Hansard, 2002-08-27

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 (2002)(2002) Dr Tan Cheng Bock25 Jul30 Jul Dr John Chen29 Jul31 Jul 25 Aug29 Aug NameFromTo (2002)(2002) Mr Ng Ser Miang30 Jul11 Aug Mr Ang Mong Seng2 Aug7 Aug Mr Yatiman Yusof4 Aug7 Aug 14 Aug16 Aug Mr Ahmad Magad5 Aug7 Aug 1 Sep13 Sep Mdm Halimah Yacob16 Aug23 Aug Mr David T E Lim26 Aug29 Aug 9 Nov23 Nov Mr K Shanmugam26 Aug30 Aug Mr Lim Swee Say14 Aug16 Aug 31 Aug5 Sep Mr Lee Yock Suan11 Aug17 Aug Mr Inderjit Singh12 Aug17 Aug 3 Sep14 Sep Mr Gan Kim Yong13 Aug- 8 Sep13 Sep A/P Ho Peng Kee13 Aug14 Aug Dr Michael Lim14 Aug18 Aug 23 Aug25 Aug Mr S Iswaran15 Aug16 Aug Mr Charles Chong16 Aug23 Aug Mr A Nithiah Nandan17 Aug23 Aug Mr Tharman Shanmugaratnam19 Aug21 Aug A/P Koo Tsai Kee19 Aug22 Aug 4 Sep14 Sep Dr Tony Tan Keng Yam19 Aug21 Aug Mr Chay Wai Chuen19 Aug25 Aug Mr Raymond Lim21 Aug24 Aug BG George Yeo22 Aug30 Aug 6 Sep8 Sep Mr Arthur Fong22 Aug26 Aug Prof S Jayakumar26 Aug27 Aug 8 Sep22 Sep Mr K Shanmugam26 Aug30 Aug Ms Irene Ng29 Aug2 Sep Mr Wong Kan Seng30 Aug7 Sep Dr Wang Kai Yuen31 Aug6 Sep 8 Sep13 Sep Mr Lim Hng Kiang1 Sep9 Sep Mr Cedric Foo2 Sep4 Sep Mrs Cynthia Lee-Phua2 Sep7 Sep Dr Ong Chit Chung2 Sep4 Sep Mr Hawazi Daipi4 Sep6 Sep NameFromTo (2002)(2002) Ms Penny Low5 Sep18 Sep Mr Wee Siew Kim5 Sep8 Sep RAdm Teo Chee Hean7 Sep14 Sep 25 Sep3 Oct Mr Mah Bow Tan6 Sep8 Sep Dr Ng Eng Hen7 Sep14 Sep Mr Abdullah Tarmugi8 Sep13 Sep 17 Sep27 Sep Mr Heng Chee How8 Sep14 Sep Mr Seng Han Thong20 Sep22 Sep ABDULLAH TARMUGI Speaker Parliament of Singapore

asked the Deputy Prime Minister and Minister for Finance, since Budget 2002 (a) how many Singaporeans have become eligible for the Economic Restructuring Shares (ERS) allocation in January 2003 by (i) inactive Central Provident Fund (CPF) account-holders making contributions to their accounts and (ii) non-salaried Singaporeans opening CPF accounts, and (b) what additional measures will the Government be taking to remind Singaporeans to make necessary contributions before the deadline of 30th November 2002.

Mr Speaker, Sir, as at 31st July 2002, around 1.3 million Singaporeans have made the requisite $50 CPF contribution to qualify for ERS. Out of this 1.3 million Singaporeans, 100,398 are inactive CPF account holders and another 221 are non-salaried Singaporeans. The Government will take steps to remind Singaporeans about the ERS. In September 2002, CPF Board will send letters to all adult Singaporeans highlighting the key features of the ERS scheme. Those who have not made the requisite $50 CPF contribution will be reminded to do so as soon as possible before the deadline. After the letters have been sent out, pamphlets covering the ERS and the rest of the GST Assistance Package, such as the rebates and the CCC Assistance Scheme, will be distributed to the public. The best way to reach out to all Singaporeans is not just through the Government's publicity efforts, but the active involvement of everyone in the community. Thus, Singaporeans should help to remind their family members, relatives and friends to make the requisite $50 CPF contribution. Grassroots leaders will also be doing their part to remind their residents about the ERS. All eligible Singaporeans who have made the $50 contribution by 30th November 2002 will receive an ERS notification letter with details on the number of the shares that will be allocated to them on 1st January 2003. Those who have not made the contribution at that time can still do so by 31st December 2002. They will then receive the shares on 1st February 2003.

asked the Deputy Prime Minister and Minister for Finance, with regard to the Monetary Authority of Singapore's proposed deposit insurance scheme, (a) who will be appointed to manage the scheme; and (b) how have other countries operated similar schemes, especially with regard to best practices needed to avoid possible conflict of interest among bankers and banking supervisors who may be represented on the boards of such appointed agencies.

Mr Speaker, Sir, MAS has not decided who will manage the deposit insurance scheme. The first phase of the deposit insurance study by MAS focused on issues related to the membership, coverage limit, the size of the fund and how participating institutions will be assessed for premium contributions. Who will manage the scheme will be considered in the second phase of the study. There are two broad options for managing deposit insurance. One option is to have the responsibility reside within MAS. There is substantial overlap in the interests and responsibilities of a bank supervisor and a deposit insurer. MAS supervises banks to assess their safety and soundness and to minimise incidences of failure. A major part of this supervision involves evaluating the risk profile of institutions - both the health of their balance sheets as well as the strength of their risk management systems and processes. The deposit insurer similarly needs to assess the risk profile of institutions so that it can price the insurance premiums appropriately and take supervisory action to minimise the risk posed by a weak institution to the deposit insurance fund. If MAS administers the deposit insurance scheme, it can leverage on its existing supervisory resources, avoid the duplication of supervisory functions and minimise the burden on institutions. Another option is to set up a separate organisation with its own governance structure. This approach emphasises the concern that the interests of a deposit insurer and a bank supervisor may not always coincide. A deposit insurer may want to close a weak bank early instead of risking further deterioration in the bank and a larger loss to the deposit insurance fund. The bank supervisor may disagree if there is a good chance that the bank can be returned to health after cleaning up its balance sheet and improving its management. But even under this option where the deposit insurer is separate from the bank supervisor, the two will still need to consult closely and share information with each other. In the second phase of the study, the MAS will assess the relative merits of the two opposing considerations, and study the practices in other countries, before making a firm proposal on an organisational structure most suitable for the Singapore deposit insurance scheme. The MAS will consult with the industry and other interested parties when the study is completed.

Sir, in the estimation of the Finance Minister, how much does he envisage that these small depositors need to pay as premium to be covered under such a scheme? What is the prevailing market rate in other countries?

Mr Speaker, Sir, the details were contained in the consultation paper which we sent out recently. Speaking from memory, our intention is to build up a deposit insurance fund which will amount to 30 basis points, which means, 0.3% of the amount of deposits insured. But we are not building this up overnight. We are planning to build this up over a period of 10 years, which means a very small levy, 3 basis points a year, over a period of 10 years. But the exact levy will vary depending on the state of the bank and the supervisory assessment of the bank on how risky it is. So the levy will vary from bank to bank, but it will be a small levy.

Sir, does MAS have any scheme to protect the deposits of large depositors and what do these other countries do for their large depositors?

