Hansard, 1999-03-10

asked the Minister for Home Affairs if he will indicate how many persons were hanged in 1998 and whether any death sentences were commuted and, if so, how many.

Kee) (for the Minister for Home Affairs: Mr Speaker, Sir, 28 prisoners were hanged in 1998. One prisoner had his death sentence commuted to life imprisonment during the same period.

asked the Minister for Home Affairs what steps are being taken by the Singapore Police Force to check the revival of the secret society movement in Singapore.

Mr Speaker, Sir, there is no revival of any secret society movement in Singapore. Police has successfully broken up the hardcore secret societies of the 50s and 60s, which were responsible for violent gang fights, protection and extortion rackets, through our tough laws and enforcement. The current gang situation in Singapore has taken on a different form, dominated by loosely organised street gangs with a fluid membership. The majority of their members are male Chinese youths aged between 13 and 19. Although they are not as vicious as the traditional secret society gangsters, they do pose law and order problems by rioting and assembling unlawfully. Some street gang fights have resulted in serious injuries and even deaths. Police recognises this problem and has taken steps to address it. In 1998, Police conducted 906 anti-gang operations covering entertainment outlets, shopping centres and known `hot-spots'. Tough action will continue this year. Police is also taking proactive measures to nip the problem in the bud. Police reaches out to the youths directly. For example, it conducts preventive education programmes, such as school talks and visits to the prisons, to educate youths on the evils and adverse consequences of joining gangs. In 1998, such Police programmes reached over 9,000 youths. This twin approach of tough enforcement and preventive education has been successful in lowering the number of street gang related rioting from 39 cases in 1996 to 16 in 1998.

Sir, to what extent are these gang fights influenced by the presence of foreigners and also due to the current economic recession?

Sir, Police has been very careful in keeping out foreign triads. They will continue to do this.

To what extent are gang fights as a consequence of the current economic conditions?

Sir, gang fights take place not purely because of economic conditions. Like I said, the majority of these are street gang type members. So they can fight out of staring incidents, sometimes keeping to turf, and sometimes because of disagreements over certain matters. So it is not essentially linked to the economic situation.

Is the Minister of State aware that there are still instances of extortion of protection money by members of either secret societies or what he terms "street gangs"? Is he aware that when such instances were brought to the attention of the Police, the Police has asked the victim to come out and identify those gang members? As a result, I am sure he is aware that most of these instances were not reported to the police.

Yes, Sir, police is aware of this. As I have said, about 70% are street gang types, and the 30%, which are the more traditional type of secret societies, have extortion activities. In fact, a few gangs were broken up in the Woodlands area just last year. That is why we have the Criminal Law (Temporary Provisions) Act to act against people who are operating such activities where it is difficult to get people to testify.

Resolved, That, notwithstanding the Standing Orders, the second and third readings of the Supply Bill for FY 1999/2000 and the Supplementary Supply Bill for FY 1998/1999 may be proceeded with immediately after the conclusion of the proceedings on the Main and Development Estimates for FY 1999/2000. - [Dr Richard Hu Tsu Tau].

Mr Speaker, Sir, I beg to move, That, notwithstanding the Standing Orders, the proceedings on the Estimates for FY 1999/2000 on 10th, 11th, 12th, 15th, 16th, 17th and 18th March 1999, be continued beyond 4.30 pm, and be exempted from the provisions of Standing Order No. 1 until 6.15 pm on each day. This is because many MPs have filed amendments to be moved in the Committee of Supply and we wish to give them as much time as possible. Resolved, That, notwithstanding the Standing Orders, the proceedings on the Estimates for FY 1999/2000 on 10th, 11th, 12th, 15th, 16th, 17th and 18th March 1999, be continued beyond 4.30 pm, and be exempted from the provisions of Standing Order No. 1 until 6.15 pm on each day. - [Mr Wong Kan Seng].

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

Estimates of Expenditure of Singapore for the financial year 1st April 1999 to 31st March 2000, contained in Paper Cmd. No. 2 of 1999. I shall take the totals for each head of expenditure in the Main and Development Estimates appearing in the last columns of the Main Estimates and Development Outlays for FY99 on pages 37 and 38 respectively of the Command Paper. Besides the "guillotine" times for heads of expenditure, which I have fixed under Standing Order 89(7)(a), I have also allotted the time for the discussion of each amendment in the Estimates. The time allotted for a discussion includes the replies from the Front bench. I shall announce these times as we go along. Although the sitting time of the Committee of Supply has been extended to 6.15 pm each day, we will still be hard-pressed for time. The time we have available falls short of the times Members have indicated would be required for discussion of their amendments. Members will therefore not necessarily be given the amount of time they have requested. Other Members who would like to join in the debate on a particular amendment will be allowed to do so only if there is sufficient time left on the amendment. We have received a total of 440 notices of amendments. Because of the limited time, there may be occasions where I will have to "guillotine" Members. However, if speeches are kept short and sweet, I am sure Members can avoid such pain being inflicted on them. As in previous years, with the cooperation of Members, I will endeavour to keep the debate going at a brisk pace. I shall deal first with the heads of expenditure in respect of which amendments stand on the Order Paper Supplement. Head V -

Head V - Prime Minister's Office. Mr Shanmugam is not here. Mr Simon Tay.

Sir, I beg to move, That the total sum to be allocated for Head V of the Main Estimates be reduced by $100. Sir, in moving this cut on the Prime Minister's Office, I am concerned about our policies regarding development of a harmonious multi-racial society. May I begin, first, Sir, by saying that I believe we have had and enjoyed a good record to date. I think Singaporeans have matured in time to accept a multi-racial society as a cornerstone of Singapore. My concern is that this should not be taken for granted, especially in this time of crisis. In this regard, I wish to raise two points for the Prime Minister's Office. The first is that it should be our policy to monitor discrimination in all matters, especially in terms of jobs. This is an issue that has arisen recently in private sector hiring, not in the Government. But if this is not addressed, the economic crisis would indeed test our social cohesion. The Government to-date has responded by saying that it would discourage discrimination and offer advice and moral leadership. I think this is correct, as a first step, and that legislation is not presently warranted. However, I would urge the Prime Minister's Office and the Government to monitor the situation as it unfolds and, if necessary, look to legislation. The second point I wish to make on this cut is that I hope the Prime Minister's Office would foster collaboration between various self-help groups. In a previous speech in this Parliament, I have given my thoughts on possible but unintended consequences of having separate ethnic self-help groups. I shall not repeat myself, but I do hope the Prime Minister's Office would consider ways to encourage greater collaboration between these different self-help groups. In particular, I am thinking of budgets that are culled from each individual budget to create a pool of resources. Say, take 20% off each self-help group's budget as Government support, and put it to a common pool. Where there are collaborative projects between two or more of these groups, this pool can be called on, but not if the projects involve only to one ethnic group. Additionally, another step that might help is to have a multi-cultural day to promote understanding and awareness of the important value of multi-culturalism in our multi-racial and multi-cultural society.

Sir, could I take both my amendments together?

Yes.

The question of race and racial harmony in Singapore has been the subject of much attention recently. The debate has been spurred partly by President Habibie's misinformed and unfortunate remarks. Clearly, President Habibie was wrong to have expressed his views and his views have received a robust rebuff from Singaporeans. However, while we take pride in our genuine multi-racialism, it is also time for some reflection and introspection. In the years after independence, meritocracy, multi-racialism, racial harmony and equal opportunity were the articles of faith on which our society and its component racial groups sought to forge a new nationhood. We wore our equality of opportunity to all on our sleeves. That is why we were able to rebut President Habibie's remarks. Having said that, we have to now look forward to the next 30 years or so and ask if the present social structure, education system and environment would provide for one of the principles, namely, multi-racialism, to endure in the way we understand it now. Why do I say that? Let us look at the four principles I mentioned. Meritocracy is a means to an end. It helps achieve a stable and prosperous society. The other three principles, namely, equality of opportunity, multi-racialism and racial harmony are both a means to an end, namely our survival as a nation as well as being an end in themselves - they are ideals which a society should seek to achieve. These principles were constantly drummed into us. Communities, based on race, were changed to racially mixed neighbourhoods. The same happened in schools and wherever the Government had a say. As a result, we are where we are today. The question is: where are we going from here? It is quite clear that looking at the future, no rational person doubts the Government's commitment to any of the four principles. That much is certain, and I believe it. However, I have to say that there is some concern among the minority communities about some of the Government policies and their possible impact, in particular, on the principle of multi-racialism and possibly equality of opportunities as we now understand them. This may be sensitive, but we have never shrunk from a frank debate on Government policies and their impact. So since there is some concern, it is time for a frank debate. 12.45 pm What is the concern? It is this. The post-independence generation, who are now in their 30s and early 40s, had a certain understanding of what multi-racialism meant. It meant that the Government would consciously promote togetherness among the races, throw everyone together in schools, in the SAF and at the work place. We will live together, have friends across racial divides, form deep friendships, work together and in time, perhaps, forge a deep sense of national consciousness based on those shared memories. The Government was seen as the key to avoiding any sort of development of our society along communal lines. In fact, the Government was seen at the forefront of breaking up development along communal lines. I do not say that multi-racialism can only mean that. However, that was how the practical application of the concept was understood, at least by some, and was backed by a high degree of symbolism on the unity among the races. With that in mind, let us see the changes that have been taking place over the last few years, and their possible impact on our existing understanding of multi-racialism. Take the school system. The structure of the school system now is such that it is possible for very bright Chinese students not to really mix, on a daily basis, in schools with students from the minority communities. They could go through 12 years of formal education like that. By the time they get to National Service, their views would have been relatively formed. They are going to be among the policy formulator of the future - the men and the women who are going to make this place tick. What would be their understanding of multi-racialism if they did not have an adequate opportunity to mix on a daily basis, as students, with members of other races? Whatever we say, I think it is undeniable that their empathy, their understanding of the minority communities would be less than that of their predecessors who grew up in schools with members of the other races. Let us also consider the policy to create cultural elites along communal lines. It will succeed with the Chinese community. However, let us be frank. Is it really going to be possible to create such elites among, say, the Indian community? Its small size would mean no significant cultural elite would emerge and even if it did emerge, the Singapore Indian population base would be too small to support that cultural elite. That is easy enough to predict. So when we talk about developing cultural elites, in practical terms, we are really talking about developing a Chinese cultural elite as a matter of official Government policy. That is not to say that because there can be no Indian cultural elite, there should also not be a Chinese cultural elite. That is nonsense. What I am saying is that whenever we talk about developing cultural elites, everyone should be clear about what it really means, so that we can again have a frank debate. What is the impact of these two polices and others like them? They would not suggest any change to the commitment to multi-racialism as a concept. However, over time, in practical terms, there could be a development of elites along communal lines. It could also lead to a situation where the top 30% of the Chinese population, the people who will run this place, having a lesser empathy with the minority races. That will represent a significant change in how the minority races understand multi-racialism and the Government's role in fostering it. Should we go down that path? Since any such change would be seen as deep lasting, there should be a thorough debate on it so that everyone understands that position. One can see the rationale for such policies. It is possible to argue that for Singapore to survive, it would be necessary for the society to have deep cultural roots. The onslaught of different cultural values is increasing tremendously, and it can be argued that the Chinese, who form the overwhelming majority, have to anchor this country and provide the bulwark against disintegration. If that is so, then it is best to have that articulated clearly. It must mean that we redefine the debate in terms of national survival. We will have to say that it is necessary now to pursue policies in education and culture which may result in creating an environment which is more communal at least among the middle classes, and we will have to say that that is necessary because the very survival of our society, as a society, is at stake. That is an argument that rational members of the minority communities can understand, whether or not they agree with it. However, it should be a debate which leads to an understanding of what is needed for our survival. Without an understanding, you will have a situation where the policy makers proceed on the basis of overriding concern for national survival, whereas the minority communities, and in particular the middle classes, will be perplexed because those Government policies which are being introduced, appear at variance with the understanding of what multi-racialism, and the Government's role in fostering it, really is. There will be no meeting of minds because the parties will be arguing from different standpoints. The letter by AMP in today's papers is one such example. Any redefinition of the social compact would have a deep lasting impact. It must be a matter for any Singaporean to think carefully about, because what we are really talking about is the social framework within which our children will live. In that context, if we are prepared to see a development of our society, along more communal lines, while we will still adhere to the principle of multi-racialism, then so be it. But let us talk frankly about it and whether such a development is really necessary for national survival.

Sir, I am calling again for the abolition or, if the Government is not willing, then the suspension of the Internal Security Act (ISA). The ISA was introduced by the British first as an emergency 1measure when there was a communist armed uprising in Malaysia in or about 1948, and then it was enacted as a formal law in the 1960s. The ISA was targeted against the communists and their supporters who advocated overthrowing the legitimate government by violent means. There was a justification in maintaining the ISA in the 1950s, the 1960s and even the 1970s. But in the 1980s the social, political and economic situation in Singapore was markedly changed. In the 1980s onwards, the Singapore society was more settled. The problem of race, language, religion, unemployment and housing had been basically solved. There was full employment and Singapore had become a property-owning nation. Under the circumstances, the ISA stands out like a sore thumb, especially today. It is an anomaly in a civil society where the Government is vested with such draconian powers. The ISA gives the power of arbitrary arrests to the Government without the necessity of charging the person arrested or bringing him to a court to be tried. It is a blatant violation of human rights. When we mention the ISA in Singapore, one name comes to mind, and he is Chia Thye Poh, who has been imprisoned for 23 years under the ISA from 1966. Chia was never formally charged or brought to a court for trial. There is only an allegation that he was a communist and that he called for violent overthrow of the elected government of the day, which he persistently denied. Even up till today, I believe Chia has not signed a confession or any statement admitting that he is a communist or advocated violence. It is a pity that the Government, when it releases detainees under the ISA, still attaches conditions and restrictions on them, which make it difficult for them to seek employment. As an Opposition Member, I am particularly concerned that the ISA should still be strongly entrenched. The very fact of its existence and mere threat of its possible implementation by the Government make very well-meaning professionals from joining the Opposition and take part in the elections on the side of the Opposition. This is a pity, because it will impede the constitutional progress of Singapore. Singapore shall then forever remain a paternalistic authoritarian state where the possibility of stagnation, rather than progress, shall be the order of the day. I believe that Singapore, being an urban society endowed with widespread education and lack of illiteracy and a thick layer of property-owning middle class, perhaps has the greatest chance of succeeding in transforming our society into a western type democratic country with modifications, of course, to suit our local conditions. In such an environment, if it should happen, people can work and live peacefully in a more open political condition where the arts and culture could flourish, and Singaporeans are given opportunities to become more creative and innovative and where our economy would produce goods and services with more value-added due to the added creative element to bring greater profits and income to our people, so that we can maintain a higher standard of living as compared to our neighbours. If the Government's aim is to achieve such a democratic society for Singapore, then it must make up its mind to dismantle the ISA. If the Government wants to be cautious and is not willing to take such a bold step, then I call on the Government to at least suspend the ISA, say, for a period of two years, and if nothing untoward happens in those two years, to suspend it for a further two years and so on, until the day when it can be totally taken off our statute books. On the other hand, if something bad does happen, the Government can easily lift the suspension and make the ISA in force once again. If such a situation does arise, I myself do not think it shall be caused from within but rather from without. As for the feeling of Singaporeans towards the ISA, I believe that the majority of them want the ISA removed. Singaporeans want this troublesome baggage manifested in the ISA be a relic of times gone by, to be left behind as we enter the new millennium.

Sir, women are under-represented in this House would, I think, be an understatement. In many countries, the women are clamouring for adequate representation in Parliament. In India, there is a cry for 30% representation, although it has not come into the statute book as yet. Political parties are vying with each other and, sadly, we have, in the case in India, where women who are elected can neither read nor write. I do not want this situation to happen in Singapore. But I am appealing to the Prime Minister to try to persuade more women to be in this House. I will go one step further and ask the women MPs to persuade at least one MP to stand for the next election. 1.00 pm Sir, women are today in the forefront of every discipline and every aspect of life in Singapore and it should be so. I urge the successful women to come forward and serve the country, maybe as an attraction, Sir. In each GRC, we should have at least one woman MP. And may I suggest to the male MPs in the GRC to give extra help to these women MPs. I will go one step further to urge the Prime Minister to appoint in each GRC a full-time MP who could be a mayor in the GRC and he could look after the local needs of the community. Sir, I have said earlier that women have climbed the ladder of success and nowhere is this example more shining than the Judiciary. When I started in 1971, there was not a single lady member on the bench. Now we have Justice Judith Prakash and Justice Lai Siew Choo. Can we hope to have similar representation in this House, Sir? Sir, with your leave, could I move to the next cut?

Yes.

Sir, the integrity of the civil service is guaranteed under the Constitution. An honest Government has set the tone for the civil service. The political leadership and the civil service work hand-in-hand to run the Government and to deliver the goods to the people. It is an important value which has made our civil service an example to emulate for other countries. Sir, meritocracy is a fundamental philosophy and we should adhere to it at all costs. Never allow foreign or local element to endanger this basic philosophy. If we allow quotas for the civil service, we are finished. The best men must come in, Sir. I agree that there should be GRCs and multi-racial representation in Parliament. By the very nature of society, we will choose the best from each community. But to say that you must be in the civil service and promoted because of your race is a dangerous trend. Sir, we have set a very high standard for the civil service and it must be so. As I said earlier, the political leadership and the civil service work hand-in-hand. I have two proposals for the Government. First, we should try to attract some of the best brains from the private sector for a short-term stint in the Administrative Service. Similarly, we should allow our civil servants, not just in the statutory board and Government-linked companies, to go for a short stint in the private sector as well. I think this process will benefit both the economy as well as the Government.

Sir, in moving this amendment, I am of course pursuing what I said in the Budget speech yesterday, and it was the cost of governing us, which I said the budget estimated at about $14 billion. I raised the question of the money spent in the Prime Minister's Office last year. But I do not think I got any answer. So I wonder whether we can get an answer this year. I see from the estimates that the expenditure on political manpower has increased by some $428,400. That is possibly because, last year, there was no provision for Senior Minister of State and Minister of State. At least the posts were not filled. I suppose, this year, it looks as though there is an intention to fill these posts. The result is that we would have about five Ministers, two Ministers of State, a Senior Parliamentary Secretary and two Political Secretaries. I do not intend to read the work programme of the Prime Minister's Office. But if one reads it, one is led to ask the question: do we really need four Ministers and two Ministers of State to administer this programme? So I would ask the Prime Minister if he would be good enough to tell us exactly the functions and duties of these various Ministers in his Department. What is it that they are overseeing? What is it that they are doing that deserve the salaries that they are paid? The public has a right to know what is it that they are getting for what they are paying. So I hope we will hear from the Prime Minister the functions and duties of the Ministers in his office. May I, if you will permit me and if there is time, say a little bit on the amendment moved by Mr Simon Tay?

Mr Jeyaretnam, under the rule of debate in the Committee of Supply, could you restrict yourself to the topic that you have indicated you are speaking on?

I see. Can I not just say one or two words on that amendment?

That is provided everybody has finished speaking. There are other Members who have indicated that they want to speak.

All right.

If there is time, you can come back to join the debate. Dr Tan Boon Wan.

Sir, the Public Service Commission administers the stable of Government scholarships. To get a feel of the requirements of these scholarships let me read out, that of the most prestigious, the President's Scholarship: "Be Singapore citizens or children of Singapore citizens; Have offered four `A' level subjects and two `S' papers, if they are in the Science/Commerce Stream; and at least three `A' level subjects, an `AO' subject and one `S' paper, if they are in the Arts Stream, at the GCE `A' level examination; Have outstanding GCE `O' level and `A' level results with at least three `A' level distinctions or equivalent qualification; Have taken SAT1; Have very good extra-curricular activities record; and Have strong leadership qualities and impeccable character." There is very strong emphasis on academic excellence and this is how the public perceives PSC to award the scholarships. You will find the same emphasis in the requirements of the other scholarships in the stable. The difference lies in the required number of subjects, papers or distinctions. Many scholarships offered by the statutory boards and companies use these Government scholarships as the base to formulate their own. These scholarships are very much sought after. Parents glamorise the scholarships to interest and motivate their children to strive for them. Each year, I believe, thousands of students, especially the brightest in the land, apply for them. Many more thousands aspire for the scholarships but do not do well enough to apply. These students prepare themselves for years to meet these requirements, their attitude rubbing off on their fellow students in schools. These scholarship requirements thus profoundly affect what and how our children, especially our brightest, learn in school. In the last two days, much has been said in this House about our knowledge-based future, the importance of creativity and innovation to such a future and the need for a mindset change. We tell our parents that we are preparing for such a future by making changes to our schools to encourage more creativity and innovative spirit. Some parents are sceptical, pointing to the mismatch between this over-emphasis on academic excellence in the scholarship and the call to our children to be more creative and innovative. Since the Government scholarships have such a strong influence on the mindsets of our young, may I urge the PSC to review our scholarship policies to reflect the growing importance of creativity and innovation.

