Hansard, 2001-07-25

Under the provisions of clause 2(d) of Article 46 of the Constitution of the Republic of Singapore, the following Members have been granted permission to be or to remain absent from sittings of Parliament (or any Committee of Parliament to which they have been appointed) for the periods stated: NameFromTo (2001)(2001) Mr Ong Kian Min16 Jul21 Jul Mr Loh Meng See17 Jul19 Jul Mr Low Thia Khiang17 Jul23 Jul Mr Zulkifli Baharudin17 Jul27 Jul 31 Jul1 Aug Mr Leong Horn Kee20 Jul24 Jul Dr Ow Chin Hock22 Jul23 Jul Assoc Prof Koo Tsai Kee22 Jul25 Jul NameFromTo (2001)(2001) Mr Zainul Abidin Rasheed22 Jul27 Jul 30 Jul30 Jul Mr Peh Chin Hua23 Jul24 Jul Prof S Jayakumar23 Jul27 Jul Dr Ker Sin Tze23 Jul28 Jul Mr Davinder Singh 25 Jul25 Jul Mr K Shanmugam 25 Jul25 Jul RAdm Teo Chee Hean30 Jul31 Jul Mr Bernard Chen30 Jul3 Aug BG George Yong-Boon Yeo1 Aug3 Aug Mr Peter Chen14 Aug17 Aug TAN SOO KHOON Speaker Parliament of Singapore

Order. I have to inform the House that the Clerk of Parliament received a letter dated 24th July 2001 from the Deputy Registrar of the Supreme Court stating that the Court of Appeal has on 23rd July 2001 dismissed Mr J B Jeyaretnam's appeal against the Order of Bankruptcy made against him on 19th January 2001. I have sought the advice of the Attorney-General whether, in view of the decision of the Court of Appeal that the appeal be dismissed, the seat of the Non-Constituency Member of Parliament has become vacant with effect from 23rd July 2001 under Article 46(2)(e) of the Constitution of the Republic of Singapore. The Attorney-General has on 24th July 2001 given his advice which reads as follows: "I advise that the seat of Mr J B Jeyaretnam as a Non-Constituency Member of Parliament has become vacant by virtue of Article 46(2)(e) of the Constitution." I have to therefore inform hon. Members that the seat of Mr J B Jeyaretnam as a Non-Constituency Member of Parliament has become vacant with effect from 23rd July 2001.

asked the Deputy Prime Minister whether he will allow finance companies to assume a wider role if the result of bank mergers limits the access of the small and medium-sized enterprises to financial services.

Mr Speaker, Sir, finance companies are already active lenders to small and medium enterprises (SMEs). For the larger finance companies, a significant portion of their total loans are extended to SMEs. MAS has also given well-managed finance companies greater leeway to offer other services which will benefit all their customers, including SMEs. These include the issuing of corporate purchasing cards, and the granting of IPO financing and secured syndicated loans subject to conditions.

Mr Speaker, Sir, will the MAS consider allowing finance companies to assume a wider range of services such as corporate advisory and financial advisory services, something which the banks are undertaking at the moment but which they may not be inclined to extend to small and medium enterprises on account of the lack of economy of scale in respect of these enterprises?

Mr Speaker, Sir, we have not considered this. We will have to look at it very carefully because advisory services are different from lending. One is commercial banking where you assess credit risk; the other one is advisory service which is merchant banking where you have to judge the market and advise how to restructure a deal in order to bring it to market and find investors who are willing to invest in it. So I think I would be careful about that. As I have explained in this House previously, I do not believe that the banks will now neglect the SMEs because they have consolidated. The SMEs are an important part of their customer base and they will want to keep them.

asked the Minister for Communications and Information Technology if his Ministry will consider allowing private bus operators or a consortium of such operators to operate intra new towns feeder bus services on a throughout-the-day basis.

asked the Minister for Communications and Information Technology when his Ministry will complete the review on introducing private bus operators to further improve bus services.

Mr Speaker, Sir, may I have your permission to take Question Nos. 2 and 3 together?

Yes.

Sir, as I stated in the House a fortnight ago, my Ministry and PTC are keeping an open mind on the issue of enhancing competition. We will examine whether we should allow private operators to operate new feeder services in new towns, and if so, under what circumstances and conditions. The study will take several months, and PTC will announce the outcome when the study is completed.

May I ask the Minister whether the viewpoints of the commuters and the private bus operators will be solicited in his review?

Sir, we are in touch with the private bus operators and we would definitely take the views of the public into consideration in the context of the overall framework of the public transport system.

Can I ask the Minister whether he foresees there would be more private bus operators in the scene? In short, what I am asking the Minister is whether he foresees that there would be additional bus operators coming to the scene.

Sir, we will have to await the outcome of the study.

asked the Minister for National Development, for the period 1998-2000, (a) how many Housing and Development Board (HDB) retailers had (i) terminated their leases; (ii) requested for change of use of their shops and were approved; and (b) how does this change of use benefit residents.

Mr Speaker, Sir, HDB shop tenants can exit from the retail trade either by terminating their tenancy with HDB or by assigning their tenancy to another operator. As for shopkeepers who own their HDB shops, they can exit from the retail trade by selling their shops in the open market. Every year, about 5% of HDB shopkeepers exit from the retail trade through one of these means. Between 1998 and 2000, there were about 800 terminations, 1,200 assignments and 500 resale cases. HDB also allows shopkeepers to change the use of their shops, except in cases where the conversion is likely to cause disamenities to HDB residents. Between 1998 and 2000, HDB gave approval for 600 shop tenants and lessees to change the use of their shops. This figure suggests that on an annual basis, about 1% of HDB retailers change the use of their shops. A flexible change of use policy will enable HDB shopkeepers to respond more swiftly to the changing needs of HDB residents. Over time, this will create a vibrant commercial environment in HDB estates, which will result in a wider variety of goods and services at competitive prices. This will definitely benefit HDB residents.

Sir, may I ask the Minister whether or not HDB will allow the change of use to eating houses, and also whether HDB will control the tenant mix of the neighbourhood?

Sir, as far as changing of use to eating houses is concerned, as I have said earlier, the change of use will only be allowed if it does not cause disamenity to residents. In this particular case, HDB feels that change of use to an eating house will create more disturbance, more disamenity, more noise nuisance to the residents. Therefore, they will not allow this. But they will allow change of use to snack shops and take-away shops which will deal with take-away food. In so far as the second question is concerned, whether HDB will control the tenant mix, the answer is that in the case of new towns or new neighbourhood centres where the tenant mix has not yet settled, where the commercial environment has not yet settled, HDB will not allow a change in the tenant mix for the first three years. But thereafter, when the commercial environment has settled down, HDB will allow freely a change of use, subject of course to the conditions that were stated earlier.

asked the Minister for National Development whether he will reconsider the increase of rentals for HDB shopkeepers in view of the plight of the HDB retailers and the present economic downturn.

Mr Speaker, Sir, the increase in HDB shop rentals is part of an ongoing exercise since 1988 to equalise the rentals for similar shop premises so that all shopkeepers operate on a level-playing field. Over the years, a disparity in rent has arisen because some HDB shop tenants are old resettlement cases, paying highly subsidised rates while other tenants have obtained their premises by tender, paying market rents. To moderate the impact on tenants who have been paying subsidised rents, HDB staggered the rental adjustments towards prevailing market rate over four renewals, at 3-yearly intervals, in other words, over a 12-year period, starting from 1988. The implementation was also carried out in phases. Tenants who are renewing their tenancies for the 4th time this year were converted to the 3-year fixed tenancy in 1989. They had their tenancies renewed for the first time in 1992 and the second time in 1995. At each renewal, the rental increases were capped at 30% of existing rents. When the tenancies were renewed for the third time in 1998, the rents were raised to 75% of market rate. The final adjustments to market rents are taking place now, at the 4th renewal of their tenancies. Some rents have been increased, while others have been maintained or reduced. By moving all tenants gradually towards the appropriate market rates, HDB ensures that all shopkeepers compete on a level-playing field. This is only fair to all shopkeepers. However, recognising the present difficult economic conditions, HDB will be enhancing the rental rebates for all its commercial and industrial tenants across-the-board. The rebates will provide some relief to all HDB shop tenants, including those whose rents are being adjusted upwards towards market rate. The details of HDB's rebates will be in the package of measures to be announced by the Minister for Trade and Industry in his Ministerial Statement shortly.

Mr Speaker, Sir, I would like to declare that I am a lessee of an Sir, I would like to pose three questions to the Minister. May I ask the Minister whether the recent efforts to assist HDB shop retailers in their predicaments would be defeated by the adjustments of HDB rentals to the market rates? May I ask whether the market rates that are being used as benchmarks for the present rental adjustments reflect the prevailing economic climate? And also may I ask whether the present method of assessing the market rates, based on recent HDB lettings, is a fair practice? Because it has been known that many novice and enthusiastic new lessees always tender higher prices and be successful at such prices that do not conform to the prevailing rentals.

Sir, let me take the last question first which pertains to the method of assessing market rates. What are the so-called market rates, are they fair market rates - I think that is the thrust of the Member's question. What HDB does is that it appoints a panel of valuers, and these are private sector valuers, these are not HDB valuers, to assess the market rates based on, first, the rentals that have been tendered in the area, but also taking into account the specific location of the shop, the micro location of the shop, the orientation of the shop, the traffic of the shop, the size of the shop, and so on. So in this respect, the fair market rate that HDB uses to adjust the rentals is a result of professional judgement on the part of this panel of valuers. I think the Member would realise that valuation is not an exact science, there is a judgement involved. But that judgement is exercised by professionals and is exercised independent of HDB. HDB will then take that value and use it as a market benchmark rate. What happens if a tenant is not satisfied with that rate? He has recourse to several avenues of appeal. The first avenue of appeal is HDB itself. He can defer the signing of the tenancy agreement pending an appeal to HDB. HDB will then assess the merits of that appeal and decide accordingly. If HDB's decision on that appeal is still not satisfactory, the tenant has recourse to another avenue which is the Chief Valuer himself. The Chief Valuer is of course the Government's valuer and his judgement can be taken as an independent judgement, independent from the panel of professional valuers that was appointed by HDB. So these are the various avenues of appeal if the tenants are not satisfied. I turn now to the first question which the Member asked, which is whether these adjustments contradict or run counter to the package of measures. First of all, let me reiterate again the purpose of this adjustment. We need to, first of all, get the cost structure correct for HDB shops. What do I mean by this? If, for example, you have two shops side by side, one paying much lower rental than the other, then obviously it is going to be very difficult for competition to be fair because the cost for one shop is much lower than the other. And this was the situation when we had in many places a lot of resettlement cases. If the Member will recall, resettlement cases were given very, very highly subsidised rentals in the early days. And we now have a situation where we have got people coming in and tendering in the open market. And we have a third situation where there are shops which are now being sold and the new landlords of these shops are now letting out their shop premises. We have got all these different types of shops and the shop tenants in each of these shops are paying different rentals. Obviously, this is not going to make for a very fair competitive environment in the neighbourhood estate. And this is reason why, in 1988, 12 years ago, HDB decided that it was time to gradually remove this anomaly and disparity in rent, so that everybody can start off on the same basis, and that is the only way for the shopkeepers to compete on an equal basis and to decide whether they are able to do that kind of business in that area or not. And that exercise has been going on, as I indicated earlier, for the last 12 years. Many of those shops had their rentals adjusted. All of them had their rentals adjusted upwards in the course of the last 12 years at varying rates of increase. The last increase was in 1998. In fact, during the last crisis, at the third renewal, rentals were increased, but up to 75%. At that time, when they were renewed for the third time, tenants knew that, at the next renewal, rentals would go up to market. Of course, since 1998, the prevailing market rents have also come down. So when we are talking about adjusting to market, we are actually not adjusting the last 25%, but we are actually adjusting less than that in most cases. There are some cases where the adjustments are slightly higher, but most of the time, the adjustments should be slightly less. And the purpose of all this is really to make sure the cost structure is correct, that the operating environment is fair to all. Having done that, we look at the situation at the moment and we have decided, after a review, that we will do an adjustment across-the-board. And this would benefit everybody, not just those whose rentals have been adjusted upwards, but also those rentals which have been maintained or which have been brought down to market. So everybody still continues to operate on a level playing field. And I think this is the best way to ensure that the shopkeepers are able to compete and compete fairly, and they are able to make a considered decision whether the costs that they are incurring allow them to do the kind of business they want to do. The package of measures that we have announced recently complements this in the sense that for those who find that they are not able to continue to do business at these fair market rentals, there are various options open to them: (1) They can sublet their shop. They are allowed to sublet their shop, either half or, if they wish to, they can assign the whole shop to somebody else. (2) They can change their trade. If they feel that this particular business is not doing well, they can decide to change the trade to something else, or they can assign it to somebody else to change their trade. (3) They can also decide that they may want to exit the business completely, take advantage of the voluntary retirement scheme (VRS) that I announced in Parliament during the last Budget, take an ex-gratia payment of $48,000, and look for an alternative means of livelihood. MOM has put in place schemes to assist these shopkeepers who do decide to take the VRS to look for alternative jobs, or to go for upgrading or retraining. NTUC has also indicated that they are prepared to bring them into a franchise scheme. So there are various alternatives if shopkeepers are not able to cope with the rentals that have been set for them. But in the first place, I think we ought to make the rentals fair across-the-board for everybody, and then we decide what are the assistance schemes that we can put in place if somebody is not able to cope, and that is what HDB has done.

Sir, the Minister did not answer my second question whether the market rates that have been used as a benchmark for the recent rental adjustment reflect the present economic climate.

The market rates are set on a regular basis. Every year, the market rates are set. And looking at the trend of the market rates that I have seen, it went up from 1995, it peaked around 1996/97 and it has started coming down, and today, the posted market rates are about 20% below the peak which is similar to what I see in the private sector market. So to that extent, I would say, yes, the present current market rates are reflective of the current economic conditions. But that is on a general basis. If there are any complaints about market rates not being fair, the Member should bring them to my attention and I will look at it on a specific basis. Because as I said earlier, market rates do vary from location to location and they do vary even within one location, from floor to floor, from direction to direction, and so on.

Mr Speaker, Sir, those who have tendered or bought shop units would be aware of the competition and of the rental paid by the competition. Is it therefore necessary or even fair for the HDB to interfere with market forces and adjust upwards the competition cost?

Sir, the HDB's adjustment to market policy has been known. As I said, it has been in existence since 1988. So I presume that those who have tendered would also be aware that HDB is actually undertaking this exercise and that rentals will be adjusted gradually to market for its competition.

Sir, may I ask the Minister whether our present policy jeopardises struggling HDB retailers who cannot afford higher rentals by forcing them out of business and depriving them of their livelihood? Could the Minister consider readjusting our policy to better cater to the demands and needs of the day?

That is precisely what we are doing, to try and better cater to the demands and needs of the day. If the shopkeeper finds that he is unable to cope with the rental increases, as I said earlier, there are other avenues for him to continue to earn a living, including subletting his shop, and having sublet his shop, taking that revenue to defray part of the cost of his shop, or assigning the shop to somebody else and still being able to earn some income or, alternatively, exiting from the retail trade altogether. But to subsidise and to continue to subsidise, as the Member is suggesting, some of these shops in order to keep them in business is, I think, not a correct approach for HDB to take.

Sir, I have a question on the valuation. I would like to ask the Minister how regularly the valuation is done. And in this round of increases that we did, when was the valuation done and, also, is the valuation done on a collective basis, or is there an opportunity to value every shophouse according to its location, type of renovation that may have been done, type of trade that it has been doing, and that perhaps will be a better way of judging the value?

Rental reviews and valuation are done on a regular basis. It is being done now on an annual basis. Reviews on a location by location basis are done, but they are staggered. There is a programme whereby rental reviews are done on a locational basis. In the review of the rents, the professional valuers will look at the general location, specific address of the shop, they look at the direction and what the tendered rents have been. They do not just look at the highest rental, they also look at the range of tendered rentals in order to make sure that there are no exceptionally high rentals, as the Member mentioned just now. Is it possible that, in some cases, rentals are exceptionally high because somebody wants a shop very badly? I am told that the valuers also look at such exceptional circumstances, and then they finally come to a judgement as to what is a fair market rental. It is not unexpected that there is a dispute between what the tenant should pay, or what he is prepared to pay, and what the HDB says he should pay. When such disputes give rise to appeals, the appeals would then be adjudged accordingly. Each appeal is looked at seriously, and if there is any cause for revision of that rental for that specific shop, it will be done.

Sir, may I ask the Minister whether the valuation also takes into account the different types of business? For example, I understand that childcare centres operated by private operators have been subjected to rental increases also in HDB estates?

I am not familiar with the particular example that the Member mentioned. If he has any further details, I will be happy to look into that.

Mr Speaker, Sir, I am just wondering whether the Minister's answer just now that, because the tenderer is aware that existing shopkeepers' rentals will be adjusted upwards, it would therefore create an infinite loop. They would be encouraged to tender higher and therefore, in the longer term, existing shopkeepers' rentals will have to be increased to match market rates and new tenderers will tender even higher. I am just wondering whether there is a need to review this approach.

Sir, I am not a HDB tenderer. I presume that anybody who wants to tender for a HDB shop must look into all the factors involved, not just the fact that we are going to adjust rentals. He must also look at the business that he is in, the kind of traffic that is generated by that shop, and a myriad host of many other things. Whether this particular factor alone will give rise to tender prices spiralling upwards, I really do not know. The fact is that they know that we are adjusting everything to market, they know that there is a certain market rental, and then it is up to them to decide how much they want to tender.

Sir, would the Minister extend the voluntary retirement scheme to all shopkeepers in the older housing estates?

Sir, we have identified a number of areas where we think the voluntary retirement scheme would be of immediate interest, and these are mainly in the older housing estates. There is a pilot voluntary retirement scheme which has just been implemented, and we are awaiting the response from that voluntary retirement scheme. If the hon. Member would like to suggest any other area that we could apply that voluntary retirement scheme, I would be happy to consider.

asked the Minister for National Development whether he will consider releasing more public sector work to the private sector instead of giving the work directly to Government corporatised companies as the construction industry has yet to recover from the 1997 economic crisis.

Mr Speaker, Sir, in asking Question No. 6, I wish to declare that I am an architect in private practice.

Mr Speaker, Sir, the Public Works Department (PWD) was corporatised in 1999 as part of the Government's efforts to progressively devolve its non-policy and non-regulatory functions to the private sector. This would benefit the private sector in the long term. To effect the corporatisation, the Government granted the corporatised PWD a moratorium period of five years starting from 1st April 1999. During this period, PWDCorp Pte Ltd is to continue with architectural and engineering consultancy, project management, and construction supervision for the construction and engineering projects of Ministries. This is to ensure a smooth transition process in the corporatisation. However, projects of $20 million or below are opened for competition among the private sector consultants. The value of work assigned to PWDCorp during the moratorium period is not more than what was already with the PWD before its corporatisation. PWDCorp does not perform any construction works. The private sector has in fact benefited as a result of the PWD corporatisation. Before its corporatisation, PWD was handling all Ministry projects. Since corporatisation, the Government has directly awarded more than $450 million worth of projects each year to other private sector consultants. Nearly half of these are sizeable projects worth between $12 million and $20 million in value each.

Sir, I believe the Minister of State mentioned $450 million worth of contracts. Could I know how much this is as a percentage of the works given out by the Government?

Sir, I do not have the figures with me, but let me just do a mental calculation. For $450 million, if you exclude the big projects, eg, reclamation and so on, I would say maybe in the region of 10%-20%. It is just a guess.

Sir, I appreciate the Minister of State doing his back-of-envelope work. 10%-20%, if it excludes the very large projects like reclamation, seems a little low, if I may say. Is there any inclination to push it up higher? Is the private sector up to the job? Historically, the Government has had reasons to doubt the private sector. But for capacity growth in this sector, could this not be fostered?

Sir, may I remind the hon. Member that PWD was formerly part of the Government and all the jobs were given to PWD. This moratorium is basically to ensure a smooth transition. PWD is now in the private sector and, therefore, it has to compete with the private sector for all the jobs, although there is a 5-year moratorium. Once the moratorium is over, they will have to compete on an equal footing. So, because it was only corporatised in 1999, I am sure, over time, the percentage and value will increase.

Sir, since PWD is now privatised and in the private sector, can the Minister of State tell us how much private-sector work is PWD doing?

Sir, this is a related question. If I know the exact figure, I would have been able to give the percentage to the hon. Member. However, now that he has jogged my memory, PWD is doing a lot of Government work, eg, schools, even the Terminal 3 design and so on, but the huge projects, eg, MRT excavation, all these are not done by PWD. I will have to check whether I am right, but I believe it is actually more than 10%-20%, probably even close to 50%. We are talking only of PWD, not Government, because Mr Tay asked about Government projects. Government projects include many other things. If my memory serves me right, it is probably about 50%. In that case, PWD would handle about $500-$600 million, and the private sector handles the other 50%.

Mr Speaker, Sir, in view of the prolonged recession in the construction industry, would the Government consider reviewing the moratorium?

Sir, we have forwarded the feedback to the Ministry of Finance and I believe they are currently reviewing it.

asked the Minister for Manpower whether there are programmes and schemes in place to help executives and professionals who lose their jobs during the current economic downturn.

Mr Speaker, Sir, my Ministry has focused many of our employment assistance and training efforts at lower skilled workers. There are good reasons for doing so. According to our statistics and information, lower skilled workers are not only more vulnerable to retrenchments, but also find it more difficult to seek re-employment. If we do not help these workers upgrade their skills, many of them could also face the prospect of long term structural unemployment even after the economy and the labour market recover. This is not to say that we have forgotten about executives and professionals. They need help of a different kind. We offer employment assistance to displaced executives and professionals through our Career Centre, known as CareerLink@mom. The centre provides information on labour market trends, advice on job opportunities and training opportunities, and employment assistance for the unemployed. It helps all categories of job seekers, including executives and professionals, as long as they are Singapore citizens. The centre also works with organisations like the Singapore National Employers Federation and the Singapore Human Resource Institute to reach out to professionals and executives should they require employment assistance. Currently, 11% of the visitors to the centre are diploma or degree holders. And 23% of jobs in the CareerLink job bank are for professionals, managers and executives. Sir, last month, my Ministry also revamped our Employment Town website (http://www.employmenttown.gov.sg) so as to provide some of CareerLink's services over the Internet, online. The revamped Employment Town will help Internet-savvy executives and professionals in their search for jobs and learning opportunities, without them having to physically visit the career centre at my Ministry. The Ministry's job bank is also available on Employment Town. To expand the available job options, the website also provides links to other job banks, recruiters and employment agencies. It also provides information on training incentives and training providers. Sir, on the issue of retraining, executives and professionals are mostly degree and diploma holders who do not lack basic skills. Our training programmes have to be more focused. For example, my Ministry has worked with the Infocomm Development Authority (IDA) on two Strategic Manpower Conversion Programmes (SMCP) to help executives and professionals make a career transition to the Infocomm sector. This programme, which was launched last year, provides funding support for employers who send existing employees or newly recruited staff for conversion training in information technology. The programme also has a Facilitator Scheme for individuals who have not been able to secure employment yet and hence are not able to get employers' funding support. Facilitators will assess the suitability of these candidates and register them for the conversion course. They will also help to place trainees with suitable employers upon completion of the course. To date, some 250 mid-career executives have benefited from the programme. Sir, in view of the economic situation, my Ministry hopes to work with economic agencies to roll out the scheme in other sectors and to expand the training numbers. A total of $40 million has been set aside under the Manpower Development Assistance Scheme (MDAS) for this programme. I must emphasise, however, that the success of the programme will depend ultimately on the expectations of the mid-career trainees as well as employers' acceptance of the concept of "mid-career conversion." I would like to urge all employers to support the concept and provide opportunities for our mid-career executives and professionals to make such a career transition. Mr Speaker, Sir, given the economic and labour market conditions, my Ministry recognises that there would be more displacements among workers, including executives and professionals. We will work with our partners to expand existing programmes and introduce new programmes to help our workers in the months ahead.

Sir, it is very heartening to hear the programmes that the Minister has just announced. But in view of the commitment, in most cases very heavy commitment, of most mid-level executives, I wonder whether the Minister would consider some form of insurance scheme with a view to perhaps legislating it, such as what is being done in many European countries, the idea here being to help executives and professionals to tide over a reasonable period of time in between jobs when they get laid off, such as in the current downturn.

We are going to encounter such ups and downs in our economic growth from time to time. We should not deviate from some fundamental positions just because we run into an occasional hiccup. We have had such a downturn before: in the mid-70s, in 1985/86 and, more recently, in 1998. We have not introduced unemployment insurance, if that is the concept that the hon. Member is suggesting, because we believe that that would just further decrease our competitiveness. Introducing unemployment insurance would be an additional cost factor for employers. We have always believed that our workers should save for the rainy day. We help them to save through the CPF mechanism, which will enable them to meet their mortgage commitments besides saving for old age. Over and above the CPF, many workers are also able to put aside additional savings of their own, particularly when we are talking about executives and professionals. I would like to remind the hon. Member that CPF contribution is capped at a ceiling of $6,000 of the salary. Income above $6,000 is not subject to CPF contribution at all. Therefore, there is tremendous opportunity for people in this category - the executives and professionals earning more than $6,000 - to put aside additional savings on their own so that they are better prepared for any sudden ups and downs in the economy. I think we should not, just because of this downturn, unscramble some fundamental principles and launch into new directions which may, in fact, have very long-term implications and may well affect our overall competitiveness in the future and make it even more difficult for us to turn the economy around.

asked the Minister for Manpower if he will give an indication of the number of middle-aged workers aged 45 years who are able to find employment after having gone through some form of training and retraining to upgrade themselves.

Sir, the Skills Redevelopment Programme (SRP) is the Ministry's main programme to enhance the skills and employability of our lower skilled workers. Under the Skills Redevelopment Programme, enhanced financial incentives are provided for workers aged 40 and above. This is to encourage employers to equip older workers with certifiable skills that will enhance their employability. Individuals, including unemployed workers, can benefit from the SRP incentives through the SRP Surrogate Employer Scheme run by NTUC and the self-help groups. The SRP has shown encouraging results. As of end June this year, close to 54,000 training places have been achieved. This includes about 8,300 individuals who had enrolled in SRP training through the Surrogate Employer Scheme. There is good representation of older workers. Some 45% of SRP trainees are aged 40 and above. The Member has asked for an indication of the number of middle-aged workers who are able to find jobs after retraining. My Ministry and the NTUC initiated a survey last year. About 75% of workers who took up full-time SRP training after being retrenched were able to secure re-employment within three to six months after their training. When asked if SRP training had equipped them with relevant skills for their new jobs, close to 60% agreed or strongly agreed that it had done so. Mendaki, one of our SRP's Surrogate Employers, conducted a similar survey recently among the retrenched workers whom they had sent for full-time SRP training. All the respondents received job offers after completing the SRP courses. 70% of those who had undergone the programme were re-employed within three months after training. Close to 80% who were employed during the survey were also earning between $1,000 and $1,500 a month. Most importantly, 78% of all respondents said that the SRP course had been useful in helping them to gain employment. Sir, I would also like to add that the SRP has not only benefited retrenched workers or the unemployed. It has also benefited employers and in-employment trainees, in other words, workers who are still employed and have a job. According to the same survey commissioned by my Ministry and NTUC, 70% of employers reported that workers who underwent the SRP training had become more productive. 75% of workers who had undergone in-employment training indicated that they were more confident of handling greater job responsibilities and more complex tasks after the training. These results are an indication of the positive impact of the Skills Redevelopment Programme training on enhancing the skills of our older and less educated workers. With the economic downturn, we will intensify our efforts to deepen and broaden the programme, so that those who are affected by the downturn will be able to benefit from the programme.

Sir, will the Ministry consider actively helping these workers who have undergone SRP training? I am speaking of the 30% who have not been able to find employment despite having gone through SRP training. Essentially, can the Ministry set up a bureau to actively seek job placements for them upon completion of such training so as to achieve 100% employment upon taking up training?

My Ministry would certainly do that. In fact, we are already doing so by helping people through our CareerLink@mom. This would include helping SRP trainees to find suitable employment upon completion of their training.

Sir, I would like to know whether we are on target to achieve the objective of training 100,000 workers in five years.

If we can hit about 28,000-30,000 participants in the SRP programme for each year for the next two years, we should be able to hit our target of 100,000.

asked the Minister for Manpower, besides the Skill Redevelopment Programme, whether the Ministry has other plans to help older workers to improve their job prospects.

Sir, my Ministry is aware that older workers with lower skills face greater difficulties seeking re-employment. Hence, our skill upgrading programmes, as I explained earlier on, offer enhanced support and special incentives to the older workers. Besides the Skills Redevelopment Programme, we have the National Skills Recognition System (NSRS) and other initiatives funded by the Government to help older and less educated workers. To facilitate skills upgrading for older workers who do not possess formal education, we introduced the National Skills Recognition System in September last year. This is an industry-driven framework to, firstly, develop and review standards for job-specific skills and, secondly, to accord recognition for standards achieved through national certification. There is no entry educational requirement for the National Skills Recognition System courses. As a result, older workers without formal education can achieve certified National Skills Recognition System standards that are recognised by the industry. Industries where NSRS training has been implemented include the hotel, marine, cleaning and call centre industries. We have also allocated resources to help older and lower skilled workers acquire critical enabling skills which will enhance their employability. We will also be introducing a new programme called the "People for Jobs" Traineeship Programme to help older and lower skilled workers make the transition to new economic sectors. The Minister for Trade and Industry's statement on the off-Budget measures will have more to say on these programmes.

Sir, does the Ministry have any plans to further enhance job consultancy or employment assistance schemes for the older workers?

Sir, the answer is yes. We will look at every possible way to provide better job assistance, especially to the older workers. As I have explained at the last Parliament sitting, we are even offering counselling services at our CareerLink@mom. There are group sessions, like workshop sessions, or even one-to-one counselling sessions for some of the older workers who need special assistance. We already have a mechanism to offer them this special counselling to help them to look for new employment.

Sir, I would like to ask the Minister whether his Ministry is doing anything to convince employers who are still resentful of recruiting older workers.

Sir, through our contacts with the Singapore National Employers Federation, we are constantly promoting this message that employers should not rule out the option of employing older or mid-career workers. As you can see from the survey results which I gave just now, in fact, employers do recognise the benefits of putting their employees or new recruits through the Skills Redevelopment Training programmes. Increasingly, as more and more employers recognise the benefits of such skills training programmes and that, in fact, an older worker can make an equally good contribution to the company's effort, I am sure there will be more opportunities opening up for the older workers. But it has got to be a two-way effort, that is, the older workers have to make that extra effort to upgrade their skills so that they can continue to make a contribution to help the company to compete and, on the other hand, we will continue to promote the benefits of employing older workers.

Sir, I would like to ask the Minister if he knows what the reasons are for the employers' reluctance to employ older workers and what can the older workers do to change the perception that employers may have of them of not being suitable for their work.

There are many reasons why some employers are reluctant to employ older workers. One of the more commonly cited reasons is the lack of skills by the older workers, who are less able to do the job that an employer has in the company. This is an area that we can tackle and we are determined to tackle this through a wide variety of training programmes. But there are other more market reasons why some employers prefer a younger worker for a certain type of work. In some cases, we also have older workers who are less reluctant to take on the job. For instance, we have employers in the food manufacturing industry crying out for workers and they are prepared to take older workers, but older workers are not prepared to take the job because they are required to work on a 12-hour shift and to be in their duty stations for a fairly long period of time during their working hours. There are many reasons and we will have to overcome them over a period of time by constantly educating employers and, at the same time, upgrading the capability of our older workers so that they are in a better position to take on these jobs.

Sir, discrimination against older workers seems to be rather widespread. My experience is also similar to the other MPs. I have heard of complaints of people who are 40 years old and above who find it difficult to get a job. Sir, I would like to ask the Minister whether he is willing to legislate against discrimination against older workers.

Sir, as I have explained earlier on, it is not a question of discrimination that some older workers encounter greater difficulties getting a job, in the sense that employers have ruled them out purely on age alone. There may be some companies that have done that, in which case obviously, they are missing out on opportunities to recruit workers that can help them. On the other hand, there are many situations where the older workers are not given the job simply because of a mismatch and this mismatch, as I explained earlier, can happen from both point of view. The employer may have an expectation of a certain level of skills which the older workers may not have, or the older workers may have certain expectations of the working environment that the employers are not able to provide. So legislation will not cure this problem. I think we better stay with a more flexible labour market where we can allow market forces to operate and employers can recruit the people who can contribute to the company. As a Government, we will come in to help all those older workers who are facing greater difficulties by giving them extra assistance to help them to acquire the skills that are needed as the economy is restructured, as jobs become more demanding in terms of the skills content and technical capabilities that are required. In other words, we will try to make our older workers more employable.

Would the Minister consider some incentive schemes to encourage employers to employ older workers, especially those who have picked up some form of skills?

Sir, we have already done so in the Skills Redevelopment Programme by paying to the employer who sends an older worker above the age of 40 years for training 100% of his training cost, instead of 80%, for a younger worker. We are also prepared to pay a higher level of absentee payroll subsidy to the employers. Further enhancement to the existing incentives will be announced by my colleague, the Minister for Trade and Industry.

asked the Minister for National Development, in light of the recent fire of some workers' quarters in Jurong which killed three foreign workers, whether the Ministry has set out guidelines on the safety and minimum standards for the accommodation of workers in the various industries.

Mr Speaker Sir, temporary buildings intended for occupation, including workers' quarters, have to be erected in compliance with the various statutory safety and health requirements. Under the Building Control (Temporary Building) Regulations, such temporary buildings have to be designed by a professional engineer and constructed under his supervision to ensure structural safety. The Regulations also stipulate requirements on structural safety, room height, ventilation, staircase width and lightning protection for such buildings. In addition, the Fire Safety Bureau (FSB) under the Ministry of Home Affairs imposes requirements to ensure fire safety. The Ministry of the Environment also has requirements to ensure environmental health.

Sir, can I ask the Minister whether he has any clue on how the recent spate of fires happened?

Sir, the Police and the Fire Safety Bureau are investigating. So it is premature to say anything about this.

Sir, could I ask the Minister of State to reveal the number of actions that has been taken against employers who have provided unsafe and unhygienic accommodation over the last one year?

Sir, on average, we receive about 30 complaints on unauthorised workers' quarters each month. Currently, we have about 200 cases on hand. They have either been served with enforcement notice with grace period granted or they are under surveillance. In the last 15 months, we have charged 15 cases in court. Let me clarify that these are mostly cases that involve shophouses, residential apartments and even landed housing where they house these workers illegally.

Sir, can I ask the Minister of State, in view of the prolonged recession in the construction industry, whether the Ministry will consider regularising the operation of these workers' quarters, so that they will continue to provide low-cost accommodation for foreign workers?

Sir, let me inform the Member that the Government allows workers' quarters to be built on construction sites, provided they get a professional engineer or a QP to design, plan and to do all the necessary calculations and supervision of the construction of these workers' quarters. This is one area where construction companies can minimise their cost. The Government has also allocated sites for construction of workers' dormitories. All these measures will perhaps help allay the concern expressed by the Member.

What about big pieces of unused private land? Are they allowed to provide such facilities?

Sir, it depends on the location of that piece of land. URA has to take land use and also the impact on the surroundings into consideration before planning approval can be given.

Sir, can I ask the Minister of State, in the light of the fact that many of these fires and unsafe incidents happened at illegal workers' quarters, whether the Ministry could work with the Ministry of Manpower to get the addresses, especially where these workers are housed, and see whether they are housed in proper quarters and whether they are housed in vacant land, so that the Ministry will have an idea where these workers are actually staying, and it will enhance enforcement action?

Sir, I will take up with the Ministry of Manpower and see whether the suggestion can be adopted. Let me also say that at the moment, the Ministry of Manpower requires employers to provide proper accommodation to the workers. In fact, they have to furnish a $5,000 security bond. And if they fail to provide proper accommodation, the bond can be forfeited. As for his suggestion, I will ask the relevant Ministry to look into it.

Sir, for enforcement purposes, would it be possible for one single agency to look into hygiene, fire safety and living condition standards? I know that when an application is made in the first instance, many departments are involved. But for enforcement purposes, can one single agency do the job to ensure that the standards are maintained strictly?

Sir, under the current arrangement, the different agencies enforce the regulations separately. First of all, if we are talking about land use, the land use approval must be given by URA. And if we are talking about building plans, then BCA will have to approve, and the normal procedure is to include fire safety and health requirements The Member suggests that we have one single agency to look into the problem of providing accommodation to foreign workers. I think we can look into the feasibility of his suggestion. Maybe we can form a ZIP team to look into this problem.

asked the Minister for Education whether efforts by his Ministry to increase the intake of teachers over a relatively short period of time have resulted in his Ministry compromising the quality and standard of teaching staff in schools.

Mr Speaker, Sir, recruitment of teachers has improved in the last few years and I am glad to report to the House that the number recruited has increased. There was a step increase in recruitment in 1996, following a major revision to the Education Scheme of Service. Recruitment increased from the level of 1,000 per year prior to 1996, to an average of 1,950 from 1996 to 1998, approximately double. During the economic crisis in 1999, my Ministry took the opportunity to increase recruitment resulting in an exceptionally large intake of 3,325 trainee teachers that year. That means more than three times what we have been recruiting per year prior to 1996. The increased recruitment over these last few years has largely been due to the improved scheme of service for the Education Service, and the relative attractiveness of teaching compared to other careers during the economic downturn. Recruitment has settled at the level of around 2,250 per year in the last two years. This is the level which my Ministry would be comfortable with to maintain the staffing level of the teaching force which is now about 24,000 strong. The Ministry has maintained the same criteria and standards for recruitment throughout this period. We have continued to target our teacher recruitment at the top one-third of each Primary One cohort, which will include graduates, school leavers with good `A' level results, and the top band of Polytechnic Diploma graduates. Besides satisfying our shortlisting criteria, all applicants to the Education Service are interviewed by a panel comprising senior educationists, very often senior principals. The interview panel assesses candidates not only on their academic qualifications alone but also on their interest in teaching, and personal and leadership qualities that will enable them to be good teachers. While they are in the National Institute of Education undergoing training, trainee teachers are also assessed for their aptitude and attitude towards teaching. I would just like to cite one statistic to show how the new teachers that we are recruiting are better prepared. About 63% of all new teachers recruited from 1996 to 2000 were graduates or were enrolled into the National Institute of Education for degree programmes. As a result of the greater number of graduates recruited, the overall percentage of graduates in the teaching force has increased from 40.9% in 1996 to 55.4% in 2000, and we expect the proportion to continue to rise. I would like to assure Mr Sin that the Ministry will continue to uphold the high standards in recruiting good teachers for our schools.

Sir, will the Minister be able to give me an indication of the number of complaints made by parents against the quality of teachers in schools over the years, and whether this number has gone down or has remained the same?

Sir, I am not able to give Mr Sin statistics on this, because complaints can be defined in many different ways. So we do not keep statistics of this nature. My sense is that, yes, parents do take a greater interest today in the education of their children, and they do come into contact with the teachers more often to discuss about their children. I think this is something positive and to be welcomed, and I would encourage both parents and teachers to take part in this kind of discussion in a positive and constructive way for the benefit of students. I would like to say though that the young teachers are doing very well. I have met many young teachers in my visits to schools and also to the National Institute of Education. They are enthusiastic, energetic and able. In fact, their senior colleagues in schools are also impressed with them. The combination of experience and youth is good for our schools and our students. I visited a primary school yesterday and, in fact, one of the senior teachers told me that I should go to Parliament and tell the Members here that the young teachers are good, so that the public do not keep beating up on them. I hope that this House, the public and parents will join me in encouraging and cheering our young teachers on, so that they will continue to do even better for their students. They need your encouragement.

asked the Deputy Prime Minister and Minister for Defence in the past 10 years, how many full-time National Servicemen per intake have been admitted to hospital and what has been the number of fatalities.

Mr Speaker, Sir, over the past 10 years, on the average, one death each year is attributable to training. Another 2-3 are non-training related, such as from traffic accidents. MINDEF computerised its medical records in 1997. Based on the computerised records for the past four years, there were, on average, about 50 cases of full-time national servicemen admitted to hospitals each month. These admissions were for a variety of medical conditions. Some examples are sprains and fractures, asthmatic attacks, chicken pox, surgical emergencies such as appendicitis. Training is an integral part of military proficiency and professionalism. To be effective, training must be realistic and challenging. MINDEF and the SAF take a very serious view of training safety. We will not compromise on safety in meeting training requirements and achieving training standards. However, despite our best efforts, there will be some residual risks in military training.

Sir, can I ask the Minister of State the procedure or standing order that the officer-in-charge is required to follow when hospitalisation is required or when death has occurred, in particular, the reporting to the next-of-kin or parents of the NSman?

Sir, I cannot give him the detailed procedure. If he would like the information, I can provide the information to him. We do take this matter very seriously and very sensitively, in particular, the reporting to the next-of-kin. For example, we will not release information to the media until the next-of-kin has been notified. But if the Member requires further or more detailed information on that, then I will have to look up the procedures.

asked the Minister for Communications and Information Technology what steps are being taken bilaterally or multilaterally to address the concerns of shipowners and crewmen regarding the increase of piracy attacks on vessels passing through the Straits of Malacca, bearing in mind the significant maritime and commercial interests of Singapore.

Sir, as a maritime nation and a responsible member of the international maritime community, Singapore takes a serious view against piracy and armed robbery against ships. As the major sea-lanes are our economic arteries, Singapore's trade will be affected if piracy causes ships to bypass our main shipping lanes. Piracy also poses serious threats to life at sea and could endanger navigational safety. As a result of the coordinated efforts of various Government agencies, we have been effective in addressing the problem of armed robberies within our waters. Since 1991, there has not been a single case of sea robbery in Singapore's waters. However, our territorial waters form only a small part of the main shipping lanes. Piracy incidents outside our waters could still pose a threat to our international trading activities. At the bilateral level, Singapore has been working closely with Indonesia to address the problem in the Singapore Straits that straddles both Singapore and Indonesian waters. The law enforcement agencies of both countries established the Indonesia-Singapore Coordinated Patrol (ISCP) to curb sea robbery in the Singapore Straits. The ISCP efforts include the regular exchange of information, effective operational channels of communication, as well as cross border pursuits. The ISCP was also held up at the 1999 International Maritime Organisation (IMO) Piracy Regional Seminar in Singapore as a possible model for other countries to emulate. Singapore also supports multilateral efforts to combat piracy and armed robbery against ships in the region. We worked with the Japanese to conclude the "Tokyo Appeal and Model Action Plan" to strengthen counter measures and co-operation among coast guard agencies, maritime administrations and shipping community in combating the problem in the region. We also actively support the IMO's efforts in formulating cooperative arrangements among neighbouring countries to deal with piracy and sea robberies in the Malacca Straits and South China Sea region. We assisted the IMO in hosting and organising an anti-piracy seminar for the Asian region in February 1999 and a follow-up regional meeting in March 2001 aimed at promoting and enhancing regional cooperation. The shipping community has a part to play in the fight against piracy and armed robbery. MPA issues Port Marine Circulars to the shipping community advising them on measures to reduce the risk of piracy and sea robbery attacks. Such measures include an anti-attack plan that covers the need for enhanced surveillance, detection equipment, and radio and alarm procedures in the event of an attack. Piracy and hijacking are transnational crimes that require the coordinated efforts of governments and affected parties. A useful instrument that establishes the ground rules and legislative framework for co-operation among states is the Convention for the Suppression of Unlawful Act at Sea, or more commonly known as the Rome Convention, which the IMO has urged member states to accede to. Singapore has decided to accede to the Rome Convention. We will do so after the enactment of the necessary legislation.

asked the Minister for Communications and Information Technology (a) what are the reasons for the regular traffic jams along the Central Expressway between the Kampong Java tunnel and Ang Mo Kio Avenue 1 exit in the evening peak hours and between 9.30 pm and 11 pm; and (b) what measures his Ministry will take to address the problem, without resorting to evening electronic road pricing charges.

asked the Minister for Communications and Information Technology whether the Ministry has any plans to improve the traffic flow at the Central Expressway before 2006 when the Kallang/Paya Lebar Expressway is expected to be completed.

Mr Speaker, Sir, may I have your permission to take Question Nos. 14 and 15 together?

Yes.

Mr Speaker, Sir, the Central Expressway (CTE) is the main expressway serving residents in the north (such as Ang Mo Kio and Yishun) and the northeast (such as Hougang and Sengkang). Therefore, many vehicles use it to get to the city during the morning peak hours and to return from the city during the evening peak hours as well as in the late evenings. This is the reason for the traffic jams along it. Electronic Road Pricing (ERP) along the CTE spreads out the traffic flow to the city during the morning peak hours and hence reduces congestion in the morning. To improve the traffic situation along the CTE, the Land Transport Authority has embarked on three major road projects. The first is the improvement to Upper Serangoon Road, which includes a second level viaduct between Upper Aljunied Road and Upper Paya Lebar Road and the extension of the road to Sengkang. When completed in early 2002, Upper Serangoon Road will be an attractive route to and from Hougang and Sengkang and will help divert some of the vehicles away from CTE. The second is the improvement to the CTE-Braddell Road junction. It will be completed by the end of 2002. Today, vehicles queue back from this junction into the CTE and slow down traffic along the expressway. When this three level interchange is completed, there will be a faster clearance of the large number of vehicles exiting from CTE to Braddell Road through the slip road. The third is the Kallang-Paya Lebar Expressway connecting the East Coast Parkway to the Tampines Expressway. Construction work will start soon and will be completed by 2006. This expressway will serve the northeast of the island and will divert more traffic particularly to/from Hougang and Sengkang away from the CTE. The North East MRT Line, now under construction, will link the north east sector (which includes Punggol, Sengkang and Hougang) with the city. It will provide a convenient alternative to driving and will relieve peak period traffic conditions along the CTE when completed by the end of 2002. So these three road projects and the North East MRT Line, when completed, will each help to relieve the traffic congestion along the CTE.

Mr Speaker, Sir, may I ask the Senior Parliamentary Secretary whether the Ministry will consider to further widen certain portions of the CTE so as to increase the traffic flow and, at the same time, do a study on the exit points along the whole CTE to reduce the bottleneck situation?

Sir, we do have a road expansion programme, but we have to study the CTE carefully because the CTE is going through a very built-up area. So the opportunities for us to expand will be very limited. But certainly that is an option that will be studied and, in fact, has been studied in some instances. With regard to the exits, LTA has studied them because this is part of the whole process of trying to provide the alternative routes. Hence, they studied traffic exiting at Braddell and the impact of Kallang-Paya Lebar Expressway. LTA would study the exits very carefully in order to take into account what sort of traffic volumes we are experiencing and how the alternatives will help to relieve the traffic volume along the CTE. 1.53 pm

Mr Speaker, Sir, as I said in Parliament on 11th July, the global economy has deteriorated much faster than anticipated. Growth in the US, Japan and EU has slowed sharply. Strong growth during the boom years, especially in the US, led many companies to ramp up production capacity, expecting demand to continue growing. When demand slowed, partly because of the NASDAQ crash, they were caught off-guard, forcing them to cut production and reduce cost. The simultaneous downturns in the US, the EU and Japan now feed negatively into each other. The global electronics downturn has worsened even more dramatically in the last few months. Worldwide semiconductor sales declined by 24% in May 2001. Global semiconductor sales are expected to fall by 25-30% this year, down sharply from +37% growth last year. The global DRAM industry is expected to plunge by an unprecedented 55% this year, down from +37% last year. The electronics industry is expected to remain weak at least till the end of 2001. . Malaysia is also slowing down, compounding the problems that we face. In Indonesia, political uncertainty has made economic recovery even more difficult but we hope that under President Megawati's leadership, the situation there will improve. Singapore's Economic Performance We cannot have a worse alignment of the planets. As a result of the weaker external environment, the Singapore economy deteriorated further in the second quarter. Annualised quarter-on-quarter growth was -10.1% compared with -10.9% in the first quarter. On a year-on-year basis, Singapore's economy slowed sharply to -0.8% in the second quarter from +4.6% and +11.0% growth in the previous two quarters. The slowdown was across all the major sectors, particularly manufacturing where output fell by 11% in May, due largely to the 20% plunge in the electronics industry. Our export performance has also worsened, in line with weaker export markets. Non-oil domestic exports fell by 16.9% in June and 9.4% in the second quarter of this year. The labour market is also showing weakness. Retrenchments rose in the first quarter, reflecting the downturn in the global electronics cycle and weaker US growth. We expect it to increase as companies start shedding workers. Several MNCs like Maxtor and Aiwa have already announced job cuts. Many have also moved to a shorter workweek. In view of the sharp deterioration in economic conditions, we have revised the 2001 growth forecast down to 0.5-1.5 % this year. Measures to Cushion Impact of the Downturn Despite almost 10% growth last year, many businesses, especially the smaller ones, have not recovered from the effects of the regional crisis in 1998. We therefore left in place some of the measures introduced in the last package. In this year's Budget, we have reduced corporate and property tax rates to help companies, especially SMEs. To help households and workers, the income tax rates have been lowered. In addition to CPF top-ups, the Government has also granted rebates on personal taxes, service and conservancy charges and rentals. A new "Utilities Save" scheme was introduced to help households pay higher electricity and water bills. To cushion the effects of the current downturn, the Government has put together a package of additional measures which I will now announce. They are classified into three categories: namely, measures to accelerate the building of economic and social infrastructure; cost-cutting measures to help companies; and measures to help those retrenched and to promote worker retraining. Further details will be given by the respective agencies over the next few days. Economic and Social Infrastructure Given the open nature of our economy, it is difficult to stimulate the economy by generating domestic demand through Government pump-priming. However, there are some projects which the Government can bring forward. Accelerating the building of our economic and social infrastructure will let us take advantage of low tender prices, and will enhance our capabilities over the long-term. Some of these projects include the development of Jurong Island, drainage and sewerage works, road and commuter facilities, and upgrading of IT projects at polytechnics and universities. In total, bringing forward these projects will inject $204 million into the economy in this financial year and $512 million in the next financial year. Cost-Cutting Measures Labour Cost Labour cost is a key component of total business cost. In difficult times, adjusting wages is an important way to save jobs and prevent companies from going under. The Government and the unions have therefore been pushing for flexible wages. We have made good progress in building up the variable wage component over the years, although there is still some way to go. So far, about 30% of unionised companies but only 2.4% of non-unionised companies have implemented a monthly variable component. In this current economic downturn, the variable component that we have built up provides our first buffer. It is far better to cut back on bonuses and perks than to retrench workers. Companies which are not doing well should use this mechanism to pay smaller variable bonuses this year, in line with the NWC recommendations. Adjusting the CPF contribution rates is a measure of last resort and should never be done lightly. In the 1998 package, the Government cut the employers' CPF contribution by 10 percentage points to help companies reduce costs and to save jobs. It was progressively restored by six percentage points as the economy recovered in the last two years. The Government would like to restore the remaining four percentage points as soon as possible because the CPF is essentially our retirement savings plan. Keeping the CPF contribution rates below the 20% level for too long will mean less savings for our old age. Under normal circumstances, we would have restored a further increment of employer CPF contributions at the end of this year. However, in the present difficult conditions, the first priority is to save jobs by helping companies to lower costs. The Government has therefore decided not to increase the employer CPF contribution rate at the end of this year. We will review the situation again in the middle of next year. This gives certainty to the first half of next year and translates to a saving of $920 million for employers for the first six months of next year. Some businessmen have suggested to MTI that the CPF should be cut again. We do not believe that such a major move is justified at this stage. However, if the global economy continues to deteriorate, we may have to consider all possibilities. Foreign Worker Levy To hold down business costs further, the Ministry of Manpower will extend the current reduced foreign worker levy rates for another year till June 2002. This will cost the Government revenue of $324 million. Existing controls on the intake of Work Permit holders remain unchanged to ensure that employers do not become over-reliant on foreign workers, especially the lower skilled foreigners. Property Tax Rebate In the last Budget Statement, the Minister for Finance announced a cut in the property tax rate from 12% to 10% for all commercial, industrial and residential properties. That reduction was to take effect from 1st July this year, when the 25% property tax rebate for commercial and industrial properties ended. The Ministry of Finance has now decided to extend the 25% property tax rebate for commercial and industrial properties for a year from 1st July this year to 30th June next year. As the property tax has been reduced from 12% to 10% on 1st July this year, the effective rate during this period would thus be 7.5% as compared to 9% before this. This will cost the Government $257 million. Rental Rebate In January this year, JTC and HDB withdrew part of the rebates given in the 1998 package of measures. In view of the current downturn, we have decided to extend the rental rebates for another year till end June next year and to increase the quantum of rebates. JTC will grant an additional 10% rental rebate, giving an effective rebate of up to 20%. HDB will give an additional 5% rebate on top of the existing 5% (and another rebate of up to 20% for those paying above market rates) and this will extend for a year. Similarly, CAAS will offer a 15% basic rental rebate for warehouse, office and concession space in the Airport for a year till the end of June next year. It will also not increase the airport service charge. HDB, JTC and CAAS will also pass on the savings from the reduction in the property tax rate to their tenants. Other landlords are encouraged to similarly pass on the reduction in property taxes to their tenants. For market and hawker stallholders, the Ministry of the Environment, HDB and JTC will be giving a 10% rental rebate to their stallholders who are paying market rent. An additional rental rebate of up to 20% will be given if the rebated rent is still higher than the prevailing market rent. All these rental rebates will take effect from 1st July 2001 for a year and they will cost the Government $272 million. Transport Cost To soften the impact on regional trade and travel, the Maritime and Port Authority of Singapore will give 20% port dues concession for container ships and commercial harbour craft. This will save businesses $7 million for the period 1st July this year to 30th June next year. Access to Finance Some companies face greater difficulties gaining access to capital for their businesses during this downturn as banks become more cautious. To help local companies, the Singapore Productivity and Standards Board (PSB) will raise the Government's risk sharing of the Local Enterprise Finance Scheme (LEFS) from 50% to 70% for one year from 1st August 2001. In anticipation of the increased demand, we will increase the loan availability under LEFS by $60 million. PSB is also working on a new programme to make it more flexible for banks to lend to SMEs with varying credit risks by covering part of the risk through a loan insurance scheme. To help medium-sized companies, the coverage of LEFS will also be expanded to cover enterprises with at least 30% local equity, with fixed asset investment of up to $50 million and employment size of not more than 300 workers for service companies. This is significantly higher than the current limit of $15 million in terms of fixed asset investment and 200 workers for service companies. A loan line of $60 million will be set aside for this purpose. Together with the additional $60 million mentioned earlier, the total loan availability under LEFS will be raised by $120 million from $600 million now to $720 million. Additional grants will also be set aside under the Enhanced Local Enterprise Technical Assistance Scheme (LETAS) to enhance specific programmes which help local companies strengthen their capital structure, trim cost, improve cashflow and streamline operation. All these measures are for a period of one year. Besides the additional loan line of $120 million, these measures are expected to cost the Government an additional $10 million. Measures to Help the Unemployed and Promote Worker Retraining Retrenchments are expected to reach 20,000 this year. Older workers and less educated workers are more vulnerable to retrenchment in a downturn, and Members raised their concern in this House earlier on at Question Time. Many of them face difficulty getting re-employed. To help the retrenched workers, and particularly those in the vulnerable groups, the Ministry of Manpower (MOM) is expanding its employment assistance and training programmes in a major way. Increased Efforts in Job Matching In the area of job matching, MOM currently operates a career centre. The centre provides information on labour market trends, advice on job and training opportunities, and employment assistance. Because of the economic downturn, the centre has served twice the number of users in recent months. To reach out to even more workers, MOM will further expand the centre's services and increase the number of access points to these services. It will work with NTUC, self-help groups and other community organisations to make available similar services and information at their locations. MOM has also put in more services on the Internet and expanded its Employment Town website. From next month, MOM will also be starting a series of community based job fairs to bring together job seekers and employers. And it is targeting to organise an average of one job fair per month for the rest of the year. `People For Jobs' Traineeship Programme Many retrenched workers will find that the jobs which they are used to will no longer be available in Singapore even after the economy recovers. This is especially so for older and less educated workers previously engaged in the manufacturing sector. To stay employed, some of them will have to switch to other industries, particularly those in the services sector. Making this change requires openness and flexibility on the part of both workers and employers. Workers will have to make some adjustments and accept different job requirements and work environments. Employers on their part should be more prepared to hire such mid-career workers who are good workers but newcomers to the industry and to help ease them into their new jobs. To help older workers with low education make this adjustment, MOM is piloting a new programme called the "People for Jobs" Traineeship Programme. The programme is akin to an apprentice programme for mid-career workers. Under the programme, MOM will provide financial support of up to $3.80 per hour or $600 per month for three months for companies which employ these retrenched workers, and who agree to put in place a mentorship or traineeship arrangement to help settle in these workers. MOM has found several employers who are prepared to take part in the pilot programme. Together, they are able to provide immediately 400 places in the services sector. And these include jobs such as sales and retail assistants, room stewards, telephone operators and housekeepers. MOM hopes to expand this programme rapidly and to increase the number of traineeship places. Expansion of Skills Redevelopment Programme (SRP) In the area of skills training, MOM and NTUC operate the SRP to help lower educated workers acquire certifiable skills. Through the SRP, some 54,000 workers have equipped themselves with relevant skills to stay employable. In view of the economic downturn, MOM will further enhance the programme. The list of approved courses will also be significantly expanded to benefit more workers and employers. And we hope to double the number of SRP trainees this year from 20,000 to 40,000 workers. This will cost an additional $28 million. And should there be greater demand, MOM is ready to expand the programme further. Incentives for Employers For workers sponsored by employers, SDF funds up to 80% of the course fees incurred for workers less than 40 years old. For workers aged 40 and above, SDF funds up to 100% of the course fees. Currently, many employers sending workers for SRP training have to pay the full fees first and claim for reimbursement only after completion of the courses. With the business downturn, many employers may not be in a position to come up with the cash upfront. MOM is therefore working out an arrangement with PSB and the training providers so that the employers only need to pay the net amount. Details will be announced once they are finalized. In addition to course fee support, absentee payroll support is also provided to employers to encourage them to send less skilled workers for training. From 1st August this year, the absentee payroll support will be increased from $5.10 to $5.40 per trainee hour for workers less than 40 years old, and from $6.15 to $6.50 per trainee hour for workers older than 40 years. We hope that this will encourage more employers to send their workers for training. According to NTUC, around 30,000 workers are already, or will be, on temporary layoff or shorter workweek. We should put this slack to good use. Companies that are facing low demand and have consequently implemented shorter workweeks and temporary layoffs should send their workers for SRP training. And during this period of training, workers will receive $3.80 per trainee hour or $600 per month as training allowance. Participating companies, which might otherwise have retrenched their workers, need not top up the training allowance. With these measures, we hope to persuade employers to use the business slowdown to upgrade the skills of their workers rather than quickly resorting to layoffs. By doing so, they will be more competitive and better prepared when the economy turns around. Help For Retrenched Workers Individuals on their own, including those who are unemployed, can also sign up for SRP through surrogate employers like the self-help groups and NTUC. The Government helps to pay for the course fees of these workers, while these surrogate employers provide additional support for low-income earners and those who are unemployed. Since 1999, 8,000 workers benefited from SRP training under the sponsorship of surrogate employers. To enable the surrogate employers to reach out to more workers, SDF will increase the course fee support given to them. From 1st August this year, SDF will increase its course fee support for trainees aged 40 and above under the surrogate employer scheme from 80% to 100%. In addition, for trainees below 40 years old, the Ministry of Manpower will provide a separate grant from the Lifelong Learning Endowment Fund to surrogate employers to offset part of their cost. These measures will help to encourage the self-help groups and NTUC to reach out to even more individuals. Unemployed workers who go for SRP training will improve their short and long-term re-employment prospects, but may have financial difficulties during the training period. To help them, the Government provides a training allowance. From 1st August this year, we will raise this training allowance from $3 per hour capped at $500 per month to $3.80 per hour capped at $600 per month, which is the same amount given to workers under employment who have taken time off for training. Enabling Skills for Less-Educated Workers A significant number of workers still lack basic skills that are increasingly required at the workplace. Together with its partners, the Ministry of Manpower has introduced two programmes: the National IT Literacy Programme and the community-based CREST programme to help these workers. The National IT Literacy Programme, jointly developed with IDA, aims to improve the employment prospect of all Singaporeans by equipping them with basic computer and Internet skills. The Ministry of Manpower will invest $8 million for the first year and another $19 million over the next two years to ensure that the training courses are kept affordable for all Singaporeans. The CREST programme, or Critical Enabling Skills Training, introduced by PSB in November 1998, aims to provide seven cores skills, such as `Learning-to-Learn', `Literacy' and `Problem Solving and Creativity' to enhance the employability of an individual worker. Presently, only workers sponsored by employers are given funding support through SDF for attending such training. With effect from October this year, the Lifelong Learning Endowment Fund will provide funding support through community self-help groups for individuals without employer support. These training and training support efforts will cost about $40 million over the next year. However, we should not see budget here as a constraint. We hope that the demand will grow, and the Government is prepared to spend as much as is needed to help more Singaporean workers stay employable. The key is to help them stay employable. The goal is easy to define but hard to achieve. We welcome more ideas on how our workers can be better prepared for global competition. The economic slowdown is also causing the retrenchment of executives and professionals. As they have skills, many of them will be able to find alternative employment, albeit at lower salaries. Despite the slowdown, the Government is continuing to recruit, for example, teachers and school administrators in the Ministry of Education, and senior officers to serve in many Ministries. The Government cannot become the employer of last resort, but it is on the lookout for good people to strengthen the Ministries and statutory boards. Professionals will also benefit from EDB's Training and Attachment Programme. EDB is stepping up its efforts to build capabilities in research and development (R&D), product and market development through this programme will be extended to training in local companies. Companies which face constraints in providing training in-house can work with our research institutes and research centres to host such training, fully funded by Government. This programme will help companies to continue training and building capabilities at a time when they are under pressure to cut back on these long-term activities. Conclusion In putting together this package, we are grateful for the suggestions made by many organisations and individuals, including members of the Committee on Singapore's Competitiveness, the Singapore Chinese Chamber of Commerce and Industry, the Singapore Confederation of Industries, the Real Estate Developers' Association and the Feedback Unit. The total cost impact of the measures announced in this off-Budget package is estimated at $2.2 billion over one year. This is equivalent to 1.4% of GDP. Though not as large as the package announced at the end of 1998 during the Asian financial crisis, it is a significant package. While the US economy is currently at a virtual standstill, there are some signs of improvement. There has been a pickup in the leading index, and consumer confidence has held firm in recent months. Federal Reserve Chairman Greenspan sounded a cautious note of optimism in his recent testimony to the US House of Representatives. Although he still saw greater risks on the downside, he also saw signs of a bottoming out of the downturn. This package will help businesses cope with the crisis. It will also help workers, especially older and less-educated workers, to prepare themselves to retain their jobs or find new jobs. And it will supplement the measures announced in the Budget in February, especially the corporate and personal tax reductions, and the rebates to help lower-income households. However, we must be realistic. No package of Government spending can neutralise the global downturn, the electronics slump, or the regional problems which are the root causes of the slowdown. MTI will monitor closely the economic situation in the coming months. If the global situation worsens, we have the resources to do more, and will be ready to do so. Even as we navigate carefully through this difficult period, we can be confident of Singapore's future. Our medium and long-term prospects are good, provided we do not make major mistakes. The Singapore economy is fundamentally sound, and the confidence of MNCs and investors in our economy remains high. For example, even though foreign investments into the region have declined, Singapore continues to attract major investments from abroad. Major projects announced recently include a 12-inch wafer fab by Taiwan's UMC, a state-of-the-art TFT Liquid Crystal Display plant by Toshiba-Matsushita, a regional distribution centre by Daimler-Chrysler, and a pharmaceutical research centre by Eli Lilly. On the services side, leading B2B companies, eg, E2open and Converge, have set up their Asia-Pacific hubs in Singapore. Autodesk, an established US software company, has also set up its Asia-Pacific headquarters and its R&D operations here. Manufacturing investment commitments in the first half of this year totalled $5.9 billion, in terms of fixed assets, which is about two-thirds the $9 billion target for the whole of this year. So there is a reasonable chance that we will be able to achieve our target of $9 billion this year. When realised, these commitments are expected to generate $4.3 billion of value added and create about 8,700 jobs. Services commitments reached $800 million in terms of total business spending in the first half of the year, and are expected to generate $750 million in value added and 3,600 jobs when realised. In addition, our current negotiations on Free Trade Agreements with major economies will open new opportunities for our businesses and attract more FDIs into Singapore. Even though the present slowdown is largely cyclical, we must press on with the restructuring of the Singapore economy. Despite the dot.com crash, the New Economy is for real and we must make use of IT and e-commerce to raise productivity and add value. The entry of China into the WTO will put pressure on wages all over the world, especially at the lower end. Whether we like it or not, because of globalisation, we are competing with hundreds of millions of eager and hungry Chinese and Indian workers for the low-end jobs. We must therefore scramble up the value ladder quickly. And, to do this, we must liberalise and rationalise many sectors of the economy, for example, in banking, telecommu nications, and power generation and supply. As companies tighten their belts, they should try not to put off longer-term improvement plans. They should build up their capabilities and reposition themselves for the turnaround. Some companies will not be able to do this because of financial difficulties. For them, the cost-cutting measures will provide some help. Workers should take this opportunity to train and upgrade so that we can switch quickly to new and better jobs. The Government will do everything possible to attract investment, promote enterprise development and help our workers stay employable. We have weathered more serious economic crises before and, provided we respond cohesively and rationally, we have every reason to be confident of overcoming this downturn, and emerging more resilient and competitive than ever. Mr Speaker, Sir, may I have your permission to distribute a summary [Annex: Cols. 1953-4 - Summary of Cost Impact] of the cost-cutting measures to the House, please? ANNEX - SUMMARY OF COST IMPACT

Yes.

Thank you. I will now take questions from hon. Members seeking clarifications on the measures.

Mr Speaker, Sir, I would like to ask the Minister whether the Government has any plans to help the private sector to explore new markets where possible and, should the situation deteriorate further, whether the Government would assure workers that employers will do their part to explore innovative ways to face the challenges and not keep calling for CPF cuts each time they face difficulties. Could the Government take a stronger stand in future towards such requests? Would the Government also consider reviewing the employment pass policy, eg, reducing the number of employment pass for job areas which can be well performed by Singaporeans?

Mr Speaker, Sir, during this period, we should look for all the bright spots that there are on our radar screen. There is one major bright spot which needs repeated emphasis, ie, China. China is expected to grow at 7% over the next five years despite this global economic downturn. Those of us who have been to China are able to sense the organic growth, the self-sustaining growth resulting from the development of its own domestic economy. China will become very big and the earlier we size up the threats and opportunities, the better we will be prepared for it. I would describe it as a kind of a juggernaut which we see coming down the road, still at first gear, lumbering along, but gradually picking up speed. We can either stand in front of the juggernaut and turn to cardboard or we study it carefully and say, "Look, let us find a good hand-hold, get our skateboard ready, put on our Walkman, and hitch a ride when the juggernaut gathers speed." And we can do this because we have an inside track into China. We have cultural relations, we have good political relations, and China is already our No. 1 investment destination. So from the viewpoint of the economic agencies, we are now conducting a review to increase our presence in China in a major way. Take tourism as an example. Throughout the last crisis, tourism growth from China increased double digits, and we can expect tourism growth from China to continue increasing in the coming years. As each province opens up, many millions of Chinese will want to travel and we must capture our share of it. There are many areas in which China will offer opportunities, including a reverse flow of investments into Southeast Asia. I have been monitoring the investment trends, and Chinese investment in Singapore has been rising steadily. Still small, but a significant trend, and we should build on it. In addition, there are other countries like India which we should look at. EDB will be increasing the number of overseas trade delegations and any opportunities that we are alerted to, we would disseminate to the business community as quickly as possible. Mr Yeo asked about what we can do to encourage employers to take a more generous and liberal attitude towards older workers. This is a major issue for us. It is a structural problem because many of our baby-boomers never had the opportunity and they still have 20 to 30 years of working life ahead of them and they are not well educated. Among them, there is widespread fear that if their number is called, then it is very difficult for them to find re-employment. It is widespread. I have, in my own constituency, grassroots leaders who are in this predicament. I have received letters from others who complain about competition from foreign workers and so on. At last weekend's Talking Point, Mr Heng Chee How, Mr Stephen Lee and one of the workers retrenched, Mr Anwar, gave a very moving account of their experiences. It requires attitudinal change on the part of all players in our economy. Firstly, among our workers, retrain, at the minimum, learn e-mail. Try, do not say, "Look, I am too old for it." If you cannot even send e-mail and work the computer keyboard, it would be very difficult to be re-employed, and it is not difficult to learn. The key here is a psychological barrier and we must help them to overcome it. We have a whole slew of programmes which we announced earlier to help those who are interested to upgrade themselves. On the side of employers, Mr Stephen Lee told us that there is already a shift but we should accelerate the shift. It is very important for us. If you study McDonalds, they have done a very good job and we should do a special case study on McDonalds. Many of us are used, when we go to McDonalds, to have aunties and uncles serve us, and that term has acquired a certain affectionate ring to it. When they come to wipe the tables or to collect our trays, people try to minimise their work. So when they can, they will also dispose of their disposables and stack the trays up. How did McDonalds achieve this? Not by paying these workers very high wages - in fact, if they had to pay them very high wages, they would never have been employed in the first place - but by altering work design. If you look at the keyboard at McDonalds, it is very simple: one fillet-o-fish, one big Mac, you press the button, it is done. You do not require very much training and the workers wear smart uniforms, they go for outings together, they get free meals, they become a little community. If the employers are prepared to make this investment in management, they will find that this investment will more than pay for itself. I will give you another example. Robinsons, which is well-known for their excellent service, they have got older staff, more stable staff. Many of our departmental stores get into a vicious circle where, to save costs, they hire part-timers. Part-timers are not committed because they see their jobs only as part-time jobs. So if you ask them about a product, they will say, "Can you please look at the label yourself?" When you go to Robinsons, they work a system where, because workers stay there longer, and they have incentivised on commissions as a whole floor, they have a vested interest. Every time they see a customer come in, they have to ensure he stays as long as possible on the floor and not to leave the floor empty-handed. Older workers are more mature, more committed and more responsible and are better for this. For many jobs in the service sector, we do not really require techno-geeks or those who have got very good physical reflexes. They can be put to better use in many sectors. The whole certification programme is, in fact, to help them to do a better job and to provide a better service. Singaporeans are increasingly prepared to pay more for better services. That is why they go to Starbucks. Because we have been investing in this area, we have made progress. All of us would have noticed how the quality of service of taxi-drivers and bus drivers in the last few years has improved dramatically. It did not come by accident. It came because between NTUC, the taxi companies, PSB and other agencies, they have been pushing it year by year and so we have upgraded ourselves. Let countries around us take the low-end risks but we move up. There is no point in our scolding employers or legislating to force them because this would only pile up their costs and some of them are already suffering. What we can do is, on the part of all parties, help to nudge employers and workers towards a different configuration. In this way, we build up our services sector and build up a greater capacity to absorb older workers in our economy. We need plenty of ideas and I would welcome anyone with any idea from any quarter in Singapore to raise them, either to MTI or our statutory boards, or to PSB, NTUC or any agencies, or to raise them up in this House. Mr Yeo also asked about employment pass holders. For work permit holders, we have a dependency ratio which ensures that the foreign workers, who are in Singapore, help Singaporeans find employment. In many factories now, the third shift is done by foreign workers. Let us think about this. Without foreign workers anchoring the third shift, there is no first shift and second shift for Singaporeans because no one is going to plonk a factory in Singapore and not operate it 24 hours a day. Without large numbers of foreign workers in Singapore, many Singaporeans would be without jobs. Of course, on the shop floor, in a particular office, there may be a certain friction in the sense that, "Look, why am I laid off? Why is he not laid off? Why is my job given to someone from another country who is working for less?" I can understand this anguish among many Singaporeans and many of them have written to me. But from the viewpoint of the economy, filling in the gaps in our economy allows us to operate a much more complex and sophisticated economy, giving us jobs which we could not otherwise have. If we were not a high-tech centre, and we can only be a high-tech centre if we have large numbers of scientists and researchers working here, many technical jobs would not be available to Singaporeans. It is for this reason that we have been relatively liberal on employment pass holders. When we encouraged Eli Lilly to come here to set up an R&D centre for the biomedical sciences, they were afraid that when they come here, Singapore is a small city-state, the range of skills that they need would not be available. Why not go to China or Europe where everything is available? I said, "Do not worry. You come here. If you need to bring in workers and expertise from other countries, we will help you." And because of this assurance, they come here. And because they come here, there will be good jobs for Singaporeans. Yes, at the local level, Singaporeans are hurt and we must help them. But the macro picture is extremely important. The key is to ensure that investments continue to flow into Singapore. If they continue to flow into Singapore, we are all right. If EDB reports to me that the pipeline is running out, then I will have to come back to this House quickly.

Sir, first of all, I would like to thank the Minister for Trade and Industry for announcing this set of measures valued at a total of $2.2 billion. I would like to say that I find this set of measures very comprehensive although it was done in a short period of time, since his announcement about the measures earlier this month. I would like to ask the Minister a few questions, Sir. Singapore is said to be a very export-oriented economy. Some of our detractors have said that Singapore is a very exposed economy. Now, with the downturn, including even the United States, Japan and our regional neighbours, we are possibly going into a further downturn. I would like to ask the Minister that, although now we have a set of measures worth $2.2 billion, in the event of a further drastic downturn, would he be prepared to consider further off-Budget measures. In this downturn, as the Chinese saying goes, we should wei yu chou mou (????), which means to plan and build our huts before the rain comes. While the $2.2 billion measures are very meaningful, I find something lacking in what the Minister has proposed. Although he has announced several measures, particularly those by MOM to help workers in skills retraining, what I would like to ask the Minister is whether he could be more generous in providing for capital grants for companies in the area of equity human capital development. This is the area where we can build our only resource, which is the human capital. Therefore, could the Government consider giving more grants in helping SMEs when they want to embark on R&D programmes involving, as the Minister has stated, information technology, software development, communications and other areas in the new economy? I think to build up the human capital and to prepare ourselves for this new economy is very important. The Minister has also mentioned about the possibilities of China.

Order. Mr Leong, could I ask you to confine yourself to asking questions?

Yes, Sir. Could I ask the Minister, since he mentioned that China is a bright spot, what are the plans that his Ministry has in helping local companies to strongly link up with China, in particular, in terms of business missions and training missions? How do we link up with businesses in China so that we could at least latch onto China, which is a growth area, despite the downturn in the other economies? Sir, finally, a point on CPF cuts. I am also pleased to hear the Minister mentioning about the holding back of the restoration of the 4% CPF cut until a review in the middle of next year. This is very comforting for the local businesses. I also agree with the Minister that there is no need for any drastic CPF cut now.

Mr Leong, may I remind you that for Ministerial Statements, you can only ask questions.

I would like to ask the Minister, in spite of the confidence that he has instilled by mentioning that there will be no further cuts in the CPF for the business sector, whether he is aware that there is a need for more cost-cutting measures for the business sector because operating cost and business cost are, in fact, a major factor in retaining their competitiveness. Could the Minister be more generous again in looking at various Government rates and fees that can be cut so that these businesses will be able to enjoy a more competitive environment because business cost is a factor for them to remain competitive? Finally, I would like to ask the Minister about the extension of property tax rebate. He did mention about an extension of property tax rebate for commercial and industrial properties. My question is: why is this rebate not also extended to the residential sector as well?

Sir, inevitably, this package will be compared to the $10.5 billion package which we had the last time. Let us go back to the $10.5 billion package and what it consisted of. Of the $10.5 billion, $7.5 billion consisted of CPF and NWC deductions. In other words, most of that package consisted of a deep wage cut across the board in Singapore. Do we need to do that this time round? So far, the necessity is not obvious. Whatever we do, we cannot give work to the wafer fabs or to the disk-drive factories or to the petrochemical island, or to our pharmaceutical companies. The reason why business is down is not because of high wage cost, but because the global market is down. If we cut wages, I think that may not be a wise thing to do, because there is no need to. In fact, the reason why we have to cut wages so deeply the last time round was because the currencies around us depreciated by about 40-50% while ours depreciated by only 15-20%. So, suddenly, we had to face a margin of 20-25% and therefore we took the 15% wage cut. This time round, when you look at our relative unit labour cost, it is still competitive. So because there is no need to do a major wage cut this time round, the present package should be sufficient. But having said that, I should also say that if things get worse in the future, then we may have to do more and we will consider all possibilities. I can understand the reluctance by all of us, by the unionists, by Singaporeans generally, to resort lightly to a CPF reduction. On the exposure of Singapore to the global economy, what is the alternative? Ever since we became independent, we knew that our own domestic economy was too small. If we rely only on the regional economy, I think we will be much worse off. In fact, it was because we did not rely on the regional economy in the last crisis that we went through it reasonably well. So we try to buffer ourselves. We have close outriggers which are grounded in ASEAN. We have further outriggers which reach out to Japan, Europe and America. But, unfortunately, when the flows everywhere are down, then we are down. It cannot be helped. Is this a criticism against our economic strategy to globalise our economy? Not at all. In fact, globalisation is the best diversification that we can have for our economy. Mr Leong asked about what else we should do on China. I mentioned earlier that we have good links with China which we should build on. Recently, the Senior Minister was in Suzhou. President Jiang Zemin and Vice Premier Li Lanqing were there for the ceremony to mark the conclusion of the first phase and the opening of subsequent phases. When I was in Shanghai for the APEC meeting, at a cocktail, one Chinese Vice Minister came up to me and said, "You know, Suzhou attracted more investments this year than Shanghai." I could not believe my ears - Suzhou had more investments than Shanghai! Later on, when I went to Suzhou, they confirmed it. Think about it. All of us know about Shanghai. Few people realise that Suzhou has done so well, and the flagship of Suzhou is our industrial park. So if you read internal Chinese literature, Singapore's standing in China is very high. Our passport is held in high regard. We are known to be trusted. So we should build upon this. The trouble is, because the situation in China is changing so fast, for many of us, in our minds, we have not pressed the "Refresh" button on China. And for China, you must press the "Refresh" button every six months to make sure that you have an updated picture. With the Olympic Games and with the opening of the western region, there will be many new possibilities. In MTI now, we are conducting a major review of our China policy, and we are bringing in our Ministries. One idea, which we are working seriously on, is this. We are now sending many of our scholars to the West. When they come back, we will send them for a one-year bond-free attachment to China. They will be fully paid, they do a job, they get attached either to a company or an institute, improve their Mandarin, know what China is like at the basement level, build up deep knowledge in MTI and all the statutory boards. Then after a few years, we have a few hundred such officers, and I think we should extend it to the other Ministries as well, we will build up a deep inside knowledge of China. Then whatever happens there, we will know how to position ourselves. China is a big market. I was talking to David Abel, my counterpart in Myanmar. When I was in Kunming, I ate turtles which were imported from Myanmar. He said, "Ah, turtles, we export lots to Yunnan." But Yunnan has been importing so many snakes, especially the poisonous variety, from Myanmar that the rat problem in Myanmar is getting out of control. So he told the Chinese, "Look, can you please slow down your eating of Myanmar snakes?" The Chinese market will open all kinds of possibilities, and we must get into it early, know what is happening, position ourselves, make use of the strengths and the assets that we have. Mr Leong also asked whether we will provide grants for companies to upgrade human resources, R&D and so on. In fact, we are doing a lot - EDB, PSB, NSTB. We have a whole range which is available. Recently, I announced on behalf of NSTB a post-graduate programme, $500 million for five years, to promote post-graduate training so that we have the knowledge workers to power the knowledge economy. And if Mr Leong has any particular ideas which are additional to what we already have, MTI will be very happy to hear of them. Sir, I hope I have answered all his questions. An hon. Member: What about property tax on residential properties?

I am sorry. Let me read out the section to Members again. This was carefully vetted by the Finance Minister. It says, "The MOF has now decided to extend the 25% property tax rebate for commercial and industrial properties for a year from 1st July this year to 30th June next year, . and the effective rate during this period would thus be 7.5% as compared with 9% before this."

Sir, I would like to ask the Minister whether his Ministry might have under-estimated the severity of the recession facing us this time. Of course, if we look at Chairman Greenspan's estimate, he is cautiously optimistic. But the US economy is a very wide economy, unlike the Singapore economy which is really based on IT and high-tech. If the Minister has studied the order book versus built ratio, for many of the high-tech companies, this is one of the worst recessions in their history. And when I was coming to Parliament today, I heard on the BBC that ABB of Sweden has cut 8,000 workers. This has just been announced and is based on this order-book-built ratio. My wife and I work for US multi-national companies and both of these companies have complete capital freeze for the next six months. This means it is zero. Both these big US multi-national companies are not spending any dollars on capital equipment. I think, to me, the recession facing us, in particular, in the high-tech sector, is quite severe. I thought perhaps in the package announced by the Minister, there might be an under-estimation of the severity of the challenges facing us.

Mr Speaker, Sir, I would like to assure Dr Wang that we are not making light of the economic situation at all. In fact, Business Times two weeks ago printed an analysis by Stephen Roach from Morgan Stanley. He is sometimes called the "Resident Bear" in the investment community. He wrote a carefully reasoned piece that in fact the whole world has already entered into a recession. Of course, among private analysts, there is a range of views and he represents one end of it. We cannot be sure. We read Greenspan very carefully and he said that he is beginning to see "the market structuring a bottom." They are very carefully chosen words. He is beginning to see the market structuring a bottom. In other words, he has not yet seen a bottom, but maybe there is a bottom forming. Two days later, the National Economic Advisor, Larry Lindsey, said that the US economy is at a virtual standstill but with the tax cut and the interest cut, next year there should be growth. Paul O'Neil, US Treasurer, declares that he is an optimist, and next year it will be at least 3%. Among Federal Reserve Governors, they said US growth this year will be between 1.25% and 2%. This means that for the second half they expect maybe 1-2% growth. Therefore, an upturn at the end of the year. Of course, you may say that these being officials, they have got to err on the optimistic side in order not to talk down the market. But, at the same time, these are very serious people with access to reams and reams of comprehensive data. So I do not think we should lightly second guess them. What we have done is this. Look, yes, on the scale between optimism and pessimism, we are on the pessimistic side. But we cannot be completely pessimistic at this point in time. If we use up all our ammunition now, there will be little left later. So hold back the 155s, hold back the F16 strikes, but do all that is necessary, given the situation now. If we need to do more later, if you are right in your gloomy prognostication, then we will do more.

Sir, can I ask the Minister that in the light that the manufacturing sector is employing a large number of manpower, what steps are being taken to deal with the hollowing out effects of the manufacturing sector, because this has long-term implications for our manpower deployment? Second, I want to know that if the downturn gets worse, what plans will be put in place to reduce the livelihood problems of workers affected by prolonged unemployment. Third, why can we not be more generous in our training allowance? We are only giving $600 training allowance which is not enough to meet the meals and transport costs of these workers. It requires more than $3 a day to get to the training places. I am curious to know whether the Ministry could be a bit more generous in providing incentives to train older workers.

Sir, this problem of hollowing out is a very serious one, and the challenge here is China. In Taiwan now, from Taichung southwards, for the last six months, there has been disinvestment and unemployment is climbing rapidly. The mood is grey. Hordes of Taiwanese companies have been shifting operations to the mainland. Years ago, George Perot talked about a great hissing sound because of NAFTA. I think Taiwan is hearing a great hissing sound now from mainland China. We anticipated this. We have been telling our people that the only way for us to earn high wages is to keep on upgrading, which means going up the value chain, product design, value adding services, knowledge intensity, R&D, high-tech. Two months ago, I went to Delphi. Delphi is the auto electronic spinoff from General Motors. They used to make car radios. But after a while, they decided that car radios were not a product they were good at, because we were too expensive here in Singapore and there were tariff barriers to surmount. But they have been thriving and still growing. Making what? They now make small electronic sensors for motorcar air bags. You may use this sensor only once in 10 years and when you need it, it had better work. Otherwise, you may die. So when it comes to very high value added products, we are trusted, we are reliable, we are able to create a system discipline. They make the little electronic components that are now in every spark plug. I did not realise this. When I was in engineering school years ago, for me, a spark plug was just a physical device and if the gap was too big, you just hammered it to the right gap, and it was okay. Now you open the car, you cannot tinker with your carburetor, your spark plug, because they are all electronic. These components for spark plugs, for carburetors, for air bags are high value added. Delphi sells to auto companies all over the world, and their products are shipped by air. This is the only way for our manufacturing to go where we weigh value not by kilogrammes but by knowledge intensity that goes into every little piece. Capacitors which are so small that they look like grains of sand. You visit our wafer fab, each is a $2 billion investment, does not occupy a lot of land, but the knowledge, the system that is in it is fantastic, and you cannot just plonk it somewhere in the jungle and expect it to work. You need people, you need a certain discipline, you need a culture of learning, of upgrading and group effort. So this is the way we are going to solve the hollowing out problem.

can we do more for the livelihood of the unemployed? We are beginning to see increases in unemployment. It is not yet a serious problem. If we need to provide direct income support, should the retrenchment situation become much worse, I believe we will do so. We have many safety nets in place at the national level, by civic organisations and grassroots organisations. Children will always be looked after. There are scholarships available, book grants available. We make sure that there is a safety net should things get worse for everyone. That is the Government's commitment to the people of Singapore, and we have the resources to do it. As to whether we should increase allowances, well, these are allowances and they are not a replacement for salaries. Our fear is while doing all these things, we must not provide a disguised dole. Someone asked earlier whether we should not have an unemployment insurance for more educated workers in Singapore. It starts with the best of intentions, but it has led to long-term structural unemployment in many countries. Because a point comes when it is not worth your while to work, and it is better to declare yourself unemployed or under-employed and collect something. So we are very mindful of that. But if we have got to do more later, we will consider whether some adjustments can be made.

Sir, my question to the Minister is on the issue of reading of the economy, as Dr Wang has brought up. There seems to be at least a six-month, if not longer, lag in the way that the Government is reading the economy as compared to how the rest of the private sector is reading it, and this has been shown a number of times in the past few years. In fact, it was just a month ago when the Minister mentioned that there was no need for off-Budget measures, and here we are - the off-Budget measures. So my question to the Minister is: are the leading indicators that we are using to read the economy good enough this time round, given the rate at which the economy has dropped from +10% to -10%, which is a 20% swing? So my fear is that we may not be reading it well enough. We also heard the Minister mentioning a recovery by the end of this year, and I think this is far from what many other people are saying about a recovery in the second half of next year or even the end of next year. So my fear is: are we through these measures administering the wrong medicine at the wrong time? On the third issue on the China strategy, while I know that the Ministry is trying to derive a China strategy that may be a long-term strategy, in my opinion, with impending WTO, with Olympic games coming to China in 2008, in the short term there are tremendous opportunities, especially in the infrastructure area. Could we, maybe through a package deal of investments between SMEs and GLCs, quickly make our way into China to see whether we can tap on some of the near-term opportunities that are available? My final question is that while we are worried about the fire-fighting that is going on, about the drop in economy, we should not lose sight of the long-term gains that we can get in a knowledge economy, and many of us have asked this before but we have not seen any contribution. I am asking this question on how we can help entrepreneurs and start-ups survive, and even in a worse situation when all the financial institutions, including the VCs whom the Government had funded in the last few years, are being very reluctant to actually pump in any money into start-ups and new ventures even though there may be ideas and they may be viable companies. So the idea of a lifeline fund, and I believe the Minister knows what I am talking about. I hope that while we may fire fight, let us see whether we can do something for the long term through policies like encouraging start-ups and entrepreneurs.

Mr Speaker, Sir, I would like to thank Mr Inderjit Singh for his helpful comments and questions. We construct a number of scenarios. One of them is the one which Stephen Roach proposed: It is as bleak and as dark as we can make it. Even if it comes to that, we will survive, and we will get out of it, and we will emerge stronger. But should some other scenarios eventuate, then it is important that in administering the medicine, we do not overdo it, because there is a price to be paid when we over-medicate. It is a question of balance. And what we have done is, at this point in time, given the situation, we do this first. If we do not have to do more, that is marvellous. If we have to do more, we will do more. That is the position that we are taking. So there is no attempt to gloss over the current difficulties. In fact, the assessment is a very realistic one. This morning, I spoke to the Mexican Economic Minister who is on a one-day visit here. He was quite worried. He is 90% dependent on the US economy for exports, and one-third of the Mexican GNP is derived from the US. So he feels the chill immediately. We were exchanging notes and he said he was going to the US after that and he had arranged a series of calls with economic agencies there in order to get a first-hand feel of the situation. The most important leading indicator is not the one that we construct for Singapore. It is the one that is constructed for the US economy, and that leading indicator in the last few months had tended a little upwards, which is why we are not sure whether that doomsday scenario will in fact eventuate. We will wait and see. We hope that our pessimism is unfounded. But if it is founded, then we will do more. That is the position that we are taking. On China, on the possibility of SMEs and GLCs working together, we should encourage it but we should not force it. Every time we have a trade delegation going to China, and I will be leading one to the western region next month, we bring along GLCs and SMEs together, including Muslim businessmen this time, because some of them will find the Muslim market in China of interest to them. As to helping start-up companies, particularly in high-tech, with a lifeline, as I have explained to Mr Singh earlier, we are doing it but not as a handout, and it will be disastrous for our own reputation if we just hand out money to people who cannot be saved. But if they are good investments, we are open to the possibilities. We remain committed to TIF. In fact, we will be increasing the quantum of TIF. We maintain our links to all the top venture capital funds in Silicon Valley and other parts of the world. And our commitment to the promotion of technopreneurship in Singapore is a long-term one, and the dot-com crash has not reduced our enthusiasm for it.

Mr Speaker, Sir, so far we have been highlighting the IT and manufacturing downturn. The building construction has been going through a downturn since the last Asian crisis. The very recent recession is more or less a final knockout blow. Would the Minister consider accelerating some of the infrastructural projects and perhaps some of the Government's building programmes, so that at least they can provide a little bit of smelling salt to revive this poor chap who has been knocked out?