Mr Speaker, Sir, generally speaking, deposit insurance schemes have a cap. Their purpose is to protect small depositors because they will find it difficult to get enough information about the banks and to make a considered assessment as to which is a safe bank to put their money. Big depositors are expected to make their own judgment and decide where it is safe to put their money and not to vest their savings to banks which are unsafe. This is not just a necessary evil but it is the way the system works. If every depositor can put money, regardless of amounts, into banks, however unsafe and be confident that it will be insured by some deposit insurance scheme, then you have a moral hazard. This means that the depositor does not have to pay attention to whether the bank is safe and the bank is under no pressure to perform and to become a sound bank in order to attract deposits. Therefore, nearly all deposit insurance schemes got caps. The caps vary. We have set our cap at $20,000 which covers 85% of deposits in Singapore. We think that is sufficient. Some countries have higher caps. Where they do, it is sometimes the result of political pressure rather than because it is prudentially a sound thing to do or because there is a need for it. In fact, Alan Greenspan, advising against raising the deposit insurance cap in the US recently, said, "This is the solution, but what is the problem?" But, nevertheless, the problem was that this was election year and the Bill was passed. We are setting it at $20,000 which we think is the correct level. If you look at Japan, of course, they have no cap whatsoever, but there banks are in quite an extraordinary situation.

asked the Deputy Prime Minister and Minister for Finance (a) what is the rationale or objective behind the reversal of the policy on rebates in the life insurance industry; and (b) in view of the Financial Advisers Act, how will this affect the development of a professional group of people such as financial advisers.

Mr Speaker, Sir, the prohibition on rebates under MAS Notice 304 was introduced in the 1990s to prevent life insurance agents or brokers from rebating, or offering to rebate, any part of their commissions as an "inducement" to clients to purchase life insurance policies, without assessing whether the policies were appropriate for the clients. The MAS discourages the use of rebates by any life insurance adviser as the basis for his recommendation to any policyholder. It still discourages this with the Financial Advisers Act, which requires financial advisers and their representatives to have a reasonable basis for their recommendation. Recommendations are expected to be reasonable and appropriate, having considered the investment objectives, financial situation and financial needs of the clients. Financial advisers and their representatives should focus on the value of their services to their clients and should not resort to the offering of rebates as a basis for their recommendation. The life insurance companies have effectively implemented the best practice recommendations of the Committee on Efficient Distribution of Life Insurance (CEDLI), including a Needs-based sales process, a comprehensive Training and Competency regime for its advisers and Enhanced Disclosure of life insurance products. MAS has therefore lifted the outright prohibition on rebates contained in MAS Notice 304. This is in line with the Authority's shift from a regulatory to a supervisory approach. We are progressively replacing prescriptive regulations with principle-based regulations, as the market demonstrates the maturity to follow best practices. Insurance companies can decide for themselves how to package and market their products without the ban. This relaxation should not lower professional standards of the life insurance advisers, because unprofessional conduct will not be viewed any less seriously under the Financial Advisers Act. However, I should clarify that the CPF Board has decided that where rebates are given for products purchased using CPF savings, the rebates should be refunded to the CPF accounts so that members' savings can be safeguarded.

Sir, how would MAS then regulate and monitor the policy of what is considered an "inducement"?

Mr Speaker, Sir, it is one of those questions which is impossible to answer in the abstract. We know it when we see it.

asked the Minister for Home Affairs (a) if he will provide an update on the progress in arresting active Jemaah Islamiyah members who fled Singapore following the arrest of 15 of their members in December; (b) whether those who have escaped to Indonesia will be arrested; and (c) whether the foreign suicide bombers whom "Sammy" planned to bring to Singapore have been identified.

Mr Speaker, Sir, ISD's investigations show that some Jemaah Islamiyah (JI) members fled Singapore following the ISD arrests in December last year. They are dispersed and are believed to be in hiding in Malaysia, Indonesia, Thailand and possibly the Philippines. Efforts are being made to bring them back to assist in investigations. The foreign suicide bombers whom `Sammy' planned to bring to Singapore are not identified. My Ministry is currently finalising a White Paper on the JI arrests and the threat of terrorism. More details will be disclosed then.

Sir, there have been reports that two main ring leaders like Bashir and Hambali are in Indonesia. What efforts are there to bring them back?

We have discussed this with the Indonesians and they understood what we have on them. But Indonesian law apparently does not currently allow them to take action.

Are the regional authorities in Malaysia, Indonesia and Philippines cooperating with our security agency in trying to detain and question them?

All the security agencies in our region are very cooperative. We have been working very closely with them, even before the Jemaah Islamiyah case. As a result of information that we shared with the Malaysians, for example, they have also mounted their own operation and found their own group of Jemaah Islamiyah. As a result of information that we shared with the Philippines, they have arrested the Indonesian bomb maker and one of the key men of Jemaah Islamiyah. He had been arrested by the Filipino authorities early this year.

Would the Minister agree that as long as these terrorists are out there, our security is still at risk?

We are always vulnerable to threats of this nature and the most manifested symbol of terrorist act was seen in New York on 11th September 2001. Terrorist threats have always been a risk to us and we have always been vigilant. We have stepped up security measures on our borders and checkpoints and at our own key installations and various places, we have also enhanced our security measures to deal with the problem. At the same time, foreign intelligence agencies share information which they have with us and we also share with them. We have to deal with this problem together.

asked the Minister for Health (a) how many people have opted out of the ElderShield Scheme; (b) what measures have been taken to dissuade them from opting out; and (c) whether he will consider giving those without Central Provident Fund accounts another chance to open one so as to benefit from the Scheme.

Mr Speaker, Sir, since the implementation of ElderShield, the Ministry of Health, together with the two ElderShield insurers - NTUC Income and Great Eastern - have been actively publicising the scheme through the various mass media and have conducted numerous grassroots briefings. Through the publicity efforts, we hope to create awareness and help Singaporeans understand the benefits of ElderShield. So far, 21% of Singaporeans aged 40 to 69 who are eligible for auto-cover have opted out of ElderShield. Some of them may already have adequate coverage from private insurance plans, while others in the lower income group may feel that they may not be able to afford the premiums. For those in the low income group, the Government will continue to help them meet their healthcare expenses through other avenues, such as Medifund and subsidies at the nursing homes. In recent weeks, 1,780 Singaporeans who opted out have changed their mind and opted back in again. For others who wish to do so, both ElderShield insurers have devised a simple process for these people to withdraw their Opt-out Forms, and still accord them auto-cover status so long as they inform the insurers of their new decisions before 30th September this year. On the time limit of 15th August 2002 to open a CPF account so as to qualify for auto-cover under ElderShield, I believe Singaporeans have been given ample time to do so since the publicity on ElderShield started in end June 2002. As at 15th August 2002, only 11 Singaporeans in the age group of 40 to 69 have come forward to open an account. There was therefore no need to extend the deadline beyond 15th August 2002. The key priority now is to ensure that Singaporeans who have received the auto-cover understand the benefits of ElderShield and make an informed choice to join the scheme.

Sir, may I ask the Minister whether the fact that about 270,000 people or about 23% of those eligible have rejected ElderShield means that this scheme may not have been well designed, therefore requiring further review urgently?

Mr Speaker, Sir, we are quite realistic. The scheme cannot meet the needs of everybody. We try to start off with a basic scheme, and it is quite understandable that a certain percentage of Singaporeans may assess that this scheme does not quite meet their needs. For example, those in the high income groups may feel that $300 pay-out is too low for them, and they will find their own means to seek other covers. For the low income groups, as I said earlier, the Government will continue to look after them if they meet the means test through our step-down care facilities.

Sir, the name "ElderShield" is actually very misleading because, as I see, it is actually a disability scheme. Will the Ministry consider changing the name, so as to be more reflective of the objective and purpose of the scheme?

Sir, severe disability insurance comes under different terms. In the private sector, it is called long-term care insurance. In other countries, it is called severe disability insurance. In our case, we coin the word "ElderShield" so that it is easier for people to identify the scheme. Essentially, severe disability sets in primarily when a person is elderly. So it is meant primarily for the elderly people. But, of course, severe disability can set in any time. A person can have a stroke when he is 45, and he will still be covered. But I think we want to reflect the primary purpose of this scheme, which is for the elderly. Hence, we call it ElderShield.