Sir, let me take the points raised by the MPs one by one. First of all, Mr Simon Tay suggested that the Government should monitor discrimination and make sure that it does not become a problem, especially discrimination in jobs. We are doing this. I agree with him that the correct approach is not legislation because you cannot legislate preference. Personal contracts and jobs are very much personal choices; whom you want to hire, whom you do not want to hire. You cannot cause a person to hire somebody else whom he does not want. But we can set the social climate so as to encourage people to look at them objectively and not go on race or ethnic prejudices or biases. The Member may be interested to know that in fact we are working out some tripartite guidelines on recruitment practices. The Ministry of Manpower has been discussing this together with SNEF, the employers' federation, and NTUC, the trade unions, and they will be publishing their guidelines within a few days. It is not a matter which can be resolved by publication of a document. But I think a cumulative series of gestures and moves like this over a period of time will help to shape the social climate. Secondly, Mr Simon Tay asked about self-help groups and whether they could be encouraged to do more joint activities. In fact, they do. For example, CDAC, Mendaki, the Eurasian Association and SINDA run a joint social service centre in Toa Payoh, which used to be a community centre. The community centre has moved and they have renovated the old building. They jointly run this social service centre. And they also have other joint activities regularly, for example, when we have community days or multi-cultural days, the self-help groups get together. I think they can do somewhat more because there will be times when you will have economies of scale, for example, running tuition classes or providing services, and we will encourage them to do so. Mr Shanmugam raised a basic question about our multi-racial policies and whether our emphasis on SAP schools and cultural elites runs against this and may cause us problems in the future, and he gave the example of how people who grow up in SAP schools now will be different from the earlier post-independence generation who grew up in fully integrated schools. I think we should cast our discussion in the framework of the situation in Singapore. Where did we come from? Where are we today? We did not start off a homogeneous society. We are not a homogeneous society. In fact, our starting point was schools which were very substantially differentiated and segregated, because many of the Chinese were in Chinese schools, many of the Malay children were in Malay schools, and the English schools catered to a minority of the population. 1.15 pm Diversity can be a problem. But in our case, as we have brought these communities closer together it has been a source of strength. And as I have explained during the debate here in January on Chinese language, the fact that we have people who have come from Chinese school backgrounds like Hwa Chong, people who have come from English school backgrounds like RI and ACS, people with strong Malay roots or strong Indian roots, makes us a diverse society with different strengths which are useful in different situations and the whole together is stronger than any single one of the parts. The diversity is a major factor for our national survival. If we were all homogenized together, not only do the communities not want it, because actually each community wants to retain some of its own identity, but we would be the weaker for it. Therefore, what we are trying to do is to retain some of the strengths of these different ethnic groups and these cultural traditions, while at the same time building a Singaporean identity. Not all of the top 30% of Chinese students attend SAP schools. For a start, RI and ACS would claim that they are any time as good as Hwa Chong, and even apart from that, if we take all the SAP schools as a whole, perhaps about 15% of Chinese students will be there. Many good Chinese students do not go into SAP schools; but we want some of them to go through SAP schools, because we think that there is something valuable in the tradition of the SAP schools which we should try our best to preserve. We are really preserving in a new situation, something which grew out of specific historical circumstances of the period after the war in a different Singapore. We are not really advancing the margins. We are just trying to maintain in a transmuted form part of what was good of the previous generation. So, our society is not becoming more and more segregated. It is society actually becoming more and more unified but yet in unity, we want to preserve some of these strengths. Between what we are doing and the extreme possibility which Mr Shanmugam has presented, I think there is a considerable difference which is not just quantitative but becomes qualitative. There is a trade-off, of course. It is not the same, learning about other cultures vicarously, as it is having a class of mixed students - Malays, Chinese, Indians and Eurasians all together, having to accommodate one another. But given that SAP schools are something which we want to maintain, there are ways we can work to minimise the disadvantages. For example, we are pressing national education in the schools, both in the formal as well as in the informal curriculum, to bring home the importance of multi-racial harmony, and to organise activities and programmes which register this message not just on paper, but through actual participation and experience, joint activities with other schools, opportunities to mix with students of other schools, so that they could get to know one another. And some of the SAP schools have regular activities which involve the minority cultural groups. For example, Catholic High School regularly invites Malay and Indian cultural groups to perform or give talks during appropriate festivals. And as I also mentioned in January, Nanyang Junior College, which is going to have a second Chinese language elective programme, hosts annually a Tamil Drama Festival and it also has a very active dikir barat group. It is a junior college which has multi-racial students and even with the Chinese LEP programme there, I hope that Nanyang Junior College will continue to promote the Malay and Indian cultural activities. Secondly, the SAP schools are now using English as the medium of instruction. They are teaching Chinese at a higher level than other schools, and with greater cultural content, but the main medium of instruction is English. The difference between a SAP school student and a student who went to Hwa Chong and Chung Cheng or Catholic High 30 years ago, is that, now they speak the language using the same textbooks as students who go to SCGS or RGS, or any of the other English schools. So the gap is much less. Thirdly, MOE is clustering the schools. We are going to group seven or nine schools together in one cluster for all the schools in Singapore so that there is greater sharing and interaction between them. SAP schools will be part of these clusters and these clusters will have other non-SAP schools in them. There will be frequent joint activities with other schools in the same cluster. So, you are within the same family. Finally, SAP schools are not the end of a person's formative experience. They go on to junior college, to national service, to work and to university, and there they will learn to mix and work together and to relate to Singaporeans, whatever their ethnic group. And feedback from our junior college principals has confirmed that in fact the SAP school students have not had a problem mixing with other non-SAP school students. But we will continue to keep the situation under close review and help create more opportunities, and we welcome suggestions from Members as to how we can do so. Mr Chiam See Tong advocated abolishing or suspending the ISA. He says that we should become a western style of democracy with modifications, then arts and culture, innovation and entrepreneurship will bloom. I do not believe that anybody is restrained from trying to make a fortune in Singapore for fear that if he does so, he will be arrested under the ISA. If only it was so simple to cause arts and culture to bloom. There are many countries without any internal security type legislation who would now be flowering in every direction today. But it is not so. The ISA is a safeguard which we have had and which we have kept for many years now and used very lightly and been accepted by Singaporeans as something which is necessary as part of our political landscape. Mr Chiam said that Singaporeans want this removed, but he did not make it an election issue in the General Elections. Other people who have made it an issue in the General Elections have lost. One of them who made it an issue was Mr Francis Seow in 1988, after he had been arrested under the ISA and released in time to take part in the elections. And when he went around Eunos making speeches, it was quite instructive. He did not say that we should abolish the ISA. He said, "I do not object to the ISA but the PAP Government has misused it." He did not do that to support the PAP Government or to support the ISA. He did that because he thought that that was the best way to collect as many votes as possible. I do not think anybody can say that the ISA has no political support. On Mr Chia Thye Poh who was under detention for many years, Mr Chiam See Tong said that he has never been charged and that he is an innocent man. Mr Chiam should read the statements which we have put out which had explained how communist cadres in Mr Chia's chain of command, direct line of authority over Mr Chia, have told us that, "Yes, he was my subordinate." And much later, a very senior communist cadre, who came back and whom ISD debriefed, confirmed, that "Yes, he was one of our men." Allegations of Mr Chia inciting violence are not matters of opinion. He made these speeches and one of the speeches was published in a left wing trade union journal. He was not just an anti-Vietnam war peacenik. He was saying, "Do like the Vietnamese. They have armed revolution. Our conditions are similar." Let us also have armed revolution. That was the implication. These facts have not been rebutted. He said, "I have not been charged in court." But he did not say that he never said that, because it was published. Mr Chia Thye Poh, you might say that was many years ago. The problem of the communists or the marxists is much less now because communism has collapsed in Russia, in the former Soviet Union, and China does not present the same sort of threat as before. But there remain problems. In 1987, Mr Chiam may remember, we arrested under the ISA four people, a Silat group who had been stockpiling weapons, headbands, and they had come in and were preparing to mount a riot. If I have such a situation, do I want to go through the motions of activating the ISA which is suspended before I arrest them? Can I wait till I get enough evidence in order to be able to prove the case in court? Or do I want to act immediately and deal with the problem before it has gone out of hand? 1987 is not very long ago, but it was not the last case. When Mr Simon Tay asked the question of how many people have been arrested under the ISA, year by year over the last few years, he expected us to say zero after 1987/1988. And I think he was surprised to discover that there were cases in 1997 - two persons in 1998 - four persons, who were arrested and detained for espionage. We have not published a lot of details on these espionage cases because we do not want to unnecessarily inflame relations and cause a public problem with countries or agencies which might have been involved. But these are real cases and I have consulted the Minister for Home Affairs just now, and I would like to say that any MP who does not take my word for it but would like to know more about these cases, whether PAP, Opposition, NMP or NCMP, could come and sign the Official Secrets Act, and we will give you a fuller briefing of what the 1997 and 1998 cases were about, and you will know that these are real cases. They happen today. We are not in toyland where everybody can be taken at face value and all is well. While you maintain the smiles and a certain facade of normalcy, a certain amount of cloak and dagger skulduggery continues all the time. And that is one of the reasons, not the only one, why we still continue to need the ISA. Mr Shriniwas Rai asked whether we are not under-represented with women and whether we could not have some more in the House. I heartily support his sentiments. We have six women in Parliament now including two Nominated MPs. I wish we could find more. But it is not very easy. If you compare our experience with other countries, we have about 6.5-7% of our legislature who are women. Most other countries, even in the West, only managed 10-15% of women in their legislatures. For example, in the United States and most of Europe, except Britain which, this time with the Labour Party, has brought in many new women MPs. The only exceptions are the Scandinavian countries, Sweden, Denmark, Norway, Finland which have 30-40% - plus women, but they are a totally different sort of society than we are. The difficulty of getting women into Parliament reflects something quite deeply structured within our society. We should try to overcome this problem but I would be doubtful if it is wise or possible to turn our society upside down and try to emulate the Scandinavian model. Various countries have tried to legislate to overcome this problem. He mentioned India. The French are also thinking about 1this matter and in fact they are thinking about a constitutional amendment, a parity amendment, which will favour equal access by men and women to elected office. It is very vague, but if they have that amendment, then they may have laws with quotas and rules and require parties to fill 40% women, and so on. But it is quite instructive that some feminists in France are against this idea. You would have thought that feminists want to be upfront and demand their rights and have their percentage, and one per GRC. But this is not so. And one of them, I quote from International Herald Tribune, March 3rd by Elisabeth Badinter, is against this. She said, "Parity is not a political matter, it is above all a matter of principle, of philosophy. The ideology of quotas breeds sordid and humiliating calculations. Does it need repeating that politics is above all an ideological choice that has nothing to do with sexual specificity?" She is speaking about the French situation but I think what she says is correct, and we have to accept this. We cannot overcome this problem with quotas or by a forced arrangement. As our society evolves gradually, it may become easier. There are more women professionals now and perhaps, as men become more enlightened and play a greater role in looking after their children and families and do their shopping, cooking and washing up, a few more women will be found in Parliament. We will try our best to find a few more by the next elections, and I hope Members will help us. 1.30 pm As for Mr Shriniwas Rai's other question on the civil service where he strongly opposed ethnic quotas, and I presume also sex quotas as well, I agree with his views. We also place great store on the independence of the public service, and therefore the key role of the Public Service Commission in ensuring this. And we have entrenched the position of the PSC in our system by requiring Presidential approval for the appointment of the Chairman and members of the Public Service Commission, and making sure that however we devolve the authority and responsibility for personnel management within the civil service, finally, the authority runs back to the PSC. There is an appeal to the PSC and there is a safeguard there. These checks and balances will continue to ensure the integrity of the civil service, recruitment, appointment and promotion practices. As for the Member's two specific suggestions to improve the quality of the civil service: (1) to recruit from the private sector on short-term contracts; and (2) to allow civil servants to be posted out to the private sector; I agree with both. In fact, we are trying to do both, but it is not easy to do, because there is a cultural difference between the civil service and the private sector, and it is not quite easy to bridge that gap. We have to try, but we have had a small number of mid-career entrants; currently, two from the private sector, and we will also be sending out civil servants to the private sector for attachments and secondment. We have done a few but we will do more. I should point out, however, that the Permanent Secretary in charge of personnel visited the New Zealanders who are also trying to grapple with this problem, and they also have not found it easy to cross over this way and bring people in. They told him something very interesting, which is that when you bring people in, for the first two years, they are very useful, because they still retain their private sector mindsets. After two years, they begin to think like civil servants and they are not unique any more. So, these are matters of organisational culture which we gradually have to overcome. Mr Jeyaretnam asked about running costs of the Government, which is $14 billion. He asked why is it so much. It is actually very little because $14 billion is less than 10% of our GDP. Our total budget expenditure is about 16-17% of our GDP, even including development expenditure, and it compares with countries spending 30% of their GDP on the public sector in the West. In Europe, it is probably 50%. In Scandinavia, maybe 55-60%. I think at 16-17% of the GDP, we are really not doing badly. I am not saying that we cannot do better and every dollar is spent optimally. As Mr Lim Swee Say said, we can always squeeze a bit harder and make some savings and do better. We will try. But I would say that, overall, we are not absurdly out of line. In terms of percentage of the labour force which the Government accounts for, we are one of the lowest in the world. I have a table which shows that only 31/2% of the labour force is in the civil service in Singapore. The only country with a lower percentage is Japan, which is 3.2%, but they have 130 million people as a denominator. Even Hong Kong, which you have thought would have a small civil service, has 5.6% of the labour force in the civil service. Malaysia has 10% and the UK has 9%. I think that, overall, we are not bloated. There are specific areas to focus on and these are matters which we will have to look into. The details of where we spend this $14 billion are fully given in the Budget book. I do not understand why the Member said he does not know where the money is spent. If he looks there, he will see who has been allocated how much and for which Ministry. The Member asked about the Ministers in the Prime Minister's Office and why there are so many. If I may be allowed to list them, first, the Prime Minister himself, who, I presume, the Member does not question. Second, is the Senior Minister who gives general advice to the Prime Minister and the rest of the Cabinet on many matters. Thirdly, there is me, whom the Prime Minister has tasked with looking after MAS and also inter-Ministerial coordination, and also answering questions from the Member. Then there is Mr Lim Boon Heng who is elected as Secretary-General of the NTUC, and the Prime Minister has appointed him into the Cabinet, because we want the NTUC to understand the national picture and we also want the NTUC to have a voice in the Cabinet. Then there is Mr Chan Soo Sen who is looking after CDCs. He is in the Ministry of Community Development and he also has half an appointment in the Prime Minister's Office, because the Prime Minister is taking a personal interest in CDCs, because it is his project which he launched. Then there is Mr Zulkifli Mohamed who is Political Secretary in NTUC and helps to keep the Prime Minister posted on what is happening on the ground in the NTUC. So, I think that everybody does have a role to play. Dr Tan Boon Wan asked about scholarship selection and whether we are over emphasising school results in selecting scholars. I do not believe so. It is necessary to have good school results to be considered as a scholar, because, particularly for the top scholarships like President's scholarship, SAF scholarship or the OMS scholars, we are really looking for the most promising kids of the generation, and to invest our hopes on. To start off, they need to have good school results, but many kids have good school results. Nowadays, 4As will be 1,000 students; 3As maybe 2,000 students, some phenomenal number. So, the fact that you have As does not mean that you will get a scholarship. The scholarship depends on something extra. Since 1988, the Public Service Commission has been sponsoring JC students to sit for the SAT1 and then those who do well are further sponsored by the PSC to sit for SAT2, as well as TOEFL. These are all standardised tests which are required for entry into American universities, and these are additional information when the PSC assesses the students. So it is not just your book learning, but also the SAT results which measure your aptitude, your IQ, in a way, whether you are able to reason, to argue, whether you have command of the language, how well you can make sense of numerical and spatial information. But even IQ is not enough. Because to win a PSC scholarship, especially the top ones, we are looking not just for intellect, we are also looking for leadership qualities, character, values, inter-personal and communication skills, and commitment to Singapore. It is a subject we had a long discussion on in the last Budget debate, as Members will remember. Furthermore, we want scholars to be adaptable, open to change, handle stress well, and so forth. It is a very demanding list. So, to select such scholars, PSC will look at the candidate's school reports, his ECA records, and the school reports, the rating by his principal and his teachers of his personal attributes, including his leadership ability, his integrity, his inter-personal and communication skills, and creativity. PSC also reviews his ECA records and pays attention to whether he has held leadership positions or made significant contributions in his extracurricular activities. This is school-based information. But apart from this, the PSC also requires each candidate to complete an essay about himself, his values and his beliefs. And then for the top scholarships, we require them to undergo an in-depth psychological interview, what motivates them, what do they consider important, what are they interested in, what do they want to achieve in life, what has their family background been, how have they coped with stresses and problems, up to that point. And for the males, we check their national service records to determine their attitude and performance in national service. Of course, if he is going for an SAF or an SPF scholarship, then we must assess the candidate's command and leadership ability as well. And after assembling all this data, the PSC requires every candidate to undergo a selection interview and the selection board has nine members and is chaired by the Chairman of the PSC himself and the other PSC members are on the board, plus people from the private sector, plus academicians from NUS and NTU, or in the case of SAF and SPF, people from MINDEF or the Ministry of Home Affairs. I think we are quite rounded in our assessments. We cannot be absolutely certain because we are after all talking about somebody 18 years old and we do not quite know how he will develop. He goes to university, four years overseas, he gets new ideas, his views change, his perspective may change. Sometimes they come back more mature, sometimes they come back different and we are disappointed. But these are risks we have to take. If we are absolutely careful and we only want to take people who are definitely going to do well, then I think we are going to be too risk averse, and we would not find high risk cases, people who could do well but, on the other hand, who might possibly not succeed. So what we want to do is to have a system where we bring in people who are obviously good and, at the same time, we take reasonable chance on people who have a good chance of succeeding, and we also take a chance on people who are not in the conventional mould but have something extra in some directions, because we would like to include even mavericks into our system. We are continually refining the process. We have not completed it. We will probably never complete it, but we hope that year by year, we will be able to bring in more talent and more people to contribute to the system.

Sir, may I seek clarification on the answers given by the Deputy Prime Minister? He speaks of each Minister having a role to play. But my question was: would he try and tell us exactly what duties are being performed by these Ministers? He mentions Mr Lim Boon Heng, NTUC Secretary-General. Is he doing trade union work in the Prime Minister's Office? Or is he doing work in the administration? I think the public would want to know that. Why is he being paid by the administration for trade union work? Secondly, he mentions about the Senior Minister giving advice to Ministers. Do Ministers still need a nanny after all these years? And do we still have to pay that amount for the occasional advice that is given? Could we have clear answers to these questions?

Mr Lim Boon Heng is a full member of the Cabinet. His views on matters reflect not just his NTUC perspective but his judgment on the issues, and we have found this entirely valuable, and he makes a full contribution. As for the Senior Minister, the Member clearly believes that he is not worth his salary. I am not sure how many other Members in this House or how many other persons in Singapore would take that view. May I return, Mr Speaker, to a point which Mr Shanmugam raised which I did not address, which is whether we are only interested in the Chinese elite, or we also would like Malay and Indian elites as well. As a practical matter, it is most straightforward to maintain or to build up Chinese elite, because the numbers are there. But as a matter of principle, and I think even in practice, we want people from all the communities who master their cultural heritage, who are fluent in their own language as well as English, and who will be able to maintain that community in Singapore, not just as a Singaporean but perhaps with different ethnic features, but as a Singaporean who has got the heritage alive and continuing through him. 1.45 pm

Order. I am afraid we have reached the "guillotine" on this Ministry. Mr Tay, would you like to withdraw your amendment? Mr Simon Tay: Sir, I thank the Deputy Prime Minister for his reply and I beg leave to withdraw my amendment. Amendment, by leave, withdrawn. The sum of $132,312,300 for Head V ordered to stand part of the Main Estimates. The sum of $41,968,700 for Head V ordered to stand part of the Development Estimates. Head K -

Sir, I beg to move, That the total sum to be allocated for Head K of the Main Estimates be reduced by $100. Sir, the total defence budget allocation amounts to 5.1% of the GDP, still way below the cap of 6% of GDP set earlier by the Government. No sensible or rational Singaporean will quarrel or object to such allocation for defence. All one has to do is to consider and survey the Asia-Pacific region since the last budget debate we have in this House. It is a region beset and riddled by economic and political crisis of one kind or another. We are now too familiar with such terms as economic meltdown, political upheaval, street riots, currency turmoil, and collapse or near-collapse of governments. Primordial forces have been unleashed. Fault lines have surfaced. There is concern over possible waves of illegal immigrants. Common-sense dictates that we must have a strong defence capability. Otherwise, we would be vulnerable. We would be at the mercy or whim and fancy of others, and then posterity would judge us: that we have failed in our duty to our fellow Singaporeans. We must remember that without a strong defence, there would not be a Singapore. We would not be able to uphold and preserve our Singaporean way of life. The time of regional crisis, I believe, is also a time of reflection, a time of bonding and indeed a time of commitment. I am sure our national servicemen will train even harder; that there is bonding across all ranks; and there is a greater sense of camaraderie and purpose. We can also use this period to sharpen our competitive edge in defence technology and operational skills. If what is around us in the region is not obvious, we can learn from Machiavelli, the 16th Century strategist from Italy, who studied the unfortunate fate of unprepared city states. His conclusion: "The foundation of a state is a good military organisation." Or we can borrow a leaf from Sun Tzu's Art of War, which emphasises defence preparedness and readiness, and the use of strategic planning and strategies to overwhelm or outwit the opposing side, with the help of balance of power, deterrence and deployment. On 15th February this year, Total Defence Day was observed. This reminded us of 15th February 1942. On that infamous day, the British surrendered to the Japanese at the Ford Factory in Bukit Timah. We trusted the British to defend Singapore. But the British instead surrendered. The lesson of history is that we must defend ourselves. Hence, we must ensure adequate defence budget every year. My question is whether the Minister considers the defence allocations for defence adequate, whether the budget will be used prudently and cost-effectively, and whether the SAF is operationally ready to defend Singapore. In this context, Sir, I wish to ask the Minister to give us his reading of the strategic situation in the region, and outline the possible scenarios that will face us. What are the measures that Mindef is taking to ensure that the SAF is operationally capable and ready to deal with any contingencies that might arise?

Sir, in this year of recession, our defence budget for FY99, standing at $7.27 billion, is roughly the same as that for FY98. As the GDP is projected to shrink, in terms of percentage of GDP, the expenditure has in fact increased to 5.1%, instead of 4.6% in FY98. Both FY98 and FY99 expenditures are higher than those in FY97 of $6.12 billion, ie, 4.17% of GDP. Yet, FY97 was a year of budget surplus while FY98 and FY99 are both deficit years. So it is quite natural that some among us might ask: what is the need to maintain or increase our defence expenditure in this time of tight budget? It is also quite natural to ask what is so urgent about our defence such that we must maintain our defence expenditure. Why should MINDEF be exempted from belt-tightening as required by other Ministries? Sir, I support the expenditure policy of the Ministry. If we look at the expenditure pattern of a defence capability comprising a weapon system and trained personnel, we will realise that it would consist of an initial purchase expenditure plus a series of annual expenditures over its life time. In other words, it does have a long tail of expenditure. So even if we stop acquiring new weapon systems today, it is not equivalent to an immediate reduction of our defence expenditure because much of the annual expenditure has already been pre-established. We could only reduce expenditure if we are prepared to let these functioning capabilities go to waste. Therefore, often times, a steady stream of expenditure for defence capabilities is indeed cheaper in the long run versus a feast or famine approach. In the latter case, the weapon systems will fall into disrepair, personnel would be reallocated or lost their readiness due to lack of training. In those cases, the cost of refurbishing to bring those capabilities back on line might even be higher. Some might question why not defer the purchase of new weapon systems like the Apache Attack helicopters until the finance of the nation improves. I think it will depend on the lead time of putting such a defence capability in place. Typically, a sophisticated system like Apache needs a long lead time to place the order, for the machines to be delivered and the pilots and maintenance crew to be trained. The elapsed time is typically three to four years. Therefore, we should look at the need of those weapon systems rather than to be too constrained by our decision based on budget consideration. The NCMP, Mr Jeyaretnam, has asked who are our enemies in his speech yesterday. He further said that instead of building up our strong and credible defence capability, why not we depend on international peace-keeping forces. He even pointed out Kuwait as a good example of international intervention in aggression. I think perhaps he has forgotten that by the time Kuwait was liberated by the international forces, it was in total ruin. In asking to identify our enemies, the NCMP has violated a taboo of international relationship. Singapore wants to maintain friendly relationship with every nation. Hopefully, we will never have an enemy. I think the NCMP knew this very well because he has been told previously. In fact, last year I suggested that he look up the origin of the Chinese proverb chian un tse wei to understand the need for a strong defence in peace time. Perhaps, he has not bothered to look it up. Therefore, he asks the same question again and again. Perhaps, he has also other motives in asking this question. Furthermore, in supporting our defence policy, the Nominated Member, Mr Simon Tay, suggested that we should carry out dialogues to explain our defence expenditure so as not to project an aggressive image. This is so, especially at a time when the countries in the region could not even maintain their previous expenditures because of their economic difficulties. Sir, I think we should remember that it takes time and money to maintain a constant level of competence, expertise and readiness in our armed forces. It would be unwise to reduce our expenditure just because we are concerned about being perceived as being aggressive. May I borrow another saying from Chuge Liang, the famous military strategist from the Three Kingdoms in ancient China, chiong ku tze ping pai how tung. This could roughly be translated as since the old time, those who master the skills on the use of arms are not necessarily the aggressors. Perhaps, those who are concerned that we are adopting a very aggressive defence posture should also read the ancient literature as well. Sir, I support the budget allocated to the Ministry.

