Mr Speaker, Sir, I support the motion. A friend asked me: Why is the Government so preoccupied with ratings by various agencies? Why is it not concerned with the people, but so concerned about being Number One? It made me pause. Not to ponder over the question, but to ponder why the question was asked. There is an obvious lack of understanding! Why is the Government concerned about ratings? Government wants to know how rating agencies see us, because that is how investors see us. If rating agencies score us poorly, we will be out of favour with investors. A poor rating will mean it would be so much harder to attract investments to create new jobs, better paying jobs for Singaporeans. Government looks at the factors rating agencies use, to see where we are trailing others, so that we can take steps to improve - if those factors are important. Only then will we get the quality investments we want, for quality jobs for our workers. We have scored well in many ratings. The danger is we can be blinded by our own success, and fail to note how others are improving. When one who is Number One becomes complacent, others will overtake it. History is replete with examples. It happens to whole industrial sectors of countries. Just after the Second World War, the leading shipbuilding country was Britain. By the late 1960s, she was overtaken by Japan. Why? Because British shipbuilders did not recognise the greater efficiency of Japanese shipbuilding methods, and when they did, management was unable to get the support of unions for the changes they needed to make. It happens to companies more frequently. IBM was the undisputed Number One in computers. When the PC came on the scene, IBM thought it was a toy. When the PC business grew, IBM belatedly went into the PC business. Those familiar with the telecoms industry know how MCIWorldCom - a relative newcomer - now challenges AT&T for top ranking. This is why management gurus say that a company must start on a new growth curve before it reaches the top of its current one. So it is useful to know where we are. What strategies we adopt depends on where we are on the growth curve. This explains why we have to make changes, even when things seem to be going well, such as in the banking industry. But it is not easy. The attitude is: "If it ain't broke, don't fix it!" But if we do not start on new growth strategies, we will be left behind in the dustbins of history. Are some of our companies in danger of being overtaken? We are Number One in ship repair. The CEO of Jurong Shipyard, Mr K K Tan, told me recently that he had visited a shipyard in Shanghai, China. The orderliness of the shipyard impressed him greatly. Obviously the shipyard was efficient and well run. He asked his host where they had learnt such modern management methods. His host replied: "From you!" Mr Tan was taken aback! How was that possible? His host said: "Do you remember 10 years ago you gave a talk here on 5S? You told us about it, and we have applied it since then." That left an even deeper impression on Mr Tan. It shows how bright, dynamic and hungry Chinese can learn and catch up! So our shipyards need to restructure to stay ahead, and Mr Tan will certainly want to do business with China, where land and labour costs are much lower. SIA regularly wins accolades. Recently, one of Mr Charles Chong's constituents in Pasir Ris told him his fears by e-mail. He said that many countries stopped their clocks when they threw out their colonial masters, and have declined ever since. But we are in danger of having stopped our clocks in the 1980s. This constituent of his works for ICAO, and had recently visited China to examine their standards and procedures. He was impressed by how fast Chinese airlines have progressed. In the 1980s he thought it would take them 50 years to catch up with Singapore. He thinks they have caught up, a good system is in place. Only the lack of expertise in marketing and selling was holding them back to give us a run for our money. These two examples, I hope, are sufficient to prod us to change, whichever industry we are in, be it banking, insurance, telecoms, air transport, sea transport, retailing, healthcare, construction, ship repairing, chemicals and petrochemicals, or electronics. We operate in a global environment. The forces at work elsewhere are present here as well. It is impossible for us to be isolated and to shut out these competitive forces. Our own market is far too small. We have to trade with the world and so contend with the global forces at work. Almost all countries embrace the market economy. The critical question for us is: what kind of operating system is best suited for us? Which system will allow our companies to be competitive and, at the same time, maintain social harmony? Which variant of the market economy is the more efficient and bring about the most good? Is it the US model, or the European one? Some say the US model, because it is the most dynamic and competitive. The US has been able to create more jobs than Europe. So unemployment in the US is lower than in Europe. But critics point out that many jobs are low-paying ones. Wage disparity in the US is far wider than in Europe. In the US, wage disparity is translated into substantial differences in the quality of life, especially in housing and education of children. Richer Americans have, over the years, retreated into their suburban enclaves and their own private schools. The inner city is a mess. The homeless roam the streets at night. Crime rate is high: there has been a doubling of the adult population in prison since 1985. Now about 2.3% of the male adult population are behind bars. The US is large and diverse. Civil society is strong. The US can absorb the social discontent. While the US model is attractive, can a small country like Singapore withstand the excesses the model brings? Do we have a choice? In a global economy, the labour market is becoming one, we have to change our sense of place. But in every country, there is a spread of people with differing abilities. Low-skilled workers should not be priced out of the market. Which is better - a system that provides more people with the dignity of work, even low paying, or one where the unemployed or unemployable live on the backs of those who work? In Europe, wage disparity is far narrower, but the social security systems are struggling. Many people choose to remain unemployed, rather than take up jobs with lower pay. Immigrants from Central Europe and North Africa take up those lower value and lower pay jobs. Most recently, many jobs of lower value and lower pay have migrated to Central Europe. The unemployed are also voters, and they applied political pressure. In France, the unemployed, led by unions, marched for higher unemployment benefits. Japan had taken a different path, using under-employment to keep unemployment low. Large conglomerates also create businesses to "retire" their older executives. After eight years of recession, the system is proving unsustainable. Cracks and strains are showing. Unemployment was 4.1% last year and estimated to push past 5% this year. Japanese companies are chipping away at their seniority-based system, shifting towards performance-based systems, closer to the US model. This will strain social cohesiveness and a new social contract will have to be made. So which way should we go? What measure do we have to take to make us even more competitive so that we can create good-paying jobs for our workers? Obviously, we want to move into the knowledge-based economy. One aspect of it is Silicon Valley type start-ups. Another is developing our companies into regionally competitive, if not, globally competitive ones. What can we do to moderate the excesses of the competitive market economy? How can we strengthen our social safety net? Some people, both Singaporeans and foreigners, mistakenly think we are grossly lacking in not setting up a social safety net. But that is because they see the social safety net as the one modelled by the West. In the years ahead, as the harsh pace of globalisation becomes more manifest, there will be louder calls for the setting up of social safety nets. We need not oppose such calls. Rather, we should contribute to the debate by pointing out that there are different solutions. There should be a free market for ideas. Let me explain with an example. Some countries have unemployment benefits, pegged to the last-drawn pay. We do not - we only have provision for retrenchment benefits. Does it mean ours is deficient? Not necessarily. Typically, in most countries, home ownership is 60% of the population. Ours is 90%. Therefore, one major household expenditure - rents - is not an issue for most of our people. What we need are mortgage assistance schemes, like what we have in the downturn. For those who rent, why, we have rent vouchers and utility vouchers, an idea which some in the West are only now discussing! Of course, our CDCs dispense those vouchers. And these are not being paid for by social insurance contributions, direct cost to companies. There will be calls for a minimum wage. It is an icon of the conventional social safety net. Yes, we do not have a minimum wage. But we do have subsidised public housing. The subsidised public housing scheme is actually another way of delivering what the minimum wage concept tries to deliver. The minimum wage adopted in other countries aims to give workers at the lower end enough to pay for housing. Our scheme delivers the same, but does not add cost to the employer. So there should be no monopoly of effective ideas for social safety nets. We should also take care that we do not adopt new ideas that appear to be great, but whose consequences are not fully known, like social security as developed in Western Europe. When first implemented, everyone thought it was great. Now the system is breaking down and governments are voted out because they try to cut back benefits to balance budgets. Why did a great idea turn out to be a millstone on the necks of society? Because people did not appreciate social trends - people living longer and birth rates falling. Instead of each generation providing for themselves, it has become one generation living off the next! Companies also get into trouble with their employee benefits. Take pensions. IBM in the United States is overhauling its employee pension scheme. It says it must do so to stay competitive with rivals which have lower cost schemes. But it is creating an employee backlash. For the first time in its history, IBM may be unionised as unhappy workers turn to the union to redress their grievances! So we should learn from such experiences to know that at first sight the idea is great, it does not necessarily turn out to be great. Today, one idea is in fashion - employee stock option plans (ESOPs). Surveys show that American companies with stock option plans out-perform those that do not. These plans are touted as 'cost free' for the companies except for the dilutive effect on shareholders. Companies here are plunging into ESOP. I think ESOP is a great idea for new start-ups like those we want under our technopreneurship programme. It offers employees the attraction of becoming millionaires by sharing risks with the company founders. Beyond the start-up phase, I am not so sure. If employee numbers become very large and growth moderates, will there be enough shares to go round, to be effective as a motivator? For mature companies seeking the services of top-notch business leaders, ESOP is also a good idea. It is a form of risks-sharing. The top executives are rewarded if their actions do bring results, take the company on a new growth curve. But ESOPs widen the income gap. The US trade union federation AFL-CIO points out that thanks largely to share options, the average American chief executive now takes home 419 times the wage of the average factory worker. In 1980, he made 42 times as much. Other studies show that ESOPs inflate reported earnings because options are not treated as expenses, and mask employee earnings to show lower wage growth. Others point out that shareholder value may well be due to bull runs of the stock market rather than the actions of management and employees. Employees with stock options get a windfall, unless stock options are indexed to the stock market. So let us study ESOP carefully and not end up with a scheme that will weigh down company earnings in the future. We may have no choice but to follow what other people do. But let us learn from their experiences to avoid the problems they run into. The pace of change will be faster. Already the average length of service of employees with a company has shrunk. With the faster pace of change, this average length of service will shrink further. It will not be because of poor work attitudes and job hopping. It will be driven by shorter life cycles of products and services. Therefore, compensation schemes and provisions for employee-welfare will have to take this factor into account. Employability, not employment, is the key issue. It is fundamental to workers' welfare. Skills training must therefore be high on our national agenda. So I return to where I started - rating agencies. We lag behind others in skills and work attitude. This shows up in all indicators of rating agencies. They tell us our weaknesses, even if BERI rates our workforce as number one. Unless we correct these weaknesses, we cannot move up the new growth curve. There will not be the bright future we want for our people. This is why we have Manpower 21. It is a key blueprint for the welfare of our people. Let us act on it! Manpower 21 can take off only if all three social partners - unions, employers and Government - work in tandem and support these schemes and enlist the support of the people. Yes, all three social partners have indeed made significant contributions on what needs to be done to develop a globally competitive workforce to support our economic vision. It is time we did the selling, the mobilising. We have to do this in concert. In pushing for Manpower 21, we must not forget that there are significant numbers within our workforce who do not have basic education. So we need to give BEST another push. We must initiate other imaginative programmes that give such people hope that they too will benefit in a better Singapore we want to create. Then, we will move into the 21st century, entering the knowledge-based economy and building our world-class homes here. Sir, I support the motion. The Senior Parliamentary Secretary to the Minister for Foreign Affairs (Mr Zainul Abidin Rasheed): Mr Speaker, Sir, thank you for allowing me to join in the debate on the President's Address and I rise in support of the motion in the name of Mr Davinder Singh. At the risk of sounding bland and making the Straits Times political writer Chua Lee Hoong yawn, I must first confess that I agree with her that we can do with more c olour in our speeches, such as the one mentioned by her in Mr S Rajaratnam's Harvard Club Anniversary speech in 1981. However, I hope she and others would not be too disappointed if I shun the example of the happy pigs mentioned in Mr Rajaratnam's speech. I do not know whether that will make my comments more acceptable today or more halal, but I hope it would not lack the passion called for. Indeed, there are happier things to speak of too. If the President's Address was lacking in passion, as Lee Hoong said, it was definitely not because President S R Nathan lacks such a spirit. I know Mr President as one who reads widely and as a man with a strong passion for Singapore. When Mr Nathan was the Chairman of the Straits Times, he had at times wished that our journalists write better, not just with colour, but with commitment and passion. Passion can come in many different colours. And in different forms too. But what about substance? That was definitely aplenty in the Presidential Address. Similarly with the Addenda. What matters most is that the Singapore Government believes in bringing home the bacon, the more succulent the better it is. However, I am sure you would understand if the Muslim Singaporeans also ask for their fair share of halal providence. This is provided for in both the Presidential Address and the Addenda. In other words, lots of food for thought and more, if we do not belong to that class of pleasure seekers, who only believe in material well-being, to be arrived at without toil, sweat and tears as in Mr Rajaratnam's speech. In short, we Singaporeans believe in our people. Those few words almost wax lyrical. Like the passion in the Pledge and the song, "We the citizens of Singapore, pledge ourselves as one united people.". I will come back to that later. But first, Mr Speaker, Sir, allow me to focus on two areas which I think are critical as we prepare for our future. First, on education. The wealth of Singapore lies in our people - our values and our instincts, our courage and tenacity, our skills and competencies. So says the MOE Addendum. I could not agree more. Our success in the future depends on how well we prepare our people for the challenges ahead. Singapore has always placed a premium on education, and it is worth reiterating why we must continue to invest heavily in our young. That is how the MOE prefaced its role. Almost a cliche perhaps, but do not let that fool us, for the substance in that Addendum speaks volumes of the thinking and the mission MOE sets for the Ministry and for all of us Singaporeans. Mr Speaker, Sir, time does not permit me to belabour the points here but suffice to say that the same Minister also chaired the Singapore 21 Committee which presented us with a vision for a progressive and gracious Singapore, living in harmony with itself, the region and the world in the next century. Allow me, however, to highlight just one point in the Addendum which, to me, will bring about far-reaching impact and I quote, "We will be more involved in pre-school education, investing in curriculum design and teacher training, conducting research and tightening regulation. A pilot research will be conducted to ascertain the most effective way for MOE to work with pre-school centres to prepare children for school learning." Currently, pre-school education is not under the direct aegis of MOE, although the pre-school centres need to be registered with the Ministry. There is ample evidence to say that in preparing for our children's education, we should start from as early as possible. Some even say, pre-natal. I do not know the extent to which MOE would get "more involved", but I am sure that parents would be most happy to learn that the MOE's hand would be more visible in pre-school education. The MOE research should also look into how more of the Ministry's budget and/or Edusave funds could be disbursed for pre-school education. The PAP's Community Foundation (PCF) now runs classes for about 70% of the nursery, K1 and K2 classes for each cohort each year. The fees chargeable vary from $15 to $100 a month, and even more in the private ones. Surely, the quality will also vary. There is also an urgent need to do centralised recruitment, training and deployment of pre-school teachers. The MOE might want to consider either doing it themselves or to establish an independent agency to undertake that role. This will certainly reduce the headaches now faced by pre-school operators and help to control the quality of teaching at these centres.