Mr Speaker, Sir, the real estate developers have been in communication with MTI. I have met a number of them personally to hear their concerns and their views of the real estate market in Singapore. It is a very important part of the domestic economy. It is one market which we have some control over and therefore one which we should watch carefully the development of. We are accelerating infrastructural projects. I mentioned Jurong Island, polytechnics and universities, sewerage works, drainage, roads, tunnels, and so on. If we over-accelerate, we may end up doing things which are unnecessary and wasting money. Worse, we may do things in a rush we should not have done. So this acceleration package which I talked about earlier is the best that we can do at this stage, given the amount of time that we have. In the coming months, if there are other possibilities of bringing forward infrastructural projects, we will certainly consider doing those things. As to the property market, it will find its own balance. It is not as if transactions have stopped. But at the right prices, transactions continue. And from time to time, you hear of projects which are reasonably priced which clear reasonably well. So I listened to real estate developers very carefully, but also know where they are coming from, and from MTI's perspective, our responsibility is not just to them but also to home buyers and to Singaporeans generally.

Mr Speaker, Sir, first, I would agree with the Minister's approach that while looking at the difficulties that are presently before us, we should not lose sight that the middle and long-term prospects are not bleak but relatively good. And in preparing for it, I think we should also look at some of the lessons that we have learned from the last Asian currency crisis. Most of the problems then had been with the CPF and wage cuts and we are helping workers to adjust. I am quite enlightened about Government still continuing with recruitment. I would like to ask whether the Government will also recruit older workers. The other point is on the wage levels which we are talking about, especially with the lower income workers. You can say that there will be pressures to bring wages down, but there is also a problem of having, as Singaporeans, certain living standards and our own cost of living to maintain, and living standards have been down. If we allow freely the wage pressures to go down, it would mean lowering our living standards which is not good for all Singaporeans. Therefore, how are we going to do that and build social cohesion? The other element is that during the economic crisis ---

Mr Thomas, are you making a speech?

No, I am asking questions.

Ask your questions now.

One is whether Government will recruit; two is how do we prevent wages for lower income dropping too low such that they cannot maintain their living standards? And the third question is this. In the last economic crisis, we heard about executives and people who, instead of being retrenched, were terminated and they had a lot of hardship because they lost their jobs and they had no retrenchment benefit, and there was some abuse of the system. What would the Government do about that? The other point is this.

Mr Thomas, can you be direct and ask your question? Because we have a lot of other Members waiting to ask their questions.

Sure.

Do you have any more questions?

One more. The last one is on the Singapore dollar. During this crisis we have a weakening Singapore dollar. The CPF has already been cut. How do we protect the value of the CPF?

Mr Speaker, Sir, on the employment of older workers, I assure Mr Thomas that the Government will not be a laggard in this area. On the importance of social cohesion at a time like this, I think many of us were very appreciative of NTUC's announcement yesterday to lower prices for low income groups and to help children of retrenched workers. I think that package touched a lot of people. And, where we can, all of us, in our own way, should help. In this way, the crisis bonds us more closely together and grassroots here will play a critical role. The role played by the NTUC in the restructuring of Singapore economy is an enormously important one. There are many things that we take for granted in Singapore which other countries cannot do, not because they do not have the knowledge, but because they face opposition. A few months ago, when a Japanese Minister visited us, he asked to visit PSA, and he wants PSA to take a stake in one of the Japanese ports. And he lamented that, when he was a young man, Yokohama was one of the world's great ports, but now Singapore and Hong Kong have surged so far ahead of Yokohama. He wants to turn things around. He cannot, not because the Japanese do not have the knowledge, but because the unions block change. There are two ways to adjust to change. One, you put friction, slow it down so that the pain is less. But the result is when the change comes, the pain will be much greater. Or you say, "OK, these are the hot spots. Let's lubricate. Let's be a bit more tolerant, send workers for training, give allowances, help the unemployed." That is our way. And we have been able to achieve this only because in many of the programmes which we announced earlier, we have been able to work very closely with the NTUC. So the NTUC, in terms of attracting investments to Singapore, is really one of our most important weapons, and the point of our social cohesion is a very important one. And if there is abuse by employers in the way they treat workers or retrench workers, I say, "We come down like a ton of bricks on them because there is a social contract." These are the rules. We all work together because these rules apply to all of us. If you are not required to, then we bite our tongue and say, "Yes, that is your prerogative." But if you breach the rules, then I say, "MOM will go after them." And if we know of such cases, I say, "Let's blow the whistle." On the value of the Singapore dollar, we manage the Singapore dollar in order to preserve the value of the currency. We do not fool around with it in order to alter wage level. And that is the reason why we have been able to maintain the value of the CPF, and that is a policy.

Mr Speaker, I would like to ask the Minister questions in three areas. First, the overall strategy. I agree that globalisation is the only way to go. But does the Minister think our economy is as robust as it should be? In 1998, we seemed to be one of the last one to enter the recession and now we seem to be one of the first. Is that a misperception? Secondly, pump priming. With these measures, will the Government be in deficit? And if it is going to be projecting a deficit, will it actually achieve one? Because, again, in the past, we projected a deficit, but we did not achieve it. Perhaps, we under spent. In respect of the pump priming of infrastructure projects, I agree it is not a question of quantum, but actually achieving it. And in this respect, the role of the PWD, which we talked about earlier in this House, has to be really looked at, with the moratorium of five years. The third area is the Government's help for the individuals. Sir, I would like to ask the Minister again about the training allowance brought up by my colleague, the MP for Tanjong Pagar GRC Dr Vasoo. If this is the training allowance for programmes which we believe truly provide training, why does the Minister believe that it might be a "disguised dole" or is in danger of being so? And if it is a true training programme, why should our allowance be $600 which is not a living wage? And in connection with individuals again, the question of keeping enough savings in the CPF and keeping costs down low for the company to survive is very real. Can I then ask the Minister, if we do generate budget surpluses, whether we anticipate a larger top-up in order to meet the shortfall?

Mr Speaker, Sir, much as I would like to answer many of Mr Simon Tay's questions, I cannot do so because they are really the prerogative of the Finance Minister. You know it is very easy to achieve a budget deficit. In most countries, they achieve it without difficulty. And I do not think we should set that as a target at all. If we need to spend on a particular programme because we are in difficulty, if it improves our capacity, we will do so, but not in order to spend money for its own sake. I think that will be a disaster. The reason why we have survived previous crises and emerged stronger from each of them is because we have been disciplined, and we should continue to be so. And if we do not make major mistakes this time round, we will not emerge worse off. I think it is important not to lose sight of the importance of that disciplined response to problems. Mr Simon Tay asked whether the allowance can become a dole and, if it is not a dole, why can it not be increased. But one shades off into the other. And if you put yourself into the mind of the individual, beyond a point, he will attend any course because it pays him well. So we have got to be mindful. There is a trade-off. There is an optimal point to be struck and we should strike it carefully, and not blithely take the position that the more the better. It need not be. It can lead to a lot of other problems, maybe not for the individual himself, but for other people.

Mr Speaker, I do not think the Minister has answered my questions on the CPF top-up and the robustness of the economy.

On direct income support, as I said earlier, if we need to do more, because of widespread unemployment, we will do so. That I am sure will be announced either during the Budget or earlier or later if the situation warrants it. On the robustness of the economy, it is a big question. Our economy is quite diversified, both in terms of the balance between services and manufacturing, within manufacturing itself, and in our geographical dependence. Our strategy has always been not to be completely dependent upon one market or one country. And that is one reason why, when negotiating all these free trade agreements, we make sure that we have broadband economic connectivity with all parts of the world. What is unfortunate is that all the planets are now in the wrong alignment simultaneously. If you do a regression analysis of the Singapore economy with the key variables, although the variables are connected, these three variables stand out - the US economy, the semiconductor cycle, Malaysia and Indonesia. The US economy is down, semiconductor is down, Malaysia and Indonesia are not in the best position. Maybe, and this is a prayer, with the opening of a new chapter in Indonesia under President Megawati, one planet has moved out of this misalignment. We had a meeting in MTI yesterday, we are quietly hopeful. Indonesia is a major trading partner of Singapore. It brings opportunities to many little businessmen all over the island. If Indonesia can restore political stability, the rupiah, as it is, makes Indonesia highly competitive even vis-a-vis China. And if they can establish free trade zones in various parts of the archipelago and create conditions which assure businessmen of stability, I think they can take off. And I was cheered that the US, the EU, Japan, the IMF, have all come up with strong statements in support of President Megawati. We would do our part, but we are small. We can only play a catalytic role. If the situation in Indonesia does improve, that is one bright spot for Singapore.

I think we will continue with more questions after the tea break. I suspend the Sitting and will take the Chair again at 3.45 pm. Sitting accordingly suspended at 3.25 pm until 3.45 pm. Sitting resumed at 3.45 pm

Debate resumed.

Mr Speaker, Sir, I have a question on the robustness of our economic strategy. Sir, going by the retrenchment trends during the previous and current crises, it would appear that the manufacturing sector, particularly electronics, is more vulnerable to regional cost and global demand factors than, say, the services sector. I would therefore like to ask the Minister, firstly, if there is a need to revisit the strategy of building the economy on the twin pillars of manufacturing and services, and, secondly, what really is our ability to diversify away from the huge reliance on electronics.

Mr Speaker, Sir, we continue to hold strongly the view that we must keep manufacturing as an important part of our economy and to have both manufacturing and services as twin engines of our growth. In the last economic crisis, without manufacturing, we would have been in deep trouble. This time round, both are down. Next time round, it may be the other way. So it is hard to say. The fact that we have both, gives us more diversification. But, of course, the world is changing, IT is changing the nature of industry. Within manufacturing, within electronics itself, we have to diversify and move into more knowledge-intensive activities the best way we can. And that is one reason why we are making very major investments in the bio-medical sciences. It will take many years before that sector bears fruit but, if we do not do the work now, there will be no harvest later. Our hope is to make that the fourth pillar of manufacturing in Singapore, after electronics, engineering and petrochemicals.

Mr Speaker, Sir, whilst I agree with the approach taken by the Government, especially when I personally think that the economy may well recover in the second half of next year, I would like to ask the Minister whether he could take steps to rectify the situation on the ground, of which I am very deeply concerned. Sir, if you could bear with me, I would like to use an example to illustrate.

Can you get directly to your question?

Yes, Sir. I will put what I want to say in a question form, Sir. Sir, would the Minister look at situations where, like the self-employed, because they need to renew their business licences to continue their business, are not allowed to do so because they have not contributed to the CPF and, because they are not allowed to do so, they are threatened with the cancellation of licences and, therefore, their livelihood will be destroyed. I would like to ask the Minister whether he can look at this situation as well as right across all Government agencies, bodies, departments and ministries where such regulations may be present to cause further hardship to those already suffering financial hardship.

Mr Speaker, Sir, there are genuine cases and we should handle them in a sympathetic way. As an MP myself, I have received such cases and there are, among them, some really genuine ones which we should support. So I will convey his particular request on the CPF to the Ministry of Manpower and, on the more general point of reviewing our rules and regulations, to make them more business-friendly, this is an on-going exercise. And whatever views or problems that businessmen face, please raise them either to me directly or to this House.

Mr Speaker, Sir, this downturn seems to have caught everybody by surprise. Just only about three months ago, we thought the economy was going to expand quite nicely this year. The question I want to ask the Minister is: how is it that our econometric model can be off the mark so quickly? Is it a model that we can use, for example, to take economic decisions on what is going to happen further down the road? If not, are we just going to base our decisions on US leading indicators, like Mexico? In other words, how good is our forecasting? The second point I want to ask the Minister is: despite the bright spot of China entering the World Trade Organisation, there is concern among the business circle, those I talk to, that getting the Olympic Games to be staged in Beijing is likely to soak up or suck in a lot of investments away from Asia. What is the Minister's assessment of this, Sir?

Mr Speaker, Sir, the first point about the accuracy of econometric modelling, the model is only as good as we understand the world and we must have good inputs. Globalisation has reduced inventory cycles so that when there is a shock in one part of the world, it transmits very quickly to other parts. Old assumptions no longer hold true. Last year, because of the Nasdaq crash, Christmas sales in the US were down. By November/December, it was felt by purchasers, it was felt by the airfreight companies. By January, Federal Express cut back on employment because they saw the economy turning down. In Singapore, we had a wafer fab which still had full order books in February and they rushed to complete it. And they broke a record from "Sand to Silicon in 16 months", but by the time they opened the fab, the order book had fallen out, to their regret. And this is because the transmission is now almost direct, that when orders are placed, they are placed not only with those who supply the items, the same orders are sent to the supplier's supplier's suppliers. And the result is inventory buffers have come down sharply and there is much less buffer in the economic system as a whole, which is why shocks get transmitted very quickly. The good thing is: if we can come down so quickly, we can also climb up quickly. That is the obverse of this conclusion. It is a problem. Last year, we kept on reviewing our economic forecast upwards; this year, we kept on reviewing it downwards. I do not think we can do any better, because this is a global problem.

Sir, the Minister has not responded to my second point about China, on the Olympic Games.

Mr Speaker, Sir, I do not quite know enough about this to give a considered reply to Mr Chng.

Mr Speaker, Sir, one of the greatest problems SMEs are facing in this downturn is the sudden decline in orders and decline in revenue and, as a result, some SMEs are not able to get enough cash flow to service the interest. I wonder whether the Government can actually do something to help these companies in the short term service their interest or even some other working capital problems.

Mr Speaker, Sir, when times get more difficult, it is natural that interest rates go up for higher-risk loans, and some companies face difficulties getting financing for working capital. The assessment of such risks cannot be done by the Government, cannot be done by PSB. It can only be done by banks and by lenders. Whether or not we can tweak LEFS in such a way as to provide some assistance is something that we can consider, but I need to get my staff to study it more carefully before agreeing to the proposal.

Mr Speaker, Sir, may I ask the Minister two questions. The first is: the package is silent on measures to help the unemployed or retrenched to service home mortgages, unlike the schemes available in 1998. I would like to know whether the Government has plans to provide such schemes in light of the fact that about 20,000 are expected to be retrenched this year. The second question, Sir, is on the calibration of the Government's response. In 1998, the growth was 0.5% and the Government came out with a $10 billion package. Even netting off the CPF wage cut aspect, it was still about $2.5 billion. This time round, our forecast is 0.5% to 1.5%. So the low end is in a similar range to 1998 and, as the Minister says, it is structuring a bottom. So we have not seen the bottom yet. The package of $2.2 billion, in fact, includes some carry-through measures from the last cycle. So the question really is: why is the Government being somewhat more restrained this time in its package when compared to the situation in 1998?

Mr Speaker, Sir, as I said earlier, the retrenchment problem is still not widespread. There is widespread fear because of growing retrenchment, but the retrenchment itself is not yet widespread. We can sense this at our meet-the-people sessions - the number of hardship cases that we are seeing. If it does become widespread, which means that our darker scenario is the more accurate one, then we may need a package of income support for those who are in distress. But we have not reached that point yet.

Sir, the Minister has not answered my second question on calibration of response.

Mr Speaker, Sir, I thought I answered that we have to calibrate our response to the actual situation. If this turns out to be a relatively short downturn and at the end of this year or early next year the global economy turns up again, then these measures which Mr Iswaran talks about ought not to be necessary. But if it is more prolonged, which is entirely possible, then we will have to do more. And some of what we do will have to be in the form of direct income support to individuals.

Mr Speaker, Sir, in the area of tourism, which I think can help our retail sector, my question is: why are we satisfied with just double-digit growth? I think there are a lot more Chinese tourists out there who are interested to come to Singapore. So what are the plans that are being put in place to attract more of them to come here, to stay longer, to spend more and also to buy more branded goods, eg, jewellery, watches, etc? I would also like to know whether the Ministry has plans to weed out those unscrupulous tour agents and shopkeepers.

Mr Speaker, Sir, Mr Goh is right that tourism is one sector which we should give particular promotion to during this period. And tourism arrivals from China and India will put food on the table for many families in Singapore. Therefore, this is an area which we should try to do more on. It is likely that Singapore Tourism Board will open more offices in China to exploit the rapid growth in Chinese tourism beyond China. They already have a very large domestic tourism, but as each province builds up its middle-class, the desire to travel is very great, and many of them like to come to Singapore. And we should welcome them. For historical reasons, because we were afraid that some of these tourists may in fact turn out to be illegal migrants, we have put all kinds of controls in order to ensure adequate safeguards. We have relaxed some two years ago, and MTI is now taking the issue up to MHA again to see whether we can relax it further, to make visa applications easier. On the point about the consumption of Chinese tourists, many of them come here on package tours which are very cheap. Then, when they come here, instead of being brought to see cultural sites, they are brought to shop and they are made to pay high prices because these are the only shops they are brought to. We have been collecting statistics. They are high spenders, especially in jewellery items. On the Chinese side, they have been wanting us to help them weed out these zero-cost package tours, which are really an abuse, and we are working with them but it is not quite easy, because that is the way the market is operating. If people want such tours, they will get such tours, one way or the other. It is like going to Las Vegas.

Order. General George Yeo, could you give way to the Leader of the House to move a procedural motion before 4 o'clock?

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

Debate resumed.

Sir, in summary, we support what Mr Goh has proposed.

Sir, on the enhanced Skills Redevelopment Programme whereby employers need to pay only 20% of course fees, may I know how soon can it be implemented? As we know, many companies need to send hundreds of their workers for SRP training but they are facing this cashflow problem of paying 100% of the course fees first. In particular, a company which sends 200 workers for a $3,000 programme, it would cost them $600,000 and the claim from Government takes months. My second question is whether the Minister will agree with Mr Simon Tay's suggestion of keeping PWD Corporation out of public projects. If so, the workers from PWD Corporation will suffer and be retrenched.

Sir, in reply to Mr Seng Han Thong's first question, as quickly as possible, there will be no unnecessary delay in working out the details of this programme. On PWD, our responsibility is not only to the industries. It is also to those workers in PWD who work with us faithfully for all these years. So when we told them that we were going to privatise it, we owed them a responsibility and we had to encourage them to move out from a permanent Government service into a private company. To give them that assurance, and they have families to support, we told them, "All right, five years' moratorium." I think we should stick to it and not because we are under pressure, cause a breach of faith in the solemn undertaking which we gave them.

Sir, I would like to pose two questions to the Minister. May I ask whether the HDB rental rebates announced earlier would more than offset the recent HDB rental hikes, or would the Minister consider reversing these HDB rental hikes to give an even better impact on these post-budget measures? Could I also ask the Minister whether he would give more incentives to businesses, factories and manufacturers to turn the downturn time to opportune time by helping them to revamp and upgrade to improve their competitive edge and their productivity?

Sir, Dr Lily Neo had an exchange with Minister Mah Bow Tan earlier on this particular issue of rental rebates. There are really two choices. For those who are already below market rental, we could have said, "Look, you do not qualify for the additional rebates because you are already below market rental." Or we say, "Let us separate the two aspects". There is already a long-term policy to bring them up to market rentals so that shops on the same row operate on a level playing field and, on that basis, we give them their rebates. Or have two separate classes of shops. I agree with Minister Mah Bow Tan that the one we have proposed is the fairest. As to whether in specific dollars and cents for particular shops, whether the net result is positive or negative, that question I would have to refer to Minister Mah Bow Tan for response because I am not familiar with the exact details. It probably varies from shop to shop. As to the other question about incentives to help our shops upgrade and become more productive, as you know, we have many programmes under PSB to help them. It is not easy. Very often, it depends on whether their own children are prepared to take over those shops and to have them upgraded. For those whose children are not prepared to join their fathers' shops, then we have got a scheme to help them exit. I believe each is given a grant of $48,000. We cannot avoid this restructuring. Basically, we have too much retail space in Singapore. Recently, in Bedok Reservoir, Sheng Siong opened a new supermarket. They say, "Special sale - eight cucumbers - $0.30". Everyone flocks there. My residents are all very happy. But all the neighbourhood shops are very unhappy. Can we stop it? Is it good to stop it? Even if there is no Sheng Siong, there is Carrefour, there is Walmart. There will be other chains operating, which will be able to sell at lower costs because they have got better supply chain management and they have got stronger purchasing power. Our job is to facilitate adjustment, not to add friction to market adjustment. That is the approach we are taking. For those who want to make the adjustment, we help them in as many ways as we can. For those who want to exit, we try to make it as easy for them to exit as possible.

Sir, the "People for Jobs" Traineeship Programme is a good programme to help workers who would find it difficult to take up technical based courses. Does the Government have any estimates of the number of people who can be considered as most vulnerable, people who would find it very difficult to move into technical lines? What is our target of training places for this programme?

Sir, I do not have the detailed forecast. The Ministry of Manpower would have them. But the basic policy is clear that we will do as much as there is demand. In other words, budget would not be a constraint and if there are better ways to make the programme work, we will do as much as possible. This is a big group in Singapore, the baby-boomers, many of whom do not even have more than six years of education. They will be in the system for another 20 to 30 years and our fear is that many of them would become demoralised if they are not able to find gainful employment. With this economic downturn, there is widespread fear among them that if they are retrenched, it is very difficult for them to get a job again. We must find various ways to help them. We have proposed some initial measures but our people are still thinking about them. The unions and employers' associations are also thinking of them. As and when good ideas come forth, we will implement them. But the basic position is to do as much as we need to do and budget ought not to be a constraint.

"to amend the Patents Act (Chapter 221 of the 1995 Revised Edition)", presented by the Minister of State for Law (Assoc. Prof. Ho Peng Kee); read the First time; to be read a Second time on the next available sitting of Parliament, and to be printed.

"to amend the Parliamentary Elections Act (Chapter 218 of the 2001 Revised Edition)", presented by the Minister for Information and the Arts (Mr Lee Yock Suan); read the First time; to be read a Second time on the next available sitting of Parliament, and to be printed.

"to amend the Constitution of the Republic of Singapore (1999 Reprint)", recommendation of President signified; presented by the Minister for Home Affairs (Mr Wong Kan Seng); read the First time; to be read a Second time on the next available sitting of Parliament, and to be printed.

"to establish a new occupational superannuation scheme known as the INVEST Plan for officers in the uniformed services under the Ministry of Home Affairs and the INVEST Fund for the purpose of that Plan and for matters connected therewith, and to make a consequential amendment to the Pension Fund Act (Chapter 224A of the 1996 Revised Edition)", recommendation of President signified; presented by Mr Wong Kan Seng; read the First time; to be read a Second time on the next available sitting of Parliament, and to be printed.

Order for Second Reading read.

Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." The Civil Service College is currently a department under the Public Service Division, comprising the Institute of Public Administration and Management, the Institute of Policy Development and the Civil Service Consulting Group. The College is the key supplier of training and consultancy services to the civil service. The Government intends to fold in the Personnel Guidance Unit, another department under the Public Service Division and restructure the combined entity into a new statutory board under the Public Service Division to be known as the Civil Service College. The objective of the Bill is to provide the legislative framework for the formation of this new statutory board. The Government places great emphasis on the training of civil servants. Our target is to give every officer at least 100 hours of training per year. Public sector organisations cannot deliver effective, high level of service unless public servants are well-trained. It is not only about equipping officers with work-based skills to better perform their duties, but with management tools for organisational development. We also want to imbue in them the appropriate values and mindset as public servants. In today's intense competition for talent, good people consider more than pay and career prospects when deciding whether to take up a job. They also look for avenues for further training and personal development in the course of their work. The public service will not be able to recruit and retain good officers if it does not offer them meaningful opportunities to be trained and developed for challenging assignments. The existing Civil Service College plays a key role in training civil servants. It offers a wide spectrum of programmes. There are courses on management issues, including human resource management and employee performance management, and operational matters like use of IT in the public service, service quality, finance and accounting. Other courses focus on leadership and policy development. The College also provides consultancy services on public sector reform initiatives, promoting organisational, people and system development through programmes like learning organisation, people developer standards, the ISO 9000 and the SQA. But the frontiers of the knowledge economy are constantly advancing and our operating environment is rapidly changing. Public officers have to keep their knowledge and skills up to date to stay relevant and productive. We thus have to continually improve existing programmes offered by the College, as well as to develop new programmes to meet fresh requirements. We also have to pay attention to the delivery of training programmes and the organisational structure of the College. Our aim is to make training more accessible to public sector organisations and help them in their organisational development. This is the background to the plan to convert the Civil Service College into a self-funding statutory board under PSD. The College's activities, such as new training programmes and consultancy projects, typically have long gestation periods. The College has to bear the developmental cost first and recoup them when the projects are completed or the new programmes are rolled out. Some of the College's programmes would then have application beyond the civil service. As a statutory board, the College can internalise their cost and revenues from its activities and so maintain more flexible control over its finances. From the point of view of human resources, the demand for the Civil Service College's training and consultancy services is not constant over time. The College needs the flexibility to assemble teams of competent trainers and consultants, in sync with its work schedules, including employing them on short-term basis for specific projects. The College will be able to do this much more effectively as a statutory board rather than as a Government department. The Personnel Guidance Unit is presently not part of the College. It provides consultancy services and applied organisational psychology. It helps public sector organisations select new recruits, as well as provide programmes for organisational diagnosis and personnel development. These are closely related to the Civil Service College's broader consultancy services on promoting organisational excellence. Putting the Personnel Guidance Unit together with the College will enable the College to provide an integrated range of services spanning assessments, selection, training and organisational development. Let me now turn to the main aspects of the Bill. The board of the statutory board shall consist of a Chairman and 5 to 15 other members, all of whom shall be appointed by the Minister, as provided by clause 5. The statutory board will take on the existing functions of the Civil Service College and Personnel Guidance Unit. The primary function of the statutory board will be to provide training for public servants and contribute to the public service's organisational development efforts. The functions, objects and duties of the statutory board are laid out in clause 13. Clauses 18 to 29 are the financial provisions. The statutory board will be self-funded with its main source of funding being fees for the services it provides. The transfer of property, liabilities and employees are provided in clauses 30 to 36. All properties, assets and liabilities of the Civil Service College and Personnel Guidance Unit departments will be transferred to the College upon its formation. All the employees of the two departments, apart from the Administrative Officers, will also be transferred to the statutory board at terms that are no less favourable than those enjoyed by the employees before the transfer. The other provisions in the Bill are standard provisions found in the Acts of other statutory boards. Sir, the Government has been continually restructuring itself to stay effective and relevant in a changing environment. We have been spinning off statutory boards from the Ministry to give them more autonomy and flexibility in their operations. We have separated the regulatory and operating functions of some statutory boards, hiving off and corporatising their operating functions into independent companies and setting up regulatory agencies to supervise the industries. As new issues and areas emerge which demand focused attention, we are also merging existing statutory boards and setting up new ones. The work of restructuring, however, is never finished. The restructuring of the Civil Service College, as a statutory board, will enable it to better focus on training and organisational development for the public service. This will help us to further upgrade the College and enhance its value to the public service. Ultimately, this should result in better trained public servants who will help to create a first-class public service in Singapore. Sir, I beg to move. Question proposed.

Sir, a lot is expected of the civil service. It has to continue to be efficient, responsive, innovative and service oriented if it were to meet the new demands and needs of the public and to function in the restructuring process of the Government organisations. It is especially true now as our society is undergoing rapid changes, especially in the way people communicate. The Internet has made it possible for people to give feedback more directly. It has also resulted in demand for e-services. The Civil Service College has a very important role in training civil servants to meet this challenge, especially because the Government aspires for the civil service to be among the best in the world. Indeed, the quality of civil servants determines whether the public service is able to respond to the new challenges and demands. In this context, I would like to ask how would the Civil Service College respond to the challenge of civil service in providing e-services to the public, ie, how the College supports the civil service in this challenge, and how the College itself is responding to the challenge of e-services. Secondly, how would the College assist officers who are moved from one department or Ministry to another so that they can continue to function efficiently? Sir, I support the plan for the Civil Service College laid out by the Deputy Prime Minister.

Sir, I rise to support the incorporation of the Civil Service College as a separate entity to allow it to be run autonomously, efficiently and effectively. The Civil Service College, if run successfully and getting our civil servants to discharge their duties and responsibilities diligently, will not only benefit the civil servants but also the members of the public whom the civil servants serve. I see a lot of potential for the College to network with the industries and private sector organisations, both in Singapore and overseas. I am sure that the College will be seeking out opportunities to benefit from opening to and participation from the academia, the private sector companies and professional services firms. As some MNCs will become powerful and influential in the globalised world, the public sector officers need to understand how these MNCs work. The civil service should also benchmark itself against the best practices adopted by excellent globalised MNCs. Sir, we have an excellent public service. We have an established tradition of evolving and strengthening the performance standards of our civil servants. We have sound policies and effective execution by civil servants. Of course, we have the odd occasion of failures, of doing things less well. All these have become the institutional memory and wealth knowledge and information retained in our public service. The world is converging towards requiring high standards of ethics and governance from governments for its citizens. There is a need for civil servants and entrepreneurs, CEOs and professional managers to understand each other. The College can facilitate the exchange and participation in each other's work and programmes. Singapore has benefitted from the experience of many established public service of developed countries. We have learnt from them and adapted in ways that work best in Singapore. Sir, I think it is now our turn to help the less developed countries to improve the standard of public servants for the benefit of the citizens of the world. And I hope the Civil Service College will provide space and opportunities for the public sector employees of overseas countries. Like the Jamaican MP who is impressed with Senior Minister Lee Kuan Yew's memoirs in how Singapore has succeeded when many others had failed, and we also read from the press report of Chinese bureaucrats who decided that by doing the Master in Public Administration is better than the MBA because it is more appropriate to their work, are examples of the attitudes and actions taken by well-meaning civil servants if opportunities are made available for them to carve a career in the public service. As learning has become even more important in the globalised and deregulated world and the active participation of citizens on our civil society, I would urge the Government to continue to provide the necessary funds and support in ensuring that adequate resources are provided. In the fast-changing world, civil servants also require to be adequately trained and developed for their jobs. As the iron rice bowl mentality of civil service is a thing of the past, the well-trained civil servants can take comfort that they can make a career switch with ease, making use of their skills, knowledge and experience in their second and subsequent careers. Finally, Sir, I presume that the Civil Service College will train all levels of public servants from the lowest to the highest grades. This is in line with the learning culture which we wish to inculcate in Singapore. The nature of work requires people working in teams. It requires an integrated and inter-disciplinary approach to problem solving and innovation in the delivering of services to the public. Sir, with its new character and status, I have no doubt that the College will become a world-class institution of learning for Singapore's civil servants.

Sir, I would support the establishment of the Civil Service College as an institution of education to improve the quality of our civil servants. This College, I understand, is not new. It was already in existence on or about the time when the PAP took power in 1959 or thereabouts. But I wonder why after nearly 40 years the Government wants to formalise its establishment. Sir, I support the formal establishment of such a College, but I have some reservations. A glaring anomaly is that it is supposed to be an institution of education, but turns out to be more a political institution. It is not formed under the jurisdiction of the Ministry of Education but under the charge of the Prime Minister's Office. Politicians are made to be in charge of this College and not professional educators. I think this is significant. I stand to be corrected, Sir. I believe that it was formed in the early days to educate civil servants on the threat of Communism and dangerous left-wing elements which were present in those early days. But, today, there are hardly such threats any more. Communism in Russia and China has collapsed for good. Both these countries have abandoned Communism as a doctrine and there is no fear of spread of Communism to other countries, including Singapore, anymore. If such is the case, then what is the thrust of the teachings of the College these days? Singapore is well known for its efficiency. I certainly have no objections to the training of our civil servants to be efficient, but I hope that the efficiency of our civil servants is neutral to all parties. The civil servants must serve the whole population without any fear or favour, and not to favour any political parties. Sir, I would take this opportunity to tell the civil servants in Singapore that the Opposition in Singapore is a loyal opposition. We are loyal to the Constitution and loyal to Singapore. We are just as responsible as the ruling party or any other Singaporean in regard to nation building, and keeping Singapore a peaceful and prosperous place. I am saying this because in my early days of participating in politics, my experience was that when the Opposition made an application to the HDB or to the Police for a public entertainment licence, we were treated with suspicion by civil servants. Those applications were in relation to a simple thing like holding a public dinner, and yet there was always a long delay. There was always complete silence to our application. And what we had to do was to send constant reminders and make telephone calls to the authorities, but we got no answers. Those applications, mind you, were not earth shattering applications. They were just simple procedural applications to hold a public dinner. My experience was that when I telephoned an officer, he would say, "Oh, your application has gone all the way up." My goodness, can you believe that? It was a simple application, and the application went all the way up, and no answer had come down yet. That was why there was a delay. Sir, I am not exaggerating. A simple application of the Opposition to hold a public dinner, and yet our application had to go all the way up to the top. Any application from the Opposition appeared to be like a hot potato to the civil servants, and no one wanted to make a decision on it. With the formal establishment of the Civil Service College, I hope that the right things can be taught in this College, to defuse the fear and suspicion of the Opposition, and not treat us as if we are like animals with horns and sharp teeth. I would like to remind the civil servants that we are also Singaporeans who treat Singapore as our home. Our true intention is also to make Singapore a better place to live in. I hope this message somehow can get into the teachings of the Civil Service College.

Mr Speaker, Sir, perhaps I will take Mr Chiam's points first since they are fresh and vivid in our minds. Mr Chiam is mistaken. The Civil Service College has nothing to do with the Political Study Centre. The Political Study Centre is what the PAP Government set up in 1959 when it first came into power in order to educate the civil servants in the realities of Singapore's politics and what the communist threat was and what the nation-building priorities were. That was in 1959. The Civil Service College is the successor of what used to be called CSSDI (Civil Service Staff and Development Institute) which was at Heng Mui Keng Terrace at Pasir Panjang. It runs staff courses, courses for middle management, courses for senior management, courses on governance, courses on good English writing, courses on how to be a good civil servant, including how to deal expeditiously with difficult hot potatoes! CSSDI had been there for many years. It was converted into a Civil Service College about a decade ago and now we are going to convert this into a statutory board, so that it can operate more flexibly and have more leeway in hiring people and taking people on contract, in doing activities beyond the strict traditional mandate. Because, as Mr Loh Meng See says, the Civil Service College also has to have links with what is happening in the outside world, to be benchmarked against best practices amongst the MNCs. So the two are totally separate, and politics is not in charge, neither are politicians in charge. These are professional educational courses which need to be run for civil servants at all levels, from the top Permanent Secretary potential, all the way down to the clerical officer or to the EO. So it is a completely neutral outfit. It has nothing to do with the travails or the vicissitudes which the Opposition gets into from time to time. I have no doubt that we will inform all civil servants that the Opposition does not consist of animals with horns and sharp teeth, and that they should defuse their fear and suspicion of the Opposition. I will make a point of informing them this. Mr Hawazi asked about e-services. E-services are indeed an important public sector initiative because it is a way for us to improve our service, a way for us to get across to the public to provide our services, to get responses to service them better. Therefore, the College provides a comprehensive range of IT programmes to help the officers to become comfortable and adept at IT in order to support electronic delivery of services. In the management programmes, there are also modules to prompt participants to consider how e-government could be adopted to help respective organisations improve their internal processes and service delivery. The College itself is also adopting infocomm technologies to better service its customers and has started offering e-learning services through its open academy. So this is one significant area for the College to focus on. The College also does assist officers who are moved from one department or Ministry to another, as Mr Hawazi has asked. It offers skills programmes to help officers to be trained for new work requirements if this is necessary. Apart from the skills specific programmes, it also has developed mental programmes to help officers prepare for and cope with different transitions in life, including changes in the work environment. Mr Loh Meng See asked about benchmarking against MNCs and the private sector. Most of our programmes are focused on the needs of the public service. That is the main mission of the Civil Service College. But we do recognise that some of these programmes offer a platform for interaction among participants from the public and private sectors which enriches the learning environment and exposes participants to more valid initiatives and perspectives. So although the College's courses are geared towards the public sector, some of these courses are open to private sector participants, except for a few in-house courses which are especially sensitive. Training for foreign civil services - indeed we do provide training as well as consultancy. In fact, the College frequently serves as a one-stop contact point for foreign civil services on matters relating to public service reforms and initiatives because many foreign civil services are interested in finding out more about Singapore's corporate governance. These interactions are valued by the College. They provide opportunities for the learning and sharing of best practices in public administration and they strengthen the understanding between Singapore and the foreign civil services. We have had amongst other civil services, civil servants from Bhutan, Botswana, China, Macau, Thailand and Vietnam, to come to the College, and they use the services which are often specially tailored to the needs of the respective civil services. I think with the increased operational flexibility of a statutory board, the College will be better placed to assemble teams of trainers and consultants quickly in response to these requests. Finally, Mr Loh Meng See asked whether the courses cover all levels of the civil service. The answer is yes. Because training is relevant and important to all levels and so the programmes cater to all levels according to their learning needs, ranging from management development programmes for senior civil servants to office skills programmes for support level civil servants. It does not mean the College does every single course. For example, it does not offer unique vocational training like nursing or civil defence which the professional organisations will provide. But the College provides the broad training programmes for the whole range of the civil service, from the bottom to the top.

Question put, and agreed to. Bill accordingly read a Second time and committed to a Committee of the whole House. The House immediately resolved itself into a Committee on the Bill. - [BG Lee Hsien Loong]. Bill considered in Committee; reported without amendment; read a Third time and passed. 4.38 pm

Order for Second Reading read.

Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." Sir, this Bill amends the Land Titles Act to, firstly, facilitate the conversion of land from the common law system to the land titles system of registration; secondly, improve the administration of the Act; and thirdly, clarify the law. In drafting this Bill, we have consulted the relevant Government departments dealing with land as well as the Law Society of Singapore. Let me highlight the main changes to the Act. I will, first, discuss the amendments to facilitate the conversion of the remaining 2% of our lands from the old common law deeds system to the land titles system of registration. There are currently two land registration systems in Singapore - the "old" common law system under the Registration of Deeds Act and the "new" land titles registration system under the Land Titles Act. The latter provides for a simpler and clearer land register. The exercise to convert all the lands in Singapore from the common law system to the land titles registration system started in 1996 and we aim to complete it by the end of this year. The Registrar of Titles has converted about 9,200 land lots with a balance of about 2,500 lots. Completing the conversion is hampered by certain technicalities in the law which the following amendments will address. First, the Bill will allow the Registrar to convert leases of about 3,000 flats which were registered under the common law system during the 1950s and 60s. This was before the Land Titles (Strata) Act came into operation. Currently, it is not possible for the Registrar to initiate the conversion of these leases. The amendments pave the way for this. In addition, to facilitate the process, as one owner's non-response can hold up the entire development's conversion, the amendments provide that the Registrar can advertise the notice of conversion in the local daily newspapers and send a copy of the notice to the owner informing him that the conversion will take place after the expiry of 21 days from the date of publication of the notice. Thereafter, the Registrar will simultaneously convert the land and the leasehold title for all the flats so that the entire development can be brought under the Act. Next, the Bill will enable the Registrar to convert land of whatever tenure. Currently, leases with an unexpired term of less than 10 years have been excluded as it was felt that they would be expiring soon. However, if they are not included in the conversion exercise, we will have to operate two systems in the meantime. This does not make sense. The Bill will also allow the Registrar to issue a certificate of title in the name of a deceased proprietor to prevent conversions being held up for months or even years because of delay in settling the estate matters. Some of the Australian states faced with this problem have similar provisions in their laws to deal with this issue. However, I wish to assure Members that although a certificate of title will be created, it will remain in the Registrar's custody and only released to the personal representatives after the deceased proprietor's estate has been settled. The Bill also deals with common law private leases. These are very old leases created in the 1800s. A good number of them do not even state a date for the commencement of the leases. They indicate the tenure but not the commencement date, which is necessary for the issuance of titles upon conversion of the lands. So, the Bill allows the Registrar, for the purposes of converting the lands, to assume that the lease commenced from the date of the lease. Sir, let me now touch on the other amendments. Land converted from the common law system is held with a caution stating that the title is subject to pre-existing claims or encumbrances. This means that the State does not guarantee the title to be free from encumbrance and a buyer of qualified title must still investigate the pre-existing common law deeds, making the conveyance more expensive. It is only when the caution lapses that the title becomes indefeasible, backed by a State guarantee. Sir, under the present law, a caution lapses only if there is a sale of the land after title conversion. The Bill will provide for the automatic lapsing of cautions 10 years after the land was converted, or after 2 years from the commencement of this amendment, whichever is later, even if there has been no sale after title conversion. This will result in more unqualified titles, which benefits the public, as the title investigations are easier and therefore cheaper. This amendment will reduce the number of qualified titles from about 13% to about 7% after 2 years and completely eliminate them after 10 years. The Bill will also now make it necessary for anyone dealing with a landowner to conduct bankruptcy searches. They can no longer rely on the Land Titles Act to exonerate them from notice of any bankruptcy proceedings affecting the landowner. This is necessary as the Bankruptcy Act provides for the automatic vesting of a bankrupt's property in the Official Assignee. The land register therefore may not show that the bankrupt's property is now vested in the Official Assignee. This amendment will not make things onerous for, say, a prospective purchaser, because in practice, lawyers invariably make bankruptcy searches during property transactions. These searches are easy to carry out as the Official Assignee's records are computerised and available for remote online search. I will now touch on the amendment relating to restrictive covenants. A restrictive covenant is an agreement made by one landowner with the owner of the neighbouring land not to do certain acts or things on his land such that it would adversely affect the neighbouring land, for example, not to build a block of flats on his land. For registered lands under the Land Titles Act, the restrictive covenant will last for 20 years from the date of its creation or notification on the land register. It can be extended for 10 years each time. For lands registered under common law, a restrictive covenant can last forever unless it is released by the owner of the neighbouring lots or extinguished by an order of court. Sir, most of the existing restrictive covenants created at common law are obsolete as they have been superseded by planning and other regulatory laws. The Bill therefore provides that restrictive covenants created at common law in respect of unregistered land may, unless extended, be extinguished automatically after the expiration of 20 years from the date of its creation or the expiration of five years from the date of notification on the land register or two years from the date of the commencement of this amended provision, whichever is the latest. This amendment will facilitate urban redevelopment of the land. Next, the Bill clarifies the position on unilateral severance of joint tenancies. In 1993, a new way to sever a joint tenancy was introduced, that is, severance by unilateral declaration. A person who co-owns property as a joint tenant is able to sever the joint tenancy by a simple unilateral notice in writing. At law, severance usually results in equal shares. But there have been owners claiming to unilaterally sever joint tenancies into unequal shares. The Registrar is not in a position to verify the truth of such claims. Therefore, the Bill now states very clearly that unilateral severance of a joint tenancy can only be in equal shares. The amendment also clarifies that tenants-in-common can convert their holdings by way of a declaration to joint tenancy only if they are tenants-in-common in equal shares. Co-owners with unequal shares who wish to hold as joint tenants can do so by way of a transfer as there is in effect a transfer of some of the interest of the co-owner with the larger share to the one with the lesser share. Finally, let me deal with the definition of "land". The current definition of "land" includes airspace or subterranean space which is held apart from the surface of the earth. This definition has posed problems because in the new mixed-use developments, the State is required to issue titles for parcels of land comprising airspace cum subterranean space. One example of this is the Sengkang MRT/LRT station which will be four storeys above ground and two levels underground. To facilitate such developments, the definition of "land" is amended to enable title to be issued for a parcel of airspace cum subterranean space. This will facilitate the creative design of complex integrated developments. Sir, this Bill will go a long way towards improving the administration of land law in Singapore. Sir, I beg to move.

Question put, and agreed to. Bill accordingly read a Second time and committed to a Committee of the whole House. The House immediately resolved itself into a Committee on the Bill. - [Assoc. Prof. Ho Peng Kee]. Bill considered in Committee; reported without amendment; read a Third time and passed.

Order for Second Reading read.

Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." Sir, this Bill is to effect a number of minor or technical amendments to several Acts. Repeal of the Coin Act First, the Coin Act. Clause 5 repeals the Coin Act. The Coin Act regulates the import and export of coins. It was enacted way back in 1903 during the Straits Settlement days to prevent large inflows of coins that threatened to displace the circulation of Straits Settlement coins. That objective obviously is no longer valid today. Currency now flows via electronic and other means. It is highly unlikely for there to be a need to impose regulatory controls on the flow of coins. Even if such a need arises, this can be done under other legislation, such as the Currency Act. Amendment to the Interpretation Act Second, clause 2 seeks to amend the Interpretation Act by replacing the Greenwich Mean Time with Coordinated Universal Time as the basis for defining Singapore Standard Time. The Greenwich Mean Time is based on astronomical observations and is no longer used for scientific purposes. The Coordinated Universal Time is the only practical time scale maintained and disseminated under the Metre Convention and is recommended for use by international bodies such as the International Bureau of Weights and Measures and International Telecommunication Union. Many countries have converted to the Coordinated Universal Time as it is more reliable, stable and accessible. Sir, Singapore, as a Member State of the Metre Convention, should officially adopt the Coordinated Universal Time. The time difference between the two is a small fraction of a second which is insignificant to most users. Amendment to the Charities Act Sir, third, the Charities Act requires the trustee of an organisation which wishes to be conferred charitable status to register it with the Commissioner of Charities with supporting documents. In addition, a registered charity which is amending its trust deeds or any other registered particulars, or is no longer in operation is also required to inform the Commissioner of the change. Failure to comply constitutes an offence. However, as the Act is silent on the time frame for compliance, the Commissioner faces difficulties in enforcing these requirements. Clause 3 seeks to amend the Charities Act by formalising the operational procedures adopted by the Commissioner of Charities since 1997. Unless an extension is given, registration and provision of all relevant information and documents will have to be completed within three months from the establishment or incorporation of the charity. A charity that has ceased to be a charity or has amended its trust deed or any other registered particulars should notify the Commissioner within seven days of the change. Amendment to the Chemical Weapons (Prohibition) Act Next, under the Chemical Weapons Convention, Singapore is required to exercise extraterritorial jurisdiction over our citizens who engage in activities contravening the Convention. Clause 4 amends the Act to make it clear that the Singapore Courts has jurisdiction to try such acts done or omitted to be done outside Singapore by any citizen of Singapore. Amendment to the Singapore Academy of Law Act Clause 17 seeks to amend the Singapore Academy of Law Act to allow the Academy to circulate summary financial statements to its members. On request of any member, the full financial statements will be available for inspection. Clause 17 also provides for rules to be made so that the Academy need not circulate the summary financial statements to certain specified classes of members, for example, those whose membership has been suspended. This has not been finalised yet, but will be finalised in the rules. The clause also provides for rules to prescribe the conditions under which these statements may be circulated as well as the information to be contained in the statement. Amendment to the Intellectual Property Office of Singapore Act Next, Sir, clause 11 amends the Third Schedule of the Intellectual Property Office of Singapore Act by deleting "65" in item 3 from the Schedule. The Third Schedule lists down offences in the Registered Designs Act, Trade Marks Act and Patents Act, the proceedings of which may be conducted by an officer duly authorised in writing by the Chief Executive of the Intellectual Property Office of Singapore. The reference to section 65 of the Registered Designs Act should be removed as the section deals with falsification of the Register, which is a serious offence involving fraud and dishonesty. The equivalent provisions in the Trade Marks Act and Patents Act were not included in the Schedule. Amendment to the NUS Act and Institute of Southeast Asian Studies Act Clause 13 amends the National University of Singapore Act by replacing the words "Vice-Chancellor", "Deputy Vice-Chancellor" and "Bursar" with "President of the University", "Deputy President of the University" and "the chief financial officer of the University" respectively. Consequent to this amendment, clause 10 seeks to amend the Institute of Southeast Asian Studies Act by replacing the word "Vice-Chancellor" with "President". Sir, let me now briefly outline the rest of the amendments which are in the nature of tidying up. Other Miscellaneous Amendments With the restructuring and privatisation of Government hospitals, the references in a number of Acts to "Government hospitals" and "health officers" in the service of the Government are obsolete. Hence, consequential amendments are proposed to the Infectious Diseases Act, the Motor-Vehicles (Third-Party Risks and Compensation) Act, the Prisons Act, the Private Hospitals and Medical Clinics Act, the Termination of Pregnancy Act and the Voluntary Sterilisation Act to omit such references. Clause 6 amends section 106D of the Companies Act to include a reference to "units" of shares and debentures in the definition of "sophisticated investor". This is a consequential amendment to those made in the Companies (Amendment) Act 2000 which came into effect on 22nd January 2001. Clause 7 seeks to reinstate the definition of the term "construction works" in the Employment of Foreign Workers Act. Presently, this term is explained as having the same meaning as the same term used in the Construction Industry Development Board ("CIDB") Act. As the CIDB Act was repealed in 1999, this amendment seeks to define "construction works" as used in its entirety in the CIDB Act. Clause 8 amends section 2 of the Housing Developers (Control and Licensing) Act by deleting the words "section 4 of" from the definition of "housing developer" as a banking licence is no longer issued under section 4. And lastly, clause 16 amends section 18(d) of the Registered Designs Act by replacing the word "Gazette" with the words "prescribed manner". This will enable the notice of registration and representation of a design to be published in the manner prescribed by rules. Sir, I beg to move. Question proposed.

Mr Speaker, Sir, just a very short clarification. It is regrettable that, in NUS, we are changing the title of "Vice-Chancellor" to "President". I accept it as part of moving with the time. My question is whether the title "Chancellor" was defined in NUS as well because my understanding is that, if I recall correctly, the President of the Republic is the Chancellor of the NUS. So if we change "Vice-Chancellor" to "President", "Deputy Vice-Chancellor" to "Deputy President", are we retaining the title of "Chancellor"? And if we do, the new order list in the university with Chancellor and President, then it seems that we have got a mixture of two cultures.

Sir, this is for the parent Ministry, Ministry of Education, and the university to decide. As the amendment only relates to Vice-Chancellor, I would take it that the word "Chancellor" remains. The amendment is for operational purposes. I think most universities in the world are moving towards the term "President". So in terms of easy recognition and easy facilitation of dialogue and other operational matters, the university deems it better to change.

Question put, and agreed to. Bill accordingly read a Second time and committed to a Committee of the whole House. The House immediately resolved itself into a Committee on the Bill. - [Assoc. Prof. Ho Peng Kee]. Bill considered in Committee; reported without amendment; read a Third time and passed.

5.00 pm

Order for Second Reading read.

Mr Deputy Speaker, Sir, I beg to move, "That the Bill be now read a Second time." The Income Tax (Amendment) Bill 2001 seeks to give legislative effect to the income tax changes that I announced in this year's Budget Statement. I have also taken the opportunity to incorporate seven other amendments to the Income Tax Act. Tax Changes Announced in the 2001 Budget Statement I shall begin with the tax changes announced in the 2001 Budget Statement. They are as follows: a) To help us maintain our tax competitiveness and lower the tax burden of businesses, a new corporate tax regime will be introduced from the Year of Assessment 2002. There are two components to this: (i) a reduction of the corporate income tax rate by one percentage point to 24.5%; and (ii) a tax exemption scheme for companies whereby three-quarters of up to the first $10,000 of a company's chargeable income, and one-half of up to the next $90,000 will be exempt from corporate tax. Clauses 17, 23 and 25 to 30 amend the Act to provide for these changes. b) To reduce the tax burden of individuals, as well as to reward individual effort and enterprise, individual income tax rates will be reduced by between two and five percentage points. Clause 31 amends the Act for this purpose. c) Because of the good performance of the economy in 2000, I had announced a one-off, across-the-board rebate of 10% on individual income tax to share the budget surplus. Clause 32 amends the Act for this purpose. d) To encourage businesses to make the best use of technology, a tax write-down of allowances over a 5-year period has been granted for certain capital expenditure incurred to acquire approved intellectual property rights. Clause 15 amends the Act for this purpose. e) To encourage self-employed persons to save more for their retirement by voluntarily contributing more to their CPF accounts, I announced an increase in the tax exemption limit for CPF contributions made by the self-employed such that self-employed persons will basically receive the same tax benefits from the CPF scheme as both employer and employee combined. This is currently 36% of their income, or $25,920, whichever is lower. Clauses 12 and 19 amend the Act for this purpose. f) To motivate employees to greater innovation and enterprise, a new tax exemption scheme for employee stock options, the Company Stock Option scheme was introduced. Clauses 10 and 11 amend the Act for this purpose. g) To encourage greater philanthropy, donations to Institutions of a Public Character of shares that are listed on the SGX as well as unit trusts that are readily tradable in Singapore will be made tax deductible. Clause 18 amends the Act for this purpose. Tax Changes Not Announced in the 2001 Budget Statement I shall now move on to tax changes not announced in the 2001 Budget Statement. Proceeds from the Disposal of Assets Held by Charities Currently, the Government grants tax exemption on the income of a charity if it spends at least 80% of its income and donations on charitable activities in Singapore. Proceeds from the disposal of assets are, however, not subject to the 80% spending rule. To correct this anomaly, clause 11 amends the Act to ensure that all receipts, including proceeds from the disposal of assets of a charity, will be subject to the 80% spending rule with effect from 1st June 2001. Buyback of Preference shares This amendment will make the tax treatment for buyback of preference shares the same as the existing tax treatment for the redemption of preference shares. The company will be regarded as distributing dividends to the shareholders from whom the shares are acquired, but the shareholder will not get a tax credit attached to the payment from the company. Clauses 4 to 7 amend the relevant sections of the Act for this purpose. Interest Income from POSBank Following the merger of POSBank and DBS Bank, the Government had announced that tax exemption on all interest income from POSBank savings deposits will continue until 31st December 2001. Tax exemption would apply only to the first $100,000 balance of each POSBank savings account-holder from 1st January 2002 to 31st December 2004. Before the merger, interest income received from POSBank savings deposits was tax-exempt. The phasing out of tax exemption was to give DBS Bank time to restructure POSBank's assets to yield higher returns, so that it can offer POSBank depositors deposit rates that are comparable with those offered by other commercial banks. Clause 8(c) amends the relevant section of the Act for this purpose. Third Child Maternity Leave Payment In his National Day Rally Speech, the Prime Minister announced that Third Child Maternity leave will allow working mothers to take time off to bond with their new-born baby without suffering a loss of wages. Third Child Maternity Leave payments will be treated as earned income for tax purposes. With the implementation of the baby bonus and paid Third Child Maternity Leave, the Government has also decided that the amount of further tax rebate granted in respect of third and fourth child born on or after 1st April 2001 be subject to a cap of $20,000 and $40,000 respectively. Clauses 3(b) and 24 amend the relevant sections of the Act for this purpose. Singapore Exchange The Income Tax Act has been amended last year to provide for Singapore Exchange Derivatives Trading Limited, which took over the activities of the former SIMEX, to continue to enjoy tax exemption until 2003. Since October last year, certain functions of the above company had been transferred to the Singapore Exchange Derivatives Clearing Limited. Clause 8(b) amends the Act to provide for tax exemption on the prescribed income derived by the Singapore Exchange Derivatives Clearing Limited from the commencement of its business up to 31st December 2003. Additionally, the Act is amended to provide exemption of dividends paid out of those exempt income derived by the Singapore Exchange Derivatives Clearing Limited, subject to certain conditions. Clause 11 amends the relevant section of the Act for this purpose. Annual Limits of General Provisions Made by Finance Companies In 1999, the Government decided to temporarily suspend the annual limits of general provisions made by finance companies for a period of two years. As the two years have passed, clause 13 amends the relevant section of the Act to reinstate these annual limits. The Supplementary Retirement Scheme (SRS) Finally, the last change pertains to the Supplementary Retirement Scheme (SRS). This scheme encourages Singaporeans to save voluntarily over and above their CPF savings by allowing a range of tax benefits. The main tax benefits are: contributions to the SRS will be tax deductible, investment returns with the exception of dividends will accumulate tax-free, and only 50% of the withdrawals from an SRS account at retirement will be taxable. Clauses 2, 3, 7, 8(a), 14, 19 to 22 and 29 amend the Act for these purposes. Mr Deputy Speaker, Sir, I commend the Bill to the House. Sir, I beg to move. Question proposed.

Mr Deputy Speaker, Sir, I would like to speak in support of this Income Tax (Amendment) Bill. The Bill seeks to implement the numerous income tax changes announced by the Government for the FY2001 Budget. As most of these tax changes have been well debated in this House, I shall not delve into them. However, the Bill also covers a new issue, which is the introduction of the Supplementary Retirement Scheme (SRS). As this SRS has not been fully debated in Parliament, I feel that it is worthwhile to raise certain issues concerning the SRS so that we can have a full debate on this matter. Matching Contribution from Employers Mr Deputy Speaker, Sir, my first point concerning the SRS is that, overall, the objectives of the proposed SRS are commendable. Essentially, the SRS is meant to encourage Singaporeans and residents to voluntarily contribute to their own retirement fund, over and above the mandatory CPF contributions. However, one negative impression of the SRS is that it appears to cater to and is more favourable as a tax incentive to the higher income group. As we all know, about 70% of the lower income group of the population do not pay income tax. For the lower income group, the tax savings in absolute terms are smaller and less meaningful, compared to the higher income group. But it is the lower income group that needs to save for their retirement. One way to assist the lower income group and encourage them to contribute more actively to the SRS is to allow for matching contribution, also on a voluntary basis, from the employers. The employers' matching contribution can be up to a limit of 1:1 basis, but it need not be set as a fixed matching quantum since it is meant as a voluntary contribution from employers. For example, the matching contribution can be just on a 1:2 basis, or at such a rate or proportion as the employers feel appropriate. Sir, I understand that the employers' matching formula is one of the reasons for the success of the equivalent SRS scheme in the US. Equal Contribution Limits for Both Locals and Foreigners At present, the scheme allows the contribution of Singaporeans and permanent residents of up to 15% of their annual income or $10,800. For foreigners, the limit is higher, at 35% of their annual income or $25,200. Sir, I find this discrepancy in the contribution rates rather strange. In fact, I find it very hard to understand. If the intention of the Government is to encourage Singaporeans and PRs to save more for their old age, then we should allow them a higher limit. In contrast, the foreigners do not need to remain in Singapore and, therefore, there is no reason for us to be concerned about their retirement funding needs. Moreover, a higher limit for foreigners means that they enjoy more tax benefits. To be consistent, I would like to ask the Minister to consider whether the contribution limit for Singaporeans and PRs can be increased to the same level as for foreigners. Increase of Tax Exempt Limit to 100% Currently, the proposal is to limit the tax-exempt portion of SRS withdrawal to only 50%. Again, I find this ruling rather strange. If the Government is sincere and truly wants Singaporeans and PRs to save more for their old age, then it would well be beneficial for the Government to allow 100% of their SRS withdrawals to enjoy tax-exempt status. This is the same tax-exempt basis for normal CPF contributions. So why not be more generous? Why be so stingy? Why not allow SRS contributions to enjoy a full 100% tax exemption upon withdrawal? If Singaporeans and PRs can voluntarily save for their old age, then they will become less of a burden to the state. Although I do not know how much tax will be lost if we give 100% tax-exempt benefit, I firmly believe that it is worthwhile to give such a benefit for Singaporeans and PRs. Extension of the 62-Year-Old Age Limit Sir, at present, the scheme restricts the contributor to an age limit of 62 years. Many older Singaporeans have enquired as to why there is an age limit of 62 years. Why discriminate against them? If Singaporeans and PRs are prepared on their own to contribute to their SRS beyond 62 years old, they should be encouraged to do so. However, I understand that the Minister and his Ministry are concerned with the risk of round-tripping, meaning that a contributor pays money into his SRS and then withdraws money immediately at the same time, with tax benefits. Sir, we can contain this problem by setting a moratorium of, say, five years on all new SRS contributions after age 62. This way, the 5-year moratorium will ensure that older workers can save for their old age and overcome the problem of round-tripping, as they can only withdraw their money five years later. Finally, I wish to reiterate that I find the SRS scheme meaningful. I am in full support of the scheme. However, as can be seen from the points that I have raised above, I just wish that the Government can be more generous in the benefits and conditions for the SRS scheme, so that more Singaporeans and PRs can be encouraged to participate voluntarily.

Mr Leong has made several proposals for changes to the SRS scheme and I will respond to them in turn. First, he says that the structure of the SRS scheme seems to favour the higher income persons. I would like to assure him that this is not so. I think Mr Leong misunderstands the intent of the SRS scheme. Let me explain. To begin with, I have to stress that SRS is a supplementary savings scheme and not an enhancement of the basic CPF scheme. The CPF is the primary scheme for retirement savings. At the long-term CPF contribution rate of 40%, a typical Singaporean's CPF savings provide individuals with a reasonable monthly retirement income in addition to a fully paid-up home of his own, all paid from CPF savings plus additional monies for his medical needs. However, the contributions towards CPF are capped at a salary of $6,000 a month. This means that earnings beyond this amount will not enjoy tax-free status for savings under the basic CPF scheme. Thus, the SRS scheme has been set up to allow those who wish to increase their retirement savings beyond what is allowed under the CPF scheme to do so. The SRS will allow them to supplement their CPF savings, but on a tax-deferrable and not a tax-exempt basis. Mr Leong also suggests that employers should be allowed to contribute to the SRS. I do not think this will be a wise proposal. Singapore already has an employee and employer scheme in the CPF, totalling 40%. Allowing employers to make contributions to SRS would put further pressure on them to contribute beyond 20% and thus raise their business cost. SRS is structured as a voluntary scheme and any individual can choose to place part of his earned income in SRS up to the prescribed cap. There is, therefore, no need for Government to dictate or encourage employers to pay part of the wages in the form of SRS contributions. Mr Leong is also concerned that the higher contribution cap allowed for foreigners in the SRS would be seen as discriminatory against Singaporeans. He suggests that the same cap be applied to both Singaporeans and foreigners alike. I would point out that it is not true that Singaporeans are treated less favourably. Foreigners are allowed a higher percentage cap on their SRS contributions because they are not permitted to participate in the CPF scheme and therefore do not enjoy the tax benefits of the CPF contributions. Singaporeans and PRs who contribute towards both CPF and SRS will, in fact, enjoy tax reliefs of up to 51% of their gross income, subject to a cap of $6,000 per month. This is, therefore, more favourable than the 35% SRS tax relief, subject to the same cap, enjoyed by foreigners. One of the reasons why foreigners are allowed to participate in the SRS scheme was because when the CPF scheme was removed from them, there was concern that the lack of a retirement scheme might discourage foreign talents from working in Singapore. The SRS was introduced to offset that change. Mr Leong also suggests that Government should be more generous and allow SRS withdrawals to be fully tax-exempt, instead of enjoying the tax benefit of about 50%. I believe that our SRS provisions are already very generous. Firstly, we have allowed tax relief to SRS contributions. We also allow investment income, except for dividends, to accumulate tax-free and subject only 50% of the savings withdrawn from SRS to tax, even though in the normal tax deferral scheme, usually the entire sum withdrawn is fully taxed. The 50% tax concession on withdrawals is, therefore, very attractive considering that a retiree's tax rate is likely to be lower than his normal terminal salary due to a reduction in his income after retirement. A retiree also has the option to spread out his withdrawals over 10 years after retirement to further lower his tax liability. Allowing SRS withdrawals to be fully tax-exempt would make the SRS scheme a completely tax-exempt scheme like the CPF scheme. This would be too generous. If it is allowed, the Government would indeed be seen to be favouring higher income persons. Mr Leong believes that the age limit of 62 should not be imposed on participation in SRS. He suggests that the age cap be lifted. The Government, in deciding the age limit for participation in SRS, had to weigh the desire of those who want to withdraw their SRS savings as early as possible, with the accompanying tax benefits, against those who want to contribute to the SRS for as long as they wish. A fair solution is, therefore, to peg the age limit to the prevailing statutory retirement age currently at 62. This means that beyond 62, the SRS account will be closed to contributions but the SRS savings will be freely withdrawable without penalty and would enjoy a concession of being taxed only on 50% of the sum withdrawn. I do not think the moratorium proposal as suggested by Mr Leong would be a satisfactory solution. The date on which SRS participants can start withdrawing their savings is also the date the new contributions would stop. Otherwise, as Mr Leong has noted, the possibility of round tripping could arise. I would like to point out that the age limit for participation in the SRS would rise over time along with any rise in the statutory retirement age in the future. Finally, I would like to thank Mr Leong again for his comments and ideas. But as SRS has just been introduced, we will monitor its progress and if improvements are warranted they would be introduced when appropriate.

Question put, and agreed to. Bill accordingly read a Second time and committed to a Committee of the whole House. The House immediately resolved itself into a Committee on the Bill. - [Dr Richard Hu Tsu Tau]. Bill considered in Committee; reported without amendment; read a Third time and passed.

Order for Second Reading read.

Mr Deputy Speaker, Sir, I beg to move, "That the Bill be now read a Second time." Sir, the Official Secrets Act (OSA) guards against disclosure of official documents and information as this can be detrimental to national and public interest. It is in line with this objective that I am presenting this Bill today. Sir, increasingly, many governmental functions have been devolved to statutory bodies. This ensures that the public sector continues to remain nimble and responsive to challenges of the future. This also allows statutory bodies to have greater flexibility to compete in the recruitment of professional talent by tapping external expertise from either local or overseas organisations. With the greater flexibility, statutory bodies will better harness their professional capabilities and concentrate on developing their core competencies, whilst the Ministries focus on the core functions of policy planning and resource allocation. For example, MINDEF is better able to concentrate on the core Ministry functions of policy planning and resource allocation, while the statutory body, Defence Science and Technology Agency (DSTA) focuses on providing the technological and engineering support to the Singapore Armed Forces. Similarly, MTI is able to better focus on policy and planning in maintaining Singapore's competitiveness, while the statutory bodies, EDB and TDB, concentrate on increasing foreign direct investments and trade. Sir, this devolution of functions results in officers in these statutory bodies having access to official information. This is inevitable as the officers require this information to discharge their functions properly and effectively. The OSA currently only covers Ministries. To ensure that the provisions of the OSA continue to cover these officers, it is necessary to extend the scope of the Act to include selective statutory bodies. Prior to conversion into a statutory body, such information would have been handled by the officers as Ministry officials and therefore covered under the OSA. Hence, what this Bill essentially does is to restore the position to what it was before the formation of the statutory bodies. It also extends coverage to new matters that the designated statutory bodies may cover. There is thus no change to the substantive scope of the OSA's provisions. Currently, some of these selected statutory bodies are covered by the statutory bodies and Government companies' Protection of Secrecy Act (PSA) but the scope of PSA is narrower than the OSA. This is not satisfactory in so far as official information vital to national security and national interest is concerned. Hence, these selected statutory bodies are now placed under the OSA. The Bill proposes to amend the OSA by introducing a Schedule of Organisations comprising selected statutory bodies and DSO National Laboratories to be protected under the OSA. In this way, the provisions relating to wrongful communication of information, falsification of reports, forgery, personation and possession of false documents will apply to these organisations. The President can amend this Schedule from time to time by notification in the Gazette. Sir, MHA has consulted all the Ministries to identify the statutory bodies under their charge that handle official information vital to national security or national interest. For example, the Monetary Authority of Singapore handles information which can impact economic security and contains market sensitivities. CISCO has access to official information relating to national safety and security such as the protection of key installations. Similarly, the other listed organisations deal with official information pertaining to their domain of work. DSO, whilst not a statutory body, has been included because it engages in sensitive defence research and development programmes to provide cutting edge technologies and capabilities to the SAF. It therefore requires a high degree of access to critical and sensitive information relating to SAF's developments and plans. Sir, with these amendments, we aim to ensure that official information continues to be properly protected and managed. This can only be for Singapore's good. Sir, I beg to move.

Question put, and agreed to. Bill accordingly read a Second time and committed to a Committee of the whole House. The House immediately resolved itself into a Committee on the Bill. - [Assoc. Prof. Ho Peng Kee]. Bill considered in Committee; reported without amendment, read a Third time and passed.

Order for Second Reading read. 5.30 pm

Mr Deputy Speaker, Sir, I beg to move, "That the Bill be now read a Second time." Sir, the Bill seeks to amend the Road Traffic Act (RTA) for the following broad purposes: (a) To provide for the issuance of special purpose licences for vehicles used in research and development and the test-bedding of new transport technologies; (b) To revise outdated definitions and classifications, update and improve procedures to facilitate administration; and (c) To step up enforcement measures against errant motorists with arrears in road tax, facilitate enforcement action against unlicensed vehicles and to provide for compulsory towing of stationary vehicles on expressways. Sir, let me now highlight the key provisions in the Bill for the proposed amendments. Clause 2 amends section 11(4A) of the RTA to empower the Minister to impose conditions in the grant of vehicular tax rebates under the Act. The current provision enables the Minister to prescribe a rebate on all or any part of tax payable for vehicles in accordance with their class, category or description. However, there is currently no express power to impose conditions in the grant of such rebates. Clause 3 amends section 11A of the RTA to allow for the issue of supplementary licences for all motor vehicles and not just motorcars. This will enable the Vintage Vehicle Scheme to be administered under this section of the Act. Under this scheme, vintage vehicles, ie, those manufactured before 1940, are exempted from the payment of additional registration fee and COE, but they are restricted in usage to 28 days per calendar year. Owners are required to pay a fee for the supplementary licence when the vehicle is used on the road. Sir, vehicle owners are currently given a 14-day grace period to renew their vehicle's road tax licence from date of expiry. Although no late penalty fee is levied during this period, a vehicle with an expired licence is prohibited from being used or kept on any road. As the compulsory insurance requirement is checked only at the point of road tax renewal, it is difficult to tell whether vehicle owners who renew their road tax licence late actually have the requisite insurance coverage during the grace period. From records, an average of about 30% of the road tax renewals are effected during this grace period. To reduce the number of late renewals and the possibility that such vehicles may be driven without proper insurance coverage during the grace period, it is proposed to abolish the 14-day grace period. Such a move is in the interest of public safety. Clause 4 therefore allows for the imposition of a late penalty fee if the motorist fails to renew his road tax licence upon expiry. Clause 5 amends section 28 to empower the Registrar to issue general licences in respect of all vehicles instead of only motor vehicles, and to suspend and revoke a general licence in certain circumstances. Clause 5 also aligns the general licensing provisions with those under the proposed section 28A pertaining to special purpose licences. For Members' information, such general licences are currently issued only to manufacturers, repairers and dealers of motor vehicles. They are for temporary use on new and unlicensed vehicles when they are driven on the roads to be sent for servicing or repairs before they are registered or re-licensed. Sir, on 30th May 2001, the Minister for Communications and Information Technology announced that the Land Transport Authority (LTA) and the Economic Development Board (EDB) were working on a scheme to encourage companies to conduct research and development in vehicle technologies here. Under this scheme, to be called the Transport Technology Innovation and Development Scheme (TIDES), new generation vehicles such as fuel-cell and hybrid vehicles can be brought into Singapore for test-bedding and research and development purposes. Since exemptions to Certificates of Entitlement and Additional Registration Fee will be granted to vehicles under this scheme, LTA and EDB will ensure that only vehicles used for test-bedding and research and development purposes will be granted such exemptions. This scheme is not meant to support commercial operations. It is hoped that Singapore, with its excellent IT and physical infrastructure, will be regarded by many Original Equipment Manufacturers (OEMs) as an ideal location for test-bedding and development of Intelligent Transport Systems (ITS). To facilitate the implementation of this scheme, clause 6 of the Bill amends the Road Traffic Act (RTA) by inserting a new section 28A to permit car equipment manufacturers and R&D institutions to apply for special purpose licences for vehicles to be used for such purposes. Vehicles under this scheme must meet all prevailing vehicle safety and emission standards before they can be licensed. Inspection requirements are imposed before they can be used for testing on public roads. This will ensure that the vehicles meet Singapore's roadworthiness and safety standards. The amendments in clause 6 also require special purpose licence vehicles to possess a valid policy of insurance during the period of licence in compliance with the requirements under the Motor Vehicles (Third-Party Risks and Compensation) Act (Cap. 189). Sir, motorists in arrears of road tax are liable to be charged in Court for keeping or using a vehicle without the requisite road tax vehicle licence. Under current provisions, the Court has powers to impose a fine for these offences, but is not empowered to make an order for the payment of road tax arrears. This results in many motorists delaying the payment of the arrears after settling their court fines. Clause 8 therefore creates a new section 29A to empower the court convicting any person charged with an offence under section 15 or 29 to order such person to pay any outstanding road tax. If the person defaults, the arrears can be recovered in the same manner as the recovery of fines. This new provision is in line with existing provisions in the Road Traffic Act, which allow the Court to order convicted motorists to pay up any arrears of Electronic Road Pricing (ERP) or Vehicle Entry Permit (VEP) charges. Clause 11 repeals section 72 as it deals with an offence already covered by the Environmental Pollution Control Act (Cap. 94A). The Ministry of the Environment (ENV) has taken over enforcement against vehicles emitting excessive smoke since June 1999. The offences for excessive smoke emission are now set out in the Environmental Pollution Control (Vehicular Emissions) Regulations 1999, which is administered by ENV. Sir, vehicle seizure powers under section 95 of the RTA can only be invoked when there is a person using the offending vehicle, or when there is reasonable belief that the vehicle is being used at the point of seizure. This hampers enforcement action when such vehicles are found parked or unattended on public roads. Some of these vehicles include de-registered or unregistered vehicles, foreign registered vehicles without requisite licences, eg, Vehicle Entry Permit, or with outstanding ERP notices, vehicles with false number plates and engine chassis discrepancy detected at Inspection Centres and authorised scrap yards. Clause 12 therefore amends section 95 to enable powers of seizure to be exercised even though the owner, driver or person in charge of the vehicle is not present. Clause 13 of the Bill repeals and re-enacts section 100 to relocate the classification and description of public service vehicles (PSVs) as the second schedule to the RTA, which is created by clause 19. The schedule may be amended from time to time by LTA by order published in the Gazette. With rapid developments in the motor vehicle industry, such classifications and descriptions are best set out in a schedule, which allows greater flexibility to make timely amendments as required. Clause 14 creates a new section 123A that will enable LTA to remove stationary vehicles from the expressways. Under section 123 of the RTA, powers to remove stationary vehicles and to collect towing charges presently reside only with the Deputy Commissioner of Police (DCP). Since 1998, as an interim measure, the DCP has authorised LTA to tow such vehicles under the Expressway Monitoring and Advisory System (EMAS). The new section 123A will empower LTA to compulsorily tow stationary vehicles found on expressways, regardless of whether the cause is a breakdown, abandonment or the commission of an offence. This will ensure that any obstruction or hazard on the expressway can be removed quickly. Clause 14 further makes it an offence for any unauthorised person to tow away any stationary vehicle from an expressway tunnel. This is to ensure safety for both the towing operator and the other motorists using the tunnel. Finally, Sir, clause 16 inserts a new section 131A to include additional modalities for serving prescribed documents. This will facilitate the serving of notices and summonses. It replaces sections 131(3) and (4) that are deleted by clause 15. Sir, this Bill contains several amendments, the primary objective being to keep the legislation relevant to support new developments in technology and improve procedures for better administration and more effective enforcement. Sir, I beg to move. Question proposed.

Mr Deputy Speaker, Sir, clause 4 of the Road Traffic (Amendment) Bill removes the 14-day grace period prior to the composition of the late penalty fee for the renewal of road tax. The 14-day grace period has been given for a long time for owners to renew the road tax licence from the date of expiry. There are all kinds of reasons why an owner may not be able to renew the licence on time. Why can the Minister not continue with the existing policy? As the grace period has been granted for so long and not to make things more difficult for the owners, why can it not be continued? When a vehicle with an expired road tax is driven without insurance cover, it is a different matter. The Government should not make it less flexible than it is at present. How many of such cases were there last year when cars with expired road tax without insurance were involved in accidents without insurance recourse? How does the granting of a 14-day grace period affect public safety on the roads? Is a car without a current road tax inherently less safe? Or, by stretching the logic, does a car with a one year road tax safer than a car with a six months road tax? The second point is on clause 8 which empowers the court to order payment for road tax arrears in addition to court fines. Under the present regulations, if a person is charged in court for using a vehicle without the required road tax, the court has only powers to impose a fine for the offence. It is not empowered to order for payment of road tax. I should point out that the road tax due should not be taken as arrears. Or, if it were, it should only be considered for that part that was due up to the time when the person was caught driving without the road tax. Technically, the road tax licence runs over a certain currency period. I am not a lawyer here. The professors of law in this House may clarify, but I plead for moderation in applying fines. The third point is on clause 11 which repeals section 72 of the Road Traffic Act. This matter is now being dealt with under the Environmental Pollution Control Act. I am not sure. Perhaps the Minister could clarify who is now going after all the excessive smoky vehicles that we see running on the roads. In the days when it was not an offence making a phone call while driving on the road, I could tell the Minister that I had been one ever eager to make phone calls to the Police on these smoky vehicles when I saw them. Nowadays, I just see them passing by. And I must say that the Police has been very efficient in the handling of such reports, at least at the receptionist end. They always give me the impression that the culprits will be caught. I wonder, with this shift to ENV, how would the patrolling of these vehicles be handled. Does the ENV maintain a group of patrol vehicles on the look out for these smoky vehicles on the roads? I would like to support this Bill.

Mr Deputy Speaker, Sir, I rise to speak in support of the Bill and not to answer the tough legal questions raised by the Chairman of the GPC on Communications. Sir, I only have a couple of points to make regarding clause 14 which inserts a new section 123A into the existing legislation, so as to give the authority or an agent the power to tow vehicles away from expressways. I am sure that everyone agrees with the policy to remove stationary vehicles from expressways. Such vehicles pose serious hazards, especially where the road shoulders are not too wide. However, I seek clarification from the Minister about the new provision as set out in clause 14. First, why is there a need to provide additionally for removal of vehicles from expressways when the original provision in section 123 already provides for removal of vehicles generally in circumstances such as where the vehicles cause unnecessary or unreasonable obstruction to traffic or otherwise causing a hazard? It is quite easy in my view to include LTA officers within this main section. Second, the new section 123A, subsection (2), imposes the duty on the authority or its agent to take the vehicle to a parking place, that is, near to that part of the expressway from which the vehicle is removed. Why impose such a duty on the authority? It can be inconvenient both to the authority and to the driver. In any case, the provision seems to be imprecise. What does it mean to be "near"? How would the driver know which parking place his car has been towed to? To avoid doubt and confusion, would it be better to designate car parks where the LTA or its agent would tow vehicles to? Third, there is a requirement that the owner would be given notice in writing of the removal and location of the car. If a car owner of a stalled vehicle on the expressway were to leave the vehicle unattended while he sought assistance, he might well return to find his car no longer there. What does he do? Does he wait at home for a notice in writing to arrive at his doorstep? How long would that take? Would this not cause unnecessary anxiety? The first sensible response of any driver would be to report to the Police that the car is missing, presumed stolen. Would this not create additional work unnecessarily for everyone, for the authority, for the Police, for the owner of the vehicle? Why can there not be a simpler mechanism, say, a number for all drivers to call to find out whether the car has been towed away by the authority legally and, if so, where has it been towed to or whether it has been stolen? Finally, there is a special provision barring the towing of vehicles from any, and I quote, "tunnel forming part of an expressway" other than by the authority or its agent. First of all, how does one know whether a tunnel is part of an expressway or not? And secondly, why should a car owner not be allowed to arrange for the towing away of his vehicle if that can be done in safe circumstances? Sir, I hope some of these issues would be thoroughly addressed as the implementation of this provision may be the source of confusion and frustration to the motoring public if the operational issues are not sorted out. The motoring public should be properly informed.

(In Mandarin): Mr Deputy Speaker, Sir, the Road Traffic (Amendment) Bill keeps our legislation relevant to the support of the development in land transport technologies, and is in keeping with our on-going efforts to improve procedures for better administration and more effective enforcement. However, I would like to comment on the proposed new section 123A, subsection (9), which states that the surplus from the sale or disposal of the vehicle under subsection (8) shall be forfeited by the Government when it is not claimed by the vehicle owner. My suggestion is that the surplus be donated to charity, as is the case of unclaimed lottery prizes. This will send a clear signal to the public that the primary intention of the Government is administrative, and it is an effective solution to the problem at hand. It is not just that Government is after their money. This would also avoid criticism that the Government has actually profited out of the convenience of the legislated laws. Members of the public who fail to collect the sum of money due to them would be less unhappy with the Government because the money has actually been turned over to charity as provided for under the law. Should the Minister agree that the unclaimed surplus go to charity, then there should be corresponding amendments to section 123, subsection (5) of the principal Act which also deals with a similar issue. I would also like to comment on the new subsection (8) of section 123A. It provides that if the Government wants to sell the vehicle under subsection (2), it has to give one month's notice in the Government Gazette. On this, my personal view is that most of our people do not have access to the Government Gazette. They do not read the Government Gazette at all. I propose that the authority should at least notify the vehicle owners in writing of its intention to dispose of or sell the vehicle to recover cost, and this is similar to that of subsection (4). Next, I would like to touch on a few issues relating to the new section 131A. I can appreciate that the proposed new insertion aims to provide the authority with more ways to serve its notices and summonses on the people concerned. However, it does not adequately address the difficulties arising from the service of these notices or summonses. The most common complaint from the people on the ground is that they did not receive the notices or summonses in the first instance due to many reasons, and as a result, they had to pay heavier penalties. In the case of summonses sent through registered mail, the problem is that most of the time there is no one at home and the intended recipient of the registered letter has to go to the designated post office to collect his notice or summons, and they have to go during working hours. If he drives, he has to find a parking lot, and if there are a lot of people, he has to queue up to just collect the summons. As a result, you have a very angry man there. On the other hand, in the case of the summons not collected by the intended recipient, the authority will have to send another registered letter or resort to other ways of serving the summons on him. To the best of my knowledge, if a registered letter is not collected, the relevant authority will summon him to court. So most people feel that the whole process is an unnecessary waste of time, money and resources. Whether it is in the court or at our meet-the-people sessions, much time is spent on ascertaining the reason why the defendants did not receive the summonses. Sometimes we do not know who is telling the truth and who is lying, and whether they have actually received the summonses or not. I hope that the Minister can spell out clearly in the law the Government's stand on the issues relating to how the notices or summonses should be served. I propose that under section 131A, we should at least cover two key principles. First, all summonses, notices or orders deemed to be duly served on the intended recipients by any of the channels as provided for under the new section 131A shall be deemed to be duly served on the defendant concerned. Secondly, it is the responsibility of the individual to ensure that all official documents sent to the address registered by him with the National Registration Office or the Land Transport Authority are duly acknowledged. In other words, the last known address shall suffice for the purpose of this section. This will send a clear signal to the members of the public that unless it is for exceptional and valid reasons, they cannot claim that they have not received the notices or summonses, and use this as an excuse for not paying the composition fine before the due date. Then, the people will have to accept that the summonses have been duly served on them, and they have to pay the fines. I hope that my above suggestions will be duly considered by the Minister. With that, I support the Amendment Bill.

Mr Deputy Speaker, Sir, I thank all the Members for their support of the Bill. First, let me answer the queries raised by the GPC Chairman. His first point is on why should we remove the 14-day grace period. He is right that the 14-day grace period was given a long, long time ago, at a time when possibly renewal notice was not sent, or it was sent and it would arrive at the recipient's home very near the date of expiry. But nowadays it is a different story. Because of greater efficiency, motorists would receive the renewal notice at least six weeks before the date of expiry. So there is really no good reason for them not to pay the road tax in time. Of course, there could be some reasons like if you are overseas for more than a month or so. If there are good reasons, LTA can consider waiving the penalty fee. But the more important point is that, if you look at the trend, currently, as I mentioned in my speech, 30% of vehicle owners only renew their road tax during the 14-day grace period. And we do not have record to show how many of them actually do not have insurance coverage because we only check insurance coverage at the point of renewal. Therefore, it would not be unreasonable to expect that many of them actually are driving their vehicles without insurance, and that is a very dangerous matter. Therefore, it is prudent to minimise this possibility by saying that they must renew their road tax before the date of expiry. That would enable LTA to check whether they have insurance coverage before the road tax is renewed. Sir, his second point is about road tax arrears. Road tax is payable for keeping or using a vehicle. If a person keeps a vehicle and refuses to pay the road tax after the road tax has expired, then he owes the Government money. Therefore, anything that he owes must be paid back, because it is due to the State. Currently, after a court case, the court fines him, he still owes LTA money, LTA will then have to go and recover the money by asking him to pay. If he does not pay, we go to the court, take a court order to seize his vehicle and then auction and sell it. So it is a long process. That is why there are some people who actually ignore this and they refuse to pay up the arrears even after the fine. So with this amendment, the court can, at the time when the fine is imposed, also order the motorist to pay up the arrears. Sir, Mr Chay's final point is about the enforcement of pollution or smoke emission. The enforcement is now carried out by ENV officers. So LTA no longer enforces this. I was told that ENV officers will take a different approach from the LTA. In the past, LTA officers actually patrolled and stopped vehicles and brought them for smoke testing. But I was told that ENV now would station their officers at strategic locations, use digital cameras to take pictures of vehicles emitting smoke from the rear, and then take enforcement action. Sir, I now come to Prof. Chin's questions. Firstly, he asked why did we need to have an additional section 123A if we already have section 123. Section 123 is currently administered by the Traffic Police. So LTA has to go through the Deputy Commissioner of Police for all the enforcement actions. Administratively, it is not a very efficient way. By creating section 123A, LTA would be able, on its own accord, to take enforcement action and deal direct with the motorists. He also asked about section 123A(2), ie, taking the vehicle to a parking place that is near to the expressway, why did we impose such a duty and what was the meaning of "near". The reason why we want to remove vehicles from the expressway is to ensure that motorists on the expressway would not be endangered by stationary vehicles. And how do we carry out this duty? We carry out this duty by appointing towing agents. The towing agents have to meet the requirement by getting to the scene within 10 to 15 minutes. So they cannot tow the vehicles too far away because then they may not be able to fulfil this requirement. Some motorists would want the tow operator to tow to their workshops, or other car parks and this would affect the operation of the towing operator. As such, the proposal stipulates that the tow operator would only need to tow to a place nearby. In fact, in practice, LTA would designate nearby HDB and URA car parks for these vehicles to be towed to. Sometimes, a motorist may make a request and say instead of this car park, why not tow to the next car park which is more convenient for him. In this regard, LTA can be flexible as long as the tow operator feels that it would not compromise on its stringent time requirement. So the word "near" is used for this purpose so that there is some flexibility on where the car park should be. Sir, Prof. Chin made a very good point on what if a motorist is not at the scene when the vehicle is towed away, and what could he do to find out what has happened to his vehicle. Yes, the Bill says that he will be given a notice. But Prof. Chin is right that the notice would only come one or two days later. What he can do is to call the EMAS hotline number at 3334111, as suggested by Prof. Chin. I am sure a lot of motorists could see this number when they drive along the expressway. LTA would publicise this number, and if a motorist finds that his vehicle is not there, this is the number to call. In fact, this number is manned 24 hours. Of course, they can go to the police if they want, but the police would also ask them to call the EMAS hotline number. Prof. Chin asked how would one know whether or not a tunnel is part of the expressway. Currently, the CTE tunnels have signages delineating the entrances of the tunnels to give motorists advance notice. With this amendment coming into operation, these tunnels, as part of the expressway, would also be gazetted and additional publicity would be given. The last question raised by Prof. Chin is whether, in a tunnel, the motorist can arrange for his own tow truck to tow away the vehicle. Sir, motorists are allowed to use their own towing service on expressways, which are not tunnels, provided that the private towing service arrives before the EMAS towing service. But to ensure the safety and convenience of the other motorists on the expressway, it is important that stalled vehicles are towed away quickly, and not be left on the carriageway or shoulders. Therefore, if the EMAS towing service arrives first, the stalled vehicle would be towed away by the EMAS towing service. When it comes to a tunnel, it is a very vulnerable environment. Because overseas experience has shown that a small accident in a tunnel could lead to a major disaster involving many casualties. Hence, it is necessary that tow operators are familiar with the tunnel regulations, entrances and exits. They should also be equipped with first aid and fire fighting skills, familiar with the location of tunnel safety equipment, the safety procedures and assist in an emergency evacuation. LTA's appointed towing operator is fully equipped with the set skills and knowledge. Other towing operators may not be trained to operate safely in the CTE tunnels. In addition, the appointed towing crew comprises two operators, one would assist to recover the stalled vehicle, and the other would ensure that safety procedures, such as the use of safety cones, are observed. This would ensure maximum safety inside the tunnel. Unlike other towing companies, they usually have only one-man-operated tow crew. Sir, I come to Mr Ong Ah Heng's questions. First, he asked why the unclaimed surplus money could not be given to charity and why should it go to the Government. Sir, forfeiture of unclaimed surplus money to Government, after setting off against outstanding charges under section 123A, is consistent with the other fiscal provisions in RTA. These provisions are correct because we should not mix charity with the provision of unclaimed money going to the Government. The Government would have its own programme and budget for charity work. But this is unclaimed money and it should go to the State. Sir, Mr Ong asked whether, under section 123A(8), publication by Gazette before the vehicle is auctioned, we should also make it a requirement to notify the owner before it is auctioned. Let me say that this notification in the Gazette is a requirement before the vehicle is put up for auction. But, administratively, once the vehicle is towed to a parking place, the vehicle owner will be notified, and if he does not collect the vehicle, he will be reminded to collect the vehicle. In the end, when the vehicle is not collected at all, it will then be put in the Gazette for a month before it is auctioned. Yes, administratively, I can ask LTA to send another letter again to tell him that we are going to auction his vehicle. We can do that administratively, but it is not required to be put in the law. Finally, Mr Ong asked how we could make sure that people would not argue that they had not received the notifications or notices of summonses. The amendment here is to make it clear that, by using one of the means indicated in serving a notice, it is deemed to have been served. In fact, Mr Ong said that we should make clear that this is so. That is what we are doing now, that is, by passing this law and publicising it. As long as notices are served by one of these means, it is deemed to have been served and that it is the responsibility of the owner to comply with the requirement of the law. We cannot force the owner to acknowledge whether or not he has received the notice. What the law requires is that the Government agency has served the notice and it is therefore up to the individual or vehicle owner to comply with the requirement. Sir, I believe I have answered all the questions and I thank Members for their support.

Question put, and agreed to. Bill accordingly read a Second time and committed to a Committee of the whole House. The House immediately resolved itself into a Committee on the Bill. - [Dr John Chen Seow Phun]. Bill considered in Committee; reported without amendment; read a Third time and passed.

Resolved, "That Parliament do now adjourn to a date to be fixed. " - [Mr Wong Kan Seng]. Adjourned accordingly at Fifteen Minutes past Six o'clock pm to a date to be fixed.