Mr Zulkifli is not here. Mr Hawazi.

Sir, all countries in the region in Southeast Asia and East Asia, in general, have taken a beating as a result of the economic crisis that we are facing now. Some even face social and political turmoil and crisis. As some of these countries turn inward to overcome their own political, social and economic problems, relations between neighbours could become even more sensitive and, to a certain extent, some even more strained than before. Have all these had any effect on the strategic situation in Southeast Asia and East Asia as the region becomes more unstable than before the recession began? I could only assume so and therefore support our defence expenditure in order to enhance our own defence capability. Sir, could the Minister give his assessment of the strategic and security situation in our region?

Sir, Singapore is a small island amidst the seas of Southeast Asia. Small as it is, Singapore is the strategic hub or pivot, straddling the sea lanes from the Indian Ocean and the Straits of Malacca on the one side, and the South China Sea in the east, and the Indonesian archipelago to our south. We are a port and a trading nation. We import and export by sea. The security of the sea lanes and access to the sea lanes are of vital concern to all of us. The sea lanes must therefore be kept open at all times for food and trade. They must not be closed off or controlled or prevailed over by unfriendly forces. The sea lanes should also be protected from piracy of all kinds. There has been a reported increase in sea robberies in the Straits of Singapore. Related to the security of the sea lanes are the claims and counter-claims by various powers over strategic islands in the seas, for example, the Spratly Islands, Paracel Islands and Mischief Reef. There is much mischief, much to our dismay, and which does not bode well for the security of the sea lanes. I therefore wish to ask the Minister for Mindef's assessment of the security of the sea lanes and what are our strategies for ensuring that the sea lanes are kept open for our vital food supplies for trade, and also on the measures to deal with sea robberies in the waters near Singapore.

Sir, in the course of recent years, we have seen reports of rising incidence of piracy, both in the territorial and international waters around Singapore. Recently, a maritime report stated that piracy on the high seas remains high with seven ship crew members killed in 79 attacks in six months to June, with 36 violent cases reported. This was for 1997. According to a report from the International Maritime Bureau, the number of casualties for 1997 had not changed from the previous year. In fact, it is known that Southeast Asia remains the most vulnerable region for piracy attacks, with 31 attacks in 1997, out of which 13 were violent. On 30th May 1997, armed pirates injured an officer and shot dead a captain of the Singapore registered "M.V. Sinfa" off Batam island. 2.00 pm With the economic crisis beginning to bite into the region, one would expect the incidence of piracy to continue to rise for the year. Such activities of buccaneering of the high seas are unacceptable to us here in Singapore who traditionally rely on the safe passage of ships to ensure the continuance of our trading activities. Besides, the taint of having pirates rule the high seas in the waters surrounding Singapore does not add much confidence to our desire to make Singapore a leading marina in the region. Sir, the Police Coast Guard and the Republic of Singapore Navy carry the responsibility for the safety of our territorial and international waters. We are a maritime nation and it is in our interest to ensure that we are in a position to ensure the safety of the ships' passage. We should ensure that the armed services, whether it be the Police or the SAF, are in a position to carry out that duty. I would like to ask the Minister whether it is true that there has been an increase in the incidence of sea piracies in the territorial and international waters around Singapore and whether more measures can be taken to ensure the safety of the ships' passage through Singapore.

Sir, the use of smart bombs and cruise missiles by the US Armed Forces in the conflicts in Iraq has demonstrated the superiority of these weapon systems. In fact, the threat of air superiority and precision bombing has forced many combatants to come to the negotiating tables. The latest example is Kosova, the Albanian enclave which is trying to break away from Serbia. Of course, these weapon systems are very expensive. I understand that each cruise missile costs $1 million. But they are effective force multipliers and could minimise the exposure of our troops to casualties. Furthermore, they are also weapon systems of tomorrow. I would like to find out from the Minister how MINDEF intends to take advantage of these technologies and whether our defence doctrine takes into consideration such weapon systems, both on our side as well as on the other side.

Sir, in view of the prevailing economic and political uncertainties and the possibility of further deterioration in the security situation in this region, as already mentioned by several speakers before me, could the Minister provide Singaporeans with some assurance on the capabilities and the operational readiness of the SAF in addressing any possible scenario in the security situation in the region?

Sir, there is a saying that old generals always fought the last war. They were not prepared for the next war. Drilled in the old methods of warfare and schooled in the old doctrines of war, they could not grasp the impact of the new dimension of technological warfare. They were like ostriches with their heads stuck in the sand of time. In World War I, for example, thousands lost their lives in the Western Front as the generals could not fully understand the deadly impact of the rapid-fire machine gun, nor thought of ways to overcome it. In World War II, the tanks made its greatest impact, as the Germans demonstrated in the Blitzking campaigns very successfully. The Germans of all people realised the power, shock effect and mobility of the tanks and fully exploited their potential. In contrast, some armies were still training with horse calvaries on the eve of World War II. At the start of the war, the Polish Army, for example, sent its horse calvaries against the German tanks. In Singapore, technology is indeed our friend. I am sure our highly-skilled and technologically competent SAF officers will maximise to the fullest the use of technology in the selection, purchase and application of military hardware. Sir, being small and with limited manpower and resources, we have all the more to focus on and to harness technology to our advantage. Such technology can also be used as a tool in training and simulation. With our purchasing power, and highly skilled-technical manpower, we can have the competitive edge through technology and the use of IT. It is not just muscle and brawn in warfare. It is the age of electronic warfare, and the IT battlefield. It is indeed a technological contest. What we lack in numbers, we can more than make up for in terms of technology, IT, firepower and mobility, whether it is air, sea or land operations. IT is being actively promoted in our schools and Singapore is moving rapidly towards a knowledge-based economy. Our National Servicemen are now more prepared than ever to use IT. I therefore wish to ask the Minister whether we have done our utmost to maximise our cutting edge in technology and IT, and whether we are leveraging to the fullest the IT skills of younger Singaporeans in enhancing our defence capability. Sir, safety in training is of great concern to both parents and National Servicemen. Indeed, it is of vital importance to all Singaporeans as each National Serviceman is precious to us. After the artillery bomb explosion in New Zealand and the anti-tank round explosion in the combing of blinds in the Pasir Laba area, MINDEF has reviewed and revamped the safety measures and procedures. I therefore wish to ask the Minister to update this House on the steps taken to ensure safety in training, to promote a culture of safety consciousness, to ingrain safety in all aspects of our training, so that safety becomes second nature to all our servicemen.

Sir, the Minister for Defence had previously informed this House that MINDEF takes training safety in the SAF very seriously and has implemented measures to further enhance safety. Could the Minister provide figures on training related injuries in the SAF to indicate whether these measures have indeed been effective in reducing such injuries? And what has been done in the area of search and disposal of unexploded ordnance at our live firing areas to enhance safety of our servicemen? Sir, with your kind permission, I would like to speak on my next cut.

Yes.

Sir, during this period of economic downturn, many employers and employees, who are National Servicemen, are facing economic difficulties in their business earnings as well as their job security. Their situation may be further exacerbated by the untimely call up for in-camp training. Could the Minister tell us whether there has been an increase in the number of applications for deferment from in-camp training, and what measures are being implemented to reduce the inconvenience of our NSmen without compromising our operational readiness? I would also be grateful if the Minister could give us details on the current MINDEF's policy on granting deferment from in-camp training to our NSmen.

Sir, I am gratified that our Armed Forces have trained in other countries and I would urge the Minister to explore further possibilities for two reasons: we have limited land space and airspace. Also, it would allow our personnel to benchmark against some of the best armies, as well as airforces and navies in other parts of the world. I think it is important that our personnel are well equipped, and by training in other countries, they learn some of the areas which we do not have here. Sir, with your permission, may I just touch on the question of national defence. I support the Government's move to allocate higher expenditure on defence. We are a peace-loving people but we must always be prepared for the worst. Any suggestion that the United Nations will come to help is a wishful dream and an unrealistic expectation. If our aggressors were to know and realise that our defence is intact, they will have second thoughts about taking us on. Every citizen, and I repeat, every citizen must feel that our defence is our just cause. We must be vigilant at all times. It is no use building all the economic infrastructure and economic growth if we do not have the capability to defend ourselves. And I am glad that the majority of Members in this House have agreed wholeheartedly that national defence must occupy priority at all times. It must be so, Sir. It is, of course, a substantial part of our GDP, but it must be so. Other countries spend much higher than us. Hon. Members, we want to live peacefully with our neighbours and we have no ill will towards any of our neighbours, but we must try to defend ourselves and be prepared at all times.

Sir, every year, we only have so many able-bodied men in each cohort for enlistment into National Service. Available manpower is thereby limited. This is compounded by the low rate of birth in our population, and the fact that the SAF has to depend on and recruit from Singaporean male citizens and second-generation PRs. Overall, with so many competing demands for the national pool of talents, the SAF has to fight for its share of top talents in the country. My question for the Minister is whether the SAF is able to meet all its manpower requirements, and what measures are being taken to ensure that the requirements are met, and whether the SAF scholarship schemes, the SAF Study Awards and the other schemes are successful in attracting and retaining a fair share of top talents in the SAF.

Sir, the SAF has over the years evolved itself into an institution that is committed not only to the defence of the territorial integrity of Singapore but also as an institution of nation building which fosters a sense of commitment and belonging to our own country. The issue of the Malays in the SAF is not new, and it was previously debated extensively in this House. At a Budget debate 10 years ago, several Members spoke on the issue of Malay participation in the SAF and had asked whether or not more Malays could be drafted into such other services as the Air Force and the Navy. At that time, there was much concern expressed by some Malay Members on the question of whether or not the Malays can enjoy a higher profile in the SAF over a period of time. Specifically, the hon. Member, Encik Othman bin Haron Eusofe, asked the Minister to sketch a scenario in the next five to 10 years on how multi-racial the SAF would be. In his reply, the then Second Minister for Defence, BG Lee Hsien Loong, said that the SAF had made significant progress since the 70s. He said then that increasingly, more and more Malays in the SAF doing national service had doubled since 1977, and were posted more widely in the SAF. We were told then that an increasing number of Malays were also serving in sensitive units like the commando battalion. Additionally, as more and more Malays were doing `A' levels and getting on to university, there was also an increasing number of Malays who were qualified for Officer Cadet School and as scholars. Indeed, as early as 10 years ago, there were even Malay SAF scholars who were on local training awards. That was 10 years ago, and indeed, 10 years on, I believe it has changed for the better. Over the years, I believe that the character and composition of the SAF has changed to reflect the character and composition of the population in Singapore. We have moved on and the issue at present is not whether the Malays are doing National Service in the SAF but whether more Malays are senior officers in the SAF. In a recent report in the newspaper, it was reported that there are many senior ranking Malay officers in the SAF, the most senior of whom is a full Colonel. Indeed, there is also now a Malay pilot in the RSAF in the person of Captain Mohamed Zakir Hamid who earned his pilot wings in 1992. Although the situation in the SAF with regard to Malay participation has changed over the years, one constant has remained, and that is, the promotion into the higher ranks of the SAF must be made on the basis of meritocracy. This principle was reiterated by our DPM Dr Tony Tan in his recent address, wherein he said that "for the SAF, meritocracy means that so long as the person is committed to Singapore, dedicated to the SAF, and capable of doing the job, his appointment would be based on performance and merit, and not by race". I support our DPM's statement on meritocracy for the SAF. It is important to bear in mind that the SAF is not only an important institution for nation building but it also has an operational role to defend Singapore against armed attack in case of war. It is imperative therefore that the SAF must be run purely on the ability of the soldiers to bear arms and to use it effectively against the enemy. I believe that an organisation which promotes its officers on the basis of race would very seriously compromise its operational ability. 2.15 pm It is very clear therefore that for the SAF today, where promotion is based purely on merits, the sky is the limit for good Malay SAF officers. I can say that 34 years since its independence, Singapore has become a much more integrated society. In the coming years, it is likely that we will see more and more senior Malay officers in the SAF. If there is any doubt as to the prospect of Malay officers in the SAF, let it be put to rest in this House. We are not racists and do not intend to be one.

Sir, in recent weeks, there have been some discussions about the position of Malays in the Singapore Armed Forces. Certainly, this subject has caught the attention of Singaporeans. As was recalled by Mr Sin Boon Ann, Malays are known to have made progress in the SAF. It is noted that the Deputy Prime Minister and Defence Minister, Dr Tony Tan, has said that it makes no sense for the SAF not to appoint or promote officers simply because they are Malays. Like in other professions, meritocracy is the basis for appointment and promotion of officers. This is a principle which Malays, like others, have accepted and lived with. Bearing that in mind, Sir, could the Minister enlighten the House on how much progress have Malay soldiers made in the SAF? For example, how many Malay soldiers have risen through the senior ranks and won scholarships and study awards given by the SAF?

Sir, the position of Malays in the SAF is now a widely discussed issue amongst members of the Malay community. I think this is a good development because it shows that we can discuss this matter quite openly and objectively. In the past many thought that this is a sensitive matter not to be discussed. But this is also an internal matter. I think the Malay community has demonstrated their strong views about the need to maintain this as an internal matter. The debate also highlighted a number of important points which I wish to raise here. (1) The Malays see their participation in the SAF as crucial in reflecting their role in Singapore. They want to be called up for National Service and prefer in fact to be enlisted in the SAF than even in the Police or Civil Defence. (2) The Malays see the SAF as a key institution and have a strong desire to see sufficient number of Malays occupying positions in the highest level. However, there are some who believe that to recognise the vital role the Malays play in the SAF, there may be a need to help them accelerate the process by giving them some special positions to occupy top positions in the SAF. I personally have a similar wish to see suitably qualified Malays holding high positions in the SAF, not because he is a Malay, but because he is good and who happens to be a Malay. I want to see a Malay General because he is a good General who has earned his stripes. I would like to see a Malay President's Scholar prepared to serve full time in the SAF. Therefore, we must make sure that, while this remains our desire, they must earn it and meritocracy must be the main determinant of the selection process. Perhaps, there are others who are also unaware of the progress Malays have made in the SAF over the years. Unfortunately, whenever this issue is being discussed and featured in the media, the same prominent commanders and pilots are highlighted, perhaps giving the false impression that the Malays have not made sufficient progress over this period of time. Perhaps, the Minister could elaborate this and hopefully enlighten the House on some of the progress Malays have made and to allay some of their fears that there are peculiar policies applied to the Malays with regard to the enlistment, recruitment and deployment of Malays in the SAF. Some still feel that there are many Malays who are exempted from National Service and the various high training programmes available to them in the SAF. In this regard, Sir, in connection with the other policies, especially defence expenditure policies, I wish to highlight the fact that we cannot go on expanding our defence policies and putting more effort into it if racial issues are allowed to divide us. I think it should not. The other point is that there was an earlier suggestion in the House that perhaps UN intervention could be one alternative to preserve peace and security with us. I pray safe that they will not come because when that happens, this is the end of the country.

Mr Chairman, Sir, Members have brought up many pertinent points relevant to our defence effort. I will comment on four areas: defence relations, defence spending, people in the SAF and technology in defence. My colleagues in the Defence Ministry will address the other points which have been brought up by Members this afternoon. Sir, the economic and political uncertainties which have beset our region will continue into 1999. Although there are some positive indicators on the economic front, we are not in the clear yet. We cannot be sure how the global economy will perform this year. The last two years have shown clearly how events can take sudden unexpected turns with serious consequences for political and social stability. Sir, questions of defence relations have been brought up in different forms by Dr Ong Chit Chung and Mr Shriniwas Rai. This climate of uncertainty which prevails in the region today requires more focused efforts by countries in the region to ensure regional peace and security. Singapore's policy is to build a security architecture comprising strong bilateral relationships interwoven with multilateral security arrangements. We believe that such an architecture helps to develop understanding and trust and to foster an environment which allows difficult issues to be discussed and disagreements to be resolved peacefully. Sir, the Five Power Defence Arrangements (FPDA) is an example of a multilateral arrangement which has served its members well. The FPDA has been in place for 27 years and its members have found it to be of value. Over the past few years, FPDA exercises and activities have been progressively enhancing professional value. The FPDA can be as useful and relevant as its members want it to be. Sir, on the bilateral front, our defence relations with a host of countries both in South East Asia and outside the region have been expanding in the scope and depth of the interactions and cooperative activities. These include SAF access to the training facilities of our friends which is valuable both to make up for our own lack of training land and airspace as well as to allow the SAF to benchmark itself against other armed forces. The SAF has valuable training facilities in countries such as Indonesia, Brunei, Thailand, Australia, France, Sweden and the United States. In the case of the US, we also believe that the US military presence in our region contributes to regional peace and security. For that reason, we have opened some of our military facilities for use by US armed forces. Our defence relationships are valuable relationships from which both Singapore and our partners derive benefit. In most cases, there is keen interest on both sides to see how we can build on interactions and cooperation for even greater mutual benefit. Sir, on defence spending, a topic touched on by Dr Ong Chit Chung and Dr Wang Kai Yuen, we must have a credible defence capability to ensure Singapore's continued security and success and in order that we can also contribute to regional peace and security. Our policy on defence spending is to cap it at 6% of the GDP regardless of whether the economic situation is good or bad, although in practice we have usually spent less. We take a long-term, steady approach because defence planning is a long-term process which requires prudent and steady investment over many years, both in people and money. In this way, we ensure that the development of the SAF proceeds smoothly and efficiently. In a way, we ensure that our defence requirements are well met and that foreign investors have the confidence to invest their money in Singapore. Sir, this policy has served us well. Today, we have an armed forces, the SAF, which has helped to make it possible for Singapore to remain an oasis of calm amidst the turmoil and uncertainty in the region. The SAF safeguards our security. It gives Singapore more room to adopt policies and take actions which best serve our interest. Hence, no one is tempted, just because Singapore is a small country, to have aggressive designs on us. Sir, the topic of people in the SAF, particularly some aspects of Malays in the SAF, and the recruitment of manpower for the SAF were touched on by Dr Ong Chit Chung, Mr Sin Boon Ann, Mr Hawazi Daipi and Mr Zulkifli bin Baharudin. Sir, the highly capable SAF that we have today is the result of many years of investment, not only in equipment and hardware, but more importantly in people. As Dr Ong has said, we must continue to attract and retain good people to join the SAF. And it was with this objective in mind that last year MINDEF launched a Manpower Management Initiative "The New Partnership Programme" for the uniformed officers corps. The objective of the New Partnership Programme is to provide a first-class career to our officers that is both challenging and rewarding. The New Partnership Programme includes changes to the career structure, remuneration package, career management and performance management of our officers. MINDEF has implemented most of the measures in this initiative last year. But, Sir, it is not enough only to make changes to the career structure and remuneration benefits of its officers corps. The SAF needs good people at every level to ensure that it can continue to perform its role effectively. The Warrant Officers and Specialists corps is just as important, as WOSEs form the backbone of the SAF. 2.30 pm Having reviewed and revamped the management of the officers corps, MINDEF has embarked on a total review of the career structure and remuneration benefits of the WOSEs corps. This review will take an equally in-depth look as for the officers into the career structures and the aspirations of WOSEs, and will make recommendations on how the manpower systems, career management, and performance management of the WOSEs can be improved. The study is in progress and the recommendations will be implemented starting in April next year. When the measures are in place, we will enhance the SAF's ability to attract and retain quality men and women at all levels, and better equip the SAF to meet the challenges of the 21st century. The SAF has always emphasised quality manpower. To that end, the SAF, like all sectors of Singapore society, works on the principle of meritocracy. This means that so long as a person is committed to Singapore, dedicated to the SAF, and capable of doing the job, his appointment and advancement will be based on performance and merit. Regardless of whether he is Chinese, Indian or Malay, regardless of what his religion may be. Meritocracy is an important ingredient in the cohesive and operationally ready SAF that we have today. I have said on another occasion, and I will say it again this afternoon, that it makes no sense for the SAF to deny an appointment or a promotion to an officer simply because of the officer's race or religion. Sir, some Members have asked about the opportunities available for Malays to progress in the SAF. There are today many Malay commanders - officers, warrant officers and specialists - in the SAF. They serve in the various arms just like their non-Malay counterparts. As Malays progress up the educational ladder, they will also qualify for more and higher appointments in the SAF. A higher proportion of each cohort of Malay enlistees now possesses the educational qualifications for selection for training to be commanders in the SAF. There has been a corresponding upward trend in the proportion of Malay enlistees selected for Officer Cadet School, and in the number of Malays serving their full-time national service as officers and section leaders. The number of Malay commanders in the SAF today reflects the educational attainments of the community and compares favourably with the proportion of Malay managers and professionals in the economy. About half the Malay regular officers are graduates. The SAF encourages promising young Malay officers who intend to make a career in the SAF to further themselves. They are given scholarships to go to university, like other deserving officers in the SAF. Malay officers have been consistently getting such awards since the early 1980s. Sir, on technology in defence, a point brought up by Dr Ong Chit Chung, besides good and committed people, it is also vital that the SAF makes use of technology to give us the edge. Technology is a strategic tool for the SAF. Manpower and resource limitations dictate that the SAF must harness technology as a force multiplier to enhance its operational capabilities. In the modern battlefield, technology is a critical factor. The odds favour the side that makes best use of technology. Therefore, we have to be proactive and innovative in exploiting technology for our defence. Over the years, the Defence Technology Group (DTG), which is the engineering and scientific arm of MINDEF, has built a strong technological base. We have invested in facilities, equipment and, most importantly, in some of the best engineering and scientific brains in Singapore to handle advanced technologies needed by the SAF. Today, the DTG is a smart defence equipment buyer as well as a technology application leader with world-class capabilities in systems engineering and integration. DTG not only buys the best equipment off the shelf, but develops in-house expertise to modify, customise and upgrade systems to maintain the SAF's technological edge. As we approach the 21st century, the challenge for MINDEF will be to maintain and sharpen this strategic edge. In this regard, there are two key driving forces in technology that we cannot ignore. First, technology advances at a phenomenal rate. New technology and systems emerge, then become obsolete at an exponential pace. The modern battlefield is rapidly evolving. We must therefore ensure that we will not have to fight today or tomorrow's wars with yesterday's technology. Hence, we must be able to keep up with the rapid technological changes and continue to stay ahead. However, rapid technological advancement will mean ever-increasing demands on Singapore's limited pool of engineering and scientific talent. Yet it will be impractical for MINDEF to simply continue to expand its engineering talent pool, as this would distort the deployment of the national engineering resource. Instead of simply growing larger, we have to do things smarter. DTG needs to be nimble enough to effectively tap on external engineering expertise to transcend our manpower limitations. Second, unlike in the past, today's defence applications no longer lead technology advancement. Some of the most advanced technologies are developed by commercial companies. We must be able to quickly seize opportunities for collaboration with external organisations to stay at the cutting edge of technology. Sir, it is imperative that we find new ways of repositioning and re-organising ourselves to ensure that we are well placed to meet these challenges. At present, the DTG in MINDEF provides the whole range of technology functions, from policy formulation to acquisition, maintenance and development. This arrangement has helped MINDEF to build up our defence capabilities quickly. But it may not be nimble enough for us to meet future challenges. MINDEF has therefore decided to restructure the DTG to better meet the future challenges. The core policy and resource allocation functions will be retained within MINDEF Headquarters, while the executive and implementation functions of DTG will be undertaken by a separate entity. MINDEF will set up a new statutory board, to be called the Defence Science and Technology Agency (DSTA) by 1st April 2000. The DSTA will serve as the Ministry's executive arm in implementing defence technology plans while the Ministry retains the policy planning and resource allocation functions. The DSTA's key roles will be to conduct defence R&D, acquire defence material, and develop military infrastructure. It will also act on behalf of MINDEF to promote and foster the development capability among the defence science and technology community in Singapore. The statutory board will continue to provide inputs and advice to assist MINDEF in policy formulation. In short, the fundamental organising principle for technology in defence is that MINDEF will determine what should be done while the statutory board is free to determine how best to do it. Transforming the DTG into a statutory board is the most optimal framework as it offers operational flexibility while ensuring MINDEF's overall control. Under the new structure, MINDEF will be able to maintain a balanced focus on policy issues. We will not be overly influenced by technology implementation. At the same time, DSTA will have the autonomy to operate in a fast changing environment for the development of defence technology. It will have flexibility in personnel management so that it can gear itself to meet the competition for quality engineering manpower. DSTA will also have more flexibility to strike up strategic alliances with strategic partners and leverage on the expertise and resources of others. The restructuring will allow DSTA more space to be more innovative and responsive to emerging technologies and to try out best practices. DSTA can also operate more efficiently using market and world class organisations as performance benchmarks. And because DSTA is given the autonomy to form partnerships, MINDEF's technology needs will be met through the increased use of commercial technologies and collaborations with research institutions and companies. This will alleviate the strain on Singapore's engineering and R&D manpower resource, and help us transcend the limits of growth imposed by our limited manpower. Sir, Members will remember that MINDEF had corporatised the Defence Science Organisation (DSO) two years ago in order to give it more flexibility to manage its people, and to subject its R&D efforts to the discipline of the market-place for greater efficiency and responsiveness. That was only the first step in the strategic shift in how MINDEF positions itself to meet the challenge of defence science and technology. The restructuring of the DTG will allow us to complete the process of building high performance organisations to better anticipate, respond to and exploit the future trends and challenges in the technology sector, so that the SAF can continue to receive world-class technology support to help it maintain its strategic edge into the next millennium. MINDEF will table a Bill to seek Parliament's approval to set up the DSTA in due course. In conjunction with the setting up of DSTA, MINDEF is reviewing whether the rest of MINDEF Headquarters can be restructured so that MINDEF can carry out its core functions optimally. At the time of our independence in 1965, our immediate priority was to quickly build up our defence capability. We did that very well by having a MINDEF that was self-contained and hence able to respond quickly and effectively to the nation's defence needs. However, MINDEF and the SAF have grown in maturity and size since those early days. It is timely to examine whether a leaner Ministry headquarters that concentrates on anticipating and exploiting defence trends and challenges can better meet our defence needs. This concept is akin to the practice of 'right-sizing' in the world of business. 2.45 pm Sir, I have decided to set up a task force to be led by Minister of State Mr David Lim to conduct a comprehensive organisational review of MINDEF. The task force will examine the organisational structure of the Ministry headquarters, MINDEF's relationships with the SAF, the DSTA and the defence industry, and its decision-making support infrastructure. When the task force has delivered its recommendations and these have been implemented, the result will be a Defence Ministry that is correctly geared to define problems, formulate strategies, establish policies and allocate resources for maximum effectiveness in developing Singapore's capability. Sir, a credible defence force does not depend only on hardware and capable people. A credible defence force depends ultimately on "heartware". At the core of Singapore's defence capability must be the will of each and every Singaporean to defend our nation. The economic crisis has brought home to us the importance of Total Defence. We have seen how critical strong social cohesion is when countries are faced with a severe crisis. As new challenges emerge, our cohesiveness and unity as a people will be further put to the test. We must continue to remain united and face these challenges together. We must leave others with no doubt that Singaporeans are a cohesive people, united not only in good times but also in facing difficult times. That we are a people who will not allow ourselves to be exploited by those who may try to play on our fears and vulnerabilities. This is why MINDEF makes it a point to remind our people, especially young Singaporeans, of the need for a strong national defence, as well as of the important contributions that each and every Singaporean can and must make to enhance our defence capability. In the SAF, we have had for many years a National Education programme which reaches out to NSmen, regulars and non-uniformed personnel. MINDEF also works closely with the Ministry of Education, and conducts its own national education programmes for school children, so that young Singaporeans have a greater awareness and better understanding of defence and security issues. Sir, Singaporeans have to understand why we cannot take our security for granted and why each and every one of us has an important role to play in ensuring the security of our nation. Sir, I want to end my remarks this afternoon by quoting from a letter which was published in the New Paper last Friday, 5th March 1999. The letter is from 3rd Sergeant (Reservist) Chong Yu Meng on his experience during national service and what the SAF means to him. I quote from 3rd Sergeant Chong's letter: 'I remembered being really terrified of going into the Army when I was 17 - right up to the day I turned up at the old CMPB near Holland Village. I was scared because I was unfit (I couldn't even do one chin-up back then, and my running time for 2.4 km was 13 minutes and 35 seconds), and I didn't know what to expect at all. The training was tough and sometimes I felt really miserable. I used to moan about feeling cold, wet, tired, hungry, thirsty, sleepy and sometimes nervous - all at the same time. By the time I "turned operational", the Army had turned me from a 69 kg weakling into someone who could do at least 18 chin-ups, run 2.4 km at the speed of 9 minutes and 15 seconds (which was pretty fast for me then). I was in a Junior College before entering the Army. I lived in a nice cosy world where everyone I knew came from a nice family and is reasonably well off, and University was a natural progression. But in the Army, I began to see that the world is a lot more diverse than I could ever imagine. I met people who came from broken homes and some who were thrown out by their own families. In short, people who have had a much, much harder life than I. But I remember these men as loyal, faithful and honourable men who will not abandon you if things got rough. I have no doubt that if the need ever arises, and we have to fight, these men will not let us down. Whenever I go back for Reservist training, I try to keep that in mind. Their sacrifice is greater because they have no other recourse - they can't simply emigrate and it is extremely difficult for them to go to university.' Sir, 3rd Sergeant Chong concludes his letter by stating that the lesson which he learned from his experience in the army is a simple one, and I quote again from his letter. This is what he says about what he learnt from his army experience: 'Whatever you can't defend, doesn't belong to you.' Sir, the last sentence of 3rd Sergeant Chong's letter, to me, sums up more eloquently than any words which I can say to explain why defence is important to Singapore and why we need a strong SAF. "Whatever you can't defend, doesn't belong to you." In this time of uncertainty, Sir, a sustained and steady effort to maintain and enhance our defence capability is our guarantee that all that we have built up in Singapore over the last 35 years will belong to us. A strong SAF, supported by all Singaporeans through their commitment to Total Defence will ensure that we will not only emerge from these difficult times unscathed but continue to enjoy peace, stability and prosperity into the next century. Much obliged, Sir.

Order. I propose to take the break now. Thereupon Mr Speaker left the Chair of the Committee and took the Chair of the House.

Order. I suspend the Sitting and will take the Chair again at 3.15 pm. Sitting accordingly suspended at 2.54 pm until 3.15 pm. Sitting resumed at 3.15 pm

Debate in Committee of Supply resumed.

Head K (cont.)

Thank you, Mr Speaker, Sir, for allowing me to respond to points raised by Members on operational readiness and safety in training. Sir, the SAF we have today is the result of years of investment in people, equipment and doctrine. It is a modern and well-integrated fighting force, operationally ready to deal with any contingency that involves our national interest. The SAF's operational readiness is maintained through frequent mobilisation exercises and realistic training. The string of missions which the SAF has successfully executed when called upon to do so, at short notice, testifies to the high operational readiness state of the SAF. As a recent example, the SAF was called upon to help evacuate Singaporeans caught in the midst of factional fighting in Cambodia. Sir, not only is our equipment ready and our men trained, but our servicemen are ready to do their duty. Surveys conducted regularly by MINDEF indicate that our full-time national servicemen and NSmen are highly committed to defend Singapore. 98% feel that they have a part to play in defending Singapore while 90% say that they are ready and prepared to risk their lives to defend Singapore. Results from our mobilisation exercises have also been consistently very high. The percentage of NSmen who have deferred their in-camp training has also been very low. In addition to this data, anecdotal evidence and feedback from visits to units by members of the MINDEF headquarters and senior commanders, show that our NSmen take their training seriously and are convinced that we should have a strong and ready SAF. MINDEF and the SAF have also put in place programmes to brief and update our people regularly on recent developments. This will help our servicemen to understand the continuing need to play their part in ensuring that we have a strong defence. The Government will continue to ensure that the SAF is operationally ready to deal with any contingency. Sir, I am sure that when the "green man" flashes, our soldiers will be there. Safety management is taken very seriously in the SAF, and is supervised personally by the Chief of Defence Force who chairs the Committee for the Promotion of Safety Efforts in MINDEF. Down the line, every division or formation has a formation safety officer whose role is to ensure that the units in their division or formation train safely. I mentioned at the last Committee of Supply the measures taken by the SAF to enhance safety. Since then, new measures have been introduced to further strengthen safety consciousness. Apart from the mandated safety courses, briefings and procedures, unit commanders are encouraged to hold safety-related activities, such as seminars and many exhibitions to promote safety consciousness in their units and among their men. They have also been given the authority to purchase safety-related equipment or material not found in the SAF inventory should they decide that this is needed. Since November 1997, we have also engaged the Southern California Safety Institute (SCSI), which is a leader in aviation safety since 1987. The SCSI provides safety training to the United States Air Force. The SCSI has been engaged to run four Risk Management Courses for our army officers. Two more SCSI courses have been planned for the coming work year. These courses will supplement the many in-house courses on safety. The SAF also has links with other safety institutes, including the US Army Safety Centre to tap their expertise in risk management. Before carrying out any training or administrative task, commanders are required to go through a structured process to assess the potential risks. This enables commanders to systematically identify potential hazards that require extra precautionary measures or commanders may decide to modify or to go ahead with the activity, after considering all the various factors. Safety briefings are also carried out before every exercise. Safety information and lessons learnt from past training accidents are now disseminated through the Army Safety Website in the Army Intranet which was launched in January this year. One of the major causes of injuries in the SAF is road accident and several measures have been taken to enhance road safety. These are: before a driver is allowed to drive on his own during an overseas exercise, he is required to undergo a minimum of four hours of day driving and two hours of night driving to orientate him to driving in that country and in those conditions under supervision so that the driver would know the terrain, the road condition and the traffic condition so as to minimise the risk of accidents. Driving simulators are being acquired to better prepare our drivers to cope with the complete range of hazardous traffic conditions and terrain which they are likely to encounter locally and overseas. We are also concerned about road safety when our servicemen are not training or on official duty. To reduce the number of motorcycle accidents involving our regular servicemen, we subsidise half the cost of a defensive riding course conducted by any of the professional driving schools. The number of fatalities that occurred during training has fallen from three in 1997 to one in 1998, while the number of injuries requiring hospitalisation fell from 72 in 1997 to 50 in 1998. Sir, any training injury or death is one injury or death too many for the SAF. We will continue to inculcate safety consciousness and find ways to reduce training injuries through improving training safety. The Member also asked about the clearing of unexploded oddment or blinds at our live firing ranges to ensure the safety of our servicemen. A blind clearing contractor has been engaged by the SAF to clear blinds in the SAFTI live firing areas once every three months. And blinds found during the search are destroyed on the spot by the contractor. The Minister of State for Defence (Mr Matthias Yao Chih): Sir, may I respond to the question from Mr Charles Chong on deferment from in-camp training. Sir, our NSmen form the bulk of our defence force. They are our frontline troop and have to be kept at high state of operational readiness to respond to any contingency at a moment's notice. The training and military proficiency of our NSmen should not be compromised. NSmen need to train together to be an effective fighting force. The absence of a single NSman can affect his unit's cohesion, morale and operational readiness, especially if he holds a critical appointment. Deferment should therefore be granted only in exceptional circumstances beyond the control of NSmen and their employers. Our NSmen and employers understand the need for NS call ups and have been supportive of their employees' attendance of in-camp training. The NSmen deferment rate has not increased despite the current economic downturn. In comparison, in 1995, of the 87,000 NS call ups, 4,500 (or about 5%) were deferred on the grounds of work commitment. In 1998, of the 98,200 call ups, 5,100 were granted deferment. The deferment rate remains stable at about 5% of total call ups. Nevertheless, MINDEF is mindful of the need to minimise the demands imposed on NSmen and the inconvenience to their work and other commitments, especially during this period. In general, NSmen are given at least six months of advance notice so that they and their employers can make the necessary arrangements to cover their jobs during their in-camp training period. In addition, we are constantly reviewing and streamlining our NS training system to ensure that the duration and frequency of call ups are kept to the minimum. For example, MINDEF has shortened the duration of the basic combat training (BCT) programme from three days to two days, and the number of BCT sessions in the 13-year NS training cycle has also been reduced from seven times during the cycle to five times. MINDEF has also restricted the number of times an NSman can be called up for NS duties during a year to a maximum of three times per work year. Where possible, units are required to bundle together all the units' activities to coincide with an ICT to minimise the number of call ups for NSmen. In addition, commanders have also been given the flexibility to grant time-off of up to two days for NSmen to attend to urgent business matters which crop up during their in-camp training. If necessary, deferment will also be considered and priority would be given to NSmen who have a good ICT attendance record. The Minister of State for Defence (Mr David T.E. Lim): Sir, I am responding to Dr Ong Chit Chung and Mr Sin Boon Ann on the concerns of the security of sea lanes and piracy in the waters near Singapore. Dr Ong pointed out the importance of the security of our sea lanes for food and trade. That is one reason why we have put strenuous efforts into developing the capabilities of the Republic of Singapore Navy over these years. The security of the sea lanes in our region is also of concern, not only to Singapore, but of the many other countries in the region, which depend on the sea for their trade. More than half of the world's merchant shipping fleet use the sea lanes passing through Southeast Asia. In this context, Singapore shares the view of many other countries that freedom of navigation in the sea lanes in our region must be ensured. As Members know, we are not a party in any of the territorial disputes in the South China Sea and we have always advocated that they be settled by peaceful means and not by force. Closer home, I am happy to note that the incidence of piracy and sea robberies in the Singapore Straits has gone down substantially since 1992. This is in large part because of the effectiveness of a long standing arrangement we have with Indonesia. Called the Indonesia-Singapore Coordinated Patrols (ISCP), this arrangement involves our navy and our Police Coast Guards and the Indonesian Navy and police. Through this arrangement, the two countries have established effective channels of communication. The arrangements also allow us to exchange information on sea robbery activities and to facilitate cross-border pursuits. The ISCP has worked very well in that there were no incidents of sea robbery in its area of operations from the time the arrangement was implemented in September 1992 until December last year. There were some incidents in December and January, but there have been no reported incidents since mid-January after the ISCP stepped up surveillance and patrols. 3.30 pm I wish to assure Members that the Republic of Singapore Navy and the Police Coast Guard are ready to step up the efforts to deal with the problem of piracy, should there be any need to do so. Sir, may I also now respond to the question by Dr Wang Kai Yuen on smart bombs. Dr Wang asked if the SAF would consider the use of these weapons. The SAF is always on the lookout for better technology to improve its capabilities and effectiveness. Advances in electronics, optics, ordnance have thrown up a wide array of new weapon systems. Smart weapon is one of these areas, and the SAF is pursuing it. Being a small country with limited resources, smart weapons can enhance the SAF's capabilities and enable it to better utilise its resources. But, as Dr Wang has pointed out, these are costly investments. We must also evaluate new weapon systems, not only as standalone capabilities but as components of a larger fighting system. MINDEF will continue to invest in technology to ensure that we maintain our technological edge.

Sir, performing National Service is an event which is seen by many as an opportunity to serve the country and its people. It should also be an occasion marked by families with pride because society recognises the contributions made by the families in sending their sons to the uniformed service of the country. After more than 30 years of National Service, boys leaving home and going to camps are treated as a matter of routine by many families. For some families, however, the prospect of their loved ones enlisting for National Service can be met with a measure of anxiety. I am not referring to those families who are reluctant to send their sons for National Service because of the perceived hardship which their sons would suffer. I am referring to families whose income depend, either wholly or substantially on the income of those brought in by their sons who are due to be enlisted for National Service. There are many Singaporeans, especially those in the lower income families, who choose to leave school early to help support the family. For many of them, working prior to enlistment is a means of supplementing the family income and would therefore be a means of subsistence for the rest of the family members. To require these males to perform National Service, while a noble sacrifice, would mean severe financial dislocation for the family concerned. I understand the SAF recognises the possible dislocation that such requirements may impose, and has put in place financial schemes to help alleviate financial hardships that arise as a consequence of the registrants performing National Service. Such schemes range from supplementary allowances to outright loans which are repayable within a short period of time after the NSman finishes his National Service. The additional allowance is not much. I understand it stands at $200 per month. In this current crisis, I envisage that there will be a greater number of NS registrants who will be caught in such a predicament. If the family were to depend on the salary of the NS registrant for subsistence, the allowance given by the SAF would not be enough to help the families financially. Additionally, the loan repayment within a short period of time will also impose an additional burden on the serviceman concerned. I would like to ask the Minister for Defence whether more assistance can be given to full-time National Servicemen whose families face financial hardship as a result of their doing National Service.

Sir, I too echo Mr Sin Boon Ann's concern about the possibility that some National Servicemen who happen to be the sole breadwinners of the family may be suffering hardship at this time of economic downturn. It is possible that even with the various financial schemes provided by MINDEF, some of which Mr Sin has also touched upon, these families would still endure hardship. So, therefore, I too would like the Minister to consider enhancing the MINDEF hardship allowance by providing a bigger monthly cash pay-out in the first instance. Furthermore, Sir, I always believe that MINDEF should pay a fair salary to our full-time National Servicemen, and this amount should be roughly equivalent to the market rate in the labour market. Last year, when I spoke on the same subject, I pointed out that other than having more cash in the pockets, paying our NSF a fair wage would also increase the CPF savings of these NSF after their two-and-a-half to three years in the service of the nation. We all know that CPF savings today are not just for old age but for a whole host of commitments such as Medisave, housing, and so on. For instance, their Medisave contributions could be used to pay for the medical care of their aged parents. Furthermore, paying NSF their market rate would truly reflect the value of using these young men as a precious resource. Perhaps by pegging it to the right value, this would minimise wastage of their time through poor planning, waiting time, misallocation, and so forth. So I hope the Minister would consider some of my suggestions.

Mr Hawazi is not speaking. Mr Gerard Ee.

Sir, I am advocating the introduction of compulsory National Service for women. Firstly, I would like to put at ease the minds of all parents who equate National Service with serving in the Armed Forces. I have no doubt that many parents would object to having their daughters charging uphill with guns, blowing up things with explosives and, worse of all, getting muscular. Mothers and fathers would freak out at the image of their daughters' lovely complexion being burnt by the sun and pimples sprouting all over. To me, National Service is service to the nation. All of us citizens of Singapore should spend some time serving our nation. It should not be the prerogative of the guys. Our ladies can play an equally important role and make as much a contribution to the nation. I have in mind a Nurses Corps. All young women should be called up to serve the nation in the Nurses Corps where they will learn nursing skills which can be put to great use in an emergency. For the period of their service, they can be trained in our hospitals and thus help ease the shortage of nurses. Those found suitable for the task can then be attached to the various services as Medics. The remainder will learn to operate in field hospitals. During peacetime, members of our Nurses Corps can be sent on goodwill missions to help out in medical situations in the villages in the region and further away. Lest the system is seen as being chauvinistic, the enlisted ladies, after a period of basic training, should be allowed to opt to serve in the SAF. There are both combative and non-combative roles that can be considered. With warfare getting more high-tech, it is not always muscle power that ensures effectiveness. In certain situations, women's intuition could well be the extra edge to combat effectiveness. I have no doubt that women can excel in the Armed Forces and could outperform some of the men. Since the introduction of National Service for men, the men have had to face a disadvantage in their career. By the time they complete their term of service, the girls of their cohort would have had at least two years of employment. Compulsory two years of National Service for girls will set this matter back to an even keel. On the social side, National Service requiring people to train and live together in groups has the desirable effect of being a social equaliser. Women from all walks of life, every level of educational experience, social status, will live and learn to cooperate with each other. They will learn to appreciate each other as fellow citizens of Singapore. On the home front, every family will have a member who can handle basic medical emergencies. Perhaps this will lessen the queues at the A&E Department. Certainly ill members of the family, young and old, would be better cared for. As an NSman myself, I have benefited greatly from the experience. During the term of service, I learned about team work, perseverance, leadership and many other qualities that have helped me. Why should the women of Singapore not be given the same opportunity? And why should Singapore not be provided with the benefit of their service? With the current economic slowdown and growing pressure on job vacancies, this would be the best time to seriously consider the introduction of compulsory National Service for women. It will delay the release into the job market of a significant number of school leavers and graduates. Before the Minister directs this issue to the Ministry of Health, I hasten to add that whilst the establishment of a Nurses Corps would require input from the Ministry of Health, I am not thinking of merely generating a large number of nurses. Apart from nursing skills, members of the Nurses Corps must be trained in discipline and organisation and be ready to be mobilised. It is the training of the SAF that can achieve this. They will have to live in dormitories and conduct field camps in different terrains. They must learn to operate in all conditions. Finally, just as National Service for men cannot be done on a voluntary basis, the establishment of a Nurses Corps can only be achieved through compulsory service.

Sir, I would not be wrong in saying that the public perceives the SAF as an institution which is male-dominated. This is true of the combat vocations of the SAF. Whether it be the Army, Navy or the Air Force, we will not find any women performing any function in a combat capacity. On the other hand, I note that there are many women serving the SAF today as full-time regulars. Over the years, we are increasingly seeing women in the SAF moving away from service vocations, like performing clerical functions and parachute rigging, to being weapon or machinery instructors or technicians working side by side with their male counterparts. In recent years, we note that a growing number of armies are beginning to engage the services of women in active combat duty. In the US, for instance, the US Army has had women operating in the frontline for some time. Similarly, in Britain, they too have women performing combat duties. Sir, Singapore is a tiny island nation state with limited resources. We are not only constrained by the physical size of our country, but also by the relatively small population base. As a consequence, the sharing of our human resource between the private and the public sectors plays an important part in the distribution of talents in this country. The armed forces today, Sir, is a complex fighting organisation. We have over the years acquired complex weapon systems. However, with sophisticated weapon systems, we would require sophisticated people to operate and maintain these weapons. Take the F16 Fighting Falcon, for instance. The F16 fighter jet is a very advanced fighter jet. The technical skills required to fly the plane are so demanding and exacting that I understand only a small percentage of the cohort of those who enter the RSAF flying school would ever end up flying the F16 jet. Sir, if the selection of F16 pilots is so demanding, would it not be in our interest to start looking at the fairer sex in order to widen the talent pool that is available for our selection? Our womenfolk have in our nation's short history made significant contributions to the readiness and effectiveness of the SAF. Because they are restricted on the role with which they are allowed to serve, they are excluded from certain positions and are limited in promotion opportunities. Likewise, in Singapore, we have a limited talent pool. In some critical and key combat positions, limiting recruitment to the male gender would only serve to restrict our pool of talents. These would include senior staff appointments, and even fighter pilots for the RSAF. If our women can meet the same high standards set for the men, there is really no reason why they should not be allowed to play a greater combat role. This is a natural progression from what our women in the SAF are accustomed to doing. Sir, my question, simply put, is whether the SAF would consider allowing women to take up combat duties in the future.

Sir, the declared policy of the SAF is to keep the SAF young and fighting fit. Towards this end, there is a cap on the length of service, and regular officers and servicemen retire at a younger age. Thereafter, the officers and servicemen would start their second careers. Almost all officers and servicemen would start second careers as life spans have increased and the national retirement age has been raised progressively. Furthermore, such officers and servicemen have very good skills indeed, which can be harnessed in civvy streets. 3.45 pm As it is the policy to keep the SAF young, MINDEF also has the obligation to prepare and assist the servicemen in their transit to second careers, especially now that the economy is not doing well and jobs are hard to come by. I therefore wish to ask the Minister what measures has MINDEF taken to assist our servicemen in their transit to second careers, and whether our servicemen leaving the SAF are able to find jobs or have meaningful and rewarding second careers. Sir, can I go on to the next cut?

Yes.

Thank you. Sir, in its report presented to Parliament on 30th November 1998, the Public Accounts Committee highlighted that in recent years, and I quote, "The Report of the Auditor-General disclosed many instances of non-compliance with prescribed financial control procedures and other lapses in the Ministry of Defence. The number of instances taken together and their recurrence convey a disturbing picture of the lack of control-consciousness in the Ministry. This is dangerous as it increases exposure to fraud and corruption." Sir, of particular concern is the laxity in tender and procurement procedures at MINDEF. For example, officers involved in procurement should know that placing fax machines designated for receiving competitive bids in the open areas could lead to leakage of price sensitive information. There were also instances of wrong payment for in-camp training to National Servicemen and lack of proper accounting for fund-raising activities for charities. The Auditor-General, in his Report for the Financial Year 1996/97, has also pointed out that the MINDEF tender boxes were opened before the closing date of the tender and the 13 tenders submitted after the closing date were considered even though they did not fall within the special cases allowed by the Ministry of Finance. Sir, MINDEF receives the largest budget allocation every year. This we fully support and endorse. At the same time, MINDEF must ensure that it is money well spent. There must be strict budgetary control and full compliance with all Government procurement procedures and tender procedures. Anything short of this would not be acceptable. I therefore wish to ask the Minister what steps have MINDEF taken to ensure such full compliance and whether any progress has been made in this matter.

Sir, at last year's Budget debate, I raised the issue of MINDEF's tender procedures and weakness in financial control based on the Auditor-General's Report for the Financial Year 1996/97, the details of which were mentioned by Dr Ong just now. In the Auditor-General's Report for Financial Year 1997/98, the issue of MINDEF's financial control remains glaring, especially on the question of accuracy of accounts being confirmed as correct by the Permanent Secretary. The Report pointed out that the two deposit accounts which were confirmed by the Permanent Secretary as correct, and I quote, "found to agree with the records kept by my Ministry" turned out to have a discrepancy of more than $100,000. Furthermore, Audit could not verify the third account as the individual account listings were not ready for the audit then. MINDEF owes an explanation to this House. How did the above happen and whether the third account mentioned in the report has been audited, and if so, what is the result of the audit? Sir, I think it is time MINDEF woke up to the call for prudent financial control and the need to follow financial procedures.

Sir, let me respond to Mr Sin Boon Ann and Dr Wang Kai Yuen about allowances and financial assistance for National Servicemen. Sir, MINDEF has a financial assistance scheme to help needy full-time National Servicemen. Under the scheme, the needy full-time National Servicemen may be given a grant of up to $200 per month. If this sum is insufficient, he can apply for further assistance in the form of an interest-free loan through his unit's manpower officer. The loan is repayable by instalments, starting three months after his operationally ready date (ORD). Since 1975, a total of 1,636 servicemen have benefited from this. In addition, MINDEF also offers one-off grant and loans to servicemen in need. For example, unit commanders have the authority to extend emergency grants and loans of up to $500 to servicemen facing financial hardship arising from unforeseen circumstances. Sir, the applications have been few. MINDEF will continue to review and revise the grants, if necessary. But at this moment, there is no revision in sight. Dr Wang also appeals for more allowances to be given to NSFs. Sir, full-time National Servicemen are not salaried workers. They perform National Service and they are paid a National Service allowance. Most NSmen stay in camp where food and accommodation are provided free of charge. The allowance given to them is meant to cover incidental daily expenses, such as for transportation. The NS allowance is reviewed regularly to keep pace with the cost of basic daily expenses. The allowance was increased in 1994 and, again, in 1996. Our ongoing monitoring shows that the allowance is still adequate and there is no need for a revision now. MINDEF will continue to review the allowance from time to time. As for paying the market value for NSFs to ensure efficient utilisation, may I assure the Member that this is MINDEF's top concern - which is that the NSFs are properly and efficiently utilised. And to this end, MINDEF and the SAF conduct stringent checks and tests to ensure that operational training is carried out efficiently and productively so that, at the end of the day, we turn out operational units which are ready to defend our country at the moment's notice. Mr David T. E. Lim: Sir, Mr Gerard Ee has made a very spirited speech about providing Singapore women with the same opportunity to serve National Service as the men, and he suggested that we train them to be nurses and deploy them both in war-time and for peace-time purposes. Sir, his comments are noted. However, the purpose of National Service is to ensure that we have an operational capability to defend Singapore. As far as the military duties and defence needs are concerned, MINDEF has no immediate need to enlist women for National Service. Through measures such as use of technology and commercialisation of non-essential support functions, MINDEF has been able to maintain operational readiness effectively although the number of males enlisted for National Service has declined because of falling birth rates. The Member's point about the benefits of National Service for women is well taken. However, it is a decision that should not be taken lightly. National Service is costly both to the nation and to those who are called to serve. Based on the operational needs, there is no requirement for enlisting women in the SAF at this time. Nevertheless, MINDEF will continue to evaluate the suggestion from time to time. Sir, I turn now to the question raised by Mr Sin Boon Ann who has also spoken out for women and suggested that they should be allowed to perform combat duties in the SAF. Sir, we are already taking an increasing number of women into the SAF and indeed there are at present some 4,000 women serving in MINDEF and the SAF. Most of them are in service, combat support or instructional jobs. A small number have applied to be in combat jobs. Those who have been found suitable and have been able to meet the requirements have been deployed in combat roles. While the male servicemen will continue to form the mainstay of a fighting capability, we will continue to recruit women to meet our manpower needs. Sir, I turn now to the issue raised by Dr Ong Chit Chung regarding second careers for SAF personnel. As this House knows, the SAF adopts a policy to keep the SAF young. For officers, a full career with the SAF spans about 23 to 25 years and most officers will leave the SAF in their mid or early 40s. Most of our Warrant Officers and Specialists who stay beyond the first contract will also leave around this age. This is an optimal length to ensure that officers and servicemen can make meaningful contributions to the SAF and, at the same time, there is a healthy turnover of leadership at every level. Therefore, most officers and servicemen will have a second career after they leave the SAF. The responsibility to prepare and equip oneself with relevant skills for a second career must, however, continue to remain with the officer or serviceman himself. But we recognise that it can be very daunting for somebody to start a new career in his mid-40s, especially when he may have housing commitments and the education of his children to worry about. We can never remove all the concerns associated with the transition to a second career but we can make it less daunting. We do it in two ways. First, we introduce the Savings and Employee Retirement (SAVER) Plan scheme for the SAF officer corps in place of the civil service pension scheme. The SAVER plan is designed to give officers a lump sum of money when they transit into second career and through this, we hope that we can reduce their concerns on financial security so that they can concentrate on their professional duties while in the SAF. Second, MINDEF provides second career preparation for all our servicemen, officers and non-officers. The Personnel Development and Services Office (PDSO) was set up, among other things, to better prepare our servicemen for transition to a second career. This preparation starts from the beginning of the serviceman's career. We develop the servicemen by providing them with adequate training for their jobs during the early stages of their career and, wherever possible, appropriate accreditation is obtained for their training so that the skills can be relevant in their second careers. Depending on individual merits, servicemen can also obtain assistance for academic upgrading. Towards the end of the servicemen's career, specific programmes are available to help them build up necessary skills to facilitate a smooth transition. Such preparation activities include briefing and counselling, psychological preparation to help servicemen and their families prepare for the changes, career talks and career facilitation to link our servicemen with potential employers. Finally, we have assistance schemes to help servicemen adapt to the employment environment outside the SAF. In particular, we offer the Pre-Release Employment Programme (PREP) and the Pre-Release Training Programme (PRTP). PREP grants half pay leave for six months to allow servicemen to work in a civilian firm prior to their ORD. PRTP allows the servicemen to go on half pay leave, also for six months, to attend a full-time course. 4.00 pm The feedback from our officers and servicemen is that these career facilitation programmes have been useful. The SAVERS Plan and our career facilitation programmes are part of a package of benefits which SAF provides to our committed servicemen. With these measures, servicemen can concentrate on the primary mission of serving SAF with minimum distraction and the need to worry about financial security and their second careers. Sir, let me move on now to the questions about budgetary controls raised by Dr Ong as well as Mr Low Thia Khiang. I would like to firstly assure the House that MINDEF takes a serious view of the observations reported by the Auditor-General's Office and which were subsequently raised in the Public Accounts Committee's Report. MINDEF has taken steps to further strengthen the respective systems to minimise the kind of problems highlighted by the Auditor-General. I would like to emphasise that when these breaches were observed by the Auditor-General, there was no loss or misuse of public funds, and no fraud. On the issue of non-compliance with procurement procedures, this has been raised and debated in this House in detail in the parliamentary debate on the 1997/1998 Budget. What I would like to add today are the further measures that have been implemented to further enhance compliance with established procedures. The Ministry of Finance has revised the Instruction Manual to allow tender boxes to be opened not more than once in five days. On our part, MINDEF has further streamlined our tender process such that each tender box is opened not more than once in four weeks. This is more stringent than the new provision in the Instruction Manual. The revised IM also allows for retention of late tenders. I would like to stress that MINDEF considers such late offers as invalid offers. However, we will continue with the practice of using these offers as price comparisons to evaluate the reasonableness of other offers. To further enhance compliance with procurement procedures, in the coming procurement seminar, we will be emphasising accountability and transparency in public procurement by highlighting the lapses that have occurred and the steps taken to tighten controls. In line with Ministry of Finance's requirement, agencies handling procurement will also be required to provide annual declarations that they have complied with all procurement policies and procedures. On the issue of breakdown on budgetary control, I would like to assure the House that there was no improper transfer of funds, nor was there any loss of public funds. MINDEF's previous practice was to update each of the transfers in the computer system after it was approved by the relevant approving authority. The various transfers were then consolidated and a transfer warrant raised for them. This practice, although more efficient, was not in conformance with the prescribed procedure. MINDEF has stopped this practice. A transfer warrant is now issued before a transfer fund is updated into the computer system. In the interest of time, I would also like to inform the House that the other cases of wrong payments and in-camp training pay have been investigated and over-payments have been recovered. Monies raised by MINDEF for charity, National Day celebrations and other projects have also been accounted for. I move to Mr Low's concern about the discrepancies in the confirmation of balances between Auditor-General's records and MINDEF's records. The Auditor-General's audit revealed that MINDEF records for two deposit accounts did not reconcile with the Accountant-General's balances, although MINDEF has submitted a confirmation certificate stating that their records were balanced. The discrepancies between these accounts were due to errors during the migration to a new financial system from the old one. MINDEF is taking action to clean up the data in the new financial system. I would emphasise that in this process, there has not been any loss of public funds. The new system has stabilised and we have since been able to reconcile these records monthly with the Accountant-General's Department. Finally, on the incorrect confirmation of balances in advance accounts, this came about as follows: 65 receipts collected by MINDEF were temporarily posted to miscellaneous receipt revenue account in the Accountant-General's Department's system as the nature of these receipts could not be determined at the time of posting. When the details of the collections became known, adjustments which should have been raised to adjust the accounts were made accordingly.

Sir, I want to the thank the DPM and the Ministers for their comprehensive replies and we are reassured that the defence of Singapore is in good hands. Sir, I beg to withdraw the amendment. Amendment, by leave, withdrawn. The sum of $6,650,000,000 for Head K ordered to stand part of the Main Estimates. The sum of $620,000,000 for Head K ordered to stand part of the Development Estimates. Head S -

Head S - Ministry of Law. Amendment No. (1), Mr Chng.

Sir, I beg to move, That the total sum to be allocated for Head S of the Main Estimates be reduced by $100. Technology and the Internet have opened up a new world of opportunities for business. There is a growing recognition that we need to promote home-grown industries and, of late, there are exhortations to groom more entrepreneurs. Whilst we improve the economic environment and make entrepreneurship a welcome development in Singapore, I wonder if the legal and administrative framework is moving fast enough. For example, the Bankruptcy Act has been amended to raise the cap of the amount owed to $250,000/- for a discharge from bankruptcy. But since the last amendments, are we implementing the law fast enough? Anecdotal evidence suggests that bankrupts have difficulties getting discharge from bankruptcies. I understand that they must show good faith in making repayment before they can be discharged. The question to raise is: are we discharging many more bankrupts than before and has the pool of entrepreneurs been correspondingly enlarged? Have there been cases of relapse after discharge? Or was the law ineffective? One may assume that the regional economic crisis may have worsened the situation and the number of bankrupts may have risen and, further, precious business manpower resources are lost. The latest buzzword is technopreneurship. With the setting up of a national broadband network, we are ideally poised to promote electronic commerce, or e-commerce. Hence the Government's pre-occupation with encouraging the growth of a knowledge economy and e-commerce is timely. With e-commerce, one can work from home, or even from a car. If more is encouraged to work from the home in e-commerce, the legal framework must make this possible. In this respect, I wish to know if the Land Titles Act, the Conveyancing and Law of Property Act, the Planning Act or the Housing and Development Act will be amended soon so that they are in tandem with the Government's call to quicken the pace of e-commerce activities. Related to the fast-changing world of e-commerce, an area of concern is the protection of intellectual property rights. My question to the Minister is: is technology changing faster than what the current law has anticipated and is able to control? In the case of the Land Titles Act, the requirement for leases of over 7 years must be in the prescribed form and registered should also be looked into. I understand that this does not help entrepreneurs in setting up businesses as it prohibits the longer-term leases. Under the Land Titles Act, unless the commercial property is already subdivided, the owner who may be an entrepreneur cannot give the tenants longer leases of more than 7 years. On the other side of the coin, an entrepreneur may not be able to sub-lease a factory space unless it is already sub-divided for more than 7 years. Sometimes, capital investments need time to have a pay-back and 7 years is an unnecessary impediment to entrepreneurship which I think should be done away with. Another area which requires attention and soon is the prohibition of registering homes for business. For those involved in e-commerce and working from their HDB homes, they should not be prohibited from using their home addresses as their business addresses where they can be contacted. The Internet is blind as to the people and the physical structure behind the business. As far as the Internet is concerned, the person behind the business is not known and sometimes an office is not particularly important. Calls to our people to change our way of doing business should always be accompanied by corresponding changes in the relevant statutes and carried out fast enough so that they will facilitate rather than impede initiatives or entrepreneurship. If the laws are inadequate or cannot move fast enough with the times, then it is difficult to focus on the bigger picture of our long term economic strategy. This is especially so when Singapore's economy is plugged into the global economy and a slower start up may mean loss of time and money and also opportunities for growth. It will also blunt the competitive edge of our entrepreneurs and, moreover, lower their morale and make them feel that the Government is not supportive or responsive to their needs and efforts to bring wealth to the nation.

Sir, we are a nation that prides ourselves as one that is ruled by the rule of law and we have been praised by the international organisations like BERI and PERC that we have a highly efficient and very high-quality judicial system. One of the fundamental pillars of our society is also that ignorance of the law is no excuse. It is therefore important that we put access to the laws as a very high priority. With the onset of the Internet, the Internet is one of the best ways to make information available to all and sundry. Currently LawNet has got a database of the laws and statutes of Singapore. We also have handy references published, for example, by the Law Society of Singapore on the different laws and the summaries thereof. All this is fine and good, but if we could also have Internet access for members of the public to on-line statutes and case laws, it will indeed help us promote this idea that ignorance of the law is no excuse and you can find it freely or at a low cost on the Internet. We could, at the very least, put on the common statutes that affect the man-in-the-street, perhaps like the Small Claims Tribunal Act, Hire Purchase Act, Road Traffic Act, Penal Code, HDB Regulations, LTA Regulations, etc. It would also be good for us to have hyperlinks on this Internet site to other areas and other websites where summaries can be obtained and this would help the man-in-the-street to know his rights and duties and the responsibilities he has under our law. Sir, may I move on to my next cut?

Yes.

All sorts of personal information today that is captured involves Government and private databases. The Government databases of course contain all the information that have been given to the Government agencies from cradle to grave. The banks and other private sector organisations will have information on your wealth or the lack thereof, your investments, the debts that you have, your credit card number, your NETs and ATM transactions, and perhaps even information that has no relation to your banking account, such as your mother's maiden name, and the occupations of your siblings. A record of your ATM or ERP transactions, for example, could lead to information on where you go shopping, and if the system is on-line, it could even, theoretically, be used to track your movements wherever you go. There have, of course, been enough Hollywood movies to drive home this point, almost to the point of paranoia and hysteria. In Singapore, Government systems are very secure, they are secured technically and also because incursions and leakages are governed by penalty prohibitions of the law such as the Official Secrets Act, the Computer Misuse Act and other Acts such as the Banking Act and the Income Tax Act. There is a very strong protection of personal data. 4.15 pm In the private sector, there are laws which govern confidentiality, the banking secrecy laws and contracts which prevent the dissemination of personal information, if such contracts exist. But very often, these contracts are biased against the small consumer who almost signs his whole life away, just for a service. Here, I am not being paranoid, because I think these things, even if the protection is in place, the best laid plans of men and mice go awry. We have seen recently, for example, incursions on SingNet which led to the "SickNet" case, so to speak, where passwords were given on the Internet. More importantly, Singapore is building itself as an e-commerce hub, and one of the things that will happen is that data would be transferred from country to country. The European Union has, in fact, come out with a directive - Directive 95/46/EC - which deals with cross-border transfers of data. And in Article 25, paragraph 1, it allows the European nations to prevent the transfer of personal data which would be inclusive of data used in e-commerce. It prevents the transfer to countries which do not ensure an adequate level of protection. And adequate level of protection is seen in the light of the rules of law, both general and sectoral, that are in force, and the professional rules and security measures which are complied with in that country. Sir, I would like to urge that we review our laws to ensure that we can comply with these provisions so that we can continue to trade with Europe and we can continue to trade with the rest of the world that would require us to perhaps have laws and, amongst other things, also to have industry codes of privacy, such as perhaps the Association of Banks in Singapore, perhaps even CASE or the NIAC. These codes of privacy that are being promulgated could be given the force of law and then the provisions can be enforced so that we can indeed be able to answer charges if ever we are prohibited from trading with data with the European nations and with other jurisdictions.

Sir, we have all read reports in the media about the competition between Singapore and Hong Kong. And Hong Kong officials, we have read, have been criticised for not being sufficiently proactive in improving the economic competitiveness of Hong Kong. The Hong Kong official who recently said that we have been able to easily adjust to make ourselves more competitive was right about one thing: that one of the advantages we enjoy in Singapore is the Government's control of Parliament. The Singapore Government rebutted the official's allegations to put him right. But, in my view, that official was not misinformed or inaccurate about our legislature. There is no need to be defensive about it. The Government is in control here not by sleight of hand or deceit, it is in control because this is what the people want, election after election. Our consistent message to Singaporeans has been that investors will take fright if they sense that the Government is losing its grip over the legislative process. The Hong Kong official has now confirmed what we have been saying all along. He has effectively conceded that our ability to control the passage of legislation has given us a decisive edge. Any government can make promises or offer incentives to investors. But not many can quickly craft and construct the legislative framework within which these incentives are to operate, without being distracted or delayed by politics or lobbying. We enjoy one substantial advantage over other countries, ie, our ability to legislate quickly and with minimum fuss. Given the mind-boggling speed with which new financial instruments are created, it is a distinct advantage for us to be able to tell the investors that we can immediately enact laws and reshape our regulations to keep pace with the changes. It is therefore crucial that we take advantage of this rare ability to make ourselves more competitive. We must demonstrate that we can quickly settle the laws that we need to draft, enact and implement to complement the changes in the financial world. The faster we update our laws, the greater the confidence we inspire. Investors need to know that there are people in the Ministry of Law and the Attorney-General's Chambers whose sole pre-occupation is to keep updated on and to monitor changes in the financial arena, so as to give them legislative backing. One example was highlighted in the press recently relating to the need to review our banking secrecy laws in the light of the changes to the practice of asset securitisation, which involves the sale by a bank of loans to a special purpose vehicle. That sale cannot take place unless the buyer knows the details of the customers whose loans are on sale, and the buyers cannot know the details of the customers because of our banking secrecy laws. That immediately calls for a need to review the laws to see whether we can amend them to make them consistent with these new financial practices, without, on the other hand, compromising the integrity of the secrecy of the accounts. In addition, we also need to quickly demonstrate that we have developed the self-confidence to decide on what our own laws should be. That after 33 years of independence, we no longer need to have an umbilical cord to English legislation. Remarkably, we still look to the United Kingdom to fill gaps in local legislation. For many years, there was a debate about what English laws apply in Singapore, and that debate has been partly resolved by the enactment of the Application of English Laws Act. But I do not think that solves the problem, because these are English Acts which we are applying so many years after independence and there is really no reason why we cannot apply our own minds to decide whether these Acts or parts of these Acts should be borrowed and modified for our purposes. One example is the Criminal Procedure Code. It has been with us for almost a hundred years and that Code continues to maintain a lifeline to English law to fill gaps in the Code. We have to demonstrate to the world that we have the self-confidence to decide, once and for all, what the criminal procedure in Singapore is, and that we really do not need the English fall-back anymore. I would like to ask the Minister what steps are being taken to keep pace with the changes in the financial arena and whether the Ministry is reviewing our legislation, including the Criminal Procedure Code. Another thing we need to do is to show the world that our public officials are commercially savvy and can and do respond to the needs of the situation. Often times, the laws we enact in this House vest a great deal of discretion in our public servants. And depending on how they act, they can make or break the perception of nimbleness and flexibility. Some of our officials have done well, but not many people know that. I will give Members an example. These days, before an Initial Public Offering is done, it often happens that the issuing company prepares what is called a "red herring prospectus", without full details of the size of the issue or the details of the pricing. The purpose of the red herring prospectus is really to distribute it to institutional investors so as to gauge the depth of the demand. Previously, the response of the public service would have been that since you do not have all the details in the prospectus, you cannot have it registered. And if you cannot have it registered, you cannot have it distributed. But the Registrar of Companies has recently waived the requirement, because he or she understands the need for this document to be circulated. That is a tremendous advance. But my point really is that if discretion is being exercised in this manner, which is consistent with commercial good sense, why not publish it to the world at large? The financial community should know that these decisions are being made and if they know about it, they will come to realise that not only do they have in Singapore a Government which adjusts and is flexible, but a legislature and a public service which are equally responsive. Two more points, Sir. First, on the question of the supply of lawyers. In November 1993, the Minister for Law moved an amendment to the Legal Profession Act to implement the recommendations of the Committee for the Supply of Lawyers. One of the major recommendations which was accepted was the redefinition of the term "qualified persons". In essence, what that means was to control the flow of graduates into the legal profession from the United Kingdom. A list of 15 universities was settled on and put in a schedule to the relevant rules. The Minister then said that the list would be reviewed from time to time. And my question is: have steps been taken to review the performance and standards of these universities and is it the intention to revise the list?

4.25 pm Lastly, the issue of corporatisation in respect of which I declare my interest. In October last year, the Minister informed the House that the Law Reform Committee and the Law Society would be putting up a proposal to the Attorney-General's Chambers and the Ministry of Law on the question of corporatisation of the legal profession. Has the proposal been submitted to the Ministry and, if so, what is the Minister's position? The Minister for Law (Prof S. Jayakumar): Sir, I wish to thank the Members who have spoken and let me respond. I will first take Mr Davinder Singh's broader question about the need to review our laws in the light of enhancing our competitiveness. Sir, I do not think there is any doubt that the legal infrastructure - and by that I mean our legal institutions, our laws, procedures and regulations - will increasingly play an important role in our economic development. Our policy therefore should be to take a proactive role in ensuring that our laws, legal institutions and legal framework are constantly updated to support national objectives. On Mr Davinder Singh's specific question on our laws to support reform in the financial sector, the Monetary Authority of Singapore and the Attorney-General's Chambers are in fact now reviewing the necessity to amend legislation such as the Banking Act, which was referred to by Mr Davinder Singh, the Securities Industry Act, the Futures Trading Act, the Insurance Act, the MAS Act and the Companies Act. This may need to be done in phases as we will have to consult the various agencies as well as the industry and professions involved. The AG's Chambers has in fact expanded its Legislation Division to cope with the increasing drafting work. Together with the Ministry of Finance, the Attorney-General has also undertaken a major review of the Companies Act, which began last year with the share buy-back scheme. I believe this review will bring the Act up to date with international developments. A point raised by Mr Chng Hee Kok and, to some extent, by Mr Davinder Singh is that in order to encourage technopreneurship and business enterprise, we should also increase our efforts to promote and develop intellectual assets and to make our people understand the importance of intellectual property rights. In fact, as far as legislation is concerned, in the past year, considerable progress has been made. And Mr Chng Hee Kok will remember that we have made amendments to the Patents Act, the Copyright Act, the new Trade Marks Act which was passed last year, which has not only modernised and simplified our Trade Marks law in line with international trends, but also enables us to comply with the TRIPS Agreement. More recently, of course, we have also passed the Geographical Indications Act 1998, the Layout-Designs Integrated Circuits Act 1999, which will further improve our laws on protection of intellectual property rights. These laws will create a conducive environment for innovation and commercialisation of technologies. I should also say that a draft Designs Bill is also under consideration. And when passed, Singaporean enterprises would no longer need to rely on the United Kingdom to seek protection of their industrial designs. It will also encourage local innovations and new ideas in industrial designs. 4.30 pm Mr Davinder Singh, Dr Toh See Kiat and Mr Chng Kee Kok made a common point that we must constantly update and review our various laws to enable the competitiveness edge to be maintained. Let me say that we support this objective. We are also looking into the following areas of law: (1) A new proposed regime for the creation and registration of personal property securities; (2) We are reviewing the law on the formalities required for the execution of deeds by individuals and corporations; (3) We are reviewing the application of consumer protection laws in cyber space; the point made by Dr Toh See Kiat; (4) We are also monitoring international developments in e-commerce and reviewing the Electronic Transactions Act in the light of experience gained in implementing such legislation; (5) We will also review the Arbitration Act to update it and make it consistent with the International Arbitration Act; and (6) The laws of evidence, including the hearsay evidence rule, will also be looked at with a view to reforming and modernising these rules. Mr Davinder Singh made a valid point about the Criminal Procedure Code. The Criminal Procedure Code, together with the Penal Code, are legislation which has been in our books for many years. They have quite a history behind them, borrowing on provisions in India and elsewhere. We have not left it on the shelf without further review and there are inter-agency committees reviewing both the Penal Code as well as the Criminal Procedure Code, and the point made by Mr Davinder Singh will be taken into account. I expect that the recommendations on the Penal Code may enable us to come out with legislation in the course of the middle of this year. Mr Davinder Singh talked about corporatisation and whether the Report has come in. Indeed, the Sub-Committee of the Law Reform Commission has submitted its report. Amongst other things, it recommends that law firms be allowed to corporatise in order to encourage growth and to enable our lawyers to compete more efficiently. Their proposal will allow eventually for the formation of multi-disciplinary "one-stop" professional corporations as well as encourage acquisition by our local law corporations of foreign law expertise. In order to protect the interests of clients, the report also recommends that it should be made compulsory for law corporations to take out a minimum of $2 million professional indemnity insurance. Other safeguards have also been proposed to ensure that high standards of professional competence and integrity are maintained. I would like to say that I have asked the Attorney-General and the officials in the Ministry of Law to study the report with a view to implementing its provisions and, where necessary, to enact the necessary legislation. Mr Davinder Singh asked about the list of scheduled universities. Members will recall, when I last spoke on this subject, I said that the list of universities is not fixed for all time. We will have to review it from time to time because standards and curriculum will change, and I gave an undertaking that we will constantly review it. We are now in the process of looking at the list of 15 universities in the light of our experience in the past five years. But, in addition, we will also consider whether to include additional universities and whether well-reputed universities in other Commonwealth universities and other jurisdictions should also be considered. I might also mention here that the Attorney-General has informed me that the Board of Legal Education will review the curriculum for the Practical Law Course as well as the institution of the pupilage and the need for a formal system of Continuing Legal Education for those in practice. In other words, Sir, in reply to Mr Davinder Singh and other Members who have spoken, we will constantly update our laws and develop our legal expertise to ensure that our legal infrastructure would be better placed to support Singapore's drive towards a knowledge-based economy and to meet new challenges. Sir, on bankruptcy legislation, let me say that Singapore laws and policies, in fact, have received high marks in international ratings. But we constantly review our bankruptcy laws and practices. When moving the amendments to the Bankruptcy legislation in 1994, I informed this House that our main objective was to encourage entrepreneurship where bankrupts, who have become so through misfortune rather than malpractice, will be subjected to a more practical and pragmatic regime of bankruptcy. This approach, in our view, helps to encourage entrepreneurship. But even this area of the law is under review, and I am glad to say that the Official Assignee has proposed, and I have approved, that the cap of $250,000 to discharge bankrupts will be increased to $500,000 and will take effect on 1st May 1999. Furthermore, under the current drive to promote technopreneurship, the Ministry of Law is also leading a study to see what else can be done to improve not only our insolvency laws, but other rules and regulations governing businesses. This includes the many points which Mr Chng Hee Kok referred to. On the specific point that Mr Chng Hee Kok referred to the provision of 7-year leases, in fact, in 1998 we further liberalised it, from seven years to 14 years. But his point was whether such requirements are an unnecessary impediment to businessmen. I take his point. The Ministry of Law and the Registrar of Land Titles, will have another look at this area and to see if indeed it is a hindrance to businessmen, and if so whether we can review it to make it less onerous. Dr Toh See Kiat's point, firstly, was on putting our statutes and information on-line. I believe he knows that we have the LawNet Legal Workbench Seminar where we announced that Internet statutes would now be on-line. His point was that we should also make this available, free of charge, or at low cost, to members of the public. He will be glad to know that, in fact, LawNet was among some of the more popular statutes on the website for free access by members of the public. What these specifically will be, I will have to inform him separately. But he gave some suggestions as to what these statutes will be. This will be taken into account. As to whether it can be completely free of charge, I should say that the Government has actually invested substantial funds to develop LawNet. The maintenance and recurrent expenditure of LawNet is undertaken by the Singapore Academy of Law on a self-financing basis. Therefore, law firms have to pay monthly subscriptions for LawNet to gain timely access to these laws, including statutes and subsidiary legislation. So it is necessary to charge a subscription fee to maintain and support the system. But having said that, let me add that the Attorney-General and the LawNet Management Committee will explore ways to see how free access to our statutes can be given to members of the public without jeopardising the viability of LawNet, whether we could have specific databases at the National Library, in the university and elsewhere. If implemented, it could mean that members of the public will be able to browse through any Act at the nearest branch of the National Library. Another option we are considering is whether the information kiosk (Nets kiosk) which is currently stationed at the Supreme Court can be upgraded to provide free access to statutes database for visiting members of the public. Being a lawyer, Dr Toh See Kiat will know that reading a statute on its own will not provide a full understanding of the law for non-lawyers. So I should make that note of caution here. It may be necessary to read books and other materials such as the Law Society's and CASE's own brochures explaining the law to non-lawyers.

Order. "Guillotine" time. Mr Chng, do you wish to withdraw your amendment?

I am reassured by the Minister and beg leave to withdraw my amendment. Amendment, by leave, withdrawn. The sum of $121,452,240 for Head S ordered to stand part of the Main Estimates. The sum of $461,068,300 for Head S ordered to stand part of the Development Estimates. Head E -

Sir, I beg to move, That the total sum to be allocated for Head E of the Main Estimates be reduced by $100. I have two amendments here and, with your leave, I propose to take them together. But may I say that the second amendment that I sent in has been re-worded. What I sent in was "Speeding up of time for hearing of cases". I suppose I should have said "Speeding the hearing of cases". Reduction of time would seem to suggest something quite different. If I may now come to the amendment. First of all, the Appellate System. I have, as Members are aware in this House, more than once raised the question of the appeals that are now available to our citizens from the decisions of a single judge or magistrate. I do not have to inform this House that for the average citizen to be totally satisfied that he has obtained justice in any court, it will be necessary that he should be allowed an appeal from that decision to a higher court and, if necessary, to a further court. At the moment, we seem to be restricting these appeals that are available to our citizens. Not very long ago, we restricted very drastically the appeals in civil cases, those heard in the Subordinate Courts. I think several Members, including myself, have expressed our concern and our unhappiness at this restriction. I would urge the Government to reconsider again the availability of appeals in Singapore. I am particularly concerned about the criminal appeals. A greater portion of the criminal cases, almost 90% of the criminal cases, are now heard and dealt with in the Subordinate Courts. The District Courts have the jurisdiction to pass very heavy sentences. I stand corrected, I think a District Court in some cases can pass a sentence up to 20 years of imprisonment. That is a very stiff heavy sentence. From that, an accused person, if he is not satisfied, not happy with the decision, has at the moment, for all practical purposes, an appeal only to a single judge. He has no further appeals after that. 4.45 pm Sir, the single Judge who hears the appeal may not be someone who has practised or sat in the criminal courts, and a number of lawyers have felt that there should be a further appeal given as of right in the more serious criminal cases to the Court of Criminal Appeal. It may be felt that to allow every accused person who is convicted a right of appeal to the Court of Criminal Appeal would overload the Court of Criminal Appeal. But if that is the concern, some restriction could be placed on it by limiting appeals to the Court of Criminal Appeal to the more serious cases, where the sentence of imprisonment is quite heavy, and the man is incarcerated as a result of his conviction for a very long period of time in the prison. I would also urge the consideration of a separate panel in the Court of Criminal Appeal to hear criminal appeals. In the United Kingdom, there is the Court of Criminal Appeal, and then there is the Court of Appeal. The Court of Criminal Appeal hears purely appeals in criminal cases. If it is felt that we cannot have two separate panels permanently, can consideration not be given to appointing ad hoc Judges to the panel of the Court hearing criminal appeals, so that they can deal with the appeal, and be paid on an ad hoc basis? Justice is a very important factor for the cohesion of the society and for the stability in the society. The citizen has to be, as I said, given complete and full confidence in our system of justice that is administered in Singapore. The Ministers have trotted out the praise given by rating agencies outside of the justice that is meted out in Singapore. But what is forgotten is that these agencies are concerned with commercial cases and how disputes in the commercial sector are dealt with.

Order. Mr Jeyaretnam, you have used up the time allocated to you.

I have got another amendment.

You have used up all the time. You have asked to speak on both amendments, is it not?

Yes.

I have given you all the time. Mr Rai.

Sir, I am continuing with Mr Jeyaretnam's question on the Court of Appeal. I have got a different proposition, Sir. I am one of those who have been very supportive, and I still support, that we have done away with the Privy Council. We have got our own Court of Appeal. It has come of age. I have one complaint. We still have got only three permanent Judges for the Court of Appeal. I would urge that we should increase it to at least five. In important cases, the quorum should be five. I know of the present practice. The Chief Justice could ask other Judges to sit in the Court of Appeal, but that is not very satisfactory. Hong Kong has got more permanent Supreme Court Judges of Appeal, and the Court of Appeal in UK as well. So I suggest to the Government to reconsider the position. It is not going to be a tremendous financial burden on the coffer if we have two more Judges of Appeal. On the question of community mediation, I applaud the Ministry, and I think the work is well received by the public. We are an Asian society. We are not a litigious society and we do not believe in getting involved in litigation. Litigation should be a last resort. I have in mind two proposals for the Government. First, take away all private summonses, ie, those summonses which are instituted by the citizens against other citizens. Also, small summonses involving family members should be dealt by the mediation centre rather than by the court. Because in the court, the parties engage lawyers, there is publicity, there is this situation sometimes, through cross-examination, where people come to very bitter ends. If it is through mediation, people sit in closed door. I suggest the people who are appointed mediators should be people with experience in life, retired civil servants, and lawyers in active practice. I think the role of the community mediation centre should be enhanced. It has been in operation for some time, and the community is very grateful to this organisation. Sir, I would urge the Government to give a second thought. I have spoken on it earlier.

The Family Court has counselled and mediated many divorce, custody, maintenance and family violence cases. I would like to add to the effort of the Subordinate Courts in enhancing its mission to administer justice by making a few suggestions on mediation principles. The first is to adopt a very cautious policy on pre-mediation screening of all clients by trained officers in family disputes before a decision is taken to proceed with mediation. The second is to adopt a careful balance in engaging parallel counselling and mediation procedures in managing a complex relationship by giving priority to client protection, child protection and mediator safety. A protocol of best practices must be drawn up and followed. The third is to be ready to terminate mediation in an apparent marital dispute over property and children, once domestic violence emerges as an issue. Sir, I raise these concerns because mediation is effective and just only when contending parties could negotiate on equal terms. If any one contending party perceives threat or violence, and domestic violence is still a "live" issue, this observation must be taken into account in any arrangement made by the mediator. Otherwise, we may subject the weaker party to continued violence at home, away from the eyes of the public. The intake Counselling Unit set up by the Family Court is a positive initiative. I was told that six more vacancies are available but there are no takers. Do we lack the skills in the area of administering restorative and therapeutic justice? Or is there a shortage of social workers? Would the Courts then consider foreign recruitment, if we cannot find local skills? Sir, we need appropriate skills, forecast and stronger resource allocation in planning the social work curriculum and student intake at our tertiary institutions to strengthen the manpower needs of various Ministries.

Sir, let me first take Mr Jeyaretnam's point. As he himself has said, he has made this point many times before. Therefore, it is an old story. In fact, as recently as the last time when we took the amendment on the Supreme Court of Judicature Act, the Minister has already replied in full as to why there is nothing wrong with the appellate system and why there is no need to add tiers to this system. I think that is basically Mr Jeyaretnam's point - that there should be more tiers to our appellate system. First, I would like to put the situation in context. As Dr Toh alluded to, and in fact Mr Jeyaretnam himself also said, our judicial system has been praised. We have received very good ratings from international agencies not just in terms of the business aspect but also in terms of the courts and the police, both from the Institute of Management and Development as well as from PERC (Political and Economic Risks Consultancy). And indeed even Singaporeans in surveys and foreigners living here have expressed confidence in our judicial system. Why? Because they know of all the innovations that have been made by the Courts, innovations that started when the current Chief Justice took up his position as Chief Justice, which now spans seven to eight years. I think all of us know that the Chief Justice and the Courts are very proactive. In other words, what needs to be done to improve the administration of justice as well as the quality of justice will be done. That is the first point. So if Mr Jeyaretnam said that we should have more tiers of appeal to increase the quality of justice, the point is, if indeed that will increase the quality of justice, that would have been done. The question is, would it necessarily improve the quality of justice? Further tiers do not necessarily result in that. What is important, as I have stressed many times in this House before, is the quality of the Judges - quality of the Judges both at the hearing stage as well as the appeal stage. I am sure that lawyers in this House as well as lawyers out of this House will agree that the quality of our Judges and their judgements have gone up consistently over the years. And this, in fact, has resulted in the low number of appeals that are being lodged from the Subordinate Courts to the High Court. The other point is how seriously appeals are taken. The fact that the Chief Justice hears all magistrates' appeals indicates that they are very seriously taken. Because he hears all these appeals, he ensures that there is consistency in the sentencing as well as set benchmark sentences. Hence, it is not necessary, as Mr Jeyaretnam has suggested, for there to be a further appeal for what he calls the more serious cases or cases carrying higher penalties, magistrates' appeals going up to the High Court and then to the Court of Appeal. Because we must not forget that finality and certainty of proceedings are also important features of a sound legal infrastructure. The other point that he makes is the institution of a separate panel of Judges to hear criminal appeals, or the appointment of ad hoc Judges, to hear these appeals. This in a way is related to Mr Rai's point, even though it is not quite the same. But the suggestion is to change the structure of the Court of Appeal. I think Mr Rai's suggestion is in the numbers, that there should be more Judges of appeals to be appointed to the Court of Appeal. My reply to that would be, in terms of how the Courts are structured, especially in terms of the Judges to man the Courts, it would be better to leave it to the Chief Justice, because he is the man on the spot. He is in charge of the administration of the courts and he knows the situation best. So I am confident that he would take into account matters such as the present workload, case load and demands of the Court of Appeal as well as the current crop of Judges and Judicial Commissioners in the High Court when he makes decisions as to whether or not there is a need to restructure or increase the number of Judges in the Court of Appeal. That is my response to Mr Jeyaretnam and Mr Rai. 5.00 pm Mr Rai also knows that as and when there is a need to constitute a larger Court of Appeal, that has been done. The Supreme Court of Judicature Act provides that the civil and criminal jurisdiction of the Court of Appeal can be exercised by three or any greater uneven number of Judges of Appeal. So even if the norm is three Judges, the point is that the CJ has the discretion, which he has exercised before, to have a larger Court of Appeal. So I think this works best because there is flexibility. Let us not disturb that. The best thing is to leave it to the judgement of the Chief Justice to decide on matters like this. Mr Rai also asked about private summonses involving family members or neighbours and whether these should be handled by the community mediation centres. The first point to note is that the CMC, currently structured, is set up not to replace the Subordinate Courts in handling these neighbourly or relational disputes arising from private summonses. Here, there is a flexibility whereby if the parties agree, the magistrate can refer these disputes which come before him to the community mediation centres. Indeed, this has been done. There have been 62 referrals so far. The Crime Registry of the Subordinate Courts, I think Mr Rai also knows, also undertakes mediation. When parties come before it to file a private summons, they will look at it and in fact they also actively utilise mediation to assist disputants in relational disputes to resolve their disputes amicably, instead of just issuing private summonses immediately. I am told that a summons is issued only if there is absolutely no prospect of an amicable resolution and the parties insist on proceeding. Indeed, over the years, the Subordinate Courts have formally institutionalised mediation to deal with magistrates' complaints. Sir, this is important. The concept of mediation, in the context of these relational dispute cases which come before the Subordinate Courts, is being used. But the point now is, should we go a step further so as to bring these disputes to the ground, to be mediated by the CMCs. My reply is that we have made a good start. The CMC is about a year now, and so far, 62 referrals have taken place. I am sure that when more CMCs are set up on the ground, so that it is better distributed geographically and more accessible to residents, more can be done. Indeed to encourage this, what we will do is the Ministry is considering a computer link-up between the Subordinate Courts and the CMCs so that the details of the parties and the dates for mediation can be worked out whilst the parties are at the Subordinate Courts. This will facilitate mediation. Community mediation on a national basis is still evolving. The Government has made mediation voluntary to encourage its wider use. In due course, when mediation has become more acceptable and is more widely used to resolve such community relational disputes, we may consider making it mandatory for these relational and neighbourly disputes to be mediated at CMCs before a private summons will be issued. Mdm Claire Chiang made some very useful suggestions which I am grateful for and which I will relay to the Subordinate Courts to consider. Her main point is that she is concerned about the use of mediation, particularly in family violence cases, and asked whether that would be effective. I understand from the Subordinate Courts that there is a difference between the intervening process which has been established in the Family Court and mediation per se. Counselling, not mediation, is the main intervention process employed in family violence cases. Even before deciding whether to counsel a family violence case, I am told that the Family Court's professional counsellor evaluates the relationship between the two parties and the merits and value of counselling. Any imbalance in power and control between the parties is considered in the evaluation which, I think, is Mdm Claire Chiang's point, particularly in family violence situation. It is an important consideration because if the abused party is a spouse and, in particular, a female, this point about power and control should be considered. The Family Court's practice with regard to counselling and mediation in cases where family violence has occurred takes the following into account. Firstly, parties can terminate counselling or mediation at any time, and they are told about this at the outset. Secondly, the applicant's safety and ongoing protection is a paramount consideration. Thirdly, court counsellors and the Judges are fully aware of the possible power and balance between the parties. And finally, the court does not condone the use of violence. Nevertheless, the Family Court is aware that not all cases are suitable for mediation or counselling. Professional counsellors make this assessment at the intake session. For example, counselling or mediation will not be conducted if either party does not agree to it. Also, mediation is seldom conducted in cases involving applications for protection orders where the key consideration is the applicant's safety. This is a valid point because if the party is seeking a protection order, that means she is at her wit's end, she wants protection, not mediation. The court recognises the plight of the spouse, in particular, if she is a woman in this situation. To further assist the applicant in such cases where protection orders are issued, they are served to the parties within one day. She will also be aware that breaches of protection orders are regarded seriously by the courts. The party against whom the order is served is given a notice to let him know what he ought not to do, clear sentencing principles have been pronounced by the criminal courts in such cases. All this underscores the court's awareness that mediation should not be undertaken at the expense of the applicant's, normally the wife's, sense of safety. Let me conclude this part by assuring her that the Family Court takes its task very seriously. It draws on all resources and I understand that it has also engaged consultants to give seminars on how to utilise mediation effectively. So every measure is constantly and carefully evaluated over time and fine-tuned and that is where Mdm Chiang's suggestions will come in useful. The system is not perfect but the resolve of the courts is to use mediation effectively so that the problem can also be addressed effectively. Before I conclude, I just want to mention one point because Mr Jeyaretnam earlier on in his speech also alluded to the earlier debate when we amended the Supreme Court of Judicature Act. I want to say that the Chief Justice, in his Opening of the Legal Year speech, gave the assurance that the recent amendments are not to prevent access to justice and that the right of appeal is not lost. He also said that he would keep the matter under review and, if necessary, would recommend to the President to vary the limits.

As Mr Jeyaretnam is not around to tell us what he wants to do with this amendment, I will therefore put it to the vote.

Question on the amendment put, and negatived. The sum of $59,293,090 for Head E ordered to stand part of the Main Estimates. The sum of $332,379,800 for Head E ordered to stand part of the Development Estimates. Head B -

Head B - Attorney-General's Chambers. Mr Rai.

Sir, I beg to move, That the total sum to be allocated for Head B of the Main Estimates be reduced by $100. Sir, may I urge the Attorney-General's Chambers to use plain language in its legislation. It is important that legislation should be clearly understood by the man-in-the-street. This point was raised in an earlier debate concerning another Bill. Can I move on to the next topic, Sir?

Yes.

Sir, I have a plea to the Government. It will be in the interest of both the legal profession and the Attorney-General's Chambers if some work were farmed out to the private sector lawyers who have more expertise in this area. Similarly, I would also urge that promising State Counsels and DPPs be attached to legal firms for a short stint from three to six months. I have in mind people who are involved in legislation and who are dealing with corporate matters. It would be good for them to be attached to some of these big firms where they have good exposure. I must declare my interest as a lawyer, Sir. But I am thinking in the long-term interest of the legal profession as well as the administration of justice, and I would urge the Minister to give this his consideration.

Sir, on Mr Rai's first point on the use of plain English, I am sure Mr Rai would be pleased to know that the AG's Chambers have indeed been using the plain English approach to legal drafting for some time. In fact, the AG has been concerned with this. As early as January 1996, the Singapore Academy of Law (OSAL) held a series of workshops to promote the use of plain English in legal drafting conducted by experts from Australia. In his keynote address at the Opening, the AG emphasised the importance of plain English drafting. He mentioned that he had instructed the legislative draftsmen to adopt plain English in legislative drafting without sacrificing precision. The Chambers have also adopted the policy of drafting legislation in plain English whenever it is feasible to do so. One initiative is the redrafting of prescribed forms for the sale and purchase of residential and commercial properties under the Housing Developers (Control and Licensing) Act and the Sale of Commercial Properties Act. These forms in plain English have been in use since October 1997. The Chambers were also involved in 1998 in assisting the Law Society in redrafting the Law Society's standard Conditions of Sale of Real Property in plain English. This is an important development of plain English in legal drafting in Singapore. The Law Revision Commission, chaired by the AG, has in its revision of statutes and subsidiary legislation, also taken the opportunity to weed out archaic and obsolete terms used in the existing legislation. The Commission has also simplified such legislation by breaking down long and complex sentences into shorter paragraphs and subsections. Headings have also been used instead of side notes for easier reading. In addition, Members would find it easier to understand a Bill by reading its Explanatory Statement first. The purpose of the Statement is to explain in plain English the intention of each proposed provision in the Bill in a precise manner. I understand that, to further facilitate the understanding of the provisions of the Bill, the Chambers is considering in future preparing a more elaborate Explanatory Statement to a Bill so that it will facilitate easier reading and understanding of the Bill. The other point Mr Rai made is with regard to assigning of cases by the AG's Chambers to civil firms. The position is that the AG's Chambers will assign cases to legal firms whenever there is a need to do so. However, Mr Rai also knows that most of the civil cases that AG currently handles involve matters like debt collection and motor accidents involving Government-owned vehicles. It is uneconomical to assign these cases to the private sector. However, the point is that whenever there is a need to do so, the AG's Chambers will do it. The last point is that, because there is little litigation on private matters, the AG is considering sending Legal Officers for attachment with private law firms to gain experience in civil work. 5.15 pm

Mr Rai, do you wish to withdraw your amendment?

Yes, I wish to withdraw the amendment. Amendment, by leave, withdrawn. The sum of $26,855,240 for Head B ordered to stand part of the Main Estimates. The sum of $6,928,900 for Head B ordered to stand part of the Development Estimates. Head N -

Head N - Ministry of Finance. Mr Rai.

Sir, I beg to move, That the sum to be allocated for Head N of the Main Estimates be reduced by $100. Sir, the Singapore dollar has been declining in comparison to the American dollar although it has risen against the basket of currencies. My concern is that if the dollar declines further, and the speculated element sets in, what steps would the Government take to see that the dollar is protected. Of course, there are some people who feel that the dollar should decline further. But I leave it to the Minister's judgement. With your permission, can I take the second cut as well, Sir?

Yes.

I have been supportive from the very beginning about the merger of the local banks. I have filed a Question for Oral Answer and the DPM has replied. I again plead to both the banks and the Government to take steps because it will be in the long-term interest of the financial market in Singapore that the banks are consolidated. Perhaps, the Government may take a lead by telling the banks. At least, those in the UOB Group should merge together. Similarly, other banks which have other subsidiaries in the stable should do so. Every other country, even in India, is thinking of a similar move to merge, and if we are to succeed in this sector, I think it would be in the long-term interest for the banking sector to have fewer banks. I would urge the Government to take the lead in persuading the local banks to do so.

Sir, last year, I made a similar call for the Minister to review the listing rules for high technology companies and I believe when the Second Minister for Trade and Industry, BG George Yeo, responded on this issue, he did indicate that this is one of the areas that will be looked into in order to encourage technopreneurship to flourish in Singapore. Sir, technological companies require substantial funds and capital investments as well as on-going spending on research and development to keep up with the fast changing technology. Funds invested in such projects can be tied up for long periods of time. Technopreneurs typically have many ideas and, as I mentioned during the debate on the Budget Statement, getting funds is a big challenge in the current Singapore environment. If an entrepreneur is successful in attracting venture capitalists, typically because of the large investments needed, the entrepreneur's share of the company could be grossly diluted if he does not have a significant amount of his own cash to invest, which is typically the case. In Taiwan, there is a vibrant environment of many new companies, especially in the Hsin Chu Science-based Industrial Park. Technopreneurs are able to source funds easily either through venture capitalists or by quickly turning around their investments in companies. There is such a thing as a grey market where shares can be traded the day the company is formed. The buy and sell prices for such company shares are in fact published in local newspapers for the public to trade in these shares. The end result is that they have a quick turnaround and availability of funds for new start-ups. Entrepreneurs can therefore multiply their funds for use in new projects. In USA, for such high-tech companies, the fast track initial public offering channel was created some years ago by setting up the Nasdaq Board. This Board does not have stringent requirements of a track record of revenue, profit or size. As long as there is a good portfolio of technology and ideas with possible future growth potential, companies are allowed to raise funds through the Nasdaq. In Singapore, listing of companies to raise funds takes a very long time and hence the cycle time of new companies to be started up is much longer, since the funds are tied up for long periods of time. Sir, I have the following suggestions for the Ministry: (a) Make it easier to list technological start-up companies where intellectual property and a potential business plan become the deciding criteria. Of course, the public must be made aware of the high risk nature of such companies and leave it to them to decide if they want to invest. In fact, I suggest, for a start, we use our second Board, Sesdaq, by allowing two categories of companies to raise funds on this Board - one group following existing rules and the other that allows the fast track criteria that I have talked about. (b) Make it easier for private venture capitalists to raise funds from the public. We should allow open fund-raising of such high risk funds, once again by making it known to potential investors the high risk nature of such funds. Sir, there are many rich individuals in Singapore who may not have the ideas but who may be willing to participate in such funds. So I hope that the Ministry would look into these suggestions.

Sir, last year, I spoke on the need to promote high-tech industry to bring our economy up the value ladder. I also asked the Government to consider providing more incentives for the private equity funds, including those for boutique funds. I am truly glad that the Government has acted swiftly and put this in place. Today, I have one more item on my wish list, which is the same as what Mr Inderjit Singh has asked for and that is, Singapore should have a stock exchange for high-tech industry. Let me explain why I wish there was one. In the midst of promoting technopreneurship, Singapore set up the basic physical infrastructure such as a high-tech park near NUS, it pumps money into R&D, the use of network with world renowned universities. But for those who are familiar and who could embrace technology, all these are wonderful things. But our society has not been oriented this way. Many of us still do not know or simply fear technology. Quite many of us cannot even define a knowledge-based economy. Therefore, there is a need to systematically educate our people. I know the schools are teaching the kids to be computer-literate. Our younger workforce also learns about IT in schools or on the job. But there is a large pool of people out there who may not be comfortable with technology and many of them do not even know how to log on to a user-friendly computer, let alone convincing them to learn about cyber transactions, gene splicing and growing artificial human organs. This group of people in our society, however, represents the wealthy. Many of them belong to the baby boom generation or even earlier generations. They have made and accumulated substantial wealth during the good years in our nation building. In Taiwan, 40% of the economy is high-tech. Many companies were started by returning scientists who came up with their peers who succeeded in other businesses. In Israel, high-tech businesses also boom due to their Jewish connections in USA. In Singapore, we probably lack all these connections. Therefore, I think a stock exchange for high-tech industry would be useful to raise funds for promising start-ups to expedite the flow of information between the technologists and the wealthy businessmen to attract talents from overseas and who hope to raise funds here and to position ourselves for the venture capitalists to operate here. And, hopefully, we can modify the risk-averse culture of Singaporeans. I know we are now too early and too small to have a full-fledged high-tech exchange, let alone to challenge Nasdaq. But, like all financial centres, there can be more than one in this world. Singapore can well be such a centre for Asia in the future. Without getting started, we probably would not be there. So I suggest that Government look into the possibility of setting up facilities similar to bulletin boards or over-the-counter in America, and these details have been covered by Mr Singh earlier. This may not form part of the existing Sesdaq and it is up to the Ministry to structure it. Lastly, please allow me to quote a few figures to let the House have a feel of how much wealth such exchange can create in the future. As at yesterday, I called up a stockbroker at 5 pm - Yahoo! had a market capitialistaion of US$33 billion; America On-line had a market capitalisation of US$85 billion. Another highflying bio-tech company, the Human Genome Science is worth US$715 billion and, of course, our Creative Technology is worth about US$1.2 billion. We have $100 billion in reserves, which is equivalent to two Yahoos! We took 33 years to build up $100 billion and Yahoo! took four years to get half of it. Of course, the Internet stocks are now very high and there is a lot of speculation on it. So, this comparison may not be fair but the contrast is very stark and makes one feel that besides building our physical infrastructure, we should find ways to churn out our national resources and to combine with outside resources so that this exchange can expedite the growth of our wealth. With good planning and some good luck, we may be able to double our wealth in a shorter period.

(In Mandarin): If what Mr Chuang said is correct, then I think the PAP Government is not up to the standard. Yahoo! took 2 years and we took more than 30 years! When the Government encouraged the people of Singapore to invest in shares, Singaporeans from all walks of life happily jumped on the band wagon, with the hope that the Government would create wealth for them through the share market. Many loyal Singaporeans believed that all activities they were encouraged by the Government to participate in would bring benefits to them. This time round, they have their fingers, some even have their hands, burnt. The most innocent ones are those who bought Malaysian shares from the CLOB share market. Since the Stock Exchange of Singapore (SES) announced in September last year to close down the CLOB market which had made lots of money for the SES and the Government for the past 8 years, those investors who bought Malaysian shares could only lament their bitterness before the heaven. All their investments are stuck, and they have no way of knowing when they will see the light of day again. The PAP Government who has all along self-proclaimed to be brilliant and capable, pushed the blame to the people and said that the people should have recognised the risk of investment. What I want to point out is that the situation here is not one of the usual risks involved in investment. The fact here is that, this CLOB market, as set up by the SES, has the inherent risk of collapse of the whole market system itself. This is not the type of risk which people describe as the risk of being eaten up by the crocodile as one enters the "crocodile pit". Now, the whole crocodile pit is disintegrated. Everything is in a quandary and heaven knows when it is going to settle down. The Government did not care about the super-risk the investors were facing, neither did they heed the Malaysian Government's repeated warning that this market was illegal, and went on to operate it for 8 years. It was only when the Government was forced into an impasse that it was thrown into confusion and left it to run its own course. As a result, the fate of the investors' share capital is now left entirely in the hands of the Malaysian Government. You call this a responsible Government? As at 31st August 1998, approximately 200,000 investors were affected and most of them were Singaporeans. Since the collapse of this CLOB market some half a year ago, apart from apologising hastily to the investors, the SES took no further positive action. The Government also seems to have washed its hands off the matter, and it leaves the Singapore investors who bought Malaysian shares at the mercy of the Malaysian Government. I would like to know what measures this self-proclaimed brilliant, capable, far-sighted and highly efficient PAP Government is going to adopt to protect the interest of Singaporean investors who invested in Malaysian shares. Moreover, the PAP Government has been advocating Total Defence all the time. But, have we done enough in our economic defence? Why is it that all of a sudden, the investment by the people of Singapore in their homeland has become the sacrifice in the political wrestle between Singapore and Malaysia, and even the control of capital has gone into the hands of a foreign government? 5.30 pm

Sir, there are two buzzwords today in Singapore: competitiveness and globalisation. In achieving the goals represented by these two words, Singapore has decided to go into the promotion and development of e-commerce and the development of Singapore as an intelligent island plugged into the world. But in the world of e-commerce with goods and services going one way, there is a need for payment to come the other way to complete the circle. Currently, however, for Internet commerce, we do have a bottleneck, and that bottleneck is because we have effectively only one Internet payment provider, ie, NETS, a cartel of banks. NETS is the only provider and it is a very high cost provider, understandably so because they have invested a lot of money into their systems. Some of these systems are, of course, increasingly getting obsolete because of the fast pace of technology development. NETS has done a good job in helping Singapore to be placed in the world of e-banking and e-commerce, but I think it is fast losing its competitiveness. We do not want it to become the hare that lost the race to the tortoise. When its services are high cost, it means that a lot of SMEs that we want to develop into e-commerce players have got this problem of not being able to pay the cost. For example, banks would charge transaction charges of 4-6% per transaction and require a minimum transaction of $50,000 per month, and there are lots of other sums involved too with the software and acquisition of the hardware and so on. These are sums that no businessman would go into if he wants to do e-commerce and then have to pay for the Internet payment services. Sir, besides the fact that obsolete technology can leave us behind, there is also this problem of being isolated from the world, because if we are intent on only developing one system that does not want to move forward, then we would end up being isolated from the world. And this would mean that the lead that we have achieved would be lost. As an example, NETS was the first smart card in the payment world. It has now been overtaken by quite a few other international services like the Belgian Proton, like Mondex, Maestro and there is the CIRRUS network and other systems all over the world that may soon overtake some of the things that NETS has developed a lead in. I would therefore call for a re-thinking of this monopoly that is currently present and allowing perhaps for non-bank clearers. In the Internet, everything is equal. All small and big players would be on a playing field that is level and therefore it might be possible to have a small, agile payment provider that is not a bank, or perhaps even a foreign bank provider or a consortium of foreign banks that could give NETS competition and a run for its money.

Sir, Mr Shriniwas Rai asked about the Singapore dollar, its value is declining, how do we protect the value of the Singapore dollar. The Singapore dollar is a floating currency. It is a managed float, but, basically, its value is determined by the market supply and demand. Against the US dollar, it has depreciated maybe 20-odd percent since the crisis began in July 1997. But on a trade weighted basis, if you take an average of a basket of all our trading partners' currencies, in fact, the exchange rate has remained, more or less, stable. It went up somewhat over a period of a year or so, and it has gradually come down and it is now more or less at the starting point. So I do not think that the exchange rate has depreciated sharply. The best guarantee of the exchange rate is a strong economy, high domestic savings, no excessive foreign borrowings, confidence by foreign parties and by Singaporeans in the economy and in the currency. If people lose confidence in your currency, then you are finished. And if your domestic population lose confidence in your currency, you are even more finished, because you will never have enough reserves to stump up when Singaporeans come and say, "Here are my Singapore dollars, I want to swop them for US dollars, Yen, Euro or whatever." I think that the best protection of the Singapore dollar value is confidence and a sound set of economic principles. As for protection from speculators, we have never encouraged speculation in the Singapore dollar. We watch it quite carefully, and if it deviates too far from what we judge to be the fundamentals, MAS does not hesitate to intervene in order to bring it back. We have not had to do so very frequently and I think we have a good credibility with the market. If we want to do something, we are not without means altogether, and I think I do not have to say very much more than that on this subject. Mr Rai also asked about mergers of banks and what more we can do. First of all, it is not within the Government's power to compel local banks to merge. They will assess for themselves whether mergers are desirable for them, attractive as a strategy to stay competitive, or whether they prefer to go on their own. The most important incentive for rationalising is the fact that we are embarked irrevocably on a course of liberalising our domestic banking sector. We have said that we are going to do it over five years. We have been working out the specific schemes, and MAS will be announcing a plan and steps to accomplish this next month. Once this is in motion, the dynamics will look after themselves. Because as the environment becomes more open, the competitive pressures will grow and there will be incentives for the banks to rationalise, to get their own acts in order, to get plans for the medium and long term, and to shift their strategies and approaches and rationalise things, which perhaps they would have left be had they not been under such great pressure. And if you were to look at what the banks have been doing over the last few months, you will know that in fact the ice has broken, and they are already taking steps. It is not just DBS which has merged with POSBank, and is making business plans domestically and in the region. OCBC has recruited a new CEO from Hong Kong and explained to its staff its plans to raise returns on its equity and service to customers, and to focus their business on retail banking. OUB also has, I believe they call it OUB 21 plan, to improve their performance. And all the other banks, I am sure, are making their calculations on what they should do in this new situation. So there has to be free play. On the one hand, people want us to encourage the private sector to bloom. On the other hand, they want us to make the private sector do things. We find a judicious balance. We have set the forces in motion and must now let them play themselves out. Mr Chuang Shaw Peng and Mr Inderjit Singh asked about raising money for start-ups and whether we need to change the rules and have a special exchange for high-tech start-ups. Currently, Sesdaq, which is SES's second board, caters to listings by small and medium sized enterprises which include technological start-ups. Contrary to popular impressions, Sesdaq's requirements for listing are in fact very basic and very flexible. You do not need any minimum profit. You do not need any issued capital or operating history to seek a listing on Sesdaq. These requirements are simpler and less onerous than those of other markets. But the fact is that when people go on to Sesdaq, they do tend to try to have some issued capital, operating history and so forth, because they find it easier to get investors to buy shares in their company if they have something to show, rather than just promises. SES does not normally take very long to accept or reject a listing application, not more than 4-6 weeks. But, of course, the issue manager may need time to perform due diligence and prepare the company for the listing before submitting the application to SES. How long the issue manager takes depends on the complexity of the case and whether any major restructuring needs to be done before the listing. We had a Corporate Finance Committee last year to review these issues amongst others, and they identified two impediments for start-up companies wishing to obtain a listing. First of all, start-ups find it difficult to find investment banks willing to manage and underwrite their share issues, because there is a perception that investors will not be interested in buying shares of start-up companies. And when they are prepared to underwrite, their fees are quite high, and higher than those paid by companies with track records. Second, compliance and due diligence costs, preparing the prospectus and financial reports for an IPO, are expensive and prohibitive, unless you are raising a fairly large amount of money. If you look at companies which list on Nasdaq, they raise at least US$50 million for the national market or US$20 million for the small capital market. And this is quite a lot more than the amounts raised by many companies here, even on the main board. Therefore, the Corporate Finance Committee has recommended that the needs of start-up companies be met not by further relaxing compliance and due diligence standards on Sesdaq, but by establishing an Internet-based bulletin board to facilitate matching the needs of start-ups and those of sophisticated investors and venture capitalists who register as subscribers. These investors are better able to understand the risks and the potential for losses of investing in start-ups, and will contractually acknowledge the risks involved. In other words, you sign, you know what you are doing. If the money is lost, this was a gamble which you were prepared to take and are able to stomach. Start-ups may raise funds by selling their shares to small groups of subscriber investors without having to comply with the usual prospectus requirements, and so lower the compliance costs. The bulletin board will cater to start-ups and companies that find listing on Sesdaq uneconomical. The Government has agreed with this recommendation of the Corporate Finance Committee, and SES will study the feasibility of setting up an Internet-based bulletin board. Besides addressing the financing concerns of high-tech start-ups, the Government has also set up the Technopreneurship 21 Committee, to look into the creation of a conducive environment that would allow nimble knowledge-based high-tech enterprises to flourish. And their initial recommendations are expected to be announced by the middle of the year. I should say, Mr Deputy Speaker, Sir, that while funding needs are a significant issue to consider, the basic problem in technological start-ups is that you need entrepreneurs, you need ideas, you need the technology and the talent, in order to launch a company. In other words, you need the primary pre-conditions before all the supporting paraphernalia will be of help to you. Otherwise, you will just be throwing money away and getting no returns. Many governments have tried spending money and have got no returns. The fact that we have $100 billion in official reserves, it is not an argument for throwing it away, but a demonstration of how not throwing money away leaves you with good savings. As for the high value of Internet stocks and the phenomenal success of Amazon.com, I agree with what Mr Low Thia Khiang said, ie, if that is the yardstick, then the Singapore Government must admit to have done very badly. But I do not think that is a yardstick and I am not sure what is going to happen with Internet stocks. I would advise Singaporeans not to look for quick schemes to double their wealth. 5.45 pm Mr Low Thia Khiang has asked about Clob. Firstly, he said the Government encourages share ownership and people have now been burnt. I should point out that we have never asked people to go and buy shares. What we have done is to arrange share ownership through Government divestments through an asset enhancement scheme through Singapore Telecom, later on Singapore Power, PSA and others. If you buy other shares on the SES, then you have to make your decisions whether to go in or not, and whether the shares are worth it or not, and when to sell. If you buy shares on Clob, then you go in on the clear understanding that these are not Singapore shares subject to Singapore rules, but over-the-counter shares bought and sold subject to rules which apply in other countries. In this case, we are talking about Malaysian shares and therefore subject to a different set of risks, and not just market risks, but the risk of the market itself breaking down or closing down, or running into some other problems. In fact, every transaction slip which Clob issued when it was operating had a disclaimer at the bottom that you are taking the risk and you have to know what you are doing. Unfortunately, a significant number of Singaporeans, including some who really could not afford it, thought that Clob was a good punt and found it more exciting that Singapore stocks, but there were risks. Mr Low said we ignored warnings that Clob was illegal and therefore we were irresponsible. In fact, Clob was never illegal. Clob was an off-shore stock market regulated under Singapore law and therefore outside the jurisdiction of Malaysian law. Therefore, Clob did not require legal recognition and authorisation of the Malaysian authorities to operate. That Clob was not recognised by the Malaysian authorities did not make it illegal for any investor, in fact even for Malaysian investors, to trade shares on Clob. Clob operated like any other off-shore securities market in the world, and there were also Malaysian shares traded in other off-shore markets, for example, in London. On its part, the SES has always ensured that Clob complied fully with Malaysian law where applicable. All Malaysian shares traded on Clob were properly registered and deposited with Malaysian Central Depository (MCD) in accordance with its rules and regulations. The CDP, which is the Singapore Central Depository of shares, complied fully with applicable Malaysian law in its relationship with MCD. Otherwise, the Malaysian authorities would doubtless have promptly rectified the situation during the nine years when Malaysian shares were traded on Clob. When the Malaysians imposed new rules on 1st September and then shortly thereafter imposed exchange controls, they actually changed the rules and changed the scheme. After which, Clob reassessed the situation and found that it was not viable to continue, and suspended trading, and reached an agreement with the KLSE in September 1998 to expedite the migration of Clob investors' shares to the investors' own securities accounts with the Malaysian Central Depository in accordance with the procedures set out by the KL Stock Exchange at that time. The CDP signed an agreement with the Malaysian Securities Clearing Automated Networks Services Sendiran Berhad (SCANS) for this purpose. The intention was that once the migration was completed an investor could trade his Clob shares on the KL Stock Exchange. In other words, the SES signed an agreement in writing with the KLSE to facilitate the migration of Clob shares, the opening of accounts in Malaysia on the MCD and the transfer of their shares to these individual accounts so that individual Clob shareholders can trade them in accordance with the new Malaysian rules through Malaysian brokers. SES and CDP have done everything expected of them under this agreement and they have been waiting for the Malaysians to do their part. We have asked SES to clarify the legal position and their legal advice is that there is no ambiguity about the legal position of Clob shareholders. Clob investors are legal owners of their Malaysian shares and they cannot be deprived of their rights, including the rights to trade their shares on the KL Stock Exchange eventually, subject to the same rules that the KLSE imposes on foreign investors. So that is where the position is. Obviously it is an unresolved issue between Singapore and Malaysia, which will be discussed further at the appropriate channels and forums. As for Total Defence and whether we are paying enough attention to economic defence, I think the Member has a valid point. On the one hand, we want to encourage inter-dependence with our trading partners, particularly with our neighbours. Because through inter-dependence, it gives both sides an incentive to work for mutual benefit. On the other hand, we also have to reserve our position and have some fall-back position in case inter-dependence does not work, so that we have some means to do it and go it alone. We do this in many areas. The Stock Exchange is one where an issue has arisen, but there are also other areas. Water is a good example where inter-dependence is our preferred choice but, if necessary, we will not be left helpless. Finally, the question from Dr Toh See Kiat on competition for Nets and also Internet banking. As part of the liberalisation of our domestic banking market, MAS is studying foreign banks' access to front and back end infrastructure necessary to support multi-purpose stored value cards being issued by foreign institutions. We are studying this and when we announce our overall liberalisation package, this will be one of the items. Foreign banks are already allowed to compete freely in the Internet banking. We have no restrictions on foreign banks setting up websites to market their services and Citibank and StanChart, for example, among others, have their own websites already, which offer Internet bill payment services for retail and corporate customers through inter-bank Giro system and also provide credit card facilities for Internet merchants. So the banks already do some. Non-banks participate in Internet commerce either as merchants or infrastructure providers. Merchants, for example, FairPrice, National Computer Services, Singapore Press Holdings or Golden Village, have access to their present credit card and the cash card payment system. Non-bank infrastructure providers, which only provide back-end Internet payment processing are not regulated by MAS. They are not banks, so they are not allowed to issue stored value cards because these cards are really a form of deposits to the banks and we want to make quite sure that there is a good institution there, properly regulated, so the institution would not fold up, taking the value of the cards with them. We are not going to review this part of the policy because the security and financial risks of Internet payments are still not yet fully understood. But we are monitoring it closely, particularly international developments in this area, to make sure that if other countries have fresh developments in Internet commerce, our laws stay up to date.

Sir, may I have your permission to seek one clarification from the Deputy Prime Minister?

Yes, make it short.

It seems to me that Singaporeans who hold Malaysian shares now are being deprived of their right to trade on the market by the Malaysian authorities. How is the Government of Singapore going to help them? Or are we going to leave it as it is with no end to it?

The shares remain the shares of the Clob shareholders. As I have explained, there is an agreement between Clob and the KL Stock Exchange to make the arrangements for the shares to be traded. The Singapore Stock Exchange has done its part. We are now awaiting for the KL Stock Exchange to do their part. The Member would have noticed that when the Prime Minister met Prime Minister Mahathir in Hanoi in December, they talked about the package of issues to be discussed and resolved together as one bundle. Clob was one of the items.

Sir, earlier Mr Low Thia Khiang mentioned that if we were to compare the Singapore economy with the Internet stocks, then Singapore has no standard. Personally, I agree with what DPM said. It is not appropriate to compare a company with a national economy. This afternoon, I would like to touch on the topic of long term competitiveness because there is really a difference between a national economy and a company. A company basically goes into business to make money. When the business is good, the money is good, they move into that business sector to make money. When the situation changes, when the business is no good, the climate changes, they can get out of the business and move on to somewhere else. Many companies that were around 20 years ago are not around today. But in the case of a country, a country cannot be opportunistic, a country cannot go into business just because things are good and get out of business and say that these are no longer good. This is because, at the end of the day, the Singapore economy has to continue for many more years to come. Another difference is that in the case of a company, when it moves from one business to another business, it can always downsize the company and retrench all their workers. But in the case of a national economy, as we restructure, as we upgrade our economy, we would have to continue to live with the same work force, the younger ones and the older ones. As long as they are Singaporeans, we will have to travel the journey of economic progress together with them as one united team. In this regard, my concern is this: as we move into a knowledge-based economy in the future, we have to help as many Singaporeans as possible to upgrade and to be transformed into knowledge workers. Yesterday, I agreed fully with what the Minister mentioned, that the Singapore Government is doing a lot to upgrade and retrain the workers through the SDF, SRP, ETF and INTECH. But my concern is that whatever we are doing up till now may not be enough to help our Singaporean workforce to upgrade fast enough to keep in pace with this evolution towards a knowledge-based economy. If we are not able to upgrade our entire workforce fast enough, in five to ten years from now, many of the Singaporean workers are going to become a liability in our economy and a liability in our society. But if we are able to act fast enough and transform as many of them as possible into knowledge workers, they can turn into a national asset and become the source of driving force to push our economy further in a knowledge-based economy. This afternoon I just want to put up a very simple request. In the past, we granted pioneer status, for example, to companies for job creation when we had high unemployment. Later on, we granted pioneer status to companies for their capital investment when we moved into a capital-intensive economy. Later on, we granted pioneer status to companies based on total business spending (TBS) because we wanted to capitalise on the regional market. We want to encourage companies to set up OHQ. In the future, as we move into a knowledge-based economy, since one of our key challenges is to transform our workers into knowledge workers, can we not consider granting pioneer status and investment allowance to companies based on their investment in manpower redevelopment, in the transformation of workers into knowledge workers?

Sir, I would like to declare my interest in the trading business. Sir, traders big and small, have contributed significantly to our economy. Smaller traders have been successful in non-traditional markets and have developed interesting niche areas where OEM or big suppliers have not been able to get into. One of the issues is that such companies in Singapore usually trade or operate in risky but profitable second or third world countries. The banks treat such small businesses like small "sampans" in rough and choppy waters who are likely to be rocked or sunk. The banks prefer to support big companies that are like big boats or ships. They rather prefer to support an ocean liner or super tanker sized big business. Little do these banks realise that many of these sampans have very strong jet engines that allow them to steer out of troubled waters. They are flexible and can move fast. On the other hand, even the Titanic could not get out of trouble fast enough. During the recent financial crisis, banks have become very conservative. A lot of us have talked about this many times and many local companies, especially the smaller traders, have been badly hit by cash flow problems. Many have viable businesses and business opportunities but lack the credit facilities and cannot take advantage of the opportunities available to them. I would like to suggest that the Minister look into the following two areas: Firstly, a Government-funded trade financing scheme where the Government can provide an LEFS-equivalent scheme using traded goods as security, if necessary. Alternatively, the Government could arrange for some local and international banks to undertake a minimum of, say, 3% to 5% of their loan portfolio to such traders and, if loss is incurred, the banks can be allowed to write off such bad debts with a double tax deduction. 6.00 pm Secondly, currently, countries like Hong Kong provide tax exemption for third country trades done outside the country by local companies. Can Singapore provide a similar incentive so that we can encourage traders to remain in Singapore while they manage such third country trades from here? Sir, it has come to my attention that in the last two years, many traders who operated out of Singapore have decided to relocate to countries like Dubai and Hong Kong for a number of reasons: firstly, the cost of doing business in Singapore where our cost is between two and four times higher than these countries; secondly, the inability to raise funds in Singapore; and thirdly, the restrictive tax practices in Singapore. I hope we can reverse this move by doing more for traders. Sir, can I move on to my next cut?

Yes.

Many Members have spoken about the need to change our tax laws in this House for the last two days. We have to consider these changes to be competitive with tax practices of countries around the world, with whom we are now competing. In the past 30 years, the focus of our economy was largely to bring in foreign direct investments of mainly large multinational corporations and on an industrialisation programme that brought Singapore from an under-developed to an almost developed economy status. Today, as we look into the future, we know that we have to change the direction and the approach needed to bring our economy to the next stage of growth to sustain another 30 years of economic prosperity. Sir, I talked about the three areas in the Budget debate, and I believe that we should focus on these three, namely, promoting growth through globalisation and searching for new markets through either greenfield investments or through mergers and acquisitions in the region or around the world; secondly, to promote entrepreneurship or technopreneurship and a knowledge based economy; and thirdly, by encouraging a vibrant small and medium enterprises sector to emerge. To achieve these, our tax laws have to be revamped to be more future orientated. Today, our system tries to be very comprehensive so as to plug any loopholes, as Mr Heng Chiang Meng mentioned yesterday. In doing so, our laws become very restrictive just because we want to capture a handful of occurrences of companies trying to benefit from these loopholes. These restrictive rules then discourage and become obstacles for companies who genuinely need to grow and who can compete around the world. We should put in place rules that allow flexibility and facilitate the growth of these three areas that I have mentioned. Sir, I have a number of suggestions for the Ministry of Finance that will help in developing the areas of our economy that we have an excellent potential for growth. These suggestions include ideas to facilitate innovation and the entrepreneurial spirit, globalisation and the future growth of industries where we have core competencies. They are: (1) To promote entrepreneurship and to develop employee loyalty, can the capital gain from stock options be made tax exempt? (2) Similarly, many start-up companies emulating the examples in Taiwan are offering free shares, in fact, that are valued at par to employees, Can these too be tax exempt? (3) Some Members have talked about this. Currently income brought back from overseas operations is fully taxable, resulting in companies leaving their funds outside Singapore. Can we make it attractive for companies to bring these funds back for use locally? I suggest a tax equivalent to at least 50% or less of the current corporate tax to encourage companies to bring their funds back into Singapore which could then be used for further investments. Some revenue to the Government is better than zero revenue, in the case where income is left outside Singapore. (4) Group tax consolidation - where we allow the offsetting of losses made within the group of a company. This will help ease cash flow and will encourage regionalisation by breaking value chains of operations rather than by completely moving the whole operations out of Singapore. In the second case, we will actually have a loss to our economy where jobs will be lost and all the value activities happen outside the country. Similarly, we can encourage many more new ventures which typically are loss making at an early stage by allowing the following: (1) Double tax deduction for the cost of regionalisation or globalisation to encourage more companies to take advantage of the good opportunities available in the region. (2) Double tax deduction for cost of hiring from overseas to encourage foreign talent to be brought into Singapore who could then be used for their global operations in the future. (3) To exempt the value-added component from GST for contract manufacturers. Such businesses enjoy very small margins of around 2%-4%, I believe, and the 3% GST can make a big difference in pricing competitiveness if we compare them to similar companies in the region, like in Malaysia and Thailand. Sir, when you have to pay for GST upfront and you price your goods, you have to add the 3% in your pricing mechanism. (4) Can we extend the bonded warehouse concept to manufacturers, making them `bonded manufacturing sites'? This will help export orientated manufacturers. In this way, these companies will be exempted from GST and the benefits are two-fold. First of all, it helps to improve their cash flow because currently the time taken to claim GST results in funds not usable as working capital or for new investments. The amount can be quite substantial for large manufacturers. For example, an operation that does about $30 million of purchases in a month, will have about $1 million taken off the system, and this is a substantial amount that could be invested for other things. Secondly, it will encourage such manufacturers to buy locally without paying GST if they are bonded manufacturing sites. This, in turn, will help our local companies or distributors who now lose out to foreign suppliers who are the preferred sources for such contract manufacturers because of the GST payment. If they purchase locally, they have to add the 3% GST on their purchases. Such a concept exists in both Malaysia and Indonesia where they are called free trade zone or licensed manufacturing warehouses. I suggest we adopt the same approach for certain industries, especially the contract manufacturing industry. Finally, to give tax incentives to small venture capitalists that can help fuel our entrepreneurship drive. Current incentives are only for big funds and I suggest that we give tax breaks for smaller funds that are willing to locate in Singapore.

Sir, a few years ago, Government introduced tax provisions for property purchased within three years. If you sell the property, you have to pay tax. This was to check speculation in the property market. I think it was timely. But the time has come for the Minister to consider whether this arrangement should still exist. I would urge him to take away this legislative process or reduce it to less than 30%. I leave it to the Minister's discretion, Sir.

Sir, allow me to add on to Mr Singh's comments on GST. The administration of the Goods and Services Tax has been a challenge to cash flow management for many SMEs. This is particularly so for those who manufacture or trade a combination of domestic and imported inputs for export market. The different treatments frequently mean that such companies indirectly bear the cost of financing the GST payments before the eventual reconciliation. To illustrate, GST is paid for inputs and value-added whilst the offsetting comes only at the point of export. With sluggish demand, the time difference can sometimes stretch for months. Sir, with intensifying competition, margins are already being sliced very thin. The administration of GST can therefore become a huge burden and sometimes mean the difference between a small profit and a loss. Can the Minister therefore review and streamline the procedures for GST administration, especially for SMEs? Can a greater grace period be allowed for such cases so as to ease cash flow for companies, especially during this difficult period?

Sir, in October 1998, we amended the Companies Act extensively to bring changes to our company law in an attempt to keep it in line with developments of company law taking place elsewhere. In that exercise, we took the opportunity to, among other things, introduce the share buy-back scheme and to clarify the status of franchise for the purpose of section 107 of the Companies Act. The amendment in October was part of a series of four amendments in the last two years. These amendments have brought about piecemeal changes but would appear to fall short of an overhaul of our Companies Act which is long overdue in Singapore. The UK, Australia and New Zealand are among some of the jurisdictions that have undertaken an extensive overhaul of their company legislation. These jurisdictions appear to be ahead of us in company law reforms. For instance, the United Kingdom now allows companies to dispense with the obligation to provide the common seal. Similarly, in Australia, the government has in place the Corporate Law Economic Reform Programme (CLERP) which constantly examines the state of corporations law in Australia and makes proposals for reforms and refinements. Some of the recent proposals made by CLERP include small business fund raising reforms to reduce the level of disclosure requirement for capital raising by smaller enterprises and also the rationalisation of prospectus requirements and liability, especially with respect to small capital raising. It would appear that the reform in Australia has taken the direction of making it easier for the small and medium enterprises to raise limited funds. In Singapore, we are trying to establish ourselves as a financial centre in the region. It is imperative therefore that changes to the company law must at the same time be kept in tandem with our plans to promote the financial services in Singapore. The Government has agreed to adopt most of the recommendations made by the Finance Committee regarding the regulation of our securities industry. A consistent move in a similar direction is also necessary in the area of company law. For instance, the following areas may be considered for reform: (i) consideration of relaxing or removing the prohibition of companies from providing financial assistance in certain cases; (ii) simplifying the registration process; (iii) reviewing the capital maintenance rule; (iv) simplification of amalgamation of companies; (v) treatment of group companies; and (vi) a reduction of the need for court approvals for various corporate decisions. The Minister, in his reply to me in October, has indicated that the Ministry is engaging in a massive exercise in which the Companies Act will be amended over a period of time. Rather than carrying out piecemeal amendments, I would like to ask the Minister whether a comprehensive overhaul of the Companies Act may be carried out and, if so, whether this can be completed in the next few years, in order that the new Companies Act can take us well into the next millennium and help set the stage for us to be a leading financial centre in this region. Sir, can I continue?

Yes.

Sir, the 1998 amendment has clarified that franchises are excluded from the ambit of section 107 of the Companies Act. While this amendment seeks to clarify the definition of interest under section 107 of the Act, I submit that the amendment has not gone far enough to clarify the proper ambit of the section. The purpose of division 6 of the Companies Act of which section 107 is a part would appear to be to protect members of the public from being misled into participating in any interest; which for the purposes of the Act means any right to participate in any profits, assets or realisation of any financial or business undertaking or scheme, whether in Singapore or elsewhere. There is more in the definition but for the purposes of my remarks, this is just the gist of it. Section 113 of the Act mandates that if an investment scheme falls within the definition of interest under the Act and an offer is made to the public for subscription or purchase of that interest, the company making such an offer must issue a prospectus. If one looks at section 107, the definition of "interest" is very broad and is capable of a wide import. This means that there could potentially be a lot of financial arrangements which would require the issuance of a prospectus. As a result of the ambiguity of the section, we are not certain that some of the other investment schemes fall within the regulatory ambit of the Companies Act, and these would include, for instance, investment in real estate overseas, buying of time-share interest in overseas properties and participation in ostrich farming in Australia. As it turns out, real estate developers promoting foreign properties in Singapore do not appear to be required by the Act to issue any statement in relation to the developments. As a consequence, many Singaporeans have found out that they have made a lemon of their investments in overseas properties when they discovered that the properties that they bought were either not built or were shabbily constructed. Indeed, it also seems strange to me that we see regularly in newspapers, invitations to members of the public to participate in investments in ostrich eggs. Sir, there are many Singaporeans who do not know the difference between a turkey and an ostrich, or are they in a position to know the nature of the company they are investing in. On the other hand, even a well-established local company cannot begin to sell a share publicly in Singapore without having to comply with the prospectus requirement under the Act. This is indeed a serious anomaly and I would urge the Ministry to regularise this anomaly by seeking to regulate the various investment schemes that are now in place in Singapore. I would therefore like to ask the Minister for Finance whether more stringent measures will be imposed on those seeking to promote investment opportunities in Singapore which are at present, not regulated by the Companies Act or the other statutes.

We have a few seconds left. I think we will stop here. Thereupon Mr Deputy Speaker left the Chair of the Committee and took the Chair of the House.

Mr Deputy Speaker, Sir, I beg to report that the Committee of Supply has made progress on the Estimates of Expenditure for the financial year 1999/2000, and ask leave to sit again tomorrow.

So be it.

Resolved, "That Parliament do now adjourn." - [Dr Richard Hu Tsu Tau]. Adjourned accordingly at Fifteen minutes past Six o'clock pm.