Sir, may I ask the Minister whether it is correct to say that the insured can only claim $300 per month should he or she be unable to do three activities of daily living of washing, dressing, feeding, toileting, mobility and transferring? Even with the aid of special equipment and always requiring the physical assistance of another person throughout the entire activity, may I ask the Minister how would the $300 help such a person, as employing a maid would probably cost twice that amount with levy?

Sir, as I said, we have to make sensible trade-offs in designing this scheme. We start off with a very basic scheme of $300, so as to keep the premiums as affordable as possible. If we raise the pay-out to $600, then the premiums will be double, and even more Singaporeans will opt out. For purposes of introducing this scheme, we want a simple scheme and as affordable as possible. And as we gain more experience, we will allow the insurers to have top-ups to the scheme. So it is quite conceivable that 3-5 years from now, the insurers will offer higher pay-outs, and correspondingly higher premiums. But the primary objective in launching this scheme is to get as many Singaporeans sign up as possible. So we want a basic scheme with low premiums.

Sir, may I ask the Minister whether it is correct to say that the majority of Singaporeans take up insurance for peace of mind and for any eventuality? Therefore, if ElderShield does not adequately address this basic issue, then it is deficient. The purpose of this national insurance scheme as ElderShield can only lessen the load of the people and not help in their needs. Therefore, the rich, as the Minister has said, probably do not need this scheme, and those who are poor and the ones that are most in need will find this scheme inadequate to ease their difficulty.

Sir, that is not true, because if you are from the low income group and you are admitted to a nursing home and you meet the means test, the nursing home will probably charge about $1,000 per month. The Government will subsidise 75%, which is $750, and your pay-out is $250. So I think the $300 goes some way in meeting the expenses. We are not saying that the $300 will pay for everything that you need if you are disabled. We want to keep the scheme as simple and as affordable as possible. We set it at $300 because that makes some sense in relation to somebody who is in the low income and will enjoy subsidies from the Government if he is admitted to a nursing home. As I said, if people think that this scheme does not quite meet their needs, they can opt out. And five years later when the insurers offer a higher pay-out of $1,000 and if they think that it meets their needs, they can opt in again. But at that time when they opt in, they will have to pass a medical test. It will not be auto cover.

Sir, the Minister just mentioned top-up or enhanced scheme. May I ask the Minister whether the enhanced scheme will be accompanied by a hike in premiums? Will Singaporeans feel the burden if premiums rose? And will people feel short-changed having to pay more and more for ElderShield coverage after some time, despite paying for many years, as the ElderShield premiums will only remain unchanged for the next five years?

ElderShield is a scheme based on actuarial calculations. So, the more people we have, the bigger the risk pool. Then, of course, those who are lower risk will subsidise those who are higher risk. The idea is to go out with at least a minimum cover of 250,000 people. That is what the actuarial consultants tell us is needed as the minimum risk pool. Anything beyond 250,000 participants, we have a sound basis for it. We have put in the contract with the insurers certain safeguards. As I said, we start off with a very simple scheme - $300 pay-out and we keep the premiums as affordable as possible. We understand that this is a very new scheme. The insurers do not have very much data to go by. They use our own data. We have done two longitudinal studies. We have taken the data of developed countries. Here, you are calculating your obligations for the next 40-50 years. Because if you take somebody in at age 40, he may live till 85-90. So you are going to do all these actuarial calculations to calculate your obligations 40-50 years down the road. I think the consultants and the actuaries have been very conservative. And that is the reason why in the contract, we have built in provisions that if the claim history is less than what they projected, then they will offer a rebate to the holders. If the claim history turns out to be higher than the projection, then, of course, we will allow them to raise the premium. Because this scheme is actuarial based and it must be self funding. In the end, the basis of the insurance is that you are paying a premium and the pay out ratio is between 1:4 or 1:5. And if Singaporeans want peace of mind and they are prepared to set aside this small sum from their Medisave, then they participate. If they think they can look after themselves, then they opt out. The choice is theirs. What we try to do is to provide this facility which is open to Singaporeans and encourage as many as possible to join in.

May I ask the Minister whether he agrees that a person who is unable to do three activities of daily living is unlikely to get better and, in fact, most likely to get worse with time? Therefore, is it not inhumane to cut off payment after five years? The Minister will probably reply that the majority of the disabled will not need aid for more than five years. My question to the Minister is: what about those who survive more than five years, by which time their financial needs will even become more critical?

Sir, as I said, we are starting a very new scheme. When we call the tender, we could have said $300 and pay out until death, in which case there is no prescribed cap. Or we could call the tender and say $300 up to a maximum of 60 months. Then there is a cap. And the insurers will tender accordingly. We decided that, as a start, we put a cap so that the insurers have as much certainty as possible to bid for the tender. If we have put $300 and pay out until the person dies, then there is additional uncertainty and the risk is that the insurer may tender at a higher price or ask for higher premiums to cover the risk. So we want to start off with a scheme which is as simple as possible. And as we build up experience and knowledge, then we can have enhancements. It is also conceivable that as we develop our claims history we can allow the claims to go beyond five years. Then the insurers will be able to calculate and say what additional premium you will have to pay to have that enhancement. So we are keeping things as simple as possible in the start-up, and then we can have enhancements as we develop experience.

Sir, since the insurance scheme is tendered out to insurance companies which are private companies, how much say has the Government in the modification of the terms and conditions of the insurance scheme?

Sir, we will have some say in the key parameters in the contract, eg, we ask them to stipulate the expected claim calculations on which they based their tender, so that sets the baseline. And if the claim history is higher than that, then we have certain provisions. If the claim history is less than that, we also have certain provisions. The provisions are in the premium adjustments, whether we get a rebate or whether we have an increase. In the contract itself, the Government, meaning the Ministry of Health and MAS, gave ourselves certain parameters that we can change, depending on how the claim history works out.

Sir, will the Minister tell us what are the parameters? And in terms of rebate adjustment in the future based on the claim pattern, actual claim data or whatever is in the terms, will he tell us what is the maximum adjustment allowed in terms of increase in premium and how much rebate could be expected?

Sir, at the end of five years, we will allow the insurers to have an increase if the claim history turns out to be worse than they expected, but the increase will not be more than 20%. At the same time, if the claim history turns out to be more benign than they expected, we will look at the claim history and we will ask them to rebate 50% back to the holders. NTUC Income has come out publicly to say that if the claim history is more benign, in fact, they will look towards giving back higher than 50% rebate. But the contract calls for a 50% rebate. Dr Lily Neo rose ---

Yes, Dr Neo. I will allow one last supplementary question because we have so many other Questions to deal with.

Mr Speaker, Sir, since we are discussing an important national issue involving many Singaporeans, in fact 1.2 million people, could I seek your indulgence to allow at least two more questions and one more clarification, please?

One more question. You can always come up with a motion, if you want to. One more question after this. We have more than 20 other Questions to deal with, Dr Neo.

Okay. I am just trying to figure out which questions that I want to ask. Could I seek a clarification after my question to the Minister?

We will wait till it comes up. Dr Neo, ask your question first.

Thank you. Could I ask the Minister whether it is correct to say that the specified medical assessors appointed by the insurers have to place very strict criteria on the other cases and all policyholders of ElderShield claims during their physical examinations? Is this not unfavourable to policyholders and working to the advantage of the insurers? May I ask the Minister what kind of percentage out of the present 8% of severely disabled people that can qualify for these claims? Based on the strict criteria by the medical assessors, I should think that this percentage must be very small indeed. Therefore, is this not a very profitable scheme for the insurers? May I also ask the Minister whether the criteria set for ElderShield claims on the aid of special equipment will be increasingly disadvantageous to policyholders as technology becomes progressively more advanced and efficient? May I also ask the Minister on the repeated publications by the Ministry of Health and the insurers citing that based on the British experience, men have 35% risk, and women 45% of being disabled some time in their lives. May I ask the Minister whether we should be more explicit and less misleading by adding that the majority of this disability will be either temporary or mild to moderately severe; therefore, they will not be eligible for ElderShield claims. But, more importantly, on a bigger picture, should the Ministry of Health and people not be alarmed by such possible high disability figure; therefore, more proactive actions on preventive measures should be embarked on urgently to prevent getting such incidents?

Mr Speaker, Sir, all insurance claims need to go through an assessment process. For the ElderShield, we have set up a group of assessors who are GPs to make this assessment. If the policyholder is not happy with the assessment done by the assessors, there is a channel for appeal to the Ministry. But it is very early days. The scheme will not kick in until 30th September. The assessors are not out yet. So, let us wait and see what the claim histories are like. Right now, we still do not have enough cases to determine one way or the other whether the assessors have been overly strict or overly lenient. I think we need at least two, three, maybe five, years to build up some kind of a pattern. At the end of that period, we will do a review. Ultimately, Singaporeans must look at the scheme and determine for themselves whether the scheme meets their requirements or not. And if they do not, they opt out. If they do, they stay in.

Mr Speaker, Sir, I disagree with the Minister because the medical assessors have already done physical examinations on many IDAPE cases, and they were really strict on these cases. May I seek a last clarification from the Minister? On the report in the Straits Times published on 7th August, it was stated that the Minister for Health said that he felt like a koyok seller when he chaired a press conference on ElderShield. Mr Speaker, Sir, my understanding of a koyok seller, and I am sure of many others, is a medicine man selling products that are less worthy and often fake medicines that do not work! Therefore, could the Minister explain what he meant by referring himself as a koyok seller with regard to ElderShield?

Mr Speaker, Sir, I have been explaining ElderShield based on its merits for many, many months, if not years. And we have to clarify and clarify and sell it so many times that I feel like I am selling a koyok. Why don't we just look at the merits and decide for ourselves whether we are in or out?

asked the Minister for Trade and Industry, in view of the recent major blackout in Singapore resulting from the sudden and accidental reduction in gas supply to our power stations, whether any safety mechanism exists to protect Singapore from suffering a repeat of such incident.

Sir, a disruption in the natural gas supply from West Natuna, Indonesia led to the tripping of seven gas fired generation plants at 10.00 am on 5th August 2002. About 1,550 MW of generation capacity was suddenly lost from the system which was drawing about 4,650 MW. Load amounting to 380 MW had to be shed to bring demand down to a level that will not overload the remaining generation capacity still operating in the system. Electricity supply was fully restored by 11.28 am. What caused the natural gas supply disruption? Natural gas from West Natuna is conveyed by a pipeline that terminates at Conoco's Onshore Receiving Facility (ORF) in Sakra on Jurong Island. During a routine maintenance carried out by Conoco at the ORF, an emergency shutdown (ESD) valve was automatically activated. This disrupted the natural gas supply to SembCorp Gas and its gas customers. The activation of the emergency valve is part of the protection design to prevent unsafe conditions in the gas network such as over-pressure. Conoco has reported that a false alarm from one of the monitoring instruments activated the emergency valve. The gas-fired plants, although designed to also run on diesel, could not switch over from gas to diesel in time as gas pressure was lost very rapidly. Instead, four standby diesel-fired turbine generators were pressed into service. It took about half an hour to bring all these units into operation from a cold start. This stabilised the system, and thereafter electricity supply was restored to the affected areas progressively. As the emergency shutdown valve was accidentally tripped, Conoco has stopped all non-essential maintenance work at the ORF until investigations are completed. They have also changed the computer logic by temporarily disabling tripping by this instrument in the automated safety system. Any tripping will be done manually. A Task Force comprising members from the industry and the Energy Market Authority (EMA) has been set up to identify all likely factors that could activate the ESD valve and cause gas disruption. The Task Force will review operating procedures and identify additional preventive measures to be taken to minimise, if not avoid altogether, future disruptions. The Task Force will take a month to complete its review. EMA is separately studying with the power companies if it is possible for the gas-fired generation plants to switch quickly over to diesel before the gas supply depletes. The likelihood of such sudden supply disruptions will be reduced when we have more sources of piped natural gas. As Members know, we will have another pipeline carrying gas from Sumatra next year. We intend to connect these separate pipelines and networks together. Interconnection will enable us to have gas from one source backing up supply from another, thus giving our system greater resilience. This can be done within five years. In the longer term, liquefied natural gas could be yet another fuel source. Presently, we use piped natural gas which cannot be stored. If we decide to use LNG as well, we will have a store of gas for emergency purposes. The public was understandably concerned that a disruption in gas supply could have caused such blackouts over parts of Singapore. We are not taking this incident lightly. It will be thoroughly investigated, and lessons will be learnt. The EMA and the power companies will spare no efforts in making our electricity system more resilient against fuel supply disruptions even as we move towards greater use of natural gas in the future.

asked the Minister for Manpower (a) what efforts have been made by his Ministry since the mid 1980s to move Singapore away from a seniority-based wage system; and (b) what strategies and specific plans his Ministry has in the coming years to move Singapore away from such a system.

Mr Speaker, Sir, the 1986 Economic Committee identified the seniority-based wage system as one of the weaknesses in our labour market. This system rewards workers more on the basis of their seniority in service and less on the value of the job. Subsequently a tripartite committee under the National Wages Council studied ways to make our wage system more flexible and linked to the value of the job. The National Wages Council Tripartite Committee on Wage Reform recommended that a flexible wage system with a variable component be implemented. It also recommended that wages should reflect the value of the job and that salary ranges should not be too wide. A reasonable maximum to minimum salary ratio could be 1.5: 1. Since the implementation of the above recommendations, we have made progress. Today more than 80% of the companies have implemented the flexible wage system with a year-end variable component and the one month Annual Wage Supplement or otherwise known as the 13th month pay, amounting to about 15% to 16% of total wages. The variable component enables companies to reward workers based on company and individual performance. On the seniority-based wage system the ratio between the maximum and minimum salary points for many jobs has been brought down from more than 2.5 times to between 1.5 and 2 times. While progress has been made in building up the variable component, which is often paid at the end of each year, our wage system is still not flexible enough to respond to the rapidly changing business conditions. Hence, in 1999 the National Wages Council recommended that a monthly variable component be introduced to enhance the flexibility of our wage system. With regard to the seniority-based wage system, more efforts have to be made to further narrow the maximum to minimum salary ratio and to actively promote a system which rewards workers based on the value of the job and their contribution. This will enhance the cost-competitiveness and employability of older workers who face a higher risk of losing their job and greater difficulty of seeking re-employment due to our seniority wage system. This year, the Economic Review Committee Sub-committee on Taxation, CPF, Wages and Land has been tasked to review the wage system in Singapore. The Sub-committee's initial recommendation to reduce CPF contribution by employer for employees aged 50 to 55 has already been accepted by the Government. Apart from this, the NWC will continue to encourage companies and unions to accelerate the building up of the monthly variable component and to further evolve a wage system based on the value of the job as well as the productivity and performance of individual employee.

Clarification, Sir. Obviously, as the Minister has said, the system is not there yet. But at what point, in terms of salary scales and variable components, will the Minister feel that we would have arrived at a stage where we are not on a seniority-wage based system, so that we no longer have to be anxious in future about other ways of approaching it, such as further CPF cuts for the older age group?

Mr Speaker, Sir, I think the situation is dynamic and it is constantly evolving. In the mid-80s, as I mentioned in my main reply, the Tripartite Committee considered that if the variable component comprised something like 18-20%, we would have more or less achieved significant progress and we would have succeeded to make our wage system flexible enough. We are almost there. As I said, 80% of our companies have adopted the variable wage system. The variable component is around 16-18%. But in recent years, the pace of change has been so fast. Competition has been heating up so rapidly. We may not be sufficiently flexible with what we have achieved so far. So we have to push the envelope up a little bit more. It is very difficult to determine, at this point in time, what percentage of the wages should be variable for us to be truly flexible, adaptable and responsive to the market changes. I think that can only be determined in the actual labour or employment market situation and also in the context of economic performance of the day. It is rather difficult to predict in advance. But what we want is to evolve a system, for instance, the monthly variable component, where you set aside 10%, or maybe 12% of your monthly wages as a variable component which companies may be able to adjust, if there is a sudden downturn in demand, or businesses drop sharply. The company can then use this MVC, comprising about 10% of the monthly wages, to make an adjustment which helps the company to weather the downturn and also reduce the burden on the company so that they do not have to instantly resort to redundancy or retrenching workers. These are just ballpark targets. But whether 10% is enough will have to depend on the state of the economy and the kind of competitive pressure that we have to face. It may well be that the 10% is sufficient. But it may also be that, as the scenario unfolds, we may need to build up more of our wages into the monthly variable component. So let us take an open-minded approach to this. Let us continue to progress on our development of a flexible wage system and then assess our competitiveness and ability to resist all these sudden changes.

There are two parts to this. One is the flexible system that allows companies to cut costs down quickly. The other is the seniority-based wage system, and my focus is actually on seniority-based wage system. I would just like to clarify if my understanding is correct. What we are talking about here, in terms of monthly variable component, is actually a variable system but within a seniority-based wage system. In other words, the older workers are still getting more, which means that this particular emphasis on MVC will not actually address the seniority-based wage system. Would that be the correct understanding?

With regard to the seniority-based wage system, as I said earlier on, we started out in the mid-80s with a maximum to minimum ratio of 2.5 to as high as 3.

3. Over the years, this has been trimmed down. Today, we are around 2 to 1.

5. I think maybe 1.5 is about reasonable, that means, between the starting point and the last point in the salary scale, it is a difference of 1.

5. That is what the NWC Tripartite Committee recommended in the mid-80s to be a reasonable maximum to minimum ratio. We have not quite arrived at it. Some companies have, but there are still many other companies operating at a ratio of 2. So they will have to individually start to make adjustment to try to bring this seniority-based wage scale to the figure of about 1.5:1. And if we get to 1.5:1, we should have a more manageable system.

If I may again ask the Minister: is he actually saying that when we reach 1.5, then in fact we can be quite comfortable that there will no longer be any need to have differential treatment of older workers versus younger workers. The other point is in fact how much longer will it take us to get that 1.5, if we have a real confidence level that this will take care of the problem. And I am asking this because I think they are all anxious that in the future we do not have to resort to CPF cuts for older workers.

Mr Speaker, Sir, as I said, 1.5 was set as a target by the NWC in the mid-80s. We have not quite reached this target. When we reach this target, we will have to assess whether, in fact, as expected by NWC in making the recommendation, 1.5 would be a reasonable figure. Of course, the competitive environment changes all the time, the nature of jobs and competition in the employment market changes all the time. So we cannot tie ourselves down to say that this shall be the ratio forever and ever. We have to realise that the labour market is in a state of dynamic equilibrium. It changes all the time, depending on who are our competitors, what is the business that we are doing in Singapore, what kind of value-added that we bring to the companies and to the economy as a whole. I think we should take this, as I said earlier on, with an open-minded progressive approach. If we reach 1.5, if we are able to sustain employment of all our older workers, then 1.5 is a good target. But even if at 1.5, we find that older workers are continually suffering a disadvantage, in the sense that they have greater difficulty retaining their jobs, they are retrenched, or they have even greater difficulty seeking re-employment, then we have to address this issue whether in fact 1.5 is reasonable, or in fact it should be even less than that.

I would like to ask the Minister how we can have comfort in knowing where we are going. Just trying to determine that we do not see a repetition, how would we know that we are actually making progress? Because it would be a sad situation 10 years down the road to be looking at the same picture again. How would the Minister be able to give comfort, if all that we can say is simply we do not really know what we are shooting for?

Mr Speaker, Sir, I hope the hon. Member will take comfort from the fact that we have not rushed into this matter of making adjustment to salary scales, nor have we done in a reckless manner. We took careful consideration in the mid-80s with the Tripartite Committee and we have been promoting this concept of a flexible wage scheme and shrinking the difference between the maximum and minimum ratio in our seniority-based wage scale progressively and carefully. So it is not the intention of the Government to force changes upon the people unnecessarily. And if, in fact, as I said, the economic situation takes a turn for the worse and we are seeing a dramatic increase in unemployment among the older workers, then it would be foolish of us to say that we had adopted a certain target years ago, this target should remain in place and we should not make any further changes. It is not that we wish to impose changes on our workers unnecessarily. But changes are forced upon us. Many of these changes are beyond our control. We are competing in a global market. And if, in fact, we have to make adjustments to our salary structures, we have to do it, just as in 1999, we had to adjust our CPF. So these are drawn upon us by external factors and we must be prepared to respond and adapt to these changes. If we blindly stick to the target and refuse to change, we are going to put ourselves in a very difficult position.

Sir, I would just like to ask the Minister to confirm whether there was actually a tripartite agreement which provides for this minimum-maximum ratio of 1.5 to be reached over two collective agreements, and that if unions and management could agree, they could of course take a shorter period, and if they cannot, they could take a longer period. Could the Minister confirm whether there is such an agreement?

Mr Speaker, Sir, when the Tripartite Committee in 1986 made this recommendation to reduce the salary range, it did suggest that unions try to achieve this maximum to minimum ratio within a certain timeframe. I cannot remember exactly what was the timeframe. The hon. Member may be correct in saying that it was over two collective agreements which, in our context, would mean about six years maximum, because a collective agreement runs for up to a maximum of three years. I think many unions have pursued this recommendation. That is why we have seen a significant improvement in this salary ratio, and we have come down from 2.5 to 3.3, down to 1.5 to 2. So improvements will be continuing in this fashion as the collective agreements are renewed.

May I ask whether the civil service timescales are, in fact, now at 1.5?

Mr Speaker, Sir, I do not have the civil service timescale figures with me. So I would not be able to comment on that directly.

Would the Minister give us the assurance that at least the civil service would take the lead in this regard, and if they are not at 1.5, that would be the direction in which the civil service would be moving?

Yes, Sir, the civil service has been taking the lead in this matter, in terms of having a flexible wage system and also reducing the maximum to minimum salary ratio. The civil service, in fact, has been one of the earliest to implement a monthly variable component. And it has also introduced the annual variable component and mid-year bonuses. All these components of a variable and flexible wage system, a performance-based wage system, has been spearheaded by the civil service. I believe the civil service would continue with the approach to achieve a more flexible and realistic wage system.

asked the Minister for Manpower whether he will consider (i) stipulating minimum standards of employment for employers who hire foreign maids and (ii) appointing inspectors to ensure the observance of these standards and monitor the welfare of foreign maids.

asked the Minister for Manpower in light of the maid abuse cases in Singapore whether he will consider (i) holding the maid agencies responsible for the welfare of foreign maids; and (ii) making it mandatory for doctors and nurses who conduct regular medical check-ups on these maids to ask if they have been physically abused by their employers.

asked the Minister for Manpower what measures will his Ministry take to prevent maid abuse, especially after the last reported case when a maid suffered about 200 personal injuries.

Mr Speaker, Sir, with your permission, can I take the three Questions from Ms Irene Ng, Mr Chiam See Tong and Mdm Halimah on maid abuse collectively?

Yes.

Let me first declare unequivocally to this House that the Government deplores ill-treatment of foreign domestic workers. We have and will continue to deal with abusive employers firmly. My Ministry reiterates its call for employers to treat foreign workers with dignity and respect. Indeed, the vast majority of foreign domestic workers in Singapore are well treated and have found work in Singapore to be rewarding. Regrettably, there remains a very small group of employers who treat their foreign workers shamefully. To this group, let me remind them that we are resolute in punishing errant employers who abuse their foreign domestic workers. As a strong deterrent against abuse, the Penal Code was amended in 1998 to enhance penalties committed against a domestic worker by one and a half times. Since then, the number of abuse cases has declined significantly. According to the Police, the number of substantiated abuse cases has dropped from 157 cases in 1997 to 41 cases in 2001 and 8 cases up till June this year. This shows that firm action and deterrent penalties are effective measures against such abuses. Let me now respond to Ms Irene Ng and Mr Chiam See Tong's queries more specifically. My Ministry had, in May, this year announced a mandatory accreditation scheme for employment agencies dealing with foreign domestic workers to help upgrade their professional standards. Accredited employment agents who put in greater effort to recruit, train and prepare foreign domestic workers for work in Singapore households will ensure a better match between the employer and foreign domestic worker. This will foster a more healthy employer-foreign domestic worker relationship and reduce the potential for conflict, complaints and abuses. On the suggestion to make it compulsory for doctors to ascertain if a foreign domestic worker has been physically abused, the Member of Parliament may wish to know that under the Criminal Procedure Code, anyone, including the doctor who is aware of physical abuse, has a legal obligation to report the matter to the Police. The Ministry of Health and my Ministry are currently working on a set of guidelines to help doctors better identify cases of physical abuse. Doctors will also be reminded to report cases of abuse. However, it would be prudent to focus more on preventing abuse of foreign domestic workers. Accordingly, we will require first-time employers of foreign domestic workers to undergo a mandatory orientation programme. This measure will enhance the Ministry's ongoing educational efforts to promote good employment practices, harmonious working relationships and mutual respect. The orientation programme will also highlight to employers the severe consequences they face if they abuse their foreign domestic workers. Details of the orientation programme will be announced in due course. The present debate on maid abuse has also led to calls for the Government to impose minimum standards of employment, as suggested by Mdm Halimah, to protect foreign domestic workers. Unlike other workers, foreign domestic workers work and stay in their employer's house throughout the day. The nature of work, the duties performed and the standard of performance also vary from household to household. It is, therefore, not practical to lay down in law standard rules regarding the specific employment conditions for foreign domestic workers. For example, it is difficult to determine the actual hours of work for foreign domestic workers since they perform active work interspersed with some free time. Having prescribed rules would make it difficult for employers and foreign domestic workers to comply, and also for the authorities to enforce them. Notwithstanding the difficulty of defining standard conditions of employment, my Ministry has always encouraged employers and their domestic workers to work out defined terms, based on mutual agreement and on the specific needs of the two parties, to avoid any misunderstanding. Many foreign domestic workers have signed written contracts with their employers with the help of their employment agents and, in some instances, with the help of their Embassies. I agree with Mdm Halimah that this practice should be further encouraged. To safeguard the welfare of foreign workers, my Ministry has set up a Foreign Workers Unit to provide free conciliation services for those who encounter work-related problems with their employers. The Unit works closely with the Embassies of the foreign workers concerned, and has been able to resolve practically all disputes amicably. We would like to remind employers of foreign domestic workers that they are ultimately responsible for the welfare of the foreign domestic worker. It is an employer's duty to take good care of the workers under their employ. The penalties for abusing these workers are severe.

Mr Speaker, Sir, the Minister of State talked generally about physical abuse of domestic maids. My work with victims of domestic violence suggests that, often times, other forms of abuse are precursors to physical violence or abuse. In order to prevent physical abuse of domestic maids, what are the measures that have been taken to detect other forms of abuse that may happen in a household, rather than wait until physical abuse actually takes place?

The Ministry's approach is two-pronged. One is specific, the other general. Specifically, we would like to allow the maids to have avenues for complaint. That is why we issue advisories. They are written in about 17 languages, because our foreign domestic workers come from 17 language-based regions. We also give hotline numbers so that they have avenues or recourse to reporting such abuses. The second, and more general approach, is to raise the threshold of reasonableness for employers. This is more difficult, because we have more than 140,000 foreign domestic workers and, therefore, more than 140,000 employers and their household members. The threshold for reasonableness and, therefore, the potential for other forms of abuse can vary from household to household. A household may declare it does not quite consider it abuse, but it may indeed be abuse. How do we raise this threshold of reasonableness? One, as we said, is that we encourage written contracts to stipulate mutual terms of employment. The other, which I have already mentioned, is the maid accreditation scheme. There are currently about 800 employment agencies that deal with placement of foreign domestic workers. We would like to raise this level so that the employment agencies can help better train and orientate these foreign domestic workers before they join the households. The other aspect is the mandatory orientation programmes which I have also mentioned, where both the employer and employee come for a course and we can explain the terms and conditions, and what to expect from one another. This will raise the general level of threshold to what would be a healthy relationship. Having said that, the majority of foreign domestic workers who work in Singapore, do find it rewarding. The number of abuses has come down, but we will continue to add on to the efforts that have been successful.

Mr Speaker, Sir, it is my understanding that maid agencies themselves are sometimes guilty of abuse of maids. I wonder how the accreditation system will be able to weed out such maid agencies.

Mr Speaker, Sir, if the hon. Member knows of any specific instances where an employment agency has abused a maid, please let us know and we will take the employment agency to task. How do we ensure that the maid accreditation system weeds out employment agencies which are not performing up to par? As I said, accreditation is not a specific programme but more a general one. We think that if we raise the level of performance of the maid employment agencies and have minimum standards and programmes which will raise their level of professionalism, a number of leaders will emerge who will give value-add to those employers who want foreign domestic workers and who will also be more responsible for the foreign domestic workers. So the answer is that it does not quite prevent specific abuses. If there are specific abuses, we will deal with them legally. If we wait until they happen, then it is really too late.

Mr Speaker, Sir, I understand, from what the Minister of State says, that it is not possible to describe all the terms and conditions, one example being working hours. But I still think it is possible to consider prescribing some minimum terms, eg, number of rest hours a day, rest days a week, annual leave, sick leave, etc. Will the Minister consider that? Secondly, on the question of inspectors, is it possible for the Ministry to consider appointing inspectors to do random checks? I understand it is not possible. If there are 140,000 maids, there are probably 140,000 households but, at least, the random checks done on such households will act as a deterrent to employers who employ maids to behave in a humane and fair manner towards their maids.

Mdm Halimah has touched on a number of points. We need to deal with them separately. One, encouraging employers and their maids to have prescribed working conditions, and I have said we do encourage it. Two, trying to craft it in legislation. This is an issue of enforcement. Even if we had these minimum conditions, can we enforce them? She therefore suggests that we employ inspectors. There is a balance to this. How much do we want to intrude into households versus protecting the maids? We have moved somewhat along those lines, in terms of the accreditation scheme for employment agencies, where we require them to check on the maids who are placed with the employers twice within six months from commencement of work. So, that is moving somewhere. To have a full force of inspectors going from house to house periodically asking how the maids have been treated, how they are, and seeing whether the terms of the employment conditions have been met, is a radical jump. I am not sure whether that is the way to move. It is an intrusion. We do not think that the situation of maid abuse quite warrants that drastic measure because, as I have mentioned, eight cases were reported and there has been a drop. So, our measures seem to have worked. We will move on the more encouraging measures before we move more into enforcement.

Sir, I am glad to hear that the Government is introducing this orientation programme for maids. I am certain that this will be a very useful programme. I also note that some of the maids employed in our households are rather young. Will the Government consider a minimum age below which they cannot be employed? As regards training, I understand that the training given by the agencies to the maids comprises only one day. I am certain that it is not enough. Will the Minister consider asking the agencies to probably double the period of training?

I need to check on Mr Chiam's point on minimum age. I think it exists, but I am not sure at what point it is prescribed. In terms of training, the hon. Member is quite right that we need a holistic solution. I do not want to be prescriptive and say it has to be 'x' number of hours. What we do want is a minimum standard to be achieved. The only way we can do that is, one, to have an accreditation system first; two, a training facility; three, a prescribed programme; and, four, a carrot-and-stick approach. Case Trust has come forward to offer to implement this accreditation system for us and we have accepted, but my Ministry has also said that we are open to any employment agency or association that can put forth a programme that satisfies our requirements. But the overall aim and the final goal are that we want to raise the level, to make sure that employment agencies, as the hon. Member said, train and also put some care into the placement, ie, match the employer and his worker.

Clarification, Sir. While the number of reports of physical abuse of maids has come down - and the Minister of State earlier mentioned about the different options and avenues that maids can actually lodge complaints should there be any forms of other abuse - I wonder what is the extent of such complaints of other forms of abuse of domestic helpers at this time, or even within the last few months, in relation to ascertaining the extent of problems with regard to maid abuse.

The hon. Member is an expert on social matters, and I am sure he is aware that mental abuse or non-physical abuse varies from one person to another. I am sure if we took a poll on the Members sitting in this House, some or even many of us may be mentally abused today! The percentage will vary from day to day. So, it is difficult to quantify. More importantly, we want to create access and avenues for any foreign domestic worker who thinks that she has been abused, to be able to contact a particular agency, whether it is MOM or the police, for us to be able to investigate that. And that has been made available. I do not have the specific numbers. I am not quite sure whether we capture it in terms of mental or physical abuse, but we have captured all cases of abuse generically, and the numbers I have mentioned stand.

Mr Speaker, Sir, based on the number the Minister of State has mentioned, would he not say that the percentage of households having maids in Singapore is rather high and, in my view, maybe among the highest in all communities in the world? Has the Ministry studied what is the propensity of Singaporean households having maids, and what measures have been considered to reduce this dependency?

Mr Speaker, Sir, I welcome the hon. Member's point. He is quite right. The number of foreign domestic workers has increased despite the recession. There are really two ways, or a combination of the two, to reduce the number. One, the levy; two, the quota. The quota is difficult because it means that the Ministry has to decide a priori who is fit or whose need is greater for a foreign domestic worker, which leads us to the second recourse, and the Ministry is studying ways to implement that.

It is heartening to note that the mandatory orientation programme for first-time employers is being considered. Maybe, just to get an idea of the shape of things to come, would the Minister just give some idea as to who will be organising it and what would it cover, so that we can see the usefulness and value for those who have to go through it, because the usual psychological block again is: why another enforced mandatory scheme for first-time employers?

Mr Speaker, Sir, we will announce the details in due course, but let me just give Members the schematics. The reason for this scheme which we thought would help is that - Mr Chiam said for the maid, but it is not quite for the maid - it is really for the employer and the employee both to be put in the same room before she starts work, and for a third party to explain the conditions and what it means to work in a household. Whether we do it through a third party or MOM engages professional bodies for it to be done, we have to work out the details. But that very act sends a number of signals to both the employer and employee. It sends a signal to the employer that, yes, the foreign domestic worker is under his employ but he has to be responsible because there are bodies within the Government and professional organisations who are also looking after the welfare of this lady, and this worker can have recourse to MOM or other agencies. It also sends a signal to the maid that there are rights and that she can be protected and this is where she can turn to. I think over and above that, it also helps set out a tone before a foreign domestic worker works in the household that this is an employer-employee relationship. I think that will be the more useful signal that we are going to send.

I will allow another two more questions and then move on to the next Question.

I would just like to ask the Minister of State why he is confining these orientation courses to just first-time employers. Certainly those who have employed maids before ought to be reminded from time to time of their obligations to and of the maid's rights as an employee in their household. Therefore, I would like to know whether or not the Ministry would consider encouraging subsequent employers to refresh themselves on the obligations and the treatment of maids in the future.

Mr Speaker, Sir, I think the majority of households who employ maids treat their maids well. The numbers reflect that. We do not want to make it onerous so that every time you change a maid - and there are many reasons why a maid who joins one particular household needs to go back or she finds it not suitable - you have to attend an orientation programme. I think that would be creating difficulties where it is not necessary. But we will monitor. If this particular programme for first-time employers does not seem to do the trick, we will decide on whether we should extend it.

Mr Speaker, Sir, the Minister of State, in an earlier response, mentioned that the threshold of reasonableness in households varies tremendously. In fact, there are 140,000 households with maids in Singapore. He also mentioned that his Ministry intends to raise this minimum threshold of reasonableness. Would it then not be timely that his Ministry publish what it thinks is the minimum level of threshold of reasonableness?

Mr Speaker, Sir, if you had to publish, for example, that you should not abuse a maid, that is not something that we need to publish, that is something we already know and something you can act against. You do not need a contract to say that you will not abuse her physically. That is understood. Whether we should move the other way and say she should work X number of hours a day, she should only do prescribed activities within the house, I think it will be difficult. It varies from household to household and we need to be realistic. I think the acid test at the end of the day is for the employer to ask if perchance a relative of his goes to a different country and works as a foreign domestic maid, would he have that employer in another country treat his relative the way he treats his maid?

Point of clarification, Mr Speaker, Sir. The Minister of State said just now that they are looking into the second option of reducing the number of maids in Singapore, which is fees. I hope the Minister of State would clarify that he is not thinking of increasing the maid levy in this aspect.

Mr Speaker, Sir, let me congratulate Mr Chia on his quickness.

Mr Speaker, Sir, I am not wanting to put too much mental abuse on anybody, particularly on the Minister of State. Obviously, younger maids will be more vulnerable and may be more vulnerable to abuse and so on. The Minister of State did not know what the minimum age is. May I ask him to undertake, if the age is below 21 years, to consider seriously that the minimum age should be set at 21 years which is, after all, the age of adulthood and the age where a contract can probably be made.

Yes, we will undertake that but as I understand it, our minimum age prescribed is consistent with international standards. But I take his point.

Mr Speaker, Sir, while I can understand the difficulties of legislating standards as regards the treatment of maids, surely, it will not be asking too much of the Government to set standards which are not necessarily enforceable but are guidelines by which we expect maids to be treated. These guidelines can then set the benchmark as to what is reasonable conduct on the part of the employer and employee.

Mr Speaker, Sir, we do have a peculiar characteristic, that is, we do like to enforce what we set out as guidelines, and that is not a bad thing. We do have guidelines that encourage the employers and employees to go into a written contract. But whether you want to enforce it in law or whether you can do it, I think it is a different matter. But let us have a bit of perspective. The number of cases of reported abuse is 8 for the first half of this year. It has come down. It shows that our enhancement of penalties has worked. Whether we should craft legislation to be more restrictive and more onerous, I think the numbers will help us to move towards any particular direction.

Sir, during the two checks that are made to the employer's home in the six months, if the employer does not adhere to the contract, how would the Ministry then know what to do with this agency and what happens to their accreditation? My second question is: is there an "1800" number available to all maids who come in? Sorry for my ignorance. If not, can we see that something be done, if possible, about it?

Yes, there is a "1800" number. With regard to her first question that during the two checks carried out by the employment agency and they find that there is unhappiness on either party, I think they would usually see whether they can make a second placement. I am not sure whether that was her question.

What I was saying is what happens to their status if the contract is made between the employer and employee, the agency comes in to do their checks and the employer is flouting the contract. How would the Ministry know that the agency is not reporting or mediating in this case? What happens to their status after that?

As I have said, under the Criminal Procedure Code, anyone who knows of abuse is bound to report it legally. So if we find that a particular employment agency was aware of the abuse and did not report it, we have a recourse to prosecution.

A point of clarification, Sir. The Minister of State said that there are guidelines. I would like to find out from the Minister of State whether these guidelines are effective and if there is any employer that flouts the guidelines, what are the powers available to the Ministry to enforce these guidelines.

Mr Speaker, Sir, can I clarify from Mdm Halimah what guidelines she is referring to?

Mr Speaker, Sir, the Minister of State mentioned about the presence of guidelines in response to a question raised by Mr Sin Boon Ann when he was asking whether, short of legislating those standards, there are guidelines. The Minister of State responded by saying yes, there are guidelines. My question is: are those guidelines effective? And if those guidelines are not complied with, what are the powers available to the Ministry to enforce them?

Mr Speaker, Sir, I was under the impression that the guidelines refer to employment conditions. This would be a similar response to what Mdm Halimah previously asked, that is, it is quite one thing to say that there should be suggested guidelines which the employer expects of the working conditions for the employee in order to craft it in law. I said that the situation suggests that we do not quite need to move towards that because the number of abuses has not been that great. We are not satisfied, but it tells us that we do not have to make it that onerous for employers. But as I have mentioned, there are also other aspects that need not be written in any guidelines which we will prosecute, for example, maid abuse, which is what we are discussing. On one hand, it is the general aspect of raising the threshold of how you treat your foreign domestic worker. I think that would take time, that would evolve. It is not something that you can prescribe at this point of time because it would change. What is normal or what is expected for one household is not quite the same for another. How do you raise the overall standards? I think our measures have worked in most instances and we will continue to see how this mandatory orientation programme works, what improvements it brings and what improvements it needs before we decide on further avenues.

Mr Sin, this is the last question.

Mr Speaker, I do not understand because, on the one hand, the Government is saying that we want to raise the general standards by way of determining what is a reasonable threshold for the public. On the other hand, I sense that the Government is fighting shy of setting standards and guidelines which need not necessarily be founded in contracts. The Government can unilaterally set certain standards that the Government expects employers to follow and whether or not these employers follow these guidelines is really up to the employers and for the general public to take a different view of it if they fail to follow these standards. But it need not necessarily be enforced as suggested by the Government.

Mr Speaker, Sir, I think it would be wrong to say that the Government fights shy of setting guidelines. I think the Government wants to make sure that we can effect the change, rather than grandstanding and posture. It is the exact reason for the maid accreditation system because you can come up with a sheet and say that is what you do. But would people follow you? Which is why we have the employment agency accreditation scheme so that we can make sure that there is an intermediary. We have 140,000 employers. We have these maid agencies which are in closest contact with these employers placing these maids. How do you effect the change that you want? It is quite one thing to say what you want and it is quite another thing to effect that change. This is the direction that we are moving. We are not only stating how we want these guidelines prescribed but we are also trying to see that they are regulated and implemented.

asked the Minister for National Development (a) how many Housing and Development Board (HDB) flats are unsold to date; (b) what are the measures taken to sell these flats; and (c) whether HDB will be building any new flats from 2002 to 2004.

Mr Speaker Sir, at the beginning of this year, HDB had about 17,500 unsold flats in the non-mature estates available for sale to the public. In the first quarter of this year, HDB offered these unsold flats to all the Registration for Flat Scheme (RFS) applicants on the queue. After RFS applicants had selected their flats, the remaining unsold flats were then offered to the public on a monthly basis under the Walk-In Selection (WIS) process from April this year onwards. For the convenience of buyers, HDB organised roadshows, conducted bus tours, opened up showflats and sample units and set up on-site sales offices to facilitate their flat purchase. So far, WIS exercises in five towns have been launched - Sengkang, Choa Chu Kang, Sembawang, Punggol and Woodlands. Through these measures, HDB has sold more than 7,000 flats in the non-mature estates from January to the end of July, leaving about 10,000 flats still available for sale. These flats will continue to be made available through the WIS on a monthly basis. HDB will assess the unsold flats supply when all the unsold RFS flats have been released under the WIS, before deciding if additional measures are necessary. In addition, HDB has sold more than 1,300 of the 1,900 flats that were offered in the first of the twice-yearly Balloting Exercises for flats in mature estates. This was held in January this year. These flats were built to re-house lessees affected by HDB's redevelopment programmes such as the Selective En-Bloc Redevelopment Scheme (SERS). HDB intentionally built these surplus units so as to optimise the land use in these popular estates and is now able to release them to the public in batches. As I had announced in Parliament in May, HDB will offer 1,300 new flats for sale in Punggol and Sengkang under the Build-To-Order (BTO) System in the 4th quarter of this year. As nearly all the unsold flats in the non-mature estates are 5-room and Executive Flats, only 4-room flats will be offered under this exercise. If the take-up rate for the flats in these sites is good, HDB will proceed with the construction. HDB will study the response to its ongoing sales measures and the BTO offer in the 4th quarter of this year, as well as the economic conditions next year before determining the building plans for 2003 and beyond. 2.00 pm

Order. End of Question time. [Pursuant to Standing Order No. 21(3), Written Answers to Question Nos. 16, 17, 21, 23, 25 and 28-33 on the Order Paper are reproduced in the section,"Oral Answers To Questions Not Reached" (Cols. 941-945). Question Nos. 12-15, 18-20, 22, 24 and 26-27 have been postponed to the sitting of Parliament on 28th August 2002.]

"to amend the International Arbitration Act (Chapter 143A of the 1995 Revised Edition)", presented by the Senior 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.

Order for Second Reading read.

Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." The People's Association Act was enacted in May 1960 and, over the last 40 years, it has been amended on a few occasions. This Bill now seeks to amend the PA Act to facilitate the introduction of the new PA symbol, commonly called the PA logo, and to update the mode of operation of bank accounts. The original PA logo was introduced in 1963. This was the first logo which was on the paper that the Clerk has distributed earlier to all hon. Members. It was incorporated into the PA Act as the Second Schedule. After 40 years, it is timely to refresh the logo in order to keep up with the time. And the new logo, which is the second logo at the bottom of the page, has retained the essential characteristics of the previous logo, but now instead of our four circles, we see one continuous element running through the four circles. This represents the PA's mission of connecting Singaporeans from all ethnic backgrounds to promote active citizenry and multi-racial harmony. The vision is one of all communities bonding closely together, increasing the common space and strengthening the nation. The Bill also proposes to delete the Second Schedule to the PA Act and to make the necessary amendments, so that there is no need to amend the Act whenever the symbol is changed in future. In order to protect the integrity of the new logo so that it will not be misused, the penalty for infringement has been increased from $500 to $10,000. This proposed penalty is in line with that of symbols of other Government statutory authorities. Section 13(3) of the PA Act governs the operation of the bank accounts of the People's Association. Cheques have to be signed by two members of the Board of Management. This provision was enacted 40 years ago. Over the years, the PA has grown in size with increased volumes of financial transactions. Like other statutory boards, the task of signing cheques and the operation of bank accounts can be delegated to authorised officers of the People's Association by the Board of Management. The Bill, therefore, seeks to amend the existing provision to give effect to this. 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. - [Mr Chan Soo Sen]. 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." The National Science and Technology Board (NSTB) was established in 1991 to help upgrade the level of technology in industry and promote R&D in the private sector. Its core activities were promoting and supporting private sector R&D through grants, and establishing research institutes and centres to support technology development in industry. The emphasis was on downstream technology development, aligned to the needs of the manufacturing sector. Our economy has advanced rapidly over the past four decades, bringing fresh challenges and priorities at each stage of development. In the 1990s, an important priority was to raise levels of technology in industry and move to higher value added productive activities. NSTB's focus was in supporting industry upgrading and promoting the development of technopreneurship. As we move up the economic ladder and into the knowledge-based arena, Singapore faces new and more complex challenges. Science and technology are advancing relentlessly. Established centres of R&D are moving ahead, and new players are emerging. Singapore has to step up the pace in building a knowledge-based economy, or be left behind. Our window of opportunity is narrowing. The development of human and intellectual capital is the key to our future economic growth. We have to move beyond the adoption of new technologies developed elsewhere. We have to create, own and exploit intellectual capital. To do so, we must broaden and deepen our scientific capabilities. Only then can we nurture and attract high value knowledge-based activities, anchor them in Singapore and provide rewarding jobs for our people. NSTB has been restructured to support this objective by moving from downstream technology development towards the promotion and encouragement of science, engineering and biomedical research. Its roles in co-funding industry R&D and technopreneurship development have been transferred to EDB. NSTB will place greater emphasis on nurturing research talent, that can create intellectual property to develop and attract higher value, knowledge-based industