government to implement with immediate effect the cost cutting measures to boost our competitiveness. The measures are very significant and I hope all Singaporeans will rally behind the Government to see how they can support a plan which can be implemented to help Singapore to be viable and to be able to meet the more serious challenges ahead. Sir, having a plan is not sufficient but I think we will have to examine why Singapore is one of the countries in Asia that is not seriously affected and dislocated by economic problems, unlike many other places. I think most Singaporeans tend to take this for granted, that things are going well and therefore there are less issues that we are challenged with. The Government is able to look after these issues. They are capable people to think of solutions. I feel this is not realistic, Sir. It is very important that we go behind the reasons as to what makes Singapore less affected by the current economic problems. This analysis is very important so that we can understand the fundamentals that can be challenged in future. Sir, I would like, at the outset, to state that political stability is one of the cornerstones in our capacity to remain afloat, and I see that we have also taken this for granted. We should look at the political mess in many of the countries around the region and the world. There are many so-called democracies which have very good plans, good ideas, but many of these have not been implemented. Many people in these countries are affected and many of them have no capacity or ability to influence such decisions that have been made, and many of these people have suffered grave economic injustices and grave problems and regression in terms of their standard of living. And all these are issues that we need to examine and appreciate in the context of why we have been able to manage effectively. Sir, what becomes very important when we are faced with a recession is our capacity to maintain good political stability and cohesion. When resources are limited, there is always competition for resources, and the less able will not be able to get the kind of resources which they require for their living. So what is most important in this respect is that I would like to urge employers to seriously examine the approaches they adopt in the employment of workers, in ensuring that their practices are not discriminatory in terms of race, language and religion. This is very important in the context of Singapore, because we are a multi-racial society. If we believe in the principle of meritocracy, then I think employers, in times of recession and economic problems, must be very objective to ensure that we deal with the problems of retrenchment and unemployment on the basis of merit and objectivity. This is very important. Otherwise, we will upset the equilibrium of the multi-racial society that we live in. Secondly, we also have to look at the whole issue about good leadership in social institutions. Unless and until we ensure that we have good people managing our various social institutions, we may not be able to discharge the kind of plans that we have. And what is important for us Singaporeans is that we have to ensure that we continue to have people with good leadership, good personal integrity and honesty to manage various social institutions. Because these very social institutions, by their nature, are institutions that will make our society viable. It is not sufficient to say that we need good social institutions, but it is important to ensure that we need to nurture and have good people who can manage these institutions. We should induct good people into these institutions so that they can continue to manage them effectively in the interest of the majority. Finally, we also need to look at a good plan to manage issues ahead. And the CSC Report is an effective plan in that we have been able to mobilise various people to work on it and come up with various ideas that we can marshal and, hopefully, with the implementation of these ideas, we will be able to make a further stride in dealing with the economic problems that we face. So good plans do require good people and good political context to manage and implement them. Without these precursors, the best ideas that we have will not see any fruition and it will not have any impact on the social lives and to solve various social problems that we may face in our society. Sir, what we need to look at is to see how the CSC Report could address a number of issues which have been left out. I foresee that the issue of prolonged unemployment needs to be re-examined very closely, because we have depended on full employment as a form of social security. This is good as long as full employment lasts, but we never know through prolonged recessions, what impact this would have on people who are less skilled, semi-skilled and others who may not be able to find themselves employable. We need to examine the assumptions of full employment very critically, and in future, if we run into a prolonged recession, there is a need to assess how people who cannot be employed for a long time would still have a way to manage their lives. Sir, prolonged unemployment is one of the issues that we need to examine and the CSC has not examined this issue fully. We have to look at what can be done, particularly for older workers who would remain unemployable for a long time. We may argue that there are retraining funds available to upgrade them, that special funds would be available and set aside for their training, but I think the issue at hand is their employability. In some circumstances, it may not be possible for them to find employment itself because work institutions may not necessarily take them. I feel that there is a need to look at either the trade union level where some funds are set aside to deal with the upgrading of these workers in order to solve their long-term employment needs and problems. The other issue the CSC Report has not addressed is the challenge of the older workforce. This would be one of the more serious challenges that we are likely to face in the next decade. And with an older workforce, would we remain competitive? This is a question we need to examine. We may not become competitive, provided they have the capacity to be trained and upgraded and to move into job areas which would deal with information technology. So I feel that with a declining population which is below replacement, the issue will become very grave in the near future, and we have to look at how we can maintain a more robust workforce. This means that we have to recruit more talents, more semi-skilled and skilled workers to enter our workforce. I see this issue requires to be studied more closely. I am glad that the Government has set up the STAR Committee to look at these issues and, hopefully, it will solve some of the problems of the greying of our workforce. I would like to give some comments on the Government measures to reduce costs which have been announced yesterday. The measures are comprehensive and will help to stimulate our economy. The measures are realistic because they are implementable and some of them, in fact, have taken immediate effect. Hopefully, with the implementation of these measures we will be able to become more viable. What is most important and gratifying to note is that the direction of the cost-cutting measures which are to be implemented works on the principle of shared burden. I am glad that the cost-cutting measures work on the basis of those who can carry a heavier burden than those who cannot. This is a very good principle and I must applaud the Government for the effort in this direction, because for those who are unable to do so they do sacrifice, but they do sacrifice a little. This, at all costs, will enhance our ownership to the problem. We will be able to promote the sense of commitment to the various issues that we face. This in itself is very important. People feel that they can work towards a common cause and we are all sharing a common purpose and a common destiny, and we all believe that we want to make Singapore viable. Therefore, the question of ownership to these issues that we face has been reinforced. What I would like to urge is that we should have been a bit more generous with the lower income group. The rebates that have been granted by the Government provide an extension for a further period of time in their relief. But we could have been more generous in increasing the amount of S&C charges and PUB rates. That would have relieved further some of their burdens because many of them are unskilled and low income workers. They will face the greatest impact in terms of the capacity to manage their lives. It is desirable and our responsibility to see that we can do much more than what we have given to them. The second area which seems to invite attention is the levy. Many working mothers are most disappointed that they have not been given a reduction. All other companies that are employing foreign workers have been given a reduction. I think working mothers employing domestic maids should deserve attention because many of them are working hard in terms of helping to develop our economy and making Singapore viable. I do not see any reason why their case could not be considered. A very small proportion of working mothers benefit from the tax set-off. A large proportion of them are not benefiting from the tax set-off measures. I think it is not equitable in the sense that we have over the years increased the levy, but when all other revenues are being reviewed, they should in fact be given an opportunity to benefit from the reduction. In that respect, the argument that we want to dampen the demand for more of them to employ maids should be re-examined. I do not think the reason is strong enough to support the argument that no reduction has been considered for them. The issue is that many of them are in the middle class group, which I would call the "sandwiched" families. I feel that they should be considered. This is no real logical reason that I can gather that they should not be given due consideration for reduction of maid levy. There is a very large sector that would be affected in these trying times. I hope that their case could be reconsidered by the Minister for Manpower. Sir, in the final analysis, the social and economic crisis that we are all facing is our problem. It is important that we have to work together to fix it. Unless we can rally around to work together and find new creative ways, new approaches and new solutions to all these issues, we would not be able to tackle the problem as we hope to do so. So it is very important for us as Singaporeans to commit ourselves to working together. I am sure that all Singaporeans will rally behind the Government to see what we can do in our own ways. Whether big or small, we are all to be counted. Like what our Mr Deputy Speaker has said, small is beautiful. It is not just beautiful, but we are a people of mettle who can withstand and be counted as Singaporeans. I hope we can come together and find ways to weather the storm ahead. By doing so, we will keep ourselves afloat.

Mr Speaker, thank you for allowing me to join in this debate on the motion. Much has been clarified by DPM Lee's response to the CSC Report yesterday. What the Government will do now, very shortly, is quite clear. Other points, however, remain for consideration - especially with regard to the medium to longer term view, but also on the possible effects of what Government will do. This is necessary because, as DPM reminded us, competitiveness is much more than cost-cutting. It is not a single attribute, but a combination of different elements. It is not only a question of economics or infrastructure, but it has human dimensions, such as education, skill and know-how, the flexibility of our system and the quality of life and the environment in our city. Competitiveness is not an absolute characteristic but a comparative one. In this debate, one detail will tend to dominate discussion, whether in this House or in the coffeeshops. This is the CPF and wage cut. The cut will touch us all. It is here and now, whereas many of the recommendations of the Report are for the longer term, and therefore more abstract. In this context, the CPF cut and wage cut may seem like a magic bullet. I doubt this is the intention and I am sure it will not be the effect. I am glad therefore that DPM Lee has put the cut and other cost-cutting measures in proper perspective. They give our companies breathing space, but only a regional and global recovery will ensure our future growth and development. As such, in making my comments on the Report, I wish to focus on three main areas. Two are more immediate, while the third is for the medium to longer term. First, the effect of the cut: can it have unintended consequences? Second, the question of equity: how are the sacrifices distributed? Third, other concerns: what else do we need to do to complement the strategies in the Report for increasing competitiveness? The cut to wages will make people feel poorer. They would be even more reluctant to spend. Domestic demand may well go down. When our shops are empty, or filled only with window-shoppers, our business confidence will be affected. As such, there is a danger of a deflationary spiral. Not so long ago, our Senior Minister Lee warned against us over-reacting to the crisis by saving too much and cutting all our expenditure. In the same vein, at the off-Budget measures, a number of us called for greater efforts to stimulate demand. The cut to wages does the opposite. It is akin to an austerity measure for every citizen and wage earner. Even the IMF is now re-thinking of austerity measures. Economists tell us that Singapore depends two-thirds on external demand and only one-third on local demand. Therefore, they do not advise pump-priming. But even so, it seems to me that many small businesses depend largely or almost wholly on domestic demand - our shops in HDB estates and Orchard Road, our hairdressers and barbers, our professionals and car mechanics, our restaurants and food courts. As such, while the absolute effect may be one-third, it can spread across many sectors and many people and smaller businesses. If so, pump-priming our domestic demand will not help a large amount, but it can help quite a number of people. I would like the Minister's clarification on this point. We should act to keep people in our shopping centres and restaurants. We should act to keep a bounce in their step. We should keep Singapore a city with a buzz, confident that we will continue to be a centre of opportunity. I believe this proposed cut to wages may unintentionally do the opposite. It is not a question of "either or". We can do both. We can have the cuts to wages as well as a package to stimulate demand. We can lower cost of living or income tax through rebates. Lowering the cost of living in tandem with lower wages will lessen the pain people will feel. It will leave some spare cash in their pockets. This would feel good for the people and be good for the economy. The second unintended consequence of the cut that I fear may be our ability to attract and retain talent. Much attention has been given to the cost of manufacturing as compared to other countries in the region. But the Report itself calls for services to be a twin engine of growth. For services, other comparisons may be more appropriate. It is common talk that wages are higher in Hong Kong for some professionals, that the maximum on personal income tax is lower, and the corporate tax is lower. For research and development, another area that the Report recommends, there are other comparisons. I would like to ask the Minister whether Singapore is competing with the right countries for the right kinds of jobs and the right sectors. Our competitive position should take into account not only the economy as a whole, but the benefit of individuals living here. After all, it is not only investments that can move from one country to another, but also people. Therefore, it is my concern that with the cut, our ability to attract foreign talents here, which the Report calls for, will be unintentionally eroded. Worse, our ability to retain our existing talents may also weaken. We need to have talented and knowledgeable professionals, for these would be the foundation of a knowledge-based economy, and this will mean paying them world class wages. Let me turn to the second question of equity. Many are concerned about how the cuts and sacrifices are distributed. The statistics show that Government charges are smaller than the wage component, only some 10%. But perceptions differ. The old joke is that the PAP Government means Pay-And-Pay. This demonstrates the strength of that perception. Unless we deal with this perception, people will not willingly accept their share of the sacrifice. Instead, there may be a palpable resentment among some sectors about what they see, rightly or wrongly, as an iron rice bowl in the civil service and in Government. How do we tackle this perception? Ideally, we need institutionalised monitoring. Unlike the wage cut, there is less immediate impact from other cost-saving measures. This is particularly where measures are given indirectly. For example, where relief is given to landlords, we should know how much of this is eventually passed on to the tenants and others. Second, we need to check Government influence on costs. Many others have spoken about GST, maid levy, ERP, etc. I will not add to the wish list, since all the goodies we are going to get have already been handed out by DPM Lee. I may want to raise more general concerns. It is a good and timely move that JTC and HDB will re-look at industrial land costs. But what about other types of land, such as offices, retail and even residential property costs? We should benchmark all these against global competition, of course accepting our constraints. Other areas the Government must look into are telecommunications and electricity. Monopolies always have the temptation to extract the maximum amount from their captive audience. We are opening up these sectors eventually to competition. DPM Lee said yesterday, as regards SingTel, Government must honour its commitment for its monopoly licence. Fair enough. But until the day the competition comes, the regulation of these monopolies must serve to bring the costs to competitive levels. This, in the longer run, is for the good of these companies themselves if they are truly to be world class companies, as the Report aspires to. I can make a more general point from this. How do we grow the world class companies? Our strategy cannot be to grant GLCs or any one else fat monopolies in Singapore, so that they can extract excessive profits here, and then venture overseas with deep pockets drawn from our money. We must ask the companies that wish to be world class to be lean and competitive, so that both their operations here and abroad are world class and give value for money. A third point is about Government statutory boards. I understand some statutory boards are in the habit of running up surpluses and yesterday I asked DPM Lee if these could be reviewed and cut. He explained that some statutory boards, like the JTC, must make surpluses because they need to get the best value for state assets that they alienate. I agree with him. But there are other boards that are different, and I think DPM also recognised this. I would ask that for such different statutory boards, the surpluses be reviewed. This is particularly for those who are supposed to facilitate business. For such business facilitation, surpluses do not always mean efficiency. Rather, the surpluses may represent costs extracted from businesses and individuals who have little choice but to pay the sums charged. For Government to be a truly good business facilitator, the policy should prefer cost recovery, rather than generating surpluses. We need to ensure that our Government agencies are benchmarked to the best practices. I agree with that. But Government agencies need to add value, not add costs. My last point on equity concerns the wage cut taken by our political leaders and top civil servants. There is a joke about political leadership and sacrifice. There is a plane with three politicians on board - Gandhi, Churchill and a third leader, Mr X. There are also a number of ordinary citizens on board. The plane is coming to a range of very high mountains, but the plane is struggling to climb high enough to pass safely. The pilot informs everyone that they may crash unless the load is lightened. They dump all the bags and cargo, but the plane is still too heavy. In this crisis, Gandhi opens the airplane door, shouts, "For My People" and jumps out. With his sacrifice, the plane lightens a bit and climbs a little. But not enough. So, Churchill looks around and goes to the door. He shouts, "For My People" and jumps out. Again, the plane climbs, but still it is not enough. Finally, there is only the third leader and a number of ordinary citizens. The third leader goes to the door, opens it, shouts, "For My People" and throws all the ordinary citizens out. DPM Lee announced yesterday a 10% cut. I think that this is enough to show that Singapore does not have leaders like the third man in the joke. Still, many will ask, "Is 10% enough?" Percentages do matter and the public will judge for themselves. What I want to ask is more a question of the system itself. Is the system we have of fixing ministerial salaries working? I ask this bearing in mind that this is the second year running in which we have departed from the system. DPM Lee yesterday suggested that it was a problem of time lag. If so, I suppose we can fix by using more "real time" information about wages. But I would like the Government to consider an entire re-thinking of the system. Perhaps instead of pegging to a handful, an elite, should the approach be to broad band? This could be to a larger percentile of wage earners and it could well be more robust and politically acceptable. Having outlined my concerns with unintended consequences and equity, let me turn finally to other concerns. I wish to outline three concerns that, in my opinion, must be allied to the question of competitiveness. The first is to improve on natural resource efficiency. Sir, an important strategy in competitiveness is to be watchful over resource input. If you can produce more from less, you are more efficient, productive and competitive. This is particularly true when you do not own or have automatic and guaranteed access to those inputs and resources. There are sound reasons to be watchful over the use of natural resources in Singapore, such as electricity and, especially, water. The Report mentions both. The Report sees water and electricity as utilities that must be optimally managed. For water, the Report calls for Government incentives to be publicised. As regards electricity, the Report addresses the question of charges for stand-by purposes. For water, there are a few other strategies mentioned such as reducing wastage. But more can and should be done. While we can better publicise existing incentives, we may actually need to have better incentives to publicise. We also need to re-look at the policy of pushing up the price. Price can encourage greater efficiencies but only if it is undertaken in a context that increases awareness and capacity, and encourages innovation and investment. Otherwise, a price increase on its own simply leads to a price increase, and that will diminish competitiveness. The same is true of electricity. The cost is of real concern to businesses and households alike. This is especially given the eventual privatisation of Singapore Power. With privatisation, there may come a need to increase profits. If profits are tied solely to the selling of electricity, then there is no incentive for Singapore Power or any other supplier to be concerned about efficiency, productivity and competitiveness. It will simply try to sell more power for more money and profit. This will lead to a less competitive Singapore. Sir, there are many reasons to embrace policies that will encourage greater efficiency in the use of natural resources. Part of these reasons are environmental. But part of the reasons are also economic. Using off-the-shelf technology, some companies are now reporting that they have achieved what they call, "Factor Four", that is, they double income, while halving resource use. These private sector innovations need to be studied and understood. They can then serve as best practices that we should encourage others to adopt. The Government has an inter-agency committee to examine energy use in Singapore. I hope that they will have one on water. And I hope that the Government will task this agency to look particularly at the question of competitiveness and efficiency. The second thing that we need to ally competitiveness to is to increase our cooperation. The thrust of the Report is on Singapore's internal factors of competitiveness. We must not forget, however, the Report is coming amidst a crisis of the region. In fact, it is this regional dimension that has delayed the Report and forced it to focus on reducing costs vis-a-vis other countries. While it is Singapore's right to cut costs, we must guard against an intended perception. This is that we are trying to out-compete other countries in a negative manner. That is to say, we are cutting costs, so that we will steal investments from our neighbours and force them to lower their costs, or to devalue their currencies again. I do not believe this is our intention. Nor do I believe it is in our interest to do so. We cannot be seen to create a race to the bottom. Our cost-cutting should not be seen as a policy to beggar our neighbours. I therefore call upon our Government to now re-emphasise Singapore's cooperation, in tandem with the Report on our competitiveness. This aspect of cooperation is a theme in the Report. It recognises the external wing and the need to go global, as well as regional. At pages 62 and 63 of the Report, it recommends the continuation of strategic flagship projects, promoting tripartite cooperation to attract third countries to invest, and using Singapore as a centre for training. These are important points that bear emphasis in the present times. The crisis has caused many Singaporean companies to lose money in the region. When we talk of going global, some may fear that this displaces our regional interest and focus. Rather, I urge the Government to send a strong signal that our global diversification is not a retreat from regionalisation, but an addition and complement to that thrust. The crisis has also caused some other countries in the region to doubt whether they will prosper from being open to the world economy, trade and investment. There are rumblings of autarchy and narrow nationalism in different countries. This is especially the case in some countries that were newly opening themselves when the crisis hit. It is well known that we stand for the belief that free trade and a connection to the world economy can help, rather than hurt. Sir, it is timely for us to act on what we believe. We should help steady other countries in the region against those who would close their economies and borders. We can and should do this by helping them better understand economics and the ways of business, and increasing their capacity to cope. We should share our experiences with them, and help train and orientate them. We should also help these countries to deal with more immediate dislocations caused by the crisis. If asked, we should help our neighbours with problems among their poorer and less well-off. There is just so much a little red dot can do, as our Prime Minister has aptly said, but what we can do, we should do. In this respect, I have asked from the Ministry of Foreign Affairs how much development assistance Singapore had given to its ASEAN neighbours in the last 18 months, that is, since the crisis began. The figure given by the Ministry of Foreign Affairs was some S$11.5 million, under the Singapore Cooperation Programme. I call on the Government to re-emphasise our commitment to cooperation and to a win-win relationship with our friends in the region by increasing this amount. We should not look to our immediate self-interests in doing this. We need to focus on the longer term interests inherent to win-win policies, and try to truly prosper our neighbours. We need to marry our sense of being competitive with our willingness to be cooperative. If we are tough enough to take a cut during these bad times, we should also be caring enough to give more during these tough times, and this will send a strong signal of our cooperation, and our neighbourliness. The third and final point I turn to is that of heartware. Last year, PM Goh spoke about the need to develop heartware. The Singapore 21 Committee, of which I am a member, has spent this last year consulting the citizens and thinking about the questions of heartware. Some have wondered why this work should concern Singaporeans now when the crisis makes us worry about the here and now, rather than 21st century. Yet I do not think the question of heartware is important, despite the crisis. Heartware is important because of the crisis. When I look at the longer term strategies in the Report, I see areas in which heartware is the critical component. One aspect is how we attract foreign talents, while taking care of Singaporeans. To do this, we must help Singaporeans excel and compete. We must also attract talent from abroad, by being an open and cosmopolitan city-society. By "cosmopolitan", I do not mean we should read Cosmopolitan magazine, but rather that we allow an active engagement and interaction of people and values. We need to facilitate foreign talent to come into Singapore, by easing bureaucratic impediments, and should increase interaction and understanding between Singaporeans and foreign talents that come. A second aspect of heartware is how we, as a people, strengthen the external wing of globalisation while remaining Singaporean. This requires a sense of rootedness. It requires us to develop a sense of being Singaporean and yet also being "world ready" so that we can go out and compete to "plug-and-play" on any stage in the world. Our companies and families must accept and even promote overseas stints as a feather in the cap of workers and family members. Government should remove hindrances to going overseas, such as the lack of double taxation agreements and concerns over children's schooling. Government agencies should keep in touch with those abroad and foster their knowledge and stake in what happens here at home. If we develop a Singapore heartbeat, a sense of belonging, no matter where we find ourselves, this will strengthen our economic external wing. Third, the question of heartware is important to competitiveness because it includes fostering creativity and resourcefulness among our people. We need to be a society in which there is a second chance for people, and in which everyone counts. Only then will people be entrepreneurial, and be willing to take risks, and to be different. And only then can we be truly competitive. Differentiation is important. As one entrepreneur, Y Y Wong, reminded me recently, competitiveness on price matters most when you have the same product. But if you are different, and people recognise your product is different, you can command that extra dollar. You then compete, but with an edge. And I think that is the competitiveness that Singapore should seek - to be competitive but to be different and to add value. With these comments and qualifications, I support the motion. The Senior Parliamentary Secretary to the Minister for Foreign Affairs (Mr Zainul Abidin Rasheed): Mr Speaker, Sir, thank you for giving me this opportunity to speak on the motion. Sir, speaking on the CSC Report after the grand and masterly intervention by DPM BG Lee yesterday, it is like an anti-climax. It is like coming to a cinema show soon after the hero has swiftly moved in to save the heroine in distress. The saving grace, however, is that after `the hero lai-lo' scene, we can at least still say, "Some money back, please." What I mean is that, yes, this is a major exercise at cost cutting, as it should be, if we are serious about retaining our competitiveness, but the Government has shown enough care to provide sufficient rebates and reductions in taxes and levies to give Singaporeans the cushion they deserve for their collective sense of sacrifice and effort at overcoming the challenge. Of course, we all know that this is no laughing matter. In short, this is no wayang. The stakes are high. Our continued prosperity and social well being as a cohesive multi-racial nation depend on whether we can pull our economic strings together. Mr Speaker, Sir, the CSC understands this fully, as reflected in its approach, strategies and recommendations for both the short and longer term. Competition will grow and we Singaporeans have a lot to lose in terms of our standard of living and quality of life if we were not prepared to face this, in the words of DPM Lee, "gravest challenge since independence" squarely. Sir, the Chairman of the CSC, Minister for Trade and Industry, Mr Lee Yock Suan, who is also my chief at Cheng San GRC, is very well known for his soft- spokenness. Mr Lee is also a man of few words. He believes in gentle but firm diplomacy. But the CSC Report by him and his respected Committee speaks volumes, and `loud and clear' of what Singapore needs to do to remain competitive. We all know that the challenges Singapore faces in the immediate and longer term future are formidable but if the well-thought-out recommendations were to be implemented, and implemented fast, they should stand us in good stead. PM Goh Chok Tong's positive response to the Report to "ask the relevant Ministries to follow up promptly on these recommendations" is also worth highlighting. The comprehensive recommendations for the short and longer term notwithstanding, we have already heard voices asking whether the Report had gone far enough to prepare us for the real challenges. Some, as reflected in the media, have even expressed disappointment. These sentiments are not necessarily bad. There will always be those who will want Singaporeans to be pushed to the limits. Such are the demands of the times, especially in this highly competitive world. An example will be the concern whether enough will be done to produce Singapore's own world class players and corporations. I think PSA is a good example of a corporation which is pushing hard to be one and is making good progress, but can we really see more? More therefore could be done to help produce our world class corporations to compete in this highly competitive world. Mr Speaker, Sir, I do not intend to go into the nuts and bolts of the Report nor the package presented by DPM BG Lee yesterday, but instead go to the spirit of the matter. I remember, earlier this year, when some of us in this House were pushing for the Government to do more to assist the ailing economy, the latter initially resisted for fear of over-alarming the people. Confidence was and is a premium in difficult and turbulent times. Even when the $2 billion off-Budget measures were announced, some felt that they could be "too little too late". However, this time around, when the CSC proposed a cost-cutting package of $10 billion, the Government went a step further with another $500 million cut. This must be for good reasons. This will in no doubt emphasise the gravity of the challenge, but not without the `cushion effect' for those that need help most, especially the lower income groups. This is commendable. It is also interesting to note that the CSC was in fact established in May last year before the July regional meltdown. Here, I am reminded of a Malay saying, "sediakan payung sebelum hujan" (or have your umbrella ready before it rains). This, after all, is true to what Singapore is well-known for: to be forward looking and we always have to be a few steps ahead. We certainly would not want to be caught flat footed. Especially when the thunderstorm clouds (not just rain clouds) were already gathering over the horizon. And if I may add, ordinary umbrellas will not do. Mr Speaker, Sir, the challenges facing us call for a concerted effort by all parties concerned. I am glad to see, Sir, that it even moved your Deputy and Member for Marine Parade GRC, Mr Eugene Yap, to speak. Almost lyrical, on Monday Mr Yap spoke of the dangers of complacency and endorsed what he called worthy kiasuism. While he used `the infamous Titanic' to illustrate, allow me to use the Maldivian `dhoni' or boat to make my point. This modest fishing boat is the saving grace for the Maldivians who know what it means to survive in the atols of the Indian Ocean. I was there earlier this month for the Inauguration of the President, President Maumoon Abdul Gayoom, and I have learnt how they, a population of about 260,000, have transformed the seafaring nation to that of a niche tourist destination known the world over. I think we have two of our companies, Banyan Tree and HPL, having their own very exclusive tourist resorts there. Without even fresh water, each of the major Maldivian tourist island resort has its own desalination facilities to make the industry succeed. Yes, most of them still turn to the dhoni, their own traditional boat, and the sea to earn a living but they also know that those skills alone will not suffice. Air travel and speedboats now rule the waters of the tourist lanes of the Maldives. Mr Speaker, Sir, many of the proud Maldivians see Singapore's drive and competitive instincts as a source of inspiration. They know what survival means. Our Singapore workers too know what survival means. When sacrifices are needed, they would not hesitate to rally to the call. And this is not the first time the workers have shown their mettle. Yes, to quote DPM BG Lee again, "tough times put our mettle to the test" and our workers were and are the first to show it. Whether it is the cut in employers' CPF contributions, other wage costs and training and retraining, the NTUC and the unions are with the Government and the Singapore people. Difficult as they may be, the workers know the realities, for the alternatives, more retrenchment and unemployment, would even be more painful. Sir, while acknowledging the workers' sacrifice, I hope the employers would also do their part. Yes, there are enough employers who have shown that they too are responsible. Compliments are also due to those who have shown their care for the workers, for example, Creative Technology, which has promised to return the CPF savings when the company does well. But I hope that there would not be those which are only too eager to exploit, or worse, to abuse the situation. For the latter, I think we should expose them. The Government, together with the NTUC, should monitor the private sector to ferret out such abuses and expose them. Mr Speaker, Sir, I am sure pragmatic Singaporeans will agree that the cost cutting measures recommended in the CSC Report and those presented by the Government yesterday are necessary. And so are the numerous other strategic measures recommended by the CSC to overcome the crisis. In other words, there is no short cut to staying competitive. Our companies, employers and workers realise that we must be a cut above the others in order to compete. But we have to do it with a collective sense of purpose. Show and convince our workers that the measures taken are equitable and fair. It may be a painstaking exercise but it has to be done patiently. The problems faced by those workers who are retrenched and terminated are real. While there are ample training and retraining opportunities, the process will take time and there may be practical problems faced by the workers and their families which need careful handling. In short, while the CSC Report and the Government statement yesterday say a lot about what must be done, let us do it with care, with a heart. It is not just a matter of dollars and cents, but a human face too. Equally important to the nuts and bolts of the recommendations and the action lines, is the right spirit to make it work. Our Singapore spirit of success but in harmony. Mr Speaker, Sir, I support the motion.

Mr Speaker, Sir, since Monday, about 35 hon. Members have spoken on perhaps twice as many issues and concerns of Singaporeans arising from this economic downturn and recession. I rise to speak in support of the motion but I will confine my remarks to areas impinging on the Ministry of Manpower's responsibilities and the recommendations of the Committee on Singapore's Competitiveness where it touches on the responsibilities of my Ministry. Sir, yesterday, DPM Lee had explained that we are facing the most severe economic crisis since our independence. The drop in demand from our regional trading partners who were more severely hit by the regional economic crisis had dimmed our growth prospects. The regional currency realignment had also affected our share of the global market. Recession is unavoidable. Sir, the downturn in the economy has led to a deterioration of the employment situation in Singapore. In the first nine months of this year, more than 20,000 workers had been retrenched. This is more than twice the number of workers laid off for the whole of 1997 and is also higher than the 19,500 workers who were retrenched during our last recession in 1985/86. We have also suffered the first contraction in total employment since the last recession in 1985 over the last two quarters. Sir, the total unemployment rate had risen from 2.3% in June this year to 4 1/2% in September this year on a seasonally adjusted basis, indicating an increase in momentum in the rise of unemployment. Sir, my Ministry has introduced many initiatives to help retrenched workers. We have expanded our Employment Service Department as an additional channel to help retrenched or unemployed Singaporeans to look for alternative jobs. We have also formed a proactive Employment Facilitation Team to reach out to employers in various sectors to determine their manpower requirements in the near future and to help them with strategies to fill their job vacancies with appropriate manpower. In particular, we seek out employers who are still recruiting so as to capture their vacancies in our job bank. In this way, we have been able to provide as many as 80% of the registrants at our Employment Service Department with at least one job referral. If a registrant is not successful in getting the job in the first instance, we have been able to make follow-up referrals to him. We have also created a Retrenchment Advisory Unit (RAU) to help employers cope with the need to downsize as demand for their goods and services shrink. The RAU has already helped employers to introduce alternatives to outright retrenchment, laying off workers directly by introducing shorter work week, temporary lay-off and putting excess manpower on training programmes and also working out how they could reduce wage costs by reduction of the flexible wage component. However, these measures cannot solve the problem of rising unemployment in this recession. Already the number of registrants at the ESD has exceeded available vacancies, unlike in the past when we used to have more than twice as many jobs as job seekers. What else can we do in response to this sudden change in economic climate? Obviously, we cannot insulate ourselves completely from the chill winds of recession sweeping through the region. We are already in fact feeling the first twinge of the biting cold brought about by the external forces. Unemployment has, as I said, reached 4.5% in September this year. This is nearly 2.5 times higher than a year ago in September 1997. We have to revitalize our economic engine in order to get us out of the woods. The CSC's comprehensive study has made it clear that our business cost is now too high compared to our competitors, as a result of the regional currency and economic crisis. We are no longer competitive in areas where our neighbours are also vying for market share. We must bring business cost back in line to survive this downturn and to avoid more painful setbacks such as higher unemployment rate. On 29th October 1998, the Straits Times published a table compiled by the Economic Intelligence Unit (EIU) showing the cost of doing business in Singapore versus Hong Kong, Indonesia, Malaysia and Thailand. The EIU concluded that regionally, Singapore was the "most expensive country to do business in". We were rated even more expensive than Hong Kong. What was particularly striking was our wage cost, which was shown to be as much as 1.7 times that of Hong Kong, 4.4 times Malaysia and 15 times Thailand. The hourly cost of labour in manufacturing in Indonesia was only one-twenty-third of that in Singapore. While Singapore need not compete on low cost labour because we offer investors and businessmen many other advantages for operating in Singapore, we also cannot completely disregard this sudden swing in the region which has severely eroded our overall competitiveness. The decline in demand and the higher costs of operations in Singapore could lead to bigger losses in market share for Singapore. If we do not tackle this problem, it will cause even more retrenchments and higher unemployment in the years ahead. As DPM Lee has pointed out, total wages and salaries paid to workers are a key component of GDP output amounting to 43%. Whereas indirect taxes paid to Government represent only 10% while profits to companies take up the rest of 47%. So obviously any measure to reduce cost of doing business and to enhance competitiveness must involve adjustments to wages and salaries, apart from reducing the indirect taxes from Government. This is a pragmatic and an effective approach. By doing so, we will be signalling to international investors and employers that Singaporeans are adaptable and pragmatic. We do not cry over spilled milk but get down quickly to build up lost competitiveness and regain market share. This is the approach adopted by the Committee on Singapore's Competitiveness (CSC). I applaud the Committee for its courage in facing up to the realities and not flinching from prescribing bitter medicines. The Committee had recommended a 10% point reduction in the employer's CPF contribution rate as well as a cut in wages to achieve a total 15% reduction. On CPF, DPM Lee had already announced yesterday that the Government accepts the CSC's recommendation and to minimise the impact on homeowners who are using their CPF savings or contributions to service mortgage loans, 6% point of the cut would come from the Ordinary Account. Contribution to the Special Account would completely be suspended. In other words, the 4% point that goes to the Special Account will be cut off. For example, a person earning $2,000 a month would see a drop of $120 in CPF savings available for mortgage repayment and not $200 which is the actual size of the CPF reduction for a person earning $2,000. As CPF members and their families may need to utilize their Medisave to meet their medical expenses even in an economic downturn, there is no need for us to reduce the Medisave contribution rate. For older workers above the age of 55 whose current contribution rates are lower, the rates will also be cut proportionately by half as announced by DPM Lee. In the case of employees above the age of 55 to age 60, their employers' CPF contribution rate will be reduced from 7.5% to 4% (a round up from 3.75%). For employees above the age of 60 to age 65, I have previously announced that existing employers' CPF contribution rate will be reduced from 7.5% to 4% with effect from 1st January 1999 as a result of the proposal to extend the retirement age from 60 to 62. Similarly, for employees above the age of 65, their employers' CPF contribution rate will also be reduced from 5% to 4% as a result of the extension of the retirement age. In line with the principle of proportionate cut, the CPF contribution rate for this group of workers will be reduced to 2% from 4%. As announced by DPM Lee the cuts will take effect on 1st January 1999. Approximately 18% of active CPF members (or 217,057 active CPF members) will have monthly CPF contributions that are less than their monthly housing instalments as a result of the cut. Out of these members, 165,661 are HDB owners, 46,446 are private property owners and 4,950 are concurrently HDB and private property owners. To help the affected CPF members, the Government will allow the use of savings in their Special Account, apart from the Ordinary Account, to meet the shortfall in their monthly loan repayment arising from the CPF cut. In addition, there will also be separate assistance schemes to help HDB and private property owners tide over the difficulties of mortgage repayment. In the case of HDB lessees, the HDB will put in place measures similar to those offered in the last economic downturn. These measures will benefit both lessees of existing HDB flats as well as affected applicants of new and resale flats. These will include allowing more working family members to become joint owners, thus using their CPF savings to meet the mortgage repayment. HDB will also reschedule mortgage loans to a longer repayment period, defer mortgage repayment and allowing payment of arrears by instalments for those who have financial difficulties. Applicants for new and resale flats will also be eligible for these assistance schemes. In addition, first-timers with financial difficulties will be allowed to downgrade to a smaller flat. In the case of private properties purchased before the CPF cut, the Government will offer affected CPF members a Bridging Loan Scheme (BLS) similar to that provided in 1986. The BLS is for CPF members who have depleted their Ordinary Account and Special Account savings for their monthly mortgage repayment. The bridging loan will be made available over a three-year period in the first instance, with the commencement of the first draw down on 1st March 1999. The quantum of the monthly bridging loan drawn down will be capped at the amount of shortfall, which arises directly from the cut of 6% point in the Ordinary Account contribution rate. To reduce the burden of mortgage repayment of CPF members during this recession, the bridging loan will be offered at a concessionary interest rate based on CPF interest rate plus 0.1%. This is significantly lower than the commercial interest rate for housing loans. The cut-off age limit for the eligibility of the loan will be based on the minimum statutory retirement age of 62 years which will take effect on 1st January 1999. Repayment will commence one year after the end of the three year draw-down period, with full repayment to be made over a period of 10 years or by the age of 65, or upon the sale of the property, whichever is earlier. The BLS will also be extended to HDB flat owners who are paying market interest rate, and whose flats were likewise purchased before the CPF cut was announced. The market rate currently applies to Permanent Residents, owners of resale flats whose household income exceeds $8,000 a month and third time purchasers of HDB flats. This is a separate group of HDB flat owners who are servicing their HDB loans at the interest rate pegged to that of the Credit POSB's interest because they have already had their fair share of the housing subsidy. As for HDB lessees who are currently enjoying concessionary interest rates (which is CPF + 0.1%) for their outstanding mortgage loans, they need not apply for the BLS as they can apply for HDB's financial assistance package at the same concessionary interest rate. Further details of the BLS and the HDB Financial Assistance Programmes will be released separately. The Government is also aware that the cut in CPF contribution rate will have an impact on CPF members who have committed their savings for insurance policies which they bought previously or who are participants in the education loan scheme. In other words, they have borrowed against their CPF savings to finance either their own education or their children's education in institutes of higher learning. To ensure that such payments are not disrupted, whether it is insurance or education, members will be allowed to set aside sufficient CPF savings to meet these payments when they apply for the bridging loan or for HDB's assistance. The CPF cut will result in a wage saving of some $3.9 billion a year to employers. This will help companies and the economy to regain and improve competitiveness in the current economic downturn. The CPF contribution rate will be adjusted upwards when the economy recovers and when a higher rate of saving will not undercut our overall competitiveness. Foreign Worker Levy Sir, I next turn to foreign worker levy. But before doing so, I should respond specifically to some points made by several MPs including Mr Leong Horn Kee and Mr Peh Chin Hua. They have suggested that CPF members should be allowed to draw some amount of money from their CPF savings during this downturn. I would like very much to agree with the Members, particularly Mr Peh Chin Hua, who is also my GRC colleague. But on this occasion, I am afraid that I have to disagree with him and the rest of the Members who have made this proposal. We have always maintained that CPF savings may be released for living expenses if Singapore runs into a prolonged and deep recession. The situation today is certainly not in this category. We are not in a prolonged and deep recession as yet. While the economic challenges are more severe than any that we have encountered previously, we should not quickly turn to the CPF account to support the living expenses for the unemployed. Most CPF members are using their CPF savings to pay for their housing mortgages, as I have just explained earlier on. As it is, with the reduction in CPF contribution by 10% point, many CPF members (217,000 of them) would have insufficient CPF to continue their monthly mortgage repayment. If we in fact allow CPF members to draw from their CPF savings for living expenses, it would mean that more CPF members would deplete their CPF savings faster and that would create a bigger problem in servicing their home mortgages. It may even cause some of the home owners to have to lose their homes in the process. Mr Peh has made a specific suggestion that we allow jobless Singaporeans to draw $150 from their CPF account to tide them over this period. My response is that if $150 is what a jobless Singaporean needs for himself and his family, the better solution is to help him find a job. We still have a large number of foreign workers in Singapore today, working in the manufacturing and service sectors, earning anywhere from $500-$600 a month, doing many jobs which Singaporeans up to now are reluctant to take on. In a crunch, jobless Singaporeans may be better off taking on similar jobs than relying on their CPF savings to sustain themselves. We will do our best to help Singaporeans who are prepared to take on such jobs, provided they are realistic about wages and the working conditions. Employers should also consider attracting unemployed Singaporeans by making use of their savings on the foreign worker levy when they employ a local worker. This is, I believe, a far better approach than allowing the unemployed to draw down on their CPF at this juncture. Sir, the danger of allowing CPF withdrawal at this early stage is that it would give some Singaporeans a false sense of security. They may be lulled into not reacting to the changed labour market situation and remain reluctant to accept jobs which pay less or are more onerous. Some may even become less willing to go for skill upgrading and retraining, thinking that they have their CPF savings that would tide them over this difficult period. This mindset will only delay our recovery and may well result in a self-fulfilling prophesy. In other words, if we allow CPF withdrawal, we induce inertia to change and to work harder. As a result, we remain uncompetitive, recession deepens and more and more people become unemployed. So, on balance, I think it is better for us to help unemployed Singaporeans find alternative jobs, and for unemployed Singaporeans to be prepared to take on more difficult jobs at even a lower pay. The situation has changed. These are difficult times. Tens of millions are unemployed in the region around us. We must be prepared to make drastic adjustments. Sir, coming back to the foreign worker levy, the Committee has recommended that the foreign worker levy be reduced as a means of cutting cost of business. DPM Lee yesterday also announced Government's acceptance of this recommendation. Let me say that there are now more than 450,000 foreign workers on work permits in Singapore. This means unskilled and at best semi-skilled workers. Many companies are still dependent on foreign workers for jobs which locals do not want to do. In particular, in the manufacturing sector, many companies have to rely on foreign workers to fulfil part of their manpower requirements. However, when we cut the foreign worker levy, we should be careful not to remove the differential between local and foreign workers. We should not cut the levy to the extent that employers are tempted to replace Singaporeans with more and more foreign workers. Cutting CPF for local workers thus gives us an opportunity to also lower foreign worker levy without widening the wage gap between local and foreign workers. Sir, to recap, the levy for skilled workers will be reduced from $100 to $30 for all sectors with effect from 1st January 1999. This is a reduction coming on top of the $100 reduction which was implemented in April this year. In other words, within a period of less than a year, we have reduced the foreign worker levy for skilled workers by $170. The levy for unskilled foreign workers will also be reduced by $90 with effect from 1st January 1999. This reduction will apply only to companies in the manufacturing, marine and services sectors to enhance their export competitiveness. The levy for unskilled foreign construction workers will not be reduced. Construction is a domestic industry and is not directly vulnerable to international competition. Overall construction costs have in fact come down for all building types during this period. The weighted Tender Price Index has fallen by 4.5% in the first six months of this year, partly due to falling material costs. Sir, moreover, the construction sector has remained overly-dependent on unskilled foreign workers. This is the main cause for the very low productivity of the sector. The productivity level of our construction workforce lags far behind those in countries such as Japan and Australia. In terms of value added per worker in the construction industry, Australia is 1.5 times ahead while Japan is three times that of Singapore. For the last three consecutive years, productivity growth for the construction sector has been negative. So far this year, productivity growth for the sector has declined by a further 2.1%. Hence, since 1995, the productivity level for construction had actually gone down by more than 15%. We need to take a determined approach to upgrade the skills level of the construction workforce in order to achieve a breakthrough in productivity. That is why we cannot reduce the levy for unskilled foreign construction workers. The levy reduction for skilled foreign construction workers and the increase in the levy for unskilled foreign construction workers, which took effect in April of this year, have in fact resulted in improvement in the quality of the construction workforce. The proportion of construction workers who have obtained Skills Evaluation Certification rose from 12% in April this year to 16% in October 1998. To reduce the levy for unskilled construction workers now will undermine the progress that we have achieved in upgrading the workforce and the industry. Instead, we should provide more incentives to the construction industry to upgrade their workforce by widening the gap between employing a skilled and an unskilled foreign construction worker. That is why we are cutting the levy for the skilled construction workers by another $70. Sir, apart from productivity consideration, unskilled foreign workers are the ones most vulnerable to abuses and malpractices. We are aware of labour suppliers who collude with contractors to cheat ignorant and unskilled foreign workers. These workers had paid agents in their home countries large fees on the promise of well-paying jobs in Singapore. Some end up abandoned without a job and accommodation shortly after they arrive in Singapore. We have already taken various measures such as the introduction of the levy bond early this year and new allocation formula, to stem such abuses. If we were to reduce the levy for unskilled construction workers at this juncture, it could encourage such malpractice to grow, bringing more unskilled foreign workers into Singapore. And this would result in more social and law and order problems for us. Sir, yesterday, the hon. Nominated Member, Mr Chuang, commented that the levy differential between skilled and unskilled foreign workers had led to an unintended side effect of PRC companies having an unfair advantage over local construction firms. I believe I am correct in this summing up of what he said. He said that because many of the workers on the low levy are PRC workers and they are employed by PRC construction companies which are better able to manage them, and that has given the PRC companies an advantage in Singapore. In other words, our policy has resulted in an uneven playing field. Sir, I would like to correct the observation made by the Nominated Member, because I do not think that is reflective of the industry overall. It may well have happened that a PRC company with skilled PRC workers had been able to tender lower and therefore won some contracts, but I do not think it is reflective of the industry as a whole. Because I would like to point out that the lower levy applies not only to skilled PRC construction workers but also to skilled workers from all other sources. Our records, in fact, show that PRC workers constitute only a minority of the number of construction workers on low levy, in other words, skilled workers. Most of the skilled workers on low levy come from Malaysia, our traditional source of supply of skilled workers, as well as other sources such as India, Bangladesh, Thailand and Myanmar. Since April this year when we lowered the skilled worker levy from $200 to $100, there has been an increasing number of skilled construction workers from these countries, particularly from Malaysia, our traditional source. When we subsequently implemented the 20% basic skill certificate requirement in August of this year, the proportion of skilled workers from other sources increased further, as new testing centres were set up in these countries. Hence, in the last six months, the proportion of PRC construction workers on low levy had, in fact, gone down. I would also like to point out that the PRC construction workers are not solely employed by PRC construction firms operating in Singapore. Our records show that there is a sizable number of non-PRC construction companies including local contractors that employ skilled PRC workers. Hence, PRC construction firms do not have an unfair advantage over local companies. My Ministry has always actively encouraged construction companies to employ skilled foreign workers. If PRC construction companies had benefited from the low levy, it shows that they have heeded our advice and quickly taken up the initiative to employ more skilled foreign workers and to upgrade the skills of their existing workers. Indeed, there is nothing to stop local construction companies from doing likewise. Local construction companies are, in fact, in a better position to tap the pool of skilled construction workers from Malaysia, in view of our historic ties and closer proximity. They can also tap many other sources of skilled workers. It is therefore unfortunate that some local construction firms, for reasons best known to themselves, have continued to rely on large numbers of unskilled foreign workers despite the many efforts by Government to encourage skills upgrading and productivity gains. These companies only have themselves to blame. I would strongly urge construction companies, both local and foreign, to employ more skilled foreign workers or to upgrade the skills of their existing workers, not only as a cost cutting measure but also to raise productivity and standard of the industry. Sir, contractors should seize this opportunity with the reduction on the skill levy to employ more skilled workers. They would not only enjoy the substantial savings in levy, about $440 per worker per month, but also benefit from the higher productivity of the skilled workers. For Singapore as a whole, it would also be beneficial as social problems are minimised. And this approach is consistent with our long-term goal of reducing the number of unskilled foreign construction workers and to enhancing construction productivity. We are, in fact, conducting a thorough and comprehensive review of how to achieve this objective under our Construction 21 study. As for foreign domestic workers, many Members have spoken on this subject and many Members have made passionate appeals on why the foreign domestic worker levy should be reduced. DPM Lee yesterday already said that the key point in cutting the foreign worker levy is to address export competitiveness. We are trying to help employers. We are trying to help companies reduce cost of production so that their products can sell well in the international market place and, instead of losing market share, they can regain lost market share. The foreign domestic worker levy will not have an effect on the competitive position of our industries, since the foreign domestic workers are employed by the households. The levy for foreign domestic worker cannot be reduced at this juncture. However, as an offset, working mothers will continue to be able to claim or enjoy the double tax deduction for the foreign domestic worker levy which they pay. Several Members have spoken on this earlier. Dr Vasoo has suggested that during this economic crisis, it is not necessary to use the foreign worker levy as a means of moderating the demand for foreign domestic workers. I am afraid that he is wrong on this score because, as it is, the number of foreign domestic workers has actually increased despite the economic downturn. Yes, the rate of increase is lower now compared to past years. But the increase shows that the demand is still strong. Hence, we still need some measure to moderate this demand to ensure that the number of foreign domestic workers does not grow out of proportion. Sir, the income of most of the households which employ foreign domestic workers far exceeds the cost of employing a foreign domestic worker, including the levy. It is therefore unlikely that the current wage cut in the end-of-year variable component would seriously affect the employment of foreign domestic workers in many households. Members may be interested to know that more than 80% of the households which employ foreign domestic workers have an income exceeding $4,000 per month, not including the employer's CPF contribution. Even with the 5-8% cut in wages, these households should still be able to retain their domestic workers if they want to do so. There are, of course, some marginal cases, whose incomes are lower. There are also some employers who have been retrenched and are now jobless. But I find it difficult to accept that even jobless Singaporeans are able to continue to enjoy the service of a foreign domestic worker. We have to be practical. Losing a job means making major adjustment to one's lifestyle, including getting down to domestic chores, if necessary. Losing a job may well require us to make sacrifices in other areas. We cannot continue to assume that whether we have a job or whether we have a pay increase or not, we should be able to afford and enjoy the services of foreign domestic workers. Furthermore, cutting the foreign domestic worker levy will in fact not benefit the vast majority of low income families who are not employers of foreign domestic workers. It is these low income families who are most in need of Government assistance and support during this period of downturn. Government will, in fact, introduce other measures to help the low income families cope with the wage cut, as announced by DPM Lee yesterday. Sir, in November 1997, my Ministry announced that the foreign domestic worker levy will be adjusted annually. We announced in November last year that we will make regular reviews and announce the changes in November to take effect in the following April. In view of the economic downturn and wage cut proposed for next year, we have decided to suspend the levy revision. Sir, on the NWC guidelines, DPM Lee has already announced Government's acceptance of the new NWC guidelines for 5-8% wage cut. Sir, our ability to reach this difficult decision with the support of workers will have a major impact on investors' confidence in Singapore. It is a strong signal to investors and employers that our workers are willing to shoulder their share of the burden to help companies retain their cost competitiveness. This willingness to suffer a wage cut will help many companies to weather the downturn. It will preserve jobs for workers and minimise unemployment. The NWC has also recommended that the wage reduction should as far as possible be effected through the variable component of the flexible wage system. We introduced the flexible wage system in the aftermath of the 1985/86 recession, precisely in anticipation of the kind of problems that we are facing today. Adjustments to the flexible wage system by cutting variable components would have less impact on the monthly incomes of workers and should be easier to shoulder. I urge the private sector employers to abide by the NWC recommendations to make the wage cut in the variable component. I would also urge all employers to follow the Government's example and apply the NWC recommendations to moderate the wage cuts for the lower income employees. Private sector employers should make a bigger wage cut for higher income executives and management staff and a smaller cut for the lower income workers. The lower income employees have less discretionary income and are more likely to suffer greater difficulty coping with wage reduction. Applying the NWC recommendations will help them to better weather this recession. Sir, the Government has also decided to make a cut in the civil servants' monthly non-pensionable variable payment. This monthly variable payment is missing from the private sector's wage structure. We should study this further to see how the private sector can also benefit from such a monthly variable component to achieve higher responsiveness to sudden economic changes. Incorporating a monthly variable component in the flexible wage system may help to minimise the need for future CPF reduction, which is a much more drastic measure with wider implications because people have committed their CPF savings for mortgage repayment and other long term commitments such as insurance policies. In fact, this has been suggested by Mr Ahmad Magad in his speech yesterday. We will study this further to see how it can be extended to the private sector wage structure to allow for greater flexibility. While we are grappling with the immediate concerns caused by the regional economic crisis, we must also be aware of the need to build up capabilities and formulate strategies for our long-term competitiveness. If we ignore the challenges that globalization will bring, we will become even more vulnerable in the future. In this respect, the CSC's vision of Singapore as an advanced and knowledge-based economy provides a sound basis for us to plan our manpower development. My Ministry supports the CSC's two-pronged approach to developing a world-class workforce: firstly, to maximize the full potential of the domestic workforce; and secondly, to attract foreign talent to enhance our capabilities and competitiveness. Maximize the full potential of domestic manpower With regard to maximizing the full potential of domestic manpower, my Ministry is working closely with the Ministries of Education and Trade and Industry, economic agencies like the Productivity and Standards Board and Economic Development Board, as well as industry partners, to develop a lifelong learning system in Singapore. This system is critical to maintaining the currency and competitiveness of Singapore's workforce. It would provide opportunities and support for every Singaporean to undergo lifelong learning for their continued employability. In this system, the stakeholders are employers, public and private training providers, unions and community organizations and, of course, the workers themselves. Everyone will play an enhanced role in supporting the in-employment training needs of our workforce. Additional funding will be allocated and new learning initiatives will be developed to encourage employers and workers to engage in lifelong learning. A national skills recognition system will be established to recognize and certify in-employment skills acquisition. New training technologies will be harnessed to support this endeavour. To kick-start the process of lifelong learning for continued employability, two national programmes have been put in place. These are the Skills Redevelopment Programme (SRP) and the Critical Enabling Skills for Training (CREST). Training under SRP leads to national skills certification and every worker trained is placed with a job, either with his existing employer or a prospective new employer. This ensures that the training is immediately relevant. SRP has been progressing well since its launch in December 1996, as I have informed this House yesterday. A total of about 190 companies have committed to skill certifying more than 10,500 workers. In June this year, the Government committed an additional $20 million to developing a Skills Development Centre to improve the training infrastructure to support training activities under SRP. I am glad to say that the Skills Development Centre has already started taking in trainees in November this year. CREST is a $200 million programme launched by the Productivity and Standards Board. It is aimed at encouraging the workforce to acquire core skills, which will provide the foundation for skills upgrading in all occupations and sectors. These skills are important in achieving a thinking, learning and innovative workforce. Sir, the on-going Manpower 21 planning exercise will study the recommendations of the CSC which pertains to manpower development. Apart from establishing a national lifelong learning system, the Manpower 21 Committee will be looking into how we can enhance the workplace environment, upgrade the manpower industry structure, and harness international talent to ensure that the capabilities of our workforce remain a key competitive advantage for Singapore in the next century. We should have detailed proposals from the Committee by the middle of next year. Enhance the attractiveness of Singapore to foreign talent On foreign talent, Government agrees with the importance of tapping into global sources of talent to sharpen our competitive edge and overcome our manpower constraints. Foreign talent combined with a highly skilled local workforce will enable us to transit smoothly and rapidly into a knowledge economy. They can help us to raise our attractiveness to more MNCs to locate key knowledge operations in Singapore and thus enhance our economic value-added. As Singapore evolves into a knowledge economy, the key determinants of success will be the skills, capabilities and innovativeness of our workers. Increasing global competition will put a premium on skilled workers. We will develop our home-grown talent fully with a new strategic manpower blueprint under the Manpower 21 planning effort. At the same time, we must augment local talent with a flow of international talent. This will provide Singapore with the enhanced capacity to generate high value added activities which is in tune with the knowledge era. Examples of such high-value added activities are the areas of e-commerce, wireless communications, automotive components, pharmaceuticals and chemical industries, where our companies today still find themselves short of IT and engineering talent, despite the current economic downturn. Sir, we must be prepared for the new global competition and change our mindset and mode of operations accordingly. Our vision of Singapore as a globally competitive knowledge economy and a world-class workforce has scope for home-grown talent to realize their full potential. It will also serve as a magnet to attract international talent to participate in the many challenging opportunities which are unfolding with the new economic re-positioning of Singapore. With an augmented talent pool we are in a better position to expand our economic pie and have more gains to be shared by all. We need to grow our stock of talent to excel in the competition which would be brought about in the future. My Ministry will adopt a comprehensive approach to developing our own manpower as well as the recruitment of international talent. Sir, we must not lose sight of the longer-term challenges because of the current downturn. Attracting foreign talents to Singapore is one aspect which can be easily swept aside during this period of rising unemployment. But if we do so, we will only hamper the growth in new businesses and industries which could play a major role in speeding up recovery. Conclusion Sir, when the region recovers from the current economic crisis, there will be intense competition for talent. We must not wait for this to happen and then set out to attract our fair share of talent. In fact, we must try to attract our fair share of talent now and take advantage of the inherent strength in our economy to attract talent at this juncture so as to stay ahead in this race and to better position ourselves for the competition in the future. Sir, the recession we are experiencing is a consequence of the regional problems. But we must act firmly and positively to deal with the new economic conditions. We have to make adjustments, including those that are painful. The CSC's recommendations to cut business costs, including wage cost, is a sound and viable approach to cope with the loss of competitiveness. However, cost-cutting measures alone will not ensure that Singapore would remain competitive. In the longer term, it is the creativity, capability, productivity and enterprise of Singaporeans which will determine whether we will prosper in an increasingly competitive global environment. As long as our employers and companies, trade unions and workers continue to strive for productivity improvement and skills upgrading, we need not fear. Through tripartite cooperation and support, we have been able to implement cost-cutting measures to overcome the economic crisis in the 1985/86 recession. Given the close partnership and strong co-operation between workers, employers and Government, I am confident that we will again be able to work hand-in-hand as a Singapore team to meet the challenges ahead, and help our economy recover speedily from the present crisis. Sir, I support the motion standing in the name of the Minister for Trade and Industry.

Clarification from the Minister, Sir. I have two clarifications. Can I ask the Minister, out of the 20,000 workers retrenched, how many of them are Singaporeans? The other is the figure given by Mr Cyrille Tan in his speech in this House. He said that there are 600,000 foreign workers in Singapore. And the Minister has just mentioned that there are only 450,000. There is a difference of 150,000 between the figures of the union and the Government. Which is correct?

Mr Speaker, Sir, for the first nine months of this year, about 20,000 workers had been retrenched. Overall, when companies retrench their workers, they retrench them in the proportion of their workforce. Companies that have more foreign workers will retrench in proportion to the profile of their workforce. So out of that 20,000, on average, it is about 70:30, because that is the typical profile of the foreign workforce in most manufacturing and service sector companies. So foreign workers will constitute about 30% of those who were retrenched. With regard to the number of foreign workers in Singapore, my figure obviously would be a more reliable figure. It is more than 450,000.

Point of clarification, Sir. In view of the economic downturn, wage cut and unemployment, will the Ministry revise downwards the threshold for employment pass applications?

Mr Speaker, Sir, in September this year we introduced a new work pass framework, PQR framework, whereby the top talent would be under the "P" work passes and "R" for restricted, before the lower skilled workers. The "Q" passes would be for the in-between grades of talents that we need in Singapore. It is a very flexible system. Although there are wage criteria such as $2,000 for a "Q" pass or employment pass, we are prepared to look at the background or the working experience and qualifications of a particular worker and decide which particular pass to grant to the foreigner. So in this case, there is no necessity to further revise the wage criteria, because we have sufficient flexibility within the system to cater to the needs of employers.

Mr Speaker, Sir, may I ask the Minister whether he has got any plans for skills training for the foreign workers, because they form quite a substantial workforce and some of them are educated but they are not equipped in English language?

Mr Speaker, Sir, if an employer wants to send his foreign worker for training, we will look into the particular training requirement. In many instances, it can also be supported. But, of course, in the context of the work permit holders, the unskilled and semi-skilled workers, it will be so much better if the employers make a special effort and recruit skilled workers from abroad, rather than bring in unskilled workers here to be trained. That is why my Ministry has encouraged the construction industry to take up private initiative to set up skill assessment centres in our overseas sources of foreign workers - China, Thailand, Bangladesh, Myanmar. The purpose is for them to screen the applicants for work permits who want to come to Singapore to find out who are the skilled workers and then bring them to Singapore. I think that is a far better approach than to bring hundreds of thousands of unskilled workers into Singapore and then set about trying to train them to upgrade their skills. The skilled workers are available out there. Go out there and recruit the skilled workers. It is far cheaper that way, more effective and efficient for business.

(In Mandarin): Mr Speaker, Sir, the CSC has made a Report on the economy of Singapore in the past and it has also made recommendations for our present and future economy. It is a rational look at our economy and I endorse the view of the Committee and also support the recommendations. In looking into the past, the Committee made use of the assessment of Singapore's competitiveness by various economic consultancy agencies, and it came to the conclusion that if not due to the currency turmoil, Singapore's competitiveness was ranked very high. We all know that Singapore is not a cheap place. In terms of wages, rentals and cost of living, it is quite high. So we are able to, in spite of all these circumstances, maintain our competitiveness in a higher rank, as stated in the Report, because of the qualitative factors. It is because we have political stability, we have tripartism and a high degree of transparency and pro-business policies. The announced cost cutting package by DPM Lee is the result of this qualitative factor in our competitive capability as mentioned in the Report. We all know that Singapore is a country marching towards a developed status. Our cost of production cannot be compared to those in Indonesia, Philippines and Malaysia. Our competitiveness will go through economic transformation towards a knowledge-based economy and strengthen the qualitative factors. At the moment, in this regional currency crisis, because of the realignment and depreciation of currencies in the region, our competitiveness is affected. So for the short-term strategies, the Report has already made recommendations for cutting wages and CPF. I think these should only be short-term measures. When our economy recovers and competitiveness regains, all these should gradually be restored. I hope that the management will be able to make use of these cost-cutting measures to revive their competitiveness and to increase their sales and market share, so as to help the Singapore economy to recover as quickly as possible. I feel that in the public debate in cost cutting, the people and the unions have already expressed their support for tripartism and they have accepted the wage cut and CPF cut. But some managements have asked for excessive demands. They have asked for pay cuts by 30% and some hope that the pay, especially that of the graduates, be reduced to those prevailing in the Philippines, Malaysia and Indonesia. These are excessive and unreasonable demands and taking advantage of the situation. As a result, the people may doubt their management's sincerity in tripartism. In my view, the wage cuts must be within the bearable level of the workers. For those companies that are not viable after these significant cost cutting measures, in my view, the problems they have are beyond what the Government and the workers could help. If that is the case, we should allow these non-viable companies to wind up, so that the resources can be diverted to the viable companies. Over the long term, this will be better for our workers and Singapore. On the question of costs, apart from wages, I think there are other charges such as Government charges, cost due to Government policies, efficiency in production and rentals. On wages, whether we like it or not, it must rise according to the higher standard of living, higher standard of education, as well as the progress in society and a higher value added economy. This is inevitable. A society's progress must bring about a better income and a better life. This is progress and advancement of a country that will bring benefits to the people and that is why we are able to motivate our people to work harder. If we look over the past 10 years, the average wage in 1986 was $1,140 per month per capita, and this has increased to $2,219 in 1995. This is an increase of 100%, averaging about 7.2% per annum. If we go by GDP, the value-added per worker has increased from $32,000 in 1986 to about $71,000 in 1995. That means over a period of 10 years, there is an increase of 8.2% per annum. If we compare the 7.2% wage increase and GDP per worker increase of 8.2%, then the average annual wage increase over the past 10 years of 7.2% is not unacceptable. If we want to maintain our competitive edge and to satisfy the desire of workers to improve their standard of living, our economy must, as stated in the Report, go through the transformation process towards a knowledge-based economy with better training of workers, better education, more creative innovations and entrepreneurship, so that we can reach for higher value-added of new products. This strategy for wage cut is one measure that we have proposed to tide over the present difficulties. After this storm, we should be able to restore the wages and improve the quality of living of our workers. Rental is an important component in the cost of operation. Yesterday, I went to a coffeeshop in my constituency. I spent 60 cents on a cup of black coffee. I made a simple calculation. How much does rental cost impact on the price of a cup of coffee? I found that it accounts for about one-sixth, that is, about 19% of the price. Rentals have been rising for many years in Singapore. For one particular year from 1994 to 1995, rentals for factories, offices and warehouses have increased by about 45% to 50%. Such a huge increase in rent affects the cost of operation significantly. The ups and downs of rentals are caused by supply and demand situation and also speculation. I am glad to note the Government is dealing with the over-supply of properties and the downward trend in property prices. On the one hand, the Government is sympathetic towards the developers and it has given them property tax rebates, allow them a longer time to complete their projects and free the Government land sales, but insists on the anti-speculation measures in property announced in 1996. The Government should monitor very closely the price trends in our property market and continue to adopt the anti-speculation strategies, so that when it reaches the bottom we should start releasing lands to meet the demand. By doing so, we will be able to avoid this sudden rise and fall of rentals, thereby affecting our competitiveness. Yesterday, it was announced that, in response to the one-third drop in land price in the past one year, all rentals of JTC industrial properties would be cut between 20% and 40%. HDB will also cut their rentals for industrial and commercial premises by about 20%. Unfortunately, JTC offers an increase of about 4% of the rentals per annum for those who asked for a fixed rental rate. I think this will give a false impression that future rentals will move upwards. Other Government measures could also cause some cost increases. For instance, take the construction industry as an example. In the case of shortage in supply of labour, the compulsory requirement for safety officers and resident engineers at worksites will add to the cost, because companies have to employ a lot of non-productive employees at higher than market prices. The Report also referred to low productivity in the building industry. It was suggested that prefabricated concept be used to increase productivity. I think the authorities concerned should look into this very seriously to understand why the prefabricated building process has cost more and the prefabrication factories are unable to survive before going in a big way for the prefabrication concept. Misunderstanding the situation will only add to cost and it is not good for our building industry. In short, the Government measures are closely related to cost. We have to ensure that our policies are pro-business. I think it is the only way to go. With the cost-cutting package announced yesterday, I am sure the wage earner's ability to spend will be lowered. The businessmen will benefit. I am concerned about those businesses who are providing services to our domestic market, like the shops, transport services, and hawker stalls. How are they going to provide better services and cheaper goods? This is very important. Last week, in one of the programmes on radio, some hawkers were interviewed. Nobody agreed or intended to cut down their prices. If that is the case, the Government should also consider how we can plough back the benefits from the cost cutting measures to our ordinary citizens so that they will also benefit. One way is to ensure that these rebates are not automatic. They must apply for it and show how they are going to reduce prices before the rebates are given. In this way, when the cost-cutting measures are implemented, our consumers can also get some benefits. In the CSC Report and the announcement of cost cutting measures yesterday, no mention was made to high-tech agriculture. I think this industrial sector should also benefit from the rental reduction from the PPD and property tax reduction from the land office so that they will be able to cut their costs and make their products more competitive in the international market. Sir, I support the motion.

Mr Speaker, Sir, during the good times, we want to clamour for the five Cs - car, condominium, credit cards, career and cash. Yesterday, we saw DPM Lee giving away five Cs in not so good times, in terms of cash, care, career, credibility and, finally, competitiveness. Let me try and respond in this manner. (1) Cash. I think the real cost reduction package is much welcomed to businesses. There is certainly no bail-out, no company buy-outs. Those who ask for handouts are certainly disappointed. But I agree with the DPM that the question is not how much more we should give now, but whether there is more to give if the situation worsens. (2) Care. I am happy that the package contains measures and rebates to help the lower income groups to ease the pain of wage reduction. (3) Career. I am happy with the Minister for Manpower and the DPM for stating that the package, hopefully, will kick in fast to save jobs. The Minister for Manpower has demonstrated commitment of the Government to retrain workers and help them find jobs. I hope, given the cost reduction, employers remain committed to train their workers. (4) Credibility. The reduction in Government charges and pay cuts of Government Ministers and civil servants, in my view, are equitable and proportionate, if seen as a whole. I would think that the Minister's salary would be affected two years from now if the formula takes place. But any kind gesture is welcomed. I can only assure the Minister that what he gives in cash, he gets more than equal measure in credibility. (5) Competitiveness. I think we expect more measures to come in the coming budget. But I urge, and I think I have some commitment that the CSC mechanism can be made part of an on-going process to make sure that we remain competitive now and in the future. Let me just touch on a few other long-term strategic recommendations covered by the CSC. I am quite pleased that the Committee comprises many people in the private sector. It demonstrates the importance of a healthy state of participation and consultation in decision-making in Singapore from experienced and expert people in the industry. Without participation, any attempt to critically examine current policies and strategies will be futile because it is not only difficult to persuade workers to accept the painful wage cuts, it may also turn out to be a worthless paper exercise. If every citizen matters, we must also accept the value, suggestions or inputs of every Singaporean. But I really wonder how much of this model of private sector participation is present at the implementation level in the Ministries and statutory boards. The CSC Report quite rightly observed that the current economic crisis highlighted the importance of Government as a business facilitator. But it should go beyond just being the regulatory authority and providing the environment that is conducive to business. It should also promote prudent and sound business practices and initiate change as an ongoing process. Take the case of JTC, for example, where the minimum criteria for investment in building, civil and machinery run counter to the preference and practices of many businesses. Why invest in brick and mortar that do not generate income or not vital to the operating requirements of businesses, compared to the investments in people, plant and machinery and technology? Why use the price mechanism to control design of buildings? Are the architects not supposed to do that? We should instead support industrialists who can extract the maximum return for minimum investment. Industrialists can provide the greatest value adding potential. But this requires private sector experience which, I believe, is quite lacking at certain levels of Government. Perhaps, as a long-term strategy, the Government can try seconding some of its officers to the private sector and encourage more recruitment from the private sector to the civil service and statutory boards. Otherwise, we will hear more calls for committees and commissions. True, I think we need to relook and re-examine our regionalisation process. I support the CSC's recommendations to extend our external wing. We need to go global. But we need to critically examine our past efforts at regionalisation and our cooperative efforts with Malaysia, Indonesia, China and India where we have presumably had the best chance of success in exporting our software, the Singapore's recipe for success. What can we learn from these challenges? How can we share with other Singapore companies? What happens to guan xi in China? Should we remain engaged in these regions or try to diversify our very limited resources globally? My fear, Mr Speaker, Sir, is that the crisis may have exposed the myth about our relevance and understanding of our Asian neighbours that we are the best partners or agents for western companies who want to invest in the region. What the crisis had shown perhaps is that Asia is indeed very diverse. Sometimes, we really have very little common with a Thai, Filipino or Cambodian as would an American or European. We behave differently. We do not speak the same language. And sometimes, some of our neighbours are not so quite friendly with us. But we really need to examine this and maximise our similarities and make ourselves more relevant to the region. We can do a number of things to ensure that we really are the best hub in the region, not only in terms of geography, but in our ability to work with our neighbours and friends. For example, having more Asian students studying and working in the country, increasing exchange at all levels of society and Government and introduce the teaching of Asian languages and cultures in our education system and allowing more access of the Asian media, both print and broadcast, into Singapore. We want to be relevant to Asia. But we must first ensure that Asia, its people, culture, history and language are all relevant to everyone of us here. Next, we must not lose sight and be distracted by the cost competitiveness alone as we benchmark against the newly industrialised economies. We must attract higher value added operations to locate in Singapore and try to invite more foreign talents to this country. But the qualitative factors that help to make Singapore livable becomes also increasingly important. Competitiveness includes more human dimensions, such as good schools, vibrant entertainment, pollution-free environment and the intellectual and creative stimulation, the buzz that is present in any global city. For example, if we want to develop Singapore into a media hub, it is essential that we have a media into and out of Singapore that is accessible, affordable and convenient, that is not unnecessarily obstructive. This would mean easier access to Government information and an intellectual environment that protects and values expression, disagreement and exchange, though not necessarily dissent, and an active civil society and a strong people's sector. In other words, Singapore is not only a home for Singaporeans but a much desired destination for foreigners. Next, the Minister for Manpower touched on foreign talent. While it is appropriate to expect Singaporeans, including top level executives, to make the symbolic sacrifice in difficult times, we have to be careful that these do not affect our attempts to attract foreign talent that is perhaps even more necessary now to boost competitiveness. They may not come here if the total package of remuneration is inferior to what they get elsewhere. We must be careful and ensure that we do not single them out for not willing to bear the same sacrifices that we, as Singaporeans, shoulder. Next, SMEs. The crisis has shown a trend for greater orientation towards Europe and America in the way they conduct business. Not only in terms of markets, but global MNCs now require suppliers to adopt corporate discipline and values that are consistent with their attitudes, for example, the respect for intellectual property, labour rights, environmental concerns, free from graft and corruption, absence of age and gender discrimination. If we want to go global and be a major partner to European and American companies, SMEs must be assisted to help them deal with some of these issues which many SMEs may otherwise consider an unnecessary intrusion into their business affairs. Mr Speaker, Sir, I support the recommendations of the CSC and compliment the efforts of the CSC but also urge that the efforts they put in be made part of an ongoing process. We have heard calls for reformation in Singapore. I hope we have similar reformation in wanting to change mindsets and to ensure that we have to place whatever it takes to put our economy back on track. With that, Sir, I support the motion in the name of the Minister for Trade and Industry.

Mr Speaker, Sir, consensus building requires trust and patience. To foreign observers, the package of cost cutting measures recommended by the CSC and the reconvened NWC is remarkable, because we are able to reach a consensus on cutting wage costs - no less than $7.5 billion of it. And we have reached this consensus so smoothly, it seems. Is reaching this consensus an easy matter? Well, just look at Hong Kong. You cannot find a better example of a market economy than Hong Kong. The employers know what to do, but can they effect it? Hong Kong Telecom has been unable to make its bonus payment flexible, linking payment to earnings, let alone implement a wage cut. Ours is not a command economy, as some Hong Kong officials seem to think, as reported in Asiaweek. Ours is a system where political and trade union leaders have to face their constituents in election by secret ballot at regular intervals. We have been fortunate in this downturn to have leaders in the NTUC and the unions who went through the 1985/86 recession. From that experience, they know that effective medicine for a severe illness tastes bitter. They are therefore psychologically prepared for tough measures in this downturn and this time, the measures are in fact more severe. In 1985/86, we cut wage costs from the employers' contribution to CPF. It was a cut in savings for the future. For the vast majority, disposable income was not cut - as we adopted a wage freeze, and not a wage cut. This time, we have gone beyond cutting savings for the future. Not only are we cutting employers' contribution to CPF, but we are also cutting disposable income. Fortunately, we have, since the last recession, put in place a flexible wage system. It allows us to cut wage costs by cutting bonuses, which is less painful. Sir, a question was asked yesterday: why is it necessary to state how much we should cut wage cost? Mr Low asked that question. It is a matter of fairness. Workers are prepared to do their part, accept wage cuts to restore our competitiveness, but they need to know how much is really needed. So first, we have to know how much we have lost in competitiveness. If we assess that we need to cut costs by 15%, then workers would be prepared to accept a 15% cut in wage costs. If we do not have such a figure, how are our workers to know that what an employer wants to cut is fair? This round, we have had to depend largely on figures provided by the Government. One indicator has been the relative unit labour cost, a comparison of our wage cost with selected Asian competitors. Another indicator has been the weighted change in currency realignments, or effective exchange rate. Both pointed to something close to 15% to 20% range. Sadly, figures provided by employers have been grossly inadequate. When I mentioned this publicly, some employers reacted indignantly, saying that for over a year already, they have said that Singapore has lost competitiveness, and cost cuts were needed. They protested that they have even raised the matter in Parliament. Yes, employers have mostly asked for cuts, ranging from 5% to 30%, but without providing cross-country comparisons on cost items. This is an example of what unionists mean when they complain of a lack of information sharing. Fortunately, some employers have provided information of cost differentials from their factories in different locations, but privately. Some of them provided the figures to us at NTUC, some to EDB and MTI. And these were individual employers. The figures they provided have allowed us to gauge whether the macro figures were largely correct. I do not raise this now to re-open the exchange. Rather, we should learn from this experience. Employers must appreciate that we have a better-educated, more discerning workforce. They expect greater transparency from employers. So we need to establish a number, one which, to the best of our ability, we think is right. It then becomes the guide for actual settlements at the workplace. We should expect negotiations at the workplace - so some cuts will be more, others less than 15%. There will be negotiations at the workplace and employers cannot take it for granted that just because we have reached this national consensus, that this is something that will be effected without further discussion. Where a company is unionised, I am confident that union leaders will settle with management rationally, and they will see to it that the cuts are fair to the workers. In the last few months, we have had a lot of discussions within the union movement. After several rounds of discussions, I reported to the Prime Minister and DPM that they need not worry about the unionised sector, but they should be concerned with the non-unionised sector. If we do not have a figure, which we make public now, how are non-unionised workers to know whether the wage cut their employers are asking for is fair? Granted management in non-unionised companies can effect any cuts they deem necessary as their employees have little choice, but what about the social discontent generated? To face this downturn, social cohesion is important, as many Members of this House have said. Naming the figure of 15% is thus necessary to serve as the benchmark for all, and remember we have the figure of 30% mentioned once again in this House in the past two days even after we have reached a national consensus in the National Wages Council! As we move to implementing the wage cuts company by company, let us not forget to maintain fairness. The public sector has shown the way. The cuts in public sector pay that Deputy Prime Minister announced yesterday was reached through discussions between the Public Service Division and the public sector unions. The final figures were agreed to only yesterday morning. I hope private sector employers will follow the example of the public sector - cutting more at the top and minimising the cuts to low income workers. It cannot have escaped the attention of employers that higher income civil servants are taking a cut in monthly pay, through the monthly variable component. Since the last recession, the public sector has consciously developed a flexible wage system, which includes a monthly variable component. It is made up of unconsolidated NWC wage increases. If the private sector had been as attentive in wage administration as the public sector has been, they too would have a substantial monthly variable component by now. It would not have increased wage costs, since the monthly variable component is taken out of a total amount of wage increase agreed to under the ambit of the NWC, as a consequence of NWC recommendations. When I suggested recently that we should build up a variable monthly component in private sector pay systems, the reaction from employers showed a singular lack of understanding. It shows how poorly they have paid attention to wage administration. Some were guarded in their reaction, but others almost condemned it! I hope they will now study closely how the public sector has managed its wage system, and understand how they too can build flexibility into their wage systems. Just as we learnt from the last recession and put in place a flexi wage system, so too must we learn from this recession and refine our wage system so as to better meet a future recession. I hope it will not happen but as business cycles go, we know that it will come sooner or later. Sir, the welfare of workers and their families depends on employment. Employment, however, depends on companies remaining viable. Therefore, the top priority of any Government or union in an economic downturn must be to ensure that workers stay employed. If that requires wages to be cut, we will cut. We have done so in 1985/86 and we are doing it again. This shows how flexible and responsible unions are in Singapore. This tripartite understanding we have developed is a valuable asset which we must maintain. It depends on trust. Each party must play its part to maintain that trust. The objective of this cost cutting package is to keep companies viable, restore their competitiveness, so that they will continue to provide jobs for their workers. Labour is playing its part by agreeing to wage cost cuts. Now employers must play theirs. No doubt some retrenchments are unavoidable - even in boom times some companies have to retrench. However, we expect the numbers to be reduced. I am glad that some companies have shelved retrenchment plans, because of the cost-cutting package. We have got this information privately. We respect the wish of these companies to remain anonymous, but we are glad that they are acting responsibly. The NTUC is pleased that two employer groups - the Singapore National Employers Federation and the Singapore Federation of Chambers of Commerce and Industry - have come out with a five-point action plan to explore new markets, develop new capabilities, boost productivity, help the unemployed and implement the wage cuts fairly. Some economists have commented that the cost-cutting package does not address the demand side of the equation. As two-thirds of demand is external, what we can do is to lower our costs, so that our exports are competitive. This is precisely what we have done. What more can we do? Both the SNEF and SFCCI have said they will be more active in exploring new markets. If we can improve on our export performance, then we will recover. This, in turn, will pull up the domestic sector which seems to be a focus of speakers earlier this afternoon. When we recover, there will be more demand for offices, factories and homes, and help the construction sector. I hope that NMP, Mr Chuang, understands that the measures help him downstream. Some of the measures help construction companies immediately but the full effect comes downstream when we have recovered. So, also the retail sector. When we recover, and the people have more money to spend, then the recovery comes. And I hope the present difficulties will spur the construction industry and the retail industry to finally do something about the appalling low productivity in both sectors and in the case of the construction industry, its heavy reliance on unskilled foreign workers. Sir, as my colleague, Mr Lim Swee Say, said yesterday, let us forget about painless solutions. There will be pain. It is not only poor company bottom lines, it is also unemployment. Though unemployment has risen, we are fortunate that there are still jobs available and still adequate. Although the Employment Service Department of the Ministry of Manpower has more workers seeking jobs than vacancies, it is not truly reflective of the employment market. The service provided is purely voluntary. Not all employers register their vacancies with the Ministry of Manpower, notwithstanding the proactive efforts of the Ministry to seek out those employers that have jobs. Not all the unemployed register either. We know there are companies still complaining that they cannot get enough Singaporean workers, and many sectors have large numbers of foreign workers. In fact, in my meet-the-people sessions, I still get employers coming to me saying that they cannot get workers and asking the Ministry of Manpower to approve the work permits. Provided workers are flexible in their choice of jobs, they can find a job. Of course, the performance of the job-matching efforts can be improved. And we will do so through tripartite effort. Having said that, I must point out that older workers find it harder to find a job. Some say that older workers expect higher pay. Yes, this is one reason. They have more commitments, but they will adjust. What I think is an equally difficult problem is the attitude of employers towards older workers. A mindset change is needed. So I call on employers to give older workers a chance, and I hope the employers' organisations will do more to persuade their members to give older workers a chance. I know that many have expressed concern over low income workers out of work. But I think, today, there is also a very significant problem of the better educated executives who lose their jobs and who find it difficult to find re-employment. So I hope that they too will be given a chance. Sir, it is natural that the focus of Members has been on restoring our competitiveness. Most Members have focused on the current business cost problem. Few have touched on the future, except perhaps the speakers earlier today. But that forms an important part of the CSC Report. The CSC recommendations also map out the future we want. It is a future based on the knowledge economy, of creating higher value, which in turn provides workers with higher pay and not lower pay. Our future does not lie in keeping our wage costs down to the same level as our neighbours. Our ambition has always been to create more wealth per person, to give our people a better life than our neighbours. That is why our wage levels are now higher. If we succeed in moving into a knowledge economy, let us not be surprised that our wages will be even higher, compared with our neighbors. But the important thing is this higher wage level must be supported by the higher wealth we create; in other words, by higher productivity overall and that is what we aim to do. Unfortunately, because of the pressing problems of the downturn, there has not been adequate discussion and debate in this House on the other recommendations of the CSC Report. Mr Speaker, Sir, I hope that over the next few months, we will have more opportunity in this House to debate on the various recommendations that have been set out. Now that we have settled what we should do, let us go forward, implement the wage cuts, pull together as one nation and come out of this as quickly as possible and then move forward into the knowledge economy. Sir, on that note, I support the motion.

Sir, may I seek clarification from the Minister without Portfolio? In his speech, he mentioned that there is a need to announce a percentage cut as a guideline, so that non-unionised workers will know how much cut is reasonable. What about some employers who take this guideline as an opportunity to cut, even though the company may still be competitive and there is no need to cut? The second clarification is: why is there a need to mandate a 10% cut in CPF? Why not leave it to the company as a guideline for a cut in wages rather than a CPF cut?

Sir, what happens if a non-unionised employer takes advantage? I think a non-unionised employer has to act responsibly. While there may be no effective monitoring system to prevent such abuse, if such employers are shortsighted and take advantage, what would be the cost? I think unhappiness within their companies and a breakdown of trust between employee and employer. When the recovery comes, people will vote with their feet. So whilst we may not have an effective check on such employers, I think it is prudent to sound out a warning to them that if they do so, it is to their own cost in the future. As regards why it is necessary to mandate a 10% CPF cut, if we want to touch the CPF, it is a blunt instrument. If we do not want to mandate a cut across the board, then we have to rely on cuts purely on the wage system. I think that burden will be too high for our workers to bear. So if we have to cut part of it from the CPF, then we have to mandate this 10% cut in the CPF.

Further clarification, Sir. How about cutting the employee's contribution in CPF so that they can tide over the period and allow companies the flexibility to decide on the correct percentage of wage deduction that will make them competitive, rather than a mandate across the board of a 10% CPF cut, whether the company is profitable or competitive, it is a 10% CPF cut? Give some money back to the workers and allow companies some flexibility in deciding. Do you not think this would be a better alternative?

Sir, this has also been explained by the Minister for Manpower. The focus is on reducing costs to the employer. That is why we cut the employer's CPF contribution, and not the employee's. Give money back to the employees by cutting the employee's contribution and give them more disposable income, I think that would only be necessary if we have a far severe recession than now. What workers are now facing is a reduction of disposable income, not 15%, but somewhere in the region of 7%. So I think this is at the moment still bearable. If more companies were to pass back savings which they get from the various cost cutting measures to the consumer, then, in fact, the effect is less than the 7% cut in disposable income.

Mr Speaker, Sir, I rise in support of the motion standing in the name of the Minister for Trade and Industry. Sir, I wish to thank Deputy Prime Minister Lee Hsien Loong for presenting the Government's response to the CSC Report. It underscores what the international news media and the fund managers are saying: that the Singapore Government has the talent and the vision to deal effectively with the current economic crisis. Our national leaders have amply demonstrated and exercised leadership and statesmanship in handling the economic problems we have. All Singaporeans would, I am sure, join us in thanking the Government for the cost cutting package, including the generous Government rebates and tax cuts. Sir, I am glad that the Government is refraining from cutting the monthly wages of the junior staff in Division III and IV levels and the daily-rated employees. This shows that the Government is considerate and mindful of the needs of the junior staff and the lower income group. This is indeed a caring Government in action, lest we forget. I hope the private sector companies will also take this into consideration when they do their own wage adjustments, especially for their junior staff. On the other hand, the Government Ministers will forgo the normal annual salary adjustment for a second year running and instead take a 10% pay cut. Our Ministers are indeed leading by example. We must all be thankful that we in Singapore have such good Ministers, whereas in many other countries they have so many problems with the economy and the leadership. Sir, we have no choice but to cut costs, in order to be competitive against other competing economies. There is no cure without some pain. But the Government, we can see by this package, is trying its best to cushion the impact, especially for the lower income groups. 4% out of the 10% CPF cut will come from the Special Account, and CPF members will further be allowed to use the balances in their Special Accounts to meet any shortfall in mortgage repayment caused by the CPF cut. The fact that the Government is trying its utmost to help homeowners can be seen in two other schemes: first, the HDB will allow deferment of mortgage payments, lengthening of the term of the mortgage loans, and inclusion of more working family members as joint owners for the purpose of payment. Second, there is a Bridging Loan Scheme for CPF holders with HDB and private property mortgages at the concessionary rate of CPF interest rate plus 0.1%. This is indeed a very attractive and generous scheme. Members of the public, I am sure, would also welcome the GST offsets, utilities rebates, public transport rebates and reduction in hospital charges. All these will, I am sure, go a long way to help the lower income groups, especially those in the HDB heartland. Sir, some are puzzled or may not understand why, when we have retrenchment and unemployment, we are establishing the Singapore Talent and Recruitment (STAR) Committee, chaired by BG George Yeo. They may forget that Singapore is not a big country with a huge hinterland and, in truth, we are a city state, aiming to be a global city. To move forward and compete, we have to attract the best talents from abroad. In fact, we need more stars. Let there be a star-studded Singapore, whether the stars are local born or overseas inducted. Many of our first generation leaders like Dr Toh Chin Chye, Mr Ong Pang Boon and Mr S. Rajaratnam were indeed inducted from abroad. Good overseas talents, with their skills, ideas and inventions, will enable Singapore to compete successfully and thereby create more jobs for all Singaporeans. Even a superpower like the United States of America, benefited from wave upon wave of immigrants, who contributed immensely with their ideas and inventions to the American economic growth. Some businessmen are saying that the CPF and wage cuts are not deep enough. They want another 5 or more percentage cut. I think enough is enough. I am glad that the Government is taking a balanced approach on this. Further cuts, I am afraid, will drastically cut cash flow and our purchasing power. There will be adverse effects if more and more held back from buying or have their purchasing power curtailed, and there will be a contraction, instead of a multiplier effect. There will be less money to go around. We definitely do not want that to happen. Many people will then say, "Money no enough." Our social fabric and cohesiveness will also be damaged. In the formula, it is possible to cushion the effects of these cuts with the NTUC package, and the Government measures announced so far. NTUC has set the pace with a $23 million aid package for workers, especially to help those in the lower income brackets. NTUC Fairprice has cut prices significantly at its supermarkets, while NTUC Income has a $12 million package to help policy holders to tide over their payments for premiums and housing loans. At the constituency level we, as Members of Parliament, will do our very best to do placement service for those out of job, award bursaries and help out those who are in need. What are the private sector companies going to do to help the workers to match the measures launched by NTUC? I am glad that the Singapore National Employers Federation and the Singapore Federation of Chambers of Commerce and Industry have announced that they will step up workers' training and retraining and assist in job placement. The question is, can the employers do more? What the employers do now, or will not do, will settle the long term relationship with the workers and unions. For the sake of our long term competitiveness and our future, the employers must be seen to be proactive in helping workers in this economic crisis. In a way, they will be helping themselves, if they could secure the loyalty and support of the workers, and motivate them to give their best. Recently, Mr Tan Chin Tuan, the former Chairman of OCBC Bank, celebrated his 90th birthday. His grand-daughter remembered that he taught her that there were principles in making money, and that making money was not everything. I sincerely hope, and urge, all our entrepreneurs and businessmen, to abide by these wise precepts of Mr Tan Chin Tuan, which were forged and tempered by years of experience in both the private and public sectors. Those at the helm of business should, in times of crisis like this, uphold and cherish our workers, who are making the supreme sacrifices in CPF cuts and wage cuts, and some are indeed losing their jobs. Companies should think long term and try to retain, retrain and redeploy the workers, rather than simply retrench them, if they could help it. If we simply cut, and cut off the workers, we will not retain their loyalty and support. The entrepreneurs will do well to follow the example of Mr Sim Wong Hoo of Creative Technology, who has pledged to keep the money saved from the CPF cuts for possible distribution as incentive or variable bonus, if the company's targets are met. Mr Sim calls it the Creative CPF Bonus Plan. I hope other employers will also do likewise and do this creatively. I urge companies that do well and are profitable to reward their workers accordingly. We thank the Government for the cuts and rebates in Government charges, like foreign worker levies, HDB and JTC factory rentals, income tax, property tax, utilities and other service charges. I hope that this will indeed start a trend or habit for Government agencies to review their cost structures, to put all aspects of costs under scrutiny, and examine ways and means of cost savings, eg, higher productivity, automation and lower head counts. The Government agencies can then pass on these savings to the customers and the public regularly. It is good that we are debating this CSC Report and deciding how best to tackle the economic crisis in a cool and calm manner in this Chamber and not in the streets, unlike in some other countries where there are riots and demonstrations. This speaks volumes of our tripartite consensus making process, of our internal cohesion, and the clear vision and high calibre of our national leaders. Mind you, this is not self-praise. It would be immodest of us to do so. Praise for Singapore, and our Singaporean way of handling the economic crisis, came from some unexpected quarters, from those who are quick to criticise us and who have been our constant critics in the past. It came no less, for example, from the Far Eastern Economic Review magazine. If I may quote from our erstwhile critic, the Far Eastern Economic Review stated in its September 1998 issue: "Singapore's quick, organised response to Malaysia's financial shutdown could solidify its place as Southeast Asia's premier financial centre. This demonstrated Singapore's reputation for long-term planning, a trait that complements Singapore's reputation for efficiency." This is indeed vindication and endorsement of our transparent, non-corrupt, honest system of Government, and our emphasis on talent and meritocracy, where the best and brightest rise to the top in the Government and in business. Newsweek, an international news magazine, reported, and I quote: "Singapore, known for its stable, transparent and clean Government, has managed the financial storm . while remaining a player in the global market. The key: unflappable government officials, long term planning and prudent fiscal policies." According to the South China Morning Post, we compare very well with Hong Kong, our nearest rival. The Hong Kong newspaper contrasted Singapore's free market approach to Hong Kong's decision to intervene in the financial markets. The South China Morning Post commented that Singapore, on the other hand, has won credit for demonstrating a cool, calm and collected response to the region's stormy financial climate and putting in place positive long term structural changes, even as its stock market falls. Sir, the CSC has done a good job. The question is how to ensure that the economic trends are monitored constantly and new measures are devised to meet ever changing circumstances. We must make sure that this tripartite mechanism and relationship forged in the economic crisis is maintained and indeed geared up to meet any new problems so that problems can be nipped in the bud. We should not let such mechanism atrophy. We should not wait around for another crisis before calling for a review and another competitiveness report. We should keep the mechanism in place, keep monitoring the trends and be always ahead and be more competitive than our immediate neighbours. I suggest therefore that the Government consider keeping the CSC or some moderated form of the CSC intact, by emplacing it in a Government agency or a think-tank with a resource panel and capacity for economic monitoring and analysis. From time to time, Sir, crisis will come, but such a mechanism can enable us to mark the trends and gear up to tackle the new issues and devise new strategies and formulas. Sir, cost-cutting is only half the story. It would not work if productivity is not raised, if workers are not motivated, if business revenues are not increased, if new businesses are not found, and if new markets are not conquered. All cuts will come to nothing. The business itself will be cut off. The real challenge therefore to Singapore, and Singaporean businessmen in particular, is to find new business, to continue to regionalise and globalise. We need new ideas, new business, new markets and new niches. We must use this crisis to forge a new spirit of entrepreneurship, of daring to do, of never say die, but to fight and survive in this business jungle. Darwin would say the survival of the fittest in the business jungle. I believe Singaporeans can do it. We can make it. We can make it happen. Indeed, this economic crisis provides us with the opportunity to jell as a people as we face the problems squarely and overcome them. It bonds the people and the Government together. We will emerge stronger, with better credit ratings and even more united and determined to make Singapore an attractive place for investment and financial transaction. We are well placed to become the global IT, service and financial hub. So let us rally behind the Government and go forth as one people to triumph over adversity and conquer the new markets. Sir, I support the motion.

Order. I suspend the Sitting and will take the Chair again at 3.45 pm. Sitting accordingly suspended at 3.25 pm until 3.45 pm.

Sitting resumed at 3.45 pm

Debate resumed.

Mr Speaker, Sir, I rise to speak in support of the measures recommended by the Committee on Singapore's Competitiveness and the cost reduction package announced by DPM yesterday. The Committee has succeeded in presenting Singapore's current competitive position and in setting out the various strategies that should be adopted to improve our overall position. I believe that even in the midst of the monumental changes that have swept us and this region during the last year and a half, it is timely that we review our strategies for long-term survival and growth. To focus on the current problems without regard for the long-term solutions would be shortsighted, like looking merely at the leaves and not seeing the entire forest. In trying to overcome the current economic difficulties, we must not be distracted from pursuing long-term priorities which are required to remain relevant and to further enhance our position in the world. The short-term measures have essentially focused on cost reduction to help businesses survive the current economic crisis. I support the urgent need to make immediate adjustments to costs here in order to adapt to the changed economic environment. The cost reduction package announced yesterday touched on a multitude of ways in which business costs in Singapore could be directly and indirectly reduced so that commercial transactions could take place more efficiently and without undue wastage. However, the cost reduction measures, crucial as they are, during this period do not provide the be-all and end-all solution to the problems faced by our businesses and to increase their competitiveness. The cost-cutting measures are only temporary holding measures to give as many enterprises as possible a fighting chance to survive in the interim. Workers are prepared to accept and adopt these measures despite the pain that will result, but bosses must realise that their businesses cannot depend on cost-cutting alone to survive this crisis and expect to emerge stronger thereafter. In the long term, it is clear, even without the economic crisis, that the only way to achieve a globally competitive position is for businesses to undergo structural reforms which are not merely based on price but on quality and added value. One of the main causes for the fall in revenue for most companies is, of course, the reduced demand for their goods and services in the domestic and regional markets. The thing which employers cannot afford to do now is to simply sit tight, paralysed with ignorance and uncertainty into wishing and waiting for the good times to return, hoping in the meantime for more cost-cutting measures to be initiated by the Government. As the Chinese saying goes, a raft in the rapids that does not move forward moves backwards. Even with reduced costs, if nothing is done to counter the drop in revenue, profit margins would diminish and eventually disappear if revenue falls below expenses, and that business will eventually die, although at a slower pace. Businesses must therefore find ways to tap new markets and increase revenue. They must be nimble and responsive to the needs of the market and to the consumers. As a simple example, in telecommunications, the Internet is changing the way we communicate and the way we source for and retrieve information in a very fundamental way. During a recent visit to the United States, I was pleasantly surprised to find public telephones which had a separate built-in data port so that executives on the move could plug in their laptop computers. And with a mere drop of a quarter, ie, 25 cents, they could dial into their head office's computer or an Internet Service Provider, retrieve their e-mails, communicate with head office and friends, and even surf the World Wide Web. During the last few days, I examined every public phone I came across, whether at Changi Airport or Raffles Place, but had not been able to find one which allowed me to plug in my portable computer to send an e-mail. Sir, I support the recommendations by the Committee that manufacturing and services should be promoted as the twin engines of growth. Today, I would like to focus on the manufacturing sector. Before I proceed further, I would like to disclose my interest in the subject as a director of a public listed electronics contract manufacturer and a director and equity contributor of a start-up technology company. I would like to bring up three points. The first is for a review of the GST structure to facilitate part of the manufacturing processes to be carried out in neighbouring countries. Second, local contract manufacturers must be encouraged to provide more than merely a manufacturing service. And, third, meeting the needs of existing MNCs that have already invested here in Singapore. I hope the relevant Ministries and Government agencies will consider these. First, as a manufacturing centre, our land limitation and highly skilled workforce have made us too expensive to manufacture and assemble the entire product in Singapore. I do not believe we should even try to do so. While we may have the skilled workforce to do some parts of the assembly work that require higher technology, the low-tech components must be farmed out to be done elsewhere, like Johor and Batam, so that we can finally put them altogether here in Singapore for export. This was the original idea behind the growth triangle. However, one obstacle to this being carried out in practice is the imposition of the goods and services tax (GST). To maintain Singapore's position as a manufacturing hub, I believe we should refine the present GST structure in regard to import of semi-finished products. Under the present GST structure, unless a particular supply of goods into Singapore is meant for re-export or falls under one of the approved schemes, like the bonded warehouse scheme, GST will be payable by the importer on the supply. This does not accommodate the practice of manufacturers who carry out certain stages of their production process outside Singapore. When the works-in-progress are sent back to Singapore after completion of the relevant process, these manufacturers will be required to pay GST on the semi-finished products which are considered taxable import supplies. Although the GST paid by the manufacturer at that point can be re-claimed as input tax when the finished goods are subsequently sold or exported, it does mean that the GST paid on the supply of semi-finished products will be tied up for a period of time. Although GST is only 3%, this can represent a relatively sizable amount, considering that a typical contract manufacturer makes only about 2% to 5% in net margins. I feel that this is an expedient time to look into possible changes to our GST structure so as to help our local manufacturers to take advantage of the lower costs of production in other countries within the growth triangle framework. The second point I would like to raise is that in order to provide value and to increase revenue, our local electronics contract manufacturers must do more than merely provide a manufacturing service. We must rise up the added value chain by offering technological innovation and more complete product solutions for customers. There is a global trend towards third party out-sourcing. This provides the opportunity for contract manufacturers who have R&D capabilities to offer innovative product solutions by suggesting improvements to the existing products in terms of their specifications or by reducing cost through new and more efficient production methods. The Taiwanese are particularly good at this. However, for Singapore, it is easier said than done. But the tripartite relationship between the big businesses, entrepreneurs and Government can be a powerful synergistic force to bring about a change in the manufacturing industry here. The entrepreneurs who have new product ideas, the established businesses with their financial resources and the Government which can provide the necessary infrastructure and assistance should work together in a more concerted and focused way to allow these ideas to materialise into useful and successful products. My third point is that Singapore will continue to depend heavily on attracting foreign investments here to provide jobs for our people and to maintain growth. Besides the workers who are directly employed under the payroll of the MNCs, there are many other workers who are employed by the multitude of companies and businesses that depend on the MNCs as their suppliers and sub-contractors. However, in this area, we face stiff competition for investments and jobs from other places. For instance, in the consumer electronics industry, countries and regions like Mexico and Eastern Europe, which are geographically closer to the huge booming consumer markets of USA and Europe, are being considered by MNCs as very attractive alternatives for them to set up their operations. Singapore has done well in attracting new investments by MNCs in the past and should continue to imaginatively develop and exploit all possible niches which will make us a world class business and financial centre. Sir, while we are working hard at attracting new foreign direct investments, we should not take for granted those MNCs which have already sunk in their investments here. We must consistently and constantly review the difficulties these MNCs face in their operations in Singapore and ask ourselves whether we are doing enough to meet their needs and to retain them. Should these MNCs decide to end their operations here and move elsewhere, they would probably be lost to Singapore forever, as having had a bad and painful experience, it will be very difficult and will take many years before their top management can justify starting up in Singapore again, even if we are able to remedy the problems at that time. Sir, in conclusion, I would like to say that in debating the measures that need to be taken, we must not forget that, as a developing economy, Singapore has succeeded beyond all initial expectations through the hard work of the people and the Government. The present crisis then may be seen as a test of our true strength and potential. Our actions and the measures we take are constantly scrutinised by foreign analysts, economists and international investors and the media. And the consensus among these watchers is that we have a very sound system that so far has withstood the test of the crisis. There is every reason for us to feel confident that the Government, from its track record - first in putting the system and infrastructure together, and then, in continuing to maintain its soundness and integrity, will be able to lead Singapore out of this crisis. With this confidence, every Singaporean should feel able to give his fullest support to the CSC's recommendations and the cost reduction package which are to be adopted by the Government. Sir, I support the motion standing in the name of the Minister for Trade and Industry.

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.

(In Mandarin): Mr Speaker, Sir, for the past one year a remark which Singaporeans often make in the coffeeshops has been "times are bad". What most people talk about are CPF cut, wage cut and whether prices will go down. At home, what worries people is whether they could keep their jobs as they have seen their own relatives and neighbours retrenched. Moreover, they worry whether they have enough money to service their mortgage loans. Mr Speaker, Sir, with the nation-wide cost-cutting measures announced by DPM Lee yesterday as well as the measures announced by the Minister for Manpower, Dr Lee Boon Yang, in place, I think we can rest assured that things are moving in the right direction. After the CSC Report and the National Wages Council's recommendations were published, the people's attention is focused on the various cost-cutting measures, particularly the specific cuts in taxes, rentals, CPF contributions and wages. In the forum page of the newspapers, the dialogue sessions and in coffeeshops, we begin to read and hear these questions being asked: "Has the Government done enough? Have the employers done enough? Have the unions done enough? Have the workers done enough?" There are people who mentioned again and again that Ministers should take the lead in having a pay cut. There are also others who doubt whether senior management staff in the private sector are willing to take a deeper pay cut. Some have asked whether companies which are still making profits should be entitled to cut their CPF contributions. We hope that bosses in the private sector would be sensitive to the needs of their employees, and would not take this opportunity to exploit them. On the other hand, we also hope that there will not be politics of jealousy in our society. When we are all faced with a common problem, we should put in a concerted effort to seek solutions to these problems. We should not wait to see who should make more sacrifice. Everyone has to make sacrifice in order to enhance our competitiveness. Mr Speaker, Sir, DPM Lee's measures demonstrate another spirit in our society, that is, we should share good fortunes and go through thick and thin together. Now that we are faced with difficulties, do the Government, employers, unions and workers know what our difficulties are? How did these difficulties come about? We should not indulge in mutual condemnation. While we share in good fortunes, we should also bear adversity together. How do we overcome these difficulties? It is obvious. We should take measures to reduce our business costs. However, when we resort to cost-cutting, we should endeavour to minimise the impact on the poor wage-earners. I am glad to hear that petrol companies have announced a reduction in petrol prices. Singapore Telecom has also announced reductions in IDD charges. We sincerely hope that Government agencies and the private sector will do the same. On the union side, the NTUC launched a $23 million package to help the workers tide over this difficult period. When this scheme was launched, one reporter asked whether the miserable price-cut of 5% to 10% was of any good when people do not even bother to stop and pick up a 5-cent coin when they see one on the ground. Having enjoyed the good times all these years, our people have become so casual about small amounts of money. However, I would still appeal to businessmen to pass on the savings from the cuts in taxes, rentals and CPF by reducing the prices of their goods and services, even if it is just for 5 cents or 10 cents. If the ordinary people could save 5 to 10 cents each time they go to work by public transport, shop at the supermarket, or to have a meal at the hawker centre, these savings when added up could amount to something significant. This would in some way help to offset the pains inflicted by the pay cut and CPF cut. In this respect, the NTUC has taken the lead. I hope the retail sector would also follow suit by giving discounts to their consumers. The media can help by giving publicity to those shops which have reduced their prices. When consumers know where they could buy things at lower prices, they would do their shopping there. This would lead to more shops giving discounts or reducing their prices in order to attract customers. It is this spirit of "every cent counts" that we try to imbue into our children's mind when we ask them to deposit their savings into piggy banks so that before Chinese New Year, they could use their savings to buy new clothes and new shoes. Our national reserve is like a "piggy bank". Some people have suggested that we should dig into the national reserves to solve our problems. But I think it is not wise to do so. I think the reserves should be made use of only as a last resort. To do so is like children using a stick to try and dig out a few coins from the piggy bank to spend. If there are other options, we should not dig into the national reserves. We should turn this spirit into a Singapore spirit. We should encourage everyone to save. That we have a huge reserve is a result of our savings because we have enjoyed good times for many years. Our people have become used to living in comfort that they tend to become grumpy when they are suddenly faced with hard times. We can understand that. When the sole breadwinner has lost his job or when the company has gone bankrupt, we ought to understand their plight and give them a helping hand. For those Singaporeans who have no family members to turn to for help, the CDCs and other self-help organisations should step in to render assistance. Whether we are civil servants, employers, or grassroots leaders, we ought to empathise and be more compassionate with our fellow country men who are now in difficulties. I hope such message could be conveyed to all Government Ministries. We hope, through the present crisis, we could become more vigilant and be more able to cope with changes. Mr Speaker, Sir, let me cite a real life example that shows how a long period of prosperity can cause our people to be less able to cope with adverse circumstances. Nowadays, more and more housing estates have covered walkways to link their blocks to the bus stops and to shield them from rain and the hot sun. However, one resident complained to me that there was no covered walkway near his block and that it was very hot to walk to the bus stop at noon and when it rains, he could not go to the bus stop. But this resident has forgotten that during the time when there were no such facilities, no one complained that he or she could not walk to the bus stop, rain or shine. What you need to do is to walk faster or to bring an umbrella when it rains. He seemed to have forgotten this instinct of coping with changes. A long period of prosperity could bring about such negative effects on the mettle of our people. It is hoped that the present crisis could lead us to realise the importance of how to survive through hardship and changes. Mr Speaker, Sir, the "every cent counts" spirit is manifested in the various recommendations in the CSC Report. I support the motion standing in the name of the Minister.

(In Mandarin): Mr Speaker, Sir, I met a few workers when I went to my office this morning. I took the opportunity to ask them what they thought about the cost-reduction package introduced by DPM Lee in Parliament yesterday. Spontaneously, they said, "Oh, lucky, no need to cut salary and I still get to receive the year-end bonus. Not bad!" So I asked them, "What do you think about the 10% cut in the employer's CPF contribution?" They said, "Oh, we know some time ago that our CPF will be cut by 10%. In order to reduce business cost for our employers to survive, we are prepared to accept this temporary measure, for the sake of our nation." When they are about to leave, they asked me, "As a Member of Parliament, can you help us to get the shopkeepers to bring down their prices? Then we will be very happy." Three things came to my mind. First, they said, "Oh, lucky, no need to cut salary and I still get to receive the year-end bonus." This proves that when accepting the recommendations of the CSC, the Government has carefully considered the plight of our workers, and they have also listened to the feedback from the MPs and the public. I would like to commend our Government for making the right decision in not having involved our lower-income employees in this round of wage reduction. Secondly, they said, "Yes, we knew that our CPF is going to be cut by 10%." On this point, it also proves that our labour MPs, the NTUC and union leaders have done a good job in explaining to the workers the rationale for this round of CPF reduction so that all the workers understand why this cut is necessary. So when the Government announced that the CPF would be reduced, they accepted it spontaneously. Thirdly, when they asked me whether I could ask the shopkeepers to bring down the prices of goods, it shows that after reducing costs for the business, the next thing to do is to reduce the cost of living. So today, I will focus on this point, that is, hereafter, how are we going to help the people of Singapore so that they have a better standard of living and our quality of life will not be affected by this economic crisis. In order to achieve this, I hereby urge all trade associations, coffeeshop owners' associations and retailers to join in a nation-wide sales campaign. Our Singapore Government has been very successful in promoting various campaigns, such as the Speak Mandarin Campaign, the Courtesy Campaign, the Healthy Lifestyle Campaign, etc. We have achieved very good results. At this point of time, it may be appropriate for us to have a "National Sales Campaign". Why should we have a National Sales Campaign? Because I think we can achieve three objectives. First, we can offset the additional burden imposed on our workers due to wage-cut measures. Secondly, Christmas, Chinese New Year and Hari Raya are coming. With all these festivals coming, if we can have a National Sales Campaign, it will also help to stimulate business activities so that our economy could recover faster. Thirdly, through this National Sales Campaign, coupled with propaganda by our Government agencies such as the Singapore Tourism Board, we could attract more tourists from other countries to visit us. At a time when the other countries are having problems, we can attract tourists to come to Singapore and shop here. I feel that with these three objectives in mind, we would be able to herald in some good news during this time of crisis. However, to promote such a campaign, we need to have the support and help from all the traders. When I spoke to a coffee-shop owner about the campaign, he told me, "If I reduce 10 cents from each cup of coffee, with a thousand cups of coffee sold every day, my daily income will be reduced by $100. However, if the Government would reduce our property tax, rental, transportation charges, we would gladly participate in this campaign." Eventually, he agreed to participate in the Bukit Gombak Constituency Sales which we are planning to have just before the New Year. This National Sales Campaign can help the lower-income families to reduce their cost of living. However, if we want to do it, we must do it in full strength. I remember once I consulted Minister George Yeo on a certain project. After listening to me, he said, "If you feel that you are doing the right thing, go ahead and do it. I will support you." This signal that he gave to me was a great encouragement to me. He gave me a lot of confidence and courage. Here, I would like to take this opportunity to tell the traders, the coffeeshop owners, "If you think you are doing the right thing, do not be afraid, go ahead and do it!" Nothing ventured, nothing gained. Only then, can we get good results. The National Sales Campaign may not be restricted only to the retailers, even the banks can join in. I remember that the Minister for Finance mentioned in a television interview that the banks are going to reduce their interest rates. If that is so, the banks might just as well join us in this National Sales Campaign, by announcing a cut in the lending rates. I think if the bank loan interest rate is lowered, the property market will pick up, and our shares index can break through the 1,500 mark. An hon. Member: It has already breached 1,500.

(In Mandarin): It has already done so? Then, let us go for the 1,600 mark. I believe that if we can put in a concerted effort, with cooperation between the people and the Government, we can achieve some good results. Now I would like to talk about the foreign worker levy. As the DPM has already mentioned, the foreign maid levy will not be lowered, and I understand the rationale behind it. However, during a dialogue session of the Feedback Unit, someone raised the point that since some tax reliefs are already in place for working mothers to offset the levy, why not extend this benefit to the husbands as well. As taxpayers can enjoy tax reliefs up to $8,280 per year for a foreign maid, it may not be a bad idea to let the husband and wife claim the relief between them, so long as it falls within this ceiling of $8,280. Whether the husband claims or the wife claims, so long as it does not exceed $8,280, there is no loss to the Government. Secondly, the levy on HDB resale flats. Dr Vasoo has raised this and the Parliamentary Secretary has already explained. But I still hope that HDB would re-consider this matter and allow those who are living in three-room flats to upgrade to bigger flats without having to pay the high resale levy. Let me quote an example. In 1997, a three-room flat could be sold for $160,000. To upgrade, the owner would have applied for a four-room flat which was then sold at about $150,000 by HDB. But now three-room flats in the western part of Singapore are selling at just $110,000, a drop of some $50,000. At the same time, the applicant is required to pay a 20% resale levy of $22,000. Thus, the applicant is left with very little money. I hope that HDB would consider helping these people who want to upgrade but are now being caught in this economic downturn. At the moment, for a three-room flat, you pay 20%; for a four-room flat, you pay 22.5%; and for a five-room flat and above, the resale levy is 25%. I suggest that we reduce the levy by 5%. Let the resale levy for a three-room flat be 15%; four-room flat, 17.5%; five-room flat and executive condominium, 20%. In the early days, those who sold a three-room flat paid only 10% in levy. It has been increased to 15%, and then 20%. Now that the tide has gone down but the boat is still so high up, I think we should allow the boat to go down with the tide. Let us follow the trend. I think it is more equitable that way. I hope that HDB will consider this matter. Another point I would like to raise is on building up world-class companies and improving the competitiveness of our local companies in the international market. This is a very far-sighted and creative approach recommended by the CSC. It recommended that many small companies could merge together to form a big company. But we all know that in our oriental society, it is very difficult for two or three companies to merge. In the past it was difficult, now it is also not easy. Even in the future, I do not think the prospect is good. However, the Government can take the lead to form a company and then invite all the companies in the same trade to join in like, for example, Temasek Holdings. We can invite these small companies to join in, help each other and then form a big company with strong foundation. After that, invite bankers and financial institutes to join in and give financial support, and then we have a huge local company which can be developed into a world-class company to venture overseas. I have heard the views and feedback from some of the businessmen. They say, "Cooperating with Government companies can be very frustrating because the civil servants who are running the business are often too rigid and inflexible." I would suggest that if we set up such a company and it is managed by civil servants, let them take care of administration and finance. But when it comes to sales, business dealings, etc, leave it to the businessmen to do it. Because between businessmen, they speak their own language. Only they can understand the nuances in the language they use. We should take advantage of their expertise in this area. For example, if you talk business with people in certain countries, whenever you start negotiating, they will ask you to cheng shang ming biao lai. To the bureaucratic Singapore civil servants, this simply means, submit your company's profile. But, in fact, what they really meant was "present us with branded watches." When you squarely submit your company's profile, it will most probably end up in the wastepaper basket. But, if you are smart enough to hand in your Rolex or Omega, your chances of success are definitely better. If it is a big project that can bring in big money for you, it is probably worth the while entertaining them. After you have cheng shang ming biao (presented them with branded watches), the next thing is, they will invite you to yanjiu, yanjiu, which on the surface sounds like "consider and discuss", but in fact it is just another hint for you to send in the yan (tobacco) and jiu (liquor). Toe the line, make the right move, and you get the contract. If not, then it is too bad, you are out of contention! If you want to deal with these foreign businessmen, you need to have a tacit understanding of the way they operate. This is something our law-abiding civil servants cannot do. But our businessmen can do it. They are the experts. They know how to talk business. The CSC has been far-sighted in recommending the eight long-term strategies. It is not possible for me to go into every one of them. Of course, we may have other opportunities in a future forum to discuss all these. Here, suffice for me to say that I support the recommendations put forward by the Committee. I like to thank the Government for accepting these recommendations. In the past, many people used to say, "Whatever recommendation that is made, once you come to the Government, they will dilute it by 40%." But this time, the Government did not dilute it. As a matter of fact, the Government enhanced it. The Committee recommended cost-reduction of $10 billion but the Government gave another $500 million to make it a $10.5 billion package. This is indeed unprecedented! Sir, I support the motion.

Mr Speaker, Sir, I am obliged to you for giving me this opportunity. Sir, I rise to support the motion moved by the Minister. Allow me to share some of the observations which I am going to make this afternoon. Sir, the Report is bold and imaginative. Some of our best minds in the Government, the private sector and the academia have worked long hours to put up this Report. Those of us who have read this Report feel a sense of gratitude in the way they have confronted the issues. The Report is farsighted, comprehensive and well written. Sir, may I ask this House to acknowledge the contributions made by all the people involved in the Report, from the main Committee to the sub-committees. It is interesting to note that most of the members are from the private sector. This is encouraging. It shows the Government's faith in the private sector, and this faith has been well rewarded. This is not a Government White Paper, but largely a product of private sector's efforts. Sir, the goals set out in the Report are achievable. We all have to work for it. We are fortunate that our fiscal management and budgetary measures have left us surplus in good years to meet the difficult years ahead. However, there is some pessimism in some sectors that the present economic slowdown will last for a few years. Some say it is the worst - and I agree with them - economic crisis that we are facing. Only time will tell how long the present condition will last. Much depends on our neighbours as well as on Japan. Sir, I am more optimistic. We can be masters of our own destiny. The acid test of a society comes in times of crisis. We are going through such crisis now. We have gone through the previous crisis and we have overcome. We will overcome the present crisis, provided we have the will and determination and resolve as a united people. Sir, yesterday DPM Lee announced the Government's measures. The Government has acted very swiftly in facing the problem. He has given solutions to the short-term problem, but the Committee has also recommended some long-term measures and I hope the Government will take the opportunity at the appropriate time to debate them as well. The wage cut has been accepted by the employees. In many countries, such a move would have caused political crisis, perhaps even crisis in the standing of the government, but we are fortunate. And it is to the credit of the NTUC and its leadership that it has persuaded the workers to accept some temporary cut. It is laudable that there is a stable industrial climate in Singapore. Labour, Government and employers all have worked in achieving this. The NTUC has done a remarkable job in getting the workers to accept less CPF and less pay. Sir, I was moved when my fellow NMP, Mr Cyrille Tan, related the question of retrenchment. He knows the problem because he himself has been a victim. He painted a graphic picture. Only a person who has been retrenched can show this. Sir, whilst the workers are asked to make some sacrifice, I am disappointed to read in the Business Times that the corporate world is not showing the same trend. Whilst the employees are asked to sacrifice, some of the captains of our corporate world are taking more pay, when, in fact, their company's performance has declined. I appeal to the corporate world to be realistic and not to be marginalised by their action. The directors cannot persuade the workers to take a pay cut when they themselves are not prepared to live by example. There is no room for double standards. Similarly, those companies which are doing well must reward their workers. Sir, I now move to the financial sector. Our financial sector is in good health. Our system is transparent. Thanks to the MAS and its officials. My complaint is that our banks are too over cautious. They are too conservative. Permit me to elaborate. MAS does not believe in getting involved in the management of credit and bank interest. It may be so on paper. However, it can - I emphasise on the word "can" - persuade the banks to be more market oriented. When savings interest rates go down, the banks must try to lower their interest rates. The banks must not be over anxious over loan portfolios. They must not stifle enterprise. There may be some companies that may be going through difficult times now but they have a potential of growth in years to come. They should give a helping hand to them. They should not recall loans. They should do so only as a last resort. I now move to the property sector, Sir. The last two years have seen property prices decline, in some cases as much as 60% from the peak. Nobody knows when we will reach the bottom. Had the Government not intervened in 1996, we would have a sad story today. Nevertheless, I urge the Government not to allow the property market to collapse. It will not be good either for the property market or for the banks or the country. What the Government should do is to take away some of the restrictions it had imposed earlier. I ask the Government to reconsider its position. Moving to manpower, Sir, manpower is our main asset. One area which we should look at is our birth rate. Those who can afford should be encouraged to have more children. We cannot forever depend on guest workers. Sir, in order to get talent, we should start young. We should encourage the bright students from other countries to come and study here. They will stimulate our students. Some of them may want to stay back and even those who return to their countries would be our life-long unpaid ambassadors. In this respect, companies could offer scholarship. SIA has such a scholarship scheme. I urge other Government-linked companies to do so. We should encourage more international schools to be set up here. We have the potential of becoming the educational hub of Asia. Sir, I share the Government's concern in attracting foreign talents. Let me take the example of the print media in Singapore. The Straits Times has a number of expatriate journalists. They have helped to improve the quality of the newspaper. Sunanda Datta Ray and Asad Latif are just two names. They are senior leader writers, very sensitive positions. Yet we have them there. Even the American and British print media have foreign talents. The world is looking for talents. If we do not attract them, other countries would do so. We must never forget that we are by-products of an immigrant society. It is very encouraging to note in the Report that the institutions of higher learning are being asked to increase their intake. With the changing of our educational policy, we would become a learning nation. Every individual should undergo some form of training every year. Our institutions of higher learning are offering extension courses. We should add more such courses. Sir, the world is changing fast. We are in the information technology age. It is imperative that we have an educated workforce. Employers must take the lead in job training. It is not just the responsibility of the Government and the labour movement. The employers have a role to play. This mindset must be changed if we hope to become a knowledge-based economy. Sir, we must also try to upgrade the skills of our foreign workers, for they form an important factor in our workforce. Many of these workers are educated but they may have a poor command of English. We could offer them some courses in English. Another area which we must review is our retirees and housewives. We have not attracted them enough. Perhaps the labour market must examine this because, as the Minister said earlier, only 3% of our workforce are part-timers. 3% is a very small number and is indeed very low. May I now move to tourism, Sir. It is a growing industry. Whilst we are also attracting talents, we have an edge over the other Asian countries. In short, we can export some of our talents. Take hotels. In some Asian countries, we still find European and American hotel managers. Can we build up our talents here so that they could manage hotels in other countries? Better still, build or buy hotels in these countries, as some companies are already doing now. The trend has already started. Similarly, Sir, I have spoken and I will speak again on the question of tourism. There is a growing class of tourists who are interested in Asian culture. Music and art attract them. Our population mix is to our advantage. We should encourage musicals, operas and ballets. Similarly, we should hold art exhibitions and musical performances. I would suggest that a committee be set up, as we have a niche over the other countries. Sir, I was pleased to read this morning in the International Herald Tribune that our cultural scene has actually attracted their attention. Sir, there is another area and many Members have spoken on this, ie, how to stimulate our retail sector. While I am not advocating that we should give spending coupons proposed by the Japanese government, I think there is not enough money to be spent in the retail sector. People do not have the money, and even those who have the money, they are trying to save for the rainy day. We must try to give some help to this sector, because it forms an important sector of our economy. Finally, we must not forget our political stability. I agree with my colleague, Dr Lee Tsao Yuan, that Singapore is fortunate in having a good government. We must evolve our own political system where the citizens can participate not only in decision making but take some of the burden of the Government. We must strengthen our civil society which is not only prepared to speak but also do its best for the society. Sir, there is so much to talk and so many Members are going to speak. I end my speech with this plea. Fellow Singaporeans, we are fortunate that we are not as badly hit as the other countries. Let us put all our resolve, put the past behind us and try to build a bright future for our children. We can do it and we will do it. We have the resources. We have the money and the means. Let us all contribute our effort to achieve the goals set out in the Report. Sir, the motion has asked the House to endorse the strategies and policies set out in the Report. I think the Government, Members, Opposition Members and NMPs must show to Singaporeans and the world at large that we are a united and one people. May I ask the entire House to give a resounding support to this motion? It should have a 100% approval from this House. Sir, I support the motion.

Mr Speaker, Sir, I rise to support the motion. Yesterday, DPM BG Lee Hsien Loong gave the Government's response to the CSC's recommendations. Once again, the Government has shown that it is a responsible and credible Government. It is prepared to take hard and difficult decisions. These decisions could not be easily taken in many other countries. In times of need, the Government is providing the right political leadership to rally and mobilise the people to the common cause. In the short term, we want our companies to survive and to save jobs for our people. Sir, the Opposition has taken cheap pot shots at the Government for failing to foresee the danger signals and taking the early pre-emptive steps that could have avoided the sharp decline in the economy. The Opposition should understand that confidence is an infectious thing. The most difficult thing about managing the economy is the psychology of people. Every step taken by the Government is closely watched and interpreted by investors and traders, both locally and overseas. It is not only in the economy that is of interest to the investors and traders. It is politics that has contributed to the worsening regional business and trading environment. For a period in the early days of the regional economic crisis, the foreign financial analysts and fund managers did not make any distinction between the situation in Singapore and the rest of the region. With our political leaders taking the lead to explain Singapore's policies and strategies, foreign investors and traders now understand that Singapore is different and Singapore got what it takes to continue to do well despite the political uncertainties in our neighbouring countries. In fact, we are taking advantage of the adversity of the regional economic crisis and turning it into a window of opportunity for Singapore to widen the gap in comparative advantage against our competitors. Sir, in the new era of information technology, telecommunications and the globalisation of the economy, we have to contend with the highly volatile international market environment. We have therefore to be quick and nimble in our response to new changes and developments affecting us. We have to be agile and flexible to operate successfully in this new environment and this requires a change in mindset. All the more we need a consensus in the vision for Singapore in the next 10 years. The Report of the Committee on Singapore's Competitiveness does just that. The target set provides the direction in which we can all work together towards a common goal. The aim is to continually improve the standard of living of all Singaporeans. For the last two days, I heard Mr Low Thia Khiang repeatedly saying that it is not necessary at this stage to cut the employer's CPF contribution, as he thinks the economy will recover very soon and we need not take the bitter medicine. He seems to suggest that the retrenchments taking place are part and parcel of working life. Too bad, you are affected. After all, only a small percentage is affected by retrenchment and unemployment. Why bring in the rest to suffer together with this minority? Sir, indeed, there are more than 1.8 million working persons in Singapore. From the selfish point of view, it could be argued that 90% of the workforce would have no problem retaining their jobs. Many could not see the threat of retrenchment or unemployment affecting them. Possibly, those working in the public sector may feel this way. We all know that nothing remains static. There is always a danger of the contagion effect. Even in good companies, people can be affected through takeovers, mergers and acquisitions. In good times, it is easier to secure alternative employment. In difficult times like this, those retrenched and new graduates may have to sit out for many months before they can find alternative employment. This is our major concern - to save jobs and to create many more new jobs for our people. What the Government has done is to promote shared values and shared interests. It is also of educational value to let every Singaporean know that we are in it together. Perhaps the Opposition Members may not be aware that they are promoting selfish attitudes among Singaporeans to care about their individual selves. Perhaps there are those who believe, like the Opposition Members, that we can take the more laissez-faire approach and things will improve naturally towards recovery. I would rather that we be safe, prudent and conservative in our approach in handling this tricky economic situation in hand. Even with these measures, we cannot guarantee that we will recover quickly. So we do what is necessary and hope for the best. I wish to commend the action taken by the Government to help bring our economy on an even keel. I am happy that the daily-rated employees and Divisions III and IV public sector employees do not suffer the direct cuts in their monthly salary. The Government, as an employer, is taking good care of the lower salaried staff. As I have said earlier, the public sector employees may feel the most secure during this period, because they are insulated from the experience of those directly affected by the downturn in business. Civil servants are always occupied. What more with work being generated for them with Government pump-priming and revisions to Government taxes, levies and charges. The Government, by its action in cutting the salaries of civil servants in Division III and above, is bringing civil servants closer to the reality on what is happening in the economy. As there is a cap in the employer's CPF contribution at the monthly salary of $6,000, it is only fair and equitable that those in the higher income category above $6,000 be made to take a direct pay cut. I am happy to note that the Ministers, Members of Parliament and senior civil servants will have their annual remuneration reduced by up to 10%. This is what leadership by example is all about, and the rest of the people should be pleased that the right tone is set for them to follow. Sir, an interesting feature in the package announced by DPM Lee yesterday is the effort to help our domestic retail trade by plugging the leak in our economy, by reducing the exempt limit of GST to travellers. I believe Singaporeans will support the move. I am sure the retail sector will welcome this gesture of the Government. I am also sure that the businesses are pleased with the reduction in the foreign worker levy. The total savings of $204 million will be an added fillip to the companies, especially the manufacturing sector. The CPF has undergone many modifications. We are introducing many uses for CPF. I am concerned whether, in the long term, CPF account holders will have enough to live on during their years in retirement. Will the investments in property and shares allow them to realise good values in time for their retirement? I would suggest that the Government do a thorough review of the CPF scheme so that we do not unconsciously lead to the unintended effects arising from the many uses of CPF accounts. Sir, on the subject of human intellectual capital, Mr J. B. Jeyaretnam yesterday criticised the Government for not reviewing the educational system. I am surprised with his remarks. He must have been deaf to the outcry of parents and teachers that we have been making too frequent changes to our educational system. I am glad that he supports the need to constantly review our educational curricula to keep up with the times. It is precisely what the Education Ministry has been doing, introducing critical thinking skills, information technology, national education and even community service into the school curricula. The GPC for Education has always been supporting the Government's efforts to bridge the skill and qualification gap, to ensure that graduates and school leavers have the capability and competency to fit easily and quickly into the work requirements. Our students are already perceptibly different today from yesteryears. They are more confident, articulate and have inquiring minds. They are our hopes for the future. I am confident that young Singaporeans can benefit from the wide range of educational courses in Singapore. Sir, the NTUC leaders and the labour movement are to be applauded for their hard work to arrive at this consensus. In fact, it is because of their hard work that they have made our jobs so much easier today. After this debate, Sir, this is the time to act. I am optimistic that our economy will recover in the not distant future.

Mr Speaker, Sir, I stand to applaud the CSC for a job well done and the Government for its response to the CSC's recommendations. I believe the Government's decisive and comprehensive package, announced by DPM Lee yesterday, will bring us out of this economic crisis sooner and will place us in a better position to handle future challenges. I would like to mention, in particular, that I welcome the Government's initiative to cut the salaries of the Ministers by 10%, in spite of the two consecutive years of wage freeze. It is good that our Government has again shown us its readiness to lead by example. Sir, while I agree with the Government's decision to cut the employer's CPF contribution by 10%, I am concerned about the cut of 4% from the Special Account. This will mean many account holders will find it harder to attain the Minimum Sum. I would like to reiterate that the Minimum Sum in the Special Account is extremely important because life expectancy of Singaporeans is increasing towards 80 years of age and many will require their Minimum Sum for subsistence in times soon to come. I strongly suggest that the shortfall in contribution here be promptly reinstated at the end of these two years. I also agree with the Government's package of aid to alleviate the burden of lower income families. However, I am disappointed that there is no mention of any help for the retrenched. Sir, I would like to entreat this House to also consider the more immediate and adverse side effects of the economic downturn which has left many people unemployed. Just last September, 62,000 workers in Singapore were without jobs. Sir, 62,000 may be just a number, mere statistics to some people. But not to us, because this means that the bad effects of retrenchment are affecting too many of our people. And the lives of these Singaporeans and their family members can indeed be badly affected, not only in financial terms but also in terms of psychological and social well-being. The conviction and confidence to achieve that Singapore dream gets questioned. These people can be left totally demoralised. Indeed, the distress from retrenchment can be very heart-breaking and the hardship from income loss can be very harsh. Although this may be especially so for sole breadwinners of families with children, the hardship will be felt by all members of the affected families. Sir, there is no provision for unemployment benefit in Singapore and I am not an advocate for one. Welfarism has many down-sides and will not work in Singapore. However, we must have some degree of humanitarian and social conscience considerations from the Government. We have built up strong reserves over the years for rainy days, I presume. Are we not in the middle of the storm right now? Although I agree with DPM's reservation yesterday about our changing from a nation of savers accumulating wealth to a nation of spenders depleting it, I would like to see a helping hand extended to the families of those retrenched workers who are having genuine difficulties, often through no fault of their own. The Government could disperse a one-time funding through the CDCs to tide over the retrenched who are in dire need during the two difficult years envisaged. Not all the retrenched workers will need the help because some have personal savings, some are from double-income families and the spouses are not unemployed. Some would simply not want such aid and certainly not for the full two years and so on. Nonetheless, even if hypothetically, every single one of the 62,000 retrenched or unemployed workers were to apply for the two full years of $500 per month subsistence help, the amount would be just under $750 million. This, indeed, would be a large sum of money, but it would be well received humanitarian aid from the nation to its very own citizens. Sir, these are not ordinary times and what can be done should be done. I have met people who have been retrenched. They looked trapped and the desperation they expressed is unbearably profound. Now, there will always be argument that we may encourage reliance and complacency as well as ending up with a "dole queue". Sir, I feel that these fears will not be validated because the applicants will need to apply for the monthly aid and they will, of course, be subjected to satisfying the eligibility criteria set out to stem abuse and dependence. Moreover, $500 per month is barely enough for subsistence and the majority of people will want to earn more than that in order to have a better living for themselves and their families. At present, there is a 4 to 1 matching grant of up to $3 million each year from the Government for the CDCs when money is raised by the grassroots. It is not easy to raise funds during times like these. There is a varying capacity by different constituencies to raise funds. The ones that have the least capability to raise funds may be the ones that need the most to support families in financial difficulties. Moreover, most of the money raised for the CDCs in many constituencies have been committed to other charitable projects. In this context, therefore, I plead with the Government for this one-time outright funding through the CDCs to help the retrenched. There is also no mention in the Government's response about the need to look into the employability difficulties faced by the older workers in the country. I share the same concern as mentioned by my parliamentary colleague, Dr Vasoo, in this area. I believe that skills upgrading of workers is the correct path forward. I also believe that higher technology industries will position us better economically in the future. However, it is necessary for us to also consider the social implications for the society as a whole when we try to achieve our ideals. We run the risk of leaving many of our people completely redundant and causing more social ills than necessary. There are about 500,000 lower-skilled workers at the moment and many of them are above 40 years of age. Mr Speaker, Sir, how many and how fast can these people be upgraded in their skills? Retraining takes time and not everyone can be upgraded in skills for a multitude of reasons. The lack of motivation may be a reason. But, financial considerations, the lack of opportunity and the inability to master new skills are even more important limitations. Of course, we cannot accept such excuses if we want a more productive workforce. Nevertheless, while trying to achieve our goal, the livelihood and well-being of these people have to be considered. Along the way, we should leave a niche section of the economic pie for them. In this respect, Sir, I would like this House to consider the following: (1) Lower technology jobs should not be phased out completely. They have to be supported and even encouraged until such time when we have trained our unskilled and semi-skilled workers. (2) Employers must be encouraged to hire more older workers. Perhaps we need a helping hand from the Government by way of incentives such as (a) linking the quota of foreign workers employed with the number of older Singaporean workers employed or (b) special tax incentives for companies which employ older workers. (3) On the part of employers again, job vacancies must be made available or even created for our local workers. There is no doubt that Singaporeans shun certain kinds of jobs and tend to let foreigners fill them. This should be addressed, for instance, by the use of more prefabricated materials in the construction industry or by the use of automation in the manufacturing industry, and so on. Steps taken to change the mindset of employers towards such ideas ought to be addressed. (4) Emphasis on changing the mindset of our local workers should also be enhanced. We need to encourage more of our own workers to take up jobs that have been designated as "for foreigners only" or jobs that are considered lowly and demeaning. Being choosy and unwilling to take on jobs below their expectations in terms of salary or status is probably the most significant mindset change required. Such mindset change will have to come in due course because more workers will be competing for limited preferred jobs in the market. (5) The Skills Redevelopment Programme's efforts towards helping companies upgrade the skills of their workers is most laudable. This programme must be encouraged and promoted resolutely to encompass more sectors of our economy. Sir, in our efforts to equip ourselves for this economic downturn, I would also like to beseech this Government not to ignore the plight of our womenfolk. I would like to commend these two points for attention: Firstly, women comprise 40% of our workforce and many of them bear the burden of having the multi-role of looking after the home, bringing up children and caring for their elderly parents. Many need maids as a result of these responsibilities. We need to help them. Although the Government is not lowering the levy for foreign domestic helpers at this juncture, I would hope for a review later. A lower levy will go a long way when family incomes are to be significantly reduced. Furthermore, not many working women earn enough to benefit from the double tax deduction. In fact, there were only 17,425 women who were eligible last year, or about only 15% of the total number of employers of foreign domestic workers. Secondly, childcare centres and before-and-after-school care centres have certainly been a boon for more mothers to seek jobs and contribute to the economy. The importance of these centres is recognised by the Government. More of them have been set up and subsidies for working mothers have been rightly given. I would like to see attention given here by having the subsidies increased in view of the impending CPF and pay cuts. Mr Speaker, Sir, I applaud the CSC's recommendation to have "neighbour care" by extending child care subsidies to all working mothers, instead of restricting them to those who send their children to formal childcare centres. This would create more jobs for the homebound women to mind someone else's children in their homes. Sir, in conclusion, we need to work together as a nation, with a single-minded wish to see us out of these bad times. We will experience hardship and we will remember the saying, "no pain, no gain". However, I would like the Government to let the degree of hardship become a factor in all our endeavours and to remember what I would add, "too much pain is no gain too". Sir, I support the motion.

Mr Speaker, Sir, so much has been discussed about Singapore's competitiveness. The cost-cutting packages announced in this House by DPM Lee was a "sunshine" package. However, these discussions on long-term economic policies and short-term cuts in business costs, which will take time to be implemented and felt, are not all understood by the man-in-the-street nor by a large segment of Singaporeans not trained in economic terms. Their immediate concerns are still the threat of unemployment and the impact of wage and CPF cuts. The recommendations evidently will enhance business competitiveness but they are pressing ordinary Singaporeans to shoulder the urgent responsibility of making Singapore more competitive, by accepting a wage cut and lowering of safety net contributions from employer's CPF contribution. This is the reality of global competition when we have to cut wages to stay competitive, because they form the most significant component in our operating costs. Sir, accepting "tough times" and a harsh business reality, however, does not wish away the assault of deprivations and the pains in people's struggles to make ends meet. Many MPs had, in the last few days, called for a compassionate gesture by the Government to try its utmost to alleviate the financial pains of Singaporeans so that, as Dr Michael Lim said, "their spirits will not be broken", and I echo their calls. What more can we all do for the vulnerable in this crisis? I do not agree to using the reserves or, as DPM Lee said yesterday, lao ben [ ]. And he had translated that to guan cai ben [ ]. That is a little bit fatalistic, and it is like the end of a journey, because there is no life in coffins. I would call it a "reserve in perpetuity" - there to guarantee generations of Singaporeans, our children and grandchildren the security of having something there for them, as a last resort. Take my own family, for example. We set up a trust for our children so that if anything happens to us or our fortunes, they have the reserve to fall back on. We explained to them that they have to grow it for their children and grandchildren, in perpetuity. And if there is a critical need, it can only be for education need. We believe, if everything else fails, an education guarantees a job, and life. Therefore, I agree, bu yao dong lao ben [ ], bu yao da puo man [ ]. Do not touch the reserves. It is a psychology of security for the country. So what can we do? I will highlight five focus areas which have direct impact which we can still work on. The first is more of the many commendable programmes already started by MOM and NTUC in areas of job search and placement and skills training for workers. I am glad to hear from the Minister this afternoon about the employment facilitating channels and the retrenchment advisory unit. Those are positive initiatives. But I would call for the strengthening of three strategies. The first is the strengthening of job matching channels for older persons. We know how hard it is for the 35 to 40-year olds to get employed, because employers and marketplace prefer younger workers with qualifications.

5.10 pm MOM has said that if employers are found to have terminated the services of a worker unfairly on account of old age, the Minister can order his reinstatement to his previous job, or require the employer to offer monetary compensation to the affected worker. Sir, that is very reassuring. We have read in the papers how hard it is for the 40-year olds to find jobs. The most recent one reported was Mr Shaik Alauddin who could not find a job for 11 months. Some of the reasons given in that article were valid - skills level, unmatchable capabilities, low work adaptability, etc. But we have to look closely at our million over 40-year olds and do a skills audit. In view of the current employers' attitude and market demand for fewer workers, who are cheaper but higher qualified ones, it may mean more "older persons" will have difficulty finding jobs. (And that represents probably three-quarters of the Members of the House here in the `50s who may become potential job seekers!). We may need to identify the kind of industry clusters which we can match and train them for. This category of people still have 20 more good years to contribute to society; it is our economic loss not to employ them. I am glad to note that DPM's response yesterday registered the same concern. May I then ask if we can consider special incentive schemes for employers who employ older persons? The second strategy is to identify more part-time work for working mothers. The Government has removed some of the disincentives for part-time work in public service by allowing part-time workers to claim the same CPF contributions and leave schemes as full-time workers on a pro-rata basis. Dr Aline Wong, in a recent statement, reported that private sector companies, however, have not been flexible in making part-time and flexi-time work more readily available to their workers. I support Dr Aline Wong's call for employer groups to study how part-time schemes are practised in some countries such as Britain and Sweden, and learn from them. Can we think of setting up a dedicated database to identify the kind of part-time work in demand in the marketplace, so that a part-time job clearing house can be set up and a mechanism for job identification, recruitment and placement can start to operate? The 900 queries for part-time jobs which Minister Lee Boon Yang reported two days ago provide a baseline for us to identify what workers are looking for and what special job designs can be customised to absorb them. This is a good start to systematically examine part-time job clusters for the Back-to-Work programme. The third strategy is more of the excellent initiatives like SRP and CREST which are targeted at 800,000 workers for the next five years, but to be extended to other beneficiaries like housewives, older persons, schools, voluntary groups, etc, so that we truly can become a learning people and thinking nation at all levels. I would like to make a call to all employers in the private sector at this juncture to reinforce the efforts of the Government by creatively aligning their work and people resources in such a way that workers, old and young, men and women, can still have a job, even if need be, on a part-time basis. For example, we can adopt a policy of wage cut by reducing two or four work days in a month for each staff. Administered on a rotational basis, the company carries on business as usual with fewer staff having to double up and perform cross-functionally. Freed from office time, many staff can now attend to family matters and go for some inexpensive training courses. Life will be more balanced, although in some cases, the salary cut can be inadequate. However, it is better that everyone in the company has a little less, than a few to lose their jobs completely. And I also urge employers to pay back to workers, in the form of bonuses, in December 1999 if their companies did well next year. My second focus is more community-based initiatives like what CDCs and voluntary agencies have developed. I will highlight two strategies. The first is reaching out to the poor. Here, I would like to applaud grassroots leaders and volunteers in Tanjong Pagar and Marine Parade and recently Ang Mo Kio/Cheng San CDCs for their mission to brief the poor in one- and two-room flats on help schemes available to them. I observed that even among the social service agencies, the knowledge of available resources for coping with the economic crisis is fragmented and poorly understood. The next obstacle for a needy person, after she or he knows where to get help, is the overwhelming procedures involved in getting the help, especially for older persons and those who feel threatened by an English-speaking institution and are illiterate. It is unfortunate that the myriad schemes offered by Government, including CDCs, CCCs, Women's Executive Committees and all the Family Service Centres and other civic bodies are not sufficiently publicised and disseminated to the needy families. This is the reason why I applaud the volunteers in the CDCs for taking the pain to go to the needy homes, listen to their problems, help to fill up the forms by detailing the sort of problems to be tackled and then fax over to CDC staff for them to follow up their support function by contacting the relevant authorities. This painstaking exercise, for me, is "grassroots democracy" at its best. I hope this effort will repeat in every constituency. By mobilising all these volunteer groups, residents in the community and CDC staff, we are revitalising the "gotong royong" spirit. The second strategy is to bring the bureaucracy to the man-in-the-street like what the CDCs did by setting up an employment hotline, employment information and exhibitions in shopping malls and working closely with MOM to help residents fill up employment forms. I hope more of these will continue which would clearly break up the tyranny of the "bureaucratic leadership" which Mr Chiam See Tong cautioned us against yesterday. My third focus is more of what the Government can do in the area of rents, fees, taxes on utilities and assistance schemes to help the cashflow situation of ordinary folks. The cost reduction package announced yesterday had gone beyond what the CSC has recommended, for which we should be thankful. However, Sir, another 5,000 more people will be losing their jobs, bringing our total unemployed to 25,000, according to recent MOM estimates. More and more bankruptcies were recorded in the first eight months of this year. What shall these households do? I am glad to hear that the Government will consider releasing CPF monies to family members to pool their resources together to pay for their house mortgages. The presenting problems, however, of clients seeking help in Family Service Centres in the past six months were essentially difficulties in securing employment, in meeting basic needs, children's school related expenses and lifestyle adjustment. The hardest hit are single parents from low income families whose situations worsen when the search for permanent employment gets harder because of the poor job market. I hope the special assistance schemes set up by NTUC, MCD and MOM will respond to the critical needs of these vulnerable groups fast and generous enough. I would like to know if any emergency fund has been set up for Ministries to have access to when they are called to respond to difficult cases and whether the criteria for application for these funds have been broadened in recent months to meet the needs of vulnerable families. DPM Lee yesterday urged us to build our "national resilience" and "social cohesion" to stand together and maintain a sense of common purpose. Let us note that people under crisis and struggling to survive, burning candles at both ends, are too spiritually and physically exhausted to be able to put their mettle to test. It is the rest of us who are better off, who must, in partnership, stretch our "helping hands" to pick up those who are falling and slipping - this is truly for me the ethos of strengthening our shared experience of adversity and struggle. In the scheme of things, whose helping hand is the firmest and the most able to be generous - the Government, of course. The fourth focus is more of what NTUC Fairprice has done by cutting down the cost of living by price reductions. It was a generous move. And as a direct beneficiary, I look forward to more cuts in even more items in January 1999. I applaud the adoption of NTUC Income for helping insurance policy holders and borrowers pay their premiums and housing loans, and a whole lot of other measures to alleviate their financial pains. To me, NTUC sets the exemplary standards in proactively moderating the impact of the economic crisis on daily costs of living of ordinary people. My fifth focus is more stress on fast response time in all Ministries by providing efficient and shorter processing time required for some of the assistance schemes offered by the Government. Maybe our bureaucracies could consider engaging a corps of paid part-time residents or retrenched persons to do the tiresome liaison work of attending to applications, giving appropriate information, filling up forms and completing the follow-up detail actions. The devil is in the detail, as we say. An economic crisis requires crisis intervention skills which are fast, efficient and effective to ensure that those affected have the information and access to critical services. In conclusion, I have been travelling around in the region in the last six months and most foreigners I met had conveyed such excellent remarks about how Singaporeans and our Government have tackled the economic crisis with remarkable discipline and caution. My deep disappointment with this Report is its lack of long-term strategic thinking on the value of the social fundamentals as social capital, which is crucial for human development and critical for honing a competitive society. By social capital, I mean the network of institutions and relationships that are important for the productive functioning of a society. The network includes the families, community bodies, social service agencies, civic bodies which are connected by shared ethos and collective memories of a place. Intangible as they are in their contribution in terms of dollars and cents to business productivity, social capital provides the sealant in community bonding and the social stability upon which economic competitiveness thrives. Resources spent on people services help to moderate the phenomenon of marginalisation and alienation among pockets of a population that can undermine social stability. The effort includes more financial and employment support to groups with special needs, for example, the disabled and mentally challenged; and more support across the board for voluntary organisations which repair the broken pieces of people's lives. I hope the Government truly regards its role just as important as businesses, and if the latter are going to enjoy lower rentals in State-owned enterprises, can it not also grant free rent for one year, or perhaps considerable rent deductions to all VWOs operating on void decks? I agree with Mr Koo Tsai Kee that the 50-50 shared operating costs between State and the VWOs is a generous formula and in the total operating costs, rentals are not a major component. However, every dollar saved from rentals, averaging at about $5,000 a year is a whole lot of money for VWO, and what a relief it is to save some money to run a service programme for the community. No doubt, we can raise funds by organising fund-raising activities, but we all know how hard it is to raise that extra dollar. I hope the Government will give this request a serious thought. Another noticeable omission in this Report was the neglect of the family as one of the drivers in the millennium competitiveness, requiring a strategic blueprint in mapping the synergy between the public and private sectors in their efforts of incorporating the agenda of family needs as part of workplace reorganisation. The Report registered, in two paragraphs, the value of pro-family work policies, such as flexi-wage and flexi-time work schedules. There are many more family-friendly policies to consider, such as childcare infrastructure, flexible compensation structure, home-working opportunities, etc, that we need to explore that will enhance productivity levels of men and women in general, without sacrificing the needs of the family. We need a new mindset to organise people resources in both the public and private sectors that is less discrete, more fuzzy and blurred, but no less ineffective and inefficient, a perspective that is multi-disciplinary, multi-functional and cross-boundary. Economics, politics, sociology, history, moral and civic studies have to be cross-fertilised to guide the way we think and plan agendas for Singapore's competitiveness. For me, the competitive Singaporean for the millennium is someone who is clear in thinking, able to amass and process the information around him, fast on his or her feet to respond to crisis and adapt to change, quick and hands-on with his hands, so that he or she is not just a talker but a doer, and feels the compassion for the needy and the vulnerable and for Singapore, which he or she calls "Home". It requires more than what this Report had blue-printed to produce the Millennium Singaporean that will be the competitive agent to bring Singapore to the next higher level. Engines, machines and electronic disc drives are only part of the competition. The other part, and a major one, is people resource and their mindsets, values and spirit. Perhaps the CSC is not the forum for presenting these laudable ideas. I therefore propose that the Singapore 21 Committee's recommendations be used as Part Two addition to the Report of the Committee on Singapore's Competitiveness, bringing into sharp focus the significance of social capital underlying economic constructs that will make Singapore a city of excellence and a society of distinction. I do support the motion standing in the name of the Minister for Trade and Industry.

(In Mandarin): Mr Deputy Speaker, Sir, there is a Chinese saying, "Even a wise man sometimes makes a mistake, while a fool may once in a while come out with a good idea." Having heard some 50 wise men and wise ladies over the last three days, let me also offer my non- wiseman idea on the subject. DPM Lee announced yesterday the cost-cutting package for Singapore. Overall, I feel that this is a pro-business package. Of course, there are also some measures which may be said to be pro-people. But I must say the vast majority of measures introduced are designed mainly for the benefit of the business. In fact, the magnitude of some items of the cost-cutting measures may even exceed the expectations of the business community, for example, the foreign worker levy. As far as the business community is concerned, it is good news. However, DPM Lee cautioned that this package, though designed to reduce business cost in Singapore to enhance our competitiveness, was no assurance of a quick recovery to the economy because the determinants are external and beyond our control. But I have a question, if these external factors, ie, the regional economic situation continues to deteriorate, then what should we do? We need to have quicker measures to react to the new reality. In fact, this package to tackle the current crisis is just some short-term measures. The Committee on Singapore's Competitiveness (CSC) was originally set up to look into how to strengthen the competitiveness of Singapore over the next ten years. It just so happened that a currency crisis broke out very soon after the CSC was formed, and it was suddenly landed with the responsibility of working out some ad hoc measures to help our businesses in Singapore tide over the crisis. In other words, we do have a designated mechanism, an official or formal mechanism, to deal with the sudden emergence of a crisis. So, with the experience gained from this present crisis, perhaps we should seriously look into the feasibility of setting up a permanent mechanism, a think-tank sort of body, to deal with any crisis that may appear from time to time. I think this is something which the Government should consider very seriously. The current crisis has also highlighted one other point and, that is, our forecasts of the overall trends in the economy seem to be quite off the mark. It appears that the authorities responsible for the forecasts, including the Government agencies and the universities, have not been able to accurately forecast the trend of economic development in the region. It looks like accurate economic forecast is even more difficult than weather forecast. Sir, before anybody can come up with a more reliable mode of economic forecasting, I would suggest that the CSC should be kept alive as it is a useful mechanism to have, particularly when its composition is a good mix of representatives from the business world. Having their fingers on the pulse of the business world, these businessmen can detect every movement in the rapidly changing business environment. They are sensitive to changes and know how to respond and react quickly. Mr Deputy Speaker, Sir, when faced with this serious economic situation, the Ministers and senior civil servants have decided to take the lead in taking a cut in their salaries. This is a very great inspiration to the people, and it has very far-reaching effects. This is a clear indication to our people that our leaders are sharing the pains with the people. The proposed pay-cuts to the civil servants will save the Government some $176 million. Of course, this is a very significant amount. In order to ensure that the sacrifices made by the Ministers and senior civil servants are made more significant, I suggest that the Government make use of these savings to set up an emergency fund to help the lower-income families which are presently in financial difficulties to tide over the current predicament. I hope that the Minister for Finance will agree to this proposal of mine. Another way is to allocate sums of money from these savings to the various Citizens' Consultative Committees (CCCs) welfare funds to carry out more welfare work because, with the present difficult situation in our economy, the CCCs are finding it very difficult to raise monies for their welfare funds. So I hope that we can make use of the savings from the pay cuts of the Ministers and top civil servants to the CCCs to help their constituents. By so doing, I hope and I believe it will also help to strengthen the bond between the people and the Government. This will not only give tangible help to those who are in need but also inspire our people. Now, let me talk about the bread-and-butter issues. I hope that the HDB would seriously consider lowering the selling prices of new HDB flats, because over the past few years, the selling prices of HDB flats have gone up quite a lot. Granted that HDB flats are still considerably cheaper than private developments, we cannot fail to take cognizance of the fact that the prices of private properties have already fallen substantially. This will, in turn, affect the prices of HDB flats. Besides, building materials and construction cost have also fallen considerably. For example, I understand that the prices of cement, which is one of the very important building materials, have gone down by about 30% in the past couple of years. With such cost savings from cheaper building materials and pay cuts of the workers, it is obvious that the construction costs of HDB flats will be lowered and HDB should pass on these savings to the people, especially the first-time buyers, the young couples. Right now, these young people have to accept a lower starting pay, or to wait longer to get a job. Finally, there is one other matter that we should concern ourselves with, and that is, with the announcement of the Government package, how are we going to ensure that this package will give real benefits to the end consumers. For example, the hawkers, the food courts, and so on, when are they going to lower their prices so as to lighten the burden on the consumers? Mr Ang Mong Seng suggested holding a "National Sales Campaign". Actually, shopkeepers and hawkers who find their business thinning away are already giving special offers and sales in desperate attempts to attract customers. The question is: for those who are doing a roaring business, how are we going to convince them to lower their prices? I think we can use administrative measures and increase competition. For example, the Ministry of Trade and Industry could call up all the business associations, the hawkers' associations, the shopkeepers' associations and remind them that they should pass on at least in part, if not in full, some of their savings from these cost-cutting measures, to the consumers. I think we should also encourage the NTUC to open up more coffeeshops at suitable locations so that there will be more competition in the retail food industry. This will help to lower the cost of living. Mr Deputy Speaker, Sir, I support the motion.

Mr Deputy Speaker, Sir, I rise in support of the motion as proposed by the Minister for Trade and Industry. Sir, over the last 14 months, many Singaporeans have experienced the effects of the regional financial crisis. Some are affected financially while others are affected psychologically. The crisis has made all Singaporeans learnt one important lesson, that is: `Do not take things for granted'. Economies can fall, diplomatic relations can sour, property and stock prices can fall, income can reduce, and our quality of life can drop. By now, many Singaporeans understand that they are much more fortunate than many people in other countries. This fortunate situation does not happen by chance. It is the foresight of our Government and our prudent management of the economy that have sheltered Singaporeans from the vagaries of the regional crisis. That is why the Government is now again rallying the support of all Singaporeans to take tough measures to position themselves in the global market in the next century. In times of crisis, all of us must make sacrifices and take a longer viewpoint in our actions and deeds. In this way, Singapore will be able to cope with the crisis and emerge stronger as a more competitive economy in the global market. The Committee on Singapore's Competitiveness (CSC) has indeed done a very comprehensive study to spearhead Singapore into the next millennium. Although many visions and strategies were recommended in the Report, it would be better if more details on targets and method statements could be highlighted to guide the respective Ministries, statutory boards or companies to achieve the desired outcomes. Sir, I am glad that the Government has accepted the cost-cutting package to increase Singapore's competitiveness. But, with falling demand from regional economies, I would urge the Government to take aggressive measures to strengthen the capabilities of our local firms and increase the market share of their products and services. Sir, I would like to offer some suggestions for the Government to consider: Market Diversification As a small country with limited resources, Singapore has no choice but to depend on foreign investors and other countries' economies. Therefore, it is crucial for Singapore to widen its business dealings with more countries so as to cushion the effects of fluctuating economies in the future. But we need to identify suitable products and services, which are in demand in these markets. We need to develop market niches. Potential areas include consultancy services for housing, industrial park, health, R&D, and education services. As for consumer products, we must form strategic alliances with MNCs to penetrate specific markets. Singapore has the Asian culture and goodwill to become trustworthy partners of MNCs. I would urge the Government to set up a task force to focus on strategic alliances with MNCs. To be successful in market diversification, it is also essential for local firms to have strategic marketing. Many local firms are family businesses and may lack the exposure in international marketing. Although the Trade and Development Board has been searching for more new markets, we need the expertise of private marketing firms, especially our own top marketing firms, to conduct market research and sell our products and services. I hope the Government can consider engaging the services of local marketing firms by paying them a retainer fee. These marketing firms can then be engaged by local firms, on a commission basis, for increasing their sales overseas. Building world class companies I support the idea of nurturing our local companies to be world-class companies. The CSC has proposed that GLCs should kick-start the process as they have the resources and experience. Although the GLCs can take the initiative, we should also, at the same time, support promising local firms to be world-class companies. Doing business is all about networking and business acumen. To succeed in strengthening our external wing, the Government must provide resources and take a stake in both GLCs and private firms to strengthen their competitiveness internationally. Strengthening Small and Medium Local Enterprises The regional crisis has surfaced some weaknesses in our SMEs, especially in financial planning and management. In order to play a supporting or partnership role to MNCs and GLCs, we must upgrade the management capabilities of our SMEs. Although there are many Government schemes to assist SMEs, not much guidance has been given to position our SMEs to be strategic partners of MNCs and GLCs. I would urge the Government to provide a scheme whereby SMEs can engage professional management firms to conduct management audit to streamline their operations and strengthen their competitiveness. These audits should focus on building capabilities instead of merely cost cutting measures. Such audits must also be conducted regularly, maybe on a 3-year basis, to ensure that SMEs are kept viable and relevant to our economy. We must also set criteria to measure the success of all Government assistance schemes in order to make sure that they add value to our local firms and our economy. Cost Cutting Measures While cost cutting measures are inevitable, we should seriously analyse the impact of these measures on Singaporeans, especially the lower income groups. It is timely for the Government to reconvene the Cost Review Committee to study the public's concerns regarding the rising cost of living. We should also study the expected standard of living and quality of life of Singaporeans in the next millennium. According to a survey conducted by the Asiaweek of 40 cities, Singapore does not rank consistently high in terms of standard of living and quality of life, especially in areas such as housing, hospital beds and cars. We need to determine a balance between standard of living, cost of living and quality of life. To be the hub of Asia and attract foreign talent, Singapore must benchmark its quality of life with comparable cities in the world. Unless this is achieved, it will be difficult to attract top foreign talent. Sir, in the short term, I hope the Government can cushion the impact of the cost cutting package on Singaporeans by adopting the following measures: (1) Provide a one-off 15% personal income tax rebate. (2) Provide a one-off subsidy for pupils in pre-school and kindergarten centres. (3) Reduce the car park fees for HDB and URA car parks by 15%. (4) Provide more tax relief for Singaporeans who upgrade themselves through skills training including professionals. (5) Encourage banks to allow HDB shops and hawker stalls to restructure their loans. (6) Increase the S&C rebate to HDB residents. (7) Increase the National Servicemen's allowance to boost the morale of SAF servicemen. (8) Exercise more flexibility to allow parents to send their children to nearby schools so as to reduce their transport cost burden. This could be achieved by having more pupils per class or building more classrooms in existing schools. Sir, I support the motion. 5.50 pm

Mr Deputy Speaker, Sir, like most of my colleagues and as the last speaker on the list, I too support and agree with the motion standing in the name of the Minister. The Report of the Committee represents what is by far the most comprehensive study since the mid-80s to address the immediate problems and the long-term strategies to keep Singapore on the right track of sustained economic growth and development. Yesterday, in this House, we heard the DPM giving the Government's response to the CSC recommendations. The response has been most encouraging. It shows that our Government takes a very serious view in dealing with our immediate problems. The measures that have been proposed so far are broad ranging. It seeks to deal with our immediate problem of business cost in one fell swoop rather than to deal with it in a piece-meal manner. These cost cutting measures no doubt will cheer the business sector. This should send a very strong and positive signal to our people and foreign investors. The measures introduced by the Government could not have come at a more appropriate time. The regional economic crisis, as we all know, has led to a deepening of contrast in the cost competitiveness of the economies of the region. The weakening of the currencies in some of the more severely affected countries has made Singapore, which is relatively unaffected by the crisis, a much more expensive place to do business in. This is no good for us, especially when our economy is very much export driven. Just looking at the cost of business alone, Malaysia, Thailand and Indonesia, by virtue of their currency depreciation, which in some cases depreciated by more than 100% against the US dollar since early last year, are now that much more competitive against Singapore's exports. This, if not for the other political problems that are confronting some of the countries in the region, would have made these countries extremely attractive alternative places for direct investments or relocation of investments from Singapore. Sir, while I agree that cost cutting measures taken by our Government will help to provide immediate relief to our businesses, cutting business cost alone is not going to be the only long term solution to sustaining or improving Singapore's competitiveness against the region and the whole world. More must be done. Indeed, this was recommended by the Committee. In general, one must go beyond the symptomatic approach of cost cutting to one where paradigm shifts and other strategies would have to be engaged. To the credit of the Committee, this was the approach taken. As an example, the Committee has boldly recommended that we should move away from investor protection approach in regulating the securities industry to one where the authorities play a supervising role, ensuring that the market is sufficiently transparent to allow the investor to make his own independent judgment about investment decisions. Leaving aside the question of whether or not this is an acceptable approach, the recommendation does suggest a rather radical shift in the thinking of our policy makers. Sir, in some ways, our country is now at the crossroads. The economic crisis has brought upon us hardships for our people and our businesses. Yet, at the same time, there are opportunities and challenges that present itself. We have been relatively unaffected by the contagion of the region. Yet, we cannot rest on our complacence and not take advantage of this opportunity to pull ahead of competition. In that sense, we should now seize this opportunity to redefine some of our economic goals and the means by which these goals may be attained. The Committee has identified several strategies, by which it is hoped would help preserve Singapore's status as one of the most competitive states in the world. Most of the strategies did not come as a surprise. However, there are also many which are seen as bold initiatives for Singapore. Sir, I support, in principle, the proposals of the Committee as set out in the Report. The vision, as articulated by the Committee, is one that I agree with, ie, making Singapore an advanced and globally competitive knowledge economy within the next decade, with manufacturing and services as the twin engines of growth. While it is easy to identify with the broad proposals of the Committee, I do have a number of issues which I would like to raise in this House. Time does not permit me to cover the proposals in a comprehensive manner. I shall confine myself to only some of the recommendations. Manufacturing and Services as Twin Engines We recognise the importance of manufacturing and services as important engines of growth for our economy. Indeed, since independence, our high economic growth has been led by the manufacturing sector; hence, the emphasis on manufacturing. While we recognise manufacturing as providing the engine of growth, I note, at the same time, our high dependence on multi-national corporations (MNCs). We are no doubt grateful to these MNCs for bringing investments to Singapore and providing Singaporeans with employment. However, we should recognise that MNCs are not indigenous companies. They are more likely than local companies to pull out their investments and cut down operations in Singapore when it is expedient for them to do so. We have seen this in the mid-80s and how our employees became displaced in the process. These MNCs do not owe us a living and we do not expect them to. In the area of manufacturing, we should therefore hedge against this dislocation by continuing to concentrate on our local enterprises. We should build on our local manufacturing bases. The Report has quite correctly pointed out that we need to build up a strong capability in all parts of the value chain. Hopefully, we can nurture enough local companies with strong capabilities that will provide an alternative base for the manufacturing sector. In this regard, we have much to learn from Taiwan where the strength of the local small and medium enterprises have helped to shelter the country against the forces of contagion which have affected the region. Sir, I recognise the need to strengthen our local manufacturing capability. We should do more to help our small and medium enterprises (SMEs). We recognise that our SMEs, because of their size, have inherent limitations. I have spoken to many operators of SMEs and their feedback has a very familiar ring about it; limited access to funds, stiff competition from Government-linked companies, and a perception that the Government does not take them seriously enough. I took a look at the participants of the CSC Report and I was sad to note that a committee as important as this, and for all the importance that we have attached to local companies, we have not included the Association of Small and Medium Enterprises in the Committee. Sir, I think this is a glaring omission. I must, at this moment, declare my interest in the matter as a member of the Association of Small and Medium Enterprises. I know that we have various incentive schemes for the small and medium enterprises. However, the feedback I got is that these schemes are rather difficult to apply for. The red-tape that the applicant has to go through is discouraging enough. Take, for instance, the Local Enterprise Financing Scheme. Will the Minister kindly enlighten us on the extent to which our local companies have been successful in applying for financial assistance through the Local Enterprise Financing Scheme in the last six months? Of course, we have often heard the lament from our local businesses that every time they are reasonably successful in an area of business, the big local boys, in the form of the Government-linked companies, will either come to compete with them, often unfairly because of their sheer size, or to buy them over. We have seen this before, whether it is in property development, construction or even in the pastry business. The net effect of competition from the larger companies has been to crowd out the smaller companies. Sir, we should, as far as possible, refrain from doing this if we are ever going to give these small and medium enterprises a fighting chance. I would therefore urge that the new economic promotion agency should not repeat our oversight of concentrating on big foreign investments to the exclusion of the smaller players in Singapore. Strengthening the External Wing Developing the external wing as a means to hedge against the risk of over reliance on the local economy is often seen as a sound and effective strategy of our Government. It has been more than five years since we heard and, for some, heeded that call. During that time, I can say that the experience of those who have ventured overseas has been rather varied and different. Some have found their investments profitable; most others have found the going tough. Singaporeans, in their venture overseas, have tended to rely on areas that they are most comfortable with and perhaps with the most experience in. Consequently, Singapore investments overseas are most visible in industrial parks, hotel developments and office complexes. Unfortunately, these are investments that call for substantial infusion of capital and with long clawback periods for the initial capital injection. The extended period of time required makes these investments rather vulnerable to the vagaries of the internal and external economies and politics. When these companies first ventured overseas, little did they realise that dealing with the local governments and appreciating the extent that the local politics can make a difference to the extent of the success of the venture. Take our Suzhou Industrial Park, for example. This is often seen and is, in fact, often touted as the flagship of Singapore's regionalisation programme overseas. If we look at the development of the Suzhou Industrial Park, we have every reason to be proud of its standing as representing everything that Singapore stands for. Yet, it was not without its difficulty. Some years ago, we realised to our consternation that the Mayor of Suzhou was undermining our development by promoting a rival industrial park there. It took the efforts of our Government and the influence of our Senior Minister Lee to put our position firmly with the Chinese that they cannot take us for a ride. The Suzhou Industrial Park has the support of our Government. What about the other private Singapore investors who answered the call of our Government to go overseas and who run into difficulties with unreasonable and bureaucratic foreign officials? Can our Government be there for them? I note the recommendation of the Committee to encourage local investors overseas to pool their resources together. Sir, this is not enough. We should have strong Government backing for our overseas investments. This may be given through the setting up of specific Governme nt agencies, other than TDB, which can be relied upon to assist our investors in a more dedicated way. This can include, for instance, helping them to resolve problems at the Governmental level. For countries like Vietnam and China, businesses are often carried out with government agencies. If a framework can be established whereby our Government can lend some official support and is able to use that to get the cooperation of their counterpart in the relevant places in these countries, I believe it will help our investors go a long way with their investment. Building world class companies The Committee has recommended that to be globally competitive, we need to be able to build up a stable of our own world-class companies with core competencies that can compete effectively in the global economies. To kick-start the process, it is recommended that Government-linked companies with their present size, core capabilities and share of talents, are best placed to lead the drive to kick-start the process of building world-class companies. Sir, while I agree that we should build up a stable of world-class companies, nurturing our own companies to attain world class status is not the only way. In my speech at a Budget debate, I had argued that we could have leap-frogged the process by taking over some of the companies with leading brand names in the world. This may be more advantageous than trying to nurture world-class companies, as this gives us almost immediate access to markets and also the cutting edge in technological developments. Rather than inventing the wheel, we should buy the wheel and make further improvements to it. We have the money for it. Sir, choosing our Government-linked companies to lead in the process of creating world-class companies raises certain underlying issues about these companies and their roles. We know that Government-linked companies play an important role in the development of our economies and have, to some extent, helped build our national profile in the global economy. Our favoured son, Singapore Airlines, for instance, has always made us proud as an example of a world-class carrier. However, Singapore Airlines is but one of the more prominent example of the many Government-linked companies that we have in our stable. Over the last decade, numerous companies and subsidiaries linked to the Government have been spawned, especially when Government functions and departments are increasingly being privatised and corporatised. Government-linked companies are unusual and in a way different from the ordinary private sector companies. In shareholdings and management, these companies have close linkages to the Government. For many of these companies, our Government holds a substantial portion, if not all, of the shareholdings in them. Their corporate management is often staffed by those who are seconded from the civil service or those who had retired from the civil service. Their close association with the Government has given these companies some advantages in their dealings with clients and financial institutions. Some of these Government-linked companies are listed in the stock exchange and are thus subjected to the requirements of the stock exchange to observe the on-going process of corporate disclosures of information. This requirement of relative transparency provides some amount of discipline on the part of the company and is often seen as a principle of good corporate governance. In a sense, shareholder and market accountability helps to protect the shareholders' interest in their investments in the company. Sir, this is fine with listed companies. The question remains about the unlisted ones. For these companies, which are not listed on the stock exchange, the perception is that they may not be subjected to the same discipline of accountability and control as the listed ones. The conduct of these companies is quite naturally not as transparent as those that are listed on the stock exchange. There is not enough information filtering through about these companies. In the case of ordinary companies, it is understandable that there is some amount of privacy that must be observed, as these are private shareholders' funds. In the way in which the private limited companies have developed, it is meant to provide the benefits of limited liability without at the same time of having the undue burden of disclosing too much corporate information about the company, other than perhaps the accounts filed with the Registry of Companies. On the other hand, there are some who feel that private limited companies of the Government are not private. Because the funds held in these companies are those which belong to the public, there is some expectation that these companies be made more transparent through greater disclosures to the public and adopting good principles of governance, which in this case may include indexes, for example, to show the extent of the return on capital, and subjecting the managers to the same forces of the market discipline of hire and fire. This will provide some assurance to the public that even private limited companies of the Government are properly run. I am not saying for a moment, Sir, that these companies are not properly run. On the other hand, I will be the first to say that we have some of the best companies in this stable. However, as the saying goes, justice must not only be done but must be seen to be done. I would say that these concerns have been generated in recent months by the high profile failures and acquisitions of some of our Government-linked companies. The concern that I am expressing is that unless we can impose a framework for greater discipline among these companies, we may be exposing ourselves to greater weaknesses by encouraging these companies to become world-class companies. Spectacular world-class companies may also suffer from spectacular world-class failures. These companies are not created overnight by pouring in massive capital alone. Therefore, I would cite caution in the way in which we approach this issue. There is just one more point that I would like to touch on before moving on. Over the years, we have engendered the growth of Government-linked companies that are multi-disciplined conglomerates. We have GLCs, for instance, that have interests ranging from shipbuilding and repair to food retail outlets. In recent years, it became fashionable to form property development companies. The fact is that many of our GLCs are into property development and are often in direct competition with each other. This form of competition has resulted in needless waste of resources. Lest we get lost in the myriad of investment activities, we should ask ourselves whether each GLC should seek to redefine itself in terms of its core mission rather than reaching out all over, like the proverbial octopus. I would argue that our GLCs should take a step backwards and re-examine its mission statement. To avoid wastage from unnecessary competition, GLCs should restructure its group holdings, get rid of its peripheral businesses and be single-minded by concentrating on its core business and competition if it wants to compete on the world stage as a world-class company. Banking and finance In its sectoral report, the Committee recommended a number of strategies to help make Singapore a premier financial hub in the region. Among some of the strategies recommended included the point that financial institutions should be allowed to assume higher risk profiles that they are comfortable with within prudential limit. Along with the suggestion, it was stated that the authorities should move away from protecting the individual investors to focusing on protecting the industry against systemic risks. The Committee also reported that over-protecting investors from specific asset risks also means losing out on potentially lucrative opportunities. Sir, I understand that the stand taken by the Government has always been on the basis of caveat emptor. It also means that it is not the business of the Government to ensure that every investment made by its people will be rewarded with success. While I agree with that principle, I would submit that there is a difference between allowing the people to make the final choice of business as opposed to maintaining a framework to ensure information flow which is backed by legal sanction if necessary, to allow investors to make the appropriate choice. Let me explain. Under our present laws, it would be an offence for anyone to offer securities to members of the public without complying with the necessary requirements of disclosure through a prospectus that must be filed with the Registry of Companies. The Act sets out the type and nature of information that must be provided in detail. The purpose of such requirement, presumably, is to ensure that investors get enough information about the company to make intelligent choices. Such requirements serve to protect the investors well. Unfortunately, such policy of investor protection does not seem to be applied uniformly. We seek to protect investors under the Act in their investments in securities. However, there seems to be a gap in their protection when it comes to property investments overseas. We see many of these sad stories in respect of our people's investments in China. I remember, in the early days some years ago, when China projects were first launched in Singapore, there was an air of excitement. For land scarce Singaporeans, the prospect of owning a piece of sizable real estate in China cheaply and at a price which was extremely affordable is something which is very attractive. I remember saying to myself then that it seemed a little anomalous that while we required people who sell securities to members of the public to make such detailed disclosures in the prospectuses, such requirements are not necessary for people who sell properties in Singapore. I do not think the developers who promote these projects have to swear statutory declarations about the truth of their advertisements, neither were they required to file complete details about their companies or its track record, or provide performance bonds to any trustee in respect of the promotion of their developments. Yet, at that time, there were many Singaporeans who went to such exhibitions and bought properties purely on the basis of scale models of developments. I remember telling myself that some of these investors could get themselves into trouble because of these relatively lax requirements. Some years later, I was right. These days, it is not uncommon for people to complain about how they have been short changed in their property purchases in China, and the sad truth is that there is very little they could do about it. Sir, my point is that while we may want to concentrate on focusing on insulating our industry from systemic risks, we cannot, at the same time, neglect our moral responsibility of having to protect our own investors against the more unscrupulous promoters. On the contrary, I would argue that we should review our laws to see how we may strengthen our laws to protect our investors even more. Finally, Sir, the strategies recommended by the CSC and the measures introduced by the Government are indeed comprehensive and broad ranging. Our journey has only just begun. However, while the Committee can point us to the direction which Singapore should take, for many of these strategies, there is substantial work to be done. I have no doubt that our Government would be able to rise to the occasion. I would urge all the people of Singapore to, at this time, close rank and stand behind our leaders as we work to pull Singapore out of this most serious challenge in recent years. Together, we will succeed.

Mr Deputy Speaker, Sir, I wish to thank all Members who have spoken in support of the motion and for their strong endorsement of the recommendations of the CSC. I think all, except possibly the Opposition Members, have strongly supported the recommendations, and this is extremely encouraging for the CSC members and all others who have contributed to the work. In fact, it is difficult to understand why the Opposition Members are not supportive, because it is so obvious that the economy is in crisis and that it is necessary for all Singaporeans to pull together to ride out this crisis. As DPM Lee has said, we are facing the toughest crisis since independence. So it is important that we do the right things and send the right message to the investors and stay on top of the problem. I am very happy that the Government has accepted the Report and all the key recommendations. In fact, the package of short-term measures that the Government has announced exceeds the expectations and the quantum is $10.5 billion, which is more than the figure of $10 billion that the CSC recommended. I think the feedback from the ground is that people are generally quite happy, including those who have been critical in the past, because they did not know what were the details and because there was perhaps insufficient explanations at that time. Looking at the feedback, in fact, there was hardly any dissenting voice. One criticism that came to mind is the one by Mr Peh Chin Hua, that the quality of the paper was too good. If that is all, then I think we are on the right track. DPM Lee explained yesterday why we are taking this package of measures and why our position seems to have changed from February when we were still thinking that we could register maybe between 2.5% and 4.5% growth this year. He has explained that the whole world has changed. In fact, just a few weeks ago, people were worried that there could be a global economic melt-down. Because of the measures taken by the Federal Reserve in cutting the interest rate and that the IMF package is now being put together for Brazil, people are now breathing more easily. But I do not think we are out of the woods yet. So we need to do our best. Several Members have asked how we arrived at this figure of 15% cut in wage cost, whether it was based on hard numbers, political bargaining or judgment. The truthful answer is that this is a gut feel. It is based on our best judgment of the situation, based on data that is available and also on the understanding of the overall economic situation and the competition that we are facing. Naturally, those companies which are now faced with a sharp fall in demand from the region, and these are mostly local companies, are the ones which are most severely affected. As Dr Wang Kai Yuen has mentioned, the response that he got fell into two groups: the local firms which are mainly directed at the domestic market and the regional market. They are the ones asking for more measures because their demand has fallen off and they are faced with cash flow problems and they need more help. So they are the ones who are probably asking for the 20%-30% cut in their cost. On the other hand, some of the multi-nationals who are here are in fact very pleased that we have been able to do this. And Singapore is probably the only country in the world that has been able to mobilise everybody, the masses, through our trade unions, with our strong tripartite cooperation, and cut wages voluntarily, including the CPF. So this is a strong message that we are sending to investors, that Singapore is a different kind of country. We face up to the problems together, and we are determined to work together as a team to overcome the crisis. I met somebody from one of the top multi-national companies just a couple of weeks ago, and it was his first time in Singapore. He is from one of the top 500 companies in the world. He was utterly impressed and he said, "It is fantastic, you know. You have this Singapore Inc. approach." So I explained to him our measures and so on. I hope at the end of the day, he is going to put in more investments into Singapore. In fact, his question was: where are the workers? So I told him that we now have a relatively high unemployment rate and we intend to allow more foreign workers in, if necessary, and we are upgrading the industry all the time. For projects that we want, like this particular project which is in the computer area, we would try and free up the market and allow in more workers. So, as I said, I hope we will get some investments from that company. So the MNCs which have links with the region, which have, for example, subsidiary companies in Batam, and they are able to continue operating, they are less affected by the financial crisis. These companies are able to take advantage of the lower cost as a result of the devaluation of currencies, and they are happy. There are also other sectors like the shipyards which are doing all right because their costs are local and their revenues are in US dollars. So they find that they are now more competitive because they are competing with Middle-east yards and the currencies of the Middle-east are still strong. But, having said all that, I think the general feeling of the Ministry and our statutory boards is that we have lost competitiveness. The key figure that stands out is this loss of market share in the US. As I mentioned in my speech, kicking off this debate, our share of exports of electronics to the US has fallen by about two percentage points, from 9.3% to 7.3%, over a period of only 1 1/2 years or so. So that is very worrying for us because electronics form a very major sector of our economy, especially in the manufacturing sector, and they employ many workers. For the exports of non-oil manufactured products, of that figure, more than 60% are electronics. So you must be able to compete in that area. Looking at the figures, we have seen increases in market share from countries like Mexico, because of the NAFTA factor, from the Philippines, even from the PRC, even though they have not devalued their renminbi. It shows how competitive their costs are. In the case of the Philippines, they were under the IMF regime until recently. They have not had the excesses of the other neighbouring countries. So their economy is still functioning and I believe they are now very attractive to quite a number of investors. We see, for example, that Japanese companies are going there to manufacture disk drives, and they will offer stiff competition to us here. Most of our disk drive manufacturers are from the US and we are one of the biggest manufacturers in the world. So the feeling is that we have a gap over them in terms of capability, in terms of supporting industries, in terms of efficiency, but the gap is narrowing. We have to cut our costs. Basically, the decision is that this time round, we must do a re-calibration of our costs downwards - wage costs and other cost factors - and especially the land cost factor. Because the way the property market has been booming, it causes a lot of ripple effects, not only in terms of the market rates that the Government will have to try and peg for our industrial land but also in terms of the other effects, the way they work through the system, since land cost is a factor in every area, whether it is transportation or utility, or what-have-you. The assessment is that we do have to do a re-calibration, and that is why we came up with this figure. I think 15% is about right, not too much, not too little. Of course, we only know when we implement and we see what is the outcome. And if we have to do more, then we must do more. But if we do better than expected, then there could be corrections, there will be better bonus for employees and so forth. Basically, this cut of 15% of wage cost will bring us back to the level of 1994, and at that situation we were still very competitive. In fact, the economy then was growing close to 10% rate and the worry was that the labour market was getting too tight. The other way to look at this is that in 1985, when we had a similar recession and the GDP declined by about 2%, the CPF was cut by 15 percentage points, and that is equivalent to 12% of wage cost. This time round, the assessment is that the crisis is more severe because it is a world-wide problem now. So we have to take more drastic measures. If you look at the currency values too, the neighbouring currencies have depreciated by about 20% to 30% between 1st July last year and the latest figure, as compared to Singapore of about 12%. The currencies have recovered recently but we still have this gap over the neighbouring countries of about 15% or so. I hope I have given Members some idea of how we sort of did a gut feel, assessed the situation, and came out with this figure. We do not want to overdo it because it is a balance. If we overdo it, then people become very depressed and very pessimistic, and this could also dampen the demand in Singapore. Coming back to this point about the printing cost being too expensive, I was thinking, when I listened to the Member, that if we had spent less money on poorer quality paper, it would have meant less business for the printers. So it is a balance. Do you want to save cost or do you want to stimulate the economy? So we have to strike a balance here. Having said that, it is true that this $7 billion cut of wage cost may have some dampening effect on the economy. Of that, about $4 billion will be CPF. So there is no withdrawal of funds from the economy. But the balance could result in some withdrawal of funds. So I hope the Minister for Finance will consider this factor and bring forward some stimulatory projects in the new budget and go for a bigger budget deficit, so that we will be able to keep the economy going. The world-wide signal now is that it is time to reflate, but at the same time, we must be able to compete. There was a criticism from quite a few Members that these measures came too late. I have to answer this criticism because I have been very involved in the whole process. If Members may recollect, the Prime Minister said, as far back as November 1996, that he felt that our costs were getting out of line. Therefore, he was suggesting that we should have a committee to review the cost situation. And that is how the CSC came to be formed in May. We could have formed it earlier but, of course, we had elections and all the process that we had to go through. So this Committee was formed in May. And when we first started, all of us were looking way ahead. The economy was booming away, labour was tight, turnover was high, job-hopping was a problem. But when this crisis came in July, the whole situation changed. Now the worry is about unemployment rather than job-hopping. If you cast your mind back, at that time, the whole situation was in turmoil. The currency market and the stock market were very volatile. Everybody was very careful and anxious not to upset the market. You do not want to send the wrong signal and say, "Oh, things are going to be terrible!" Because then the market would really go down and it would be a self-fulfilling affair. So when we came out with figures on GDP projections, we tended to be careful, to be realistic, but not overly pessimistic. So, at that time, we felt that we might still be able, with our momentum of growth from past years, to make maybe 3% growth. So the package of measures were tailored for that situation. It was kind of a measured approach. On hindsight, I still think that was the best way to do it. Now that we are convinced that the storm is really on us and it is a very serious problem, our costs are really out of line, we have come out with a very big package of measures. And we still have reserves left, in case we have to do some more because the crisis is not over yet. Members mentioned the problem of liquidity. The feeling here is that, generally, there has been no problem of liquidity squeeze. I think DPM Lee, in some answers to oral questions, has explained that, in fact, the bank lending has continued to grow, although at a slower rate. The problem has been that the banks are now naturally more cautious, and rightly so, because some of them are so exposed in the region. That is why we have liberalised the Local Enterprise Finance Scheme, and I am glad to report that in terms of the short-term lending for export factoring, for working capital, the demand and the quantum of loans have really gone up. But in terms of loans for fixed assets, naturally companies are cautious. So the quantum has not gone up that much. The difficulty here is that we do not want to have a situation where our civil servants try and second-guess the bankers. The bankers assess the applications and they decide whether they are worth supporting or not supporting. As it is, we are sharing half the risk, and we are giving the entire spread of 2 1/4% on both the Government's share as well as their share entirely to the banks. That means they are earning a spread of about 4 1/2% on their loans. It is, I think, adequate for the purpose. But they have to assess whether it is worth their while and safe for them to lend. In cases where the borrowers feel that they deserve something better, they can go and see PSB, and then PSB can perhaps talk to the banks and discuss and see whether their assessment is correct. At the end of the day, the decision must be made by the banks. Having said that, we are open to suggestions. We are studying this all the time. If we can liberalise this further in a safe way and extend this scheme to more sectors, we will be happy to do so. There has also been concern for the retail sector, the sharp decline in demand as a result of the fall in tourist arrivals and the reduction in local spending. Here, I think it is important for us to go out and get more business. A short while ago, I was just at a function to present the Tourism Awards and I announced that the Singapore Tourism Board would be spending $30 million more next year in its marketing efforts. This will be on top of the usual $80 million per year that they spend on marketing. So it is an increase of 40%. This will tie in with the new programme they have to launch to welcome the new millennium. And I hope, with this effort, we will be able to increase our share of the tourism market. The key thing here is that it is not enough just to cut cost. We must all go out and try and get more business through STB, the Trade Development Board and EDB, and they are all going to work that much harder to try and get business for Singapore. Again, Members have spoken eloquently about the needs of the individuals. I think this is very important. We not only must ensure that our costs are competitive but also that the needs of individuals who are affected are taken care of. One way of doing this is through the CDCs, as mentioned by quite a few Members. I personally will be in favour of providing more funds to the CDCs. But, again, this depends on the Ministries concerned. Remember that I am talking here as Chairman of the CSC. A few speakers, including the last Member to speak, Mr Sin Boon Ann, have been quite critical of the Government-linked companies. I think some of the comments are valid. Some of the GLCs have, in fact, strayed from their core business. That is why the CSC has come out with this recommendation that they should focus on one area. Even the big companies, like Sony and others have come to realise that they have gone into too many areas. They have gone into movies. They have gone into what-have-you and realise that they have to go back and concentrate on areas which they know well, because there is only so much managerial resource. If you spread your management too thinly, then you cannot look after the business properly. So the recommendation of the Committee is that the GLCs should refocus and spearhead our efforts into particular areas and, hopefully, they will be able to lead us in our regionalisation drive as well by bringing along the supporting industries and the others. This is an area which, I believe, Temasek Holdings will be looking carefully into. The other area I want to touch on briefly is this long-term vision which Members have supported generally. It is an ambitious but, I believe, achievable vision. But it may take longer than 10 years, I agree. Some Members have said that, in fact, this vision is not entirely new and that is also true. Because we have been going on this track all this while and it goes to show that we are on the right track. I remember that, as far back as 1969, not quite 1969 when I joined EDB, but early 1970s, we were already talking of having brain services, promoting brain service industries. So here, we are back to knowledge industries. We have done a lot since then, the kind of manufacturing that we have gone into, wafer fabrication and all that. We have moved into more knowledge and skill-intensive areas, and that is the correct thrust. It is good for us that we maintain this core of manufacturing. I think Hong Kong has come to realise too late. They are hollowed out. They pushed all this to Shenzhen and elsewhere and even though that is part of China, and they are part of China, they have to compete very hard. And now, what is the role for Hong Kong? That is their worry. And that is why the CSC recommended that we should have both manufacturing and services. In fact, the two are complementary. A lot of the services actually are for the manufacturing, whether it is transportation, logistics or financing. So our aim should be to promote high value-added services and manufacturing together. One of the key areas that we will have to strive for is to try and develop technopreneurship. This is the idea of a knowledge economy and we are studying, of course, Silicon Valley, looking at how Taiwan does it, how Israel does it. We are investing a lot of money in R&D. The question is: can we realise more returns from that? It is good to build up capabilities and it is very important. But, eventually, we must be able to have our own start-up companies, float them and develop our own indigenous companies. Here, I would like to mention that the Government is taking this effort very seriously. The Government has decided to set up a committee chaired by DPM Dr Tony Tan. There is a committee known as Technopreneur 21 Ministerial Committee (T21MC) - we have all these acronyms nowadays - chaired by DPM Dr Tony Tan and there will be three other Ministers on this Committee. My colleague, BG George Yeo, will be Deputy Chairman and the others will be Mr Lim Hng Kiang and RAdm Teo Chee Hean. So you can see that it is a very high-powered Committee. The intention is to give this area a big push because I think this area of the future, it has come with the development of computers, with the development of IT. We have Singapore One. We are trying to make more use of it. I think we are really at the cutting edge. The question is whether we have the talent. Can we attract more people to come here? Can we link up with other countries and achieve synergies? IT is one big area. The other area will be in the life sciences. Nowadays, it is possible for researchers to screen drugs, millions of drugs in a short period of time. So now with all these new areas of cloning, cloning of heart tissue and so on, these will be new growth industries of the future. I realise there will be a lot of ethical problems as well. These are growth industries and we should not miss out on them. So the investment in R&D, the setting-up of Science Parks, setting-up of Incubator Units, providing support to the technopreneurs who are usually more scientifically inclined rather than businessmen, holding their hands in business, and so on. These are things that we are putting in place. And with Dr Tony Tan and BG George Yeo who are very keen in this area, I am sure we will see some progress in this sector. It is getting late and I do not want to prolong this debate. I just want to thank all the Members for their contributions. I am sure all their ideas will be considered. I cannot answer all the points today. But the officers who are watching the closed circuit TV have been carefully taking down all the notes and all the points will be considered and, where feasible, they will be implemented. Thank you. [Applause]. Resolved, 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.

Sir, I think we have heard enough today. Tomorrow we have eight more Bills. Please come back tomorrow. I beg to move, That Parliament do now adjourn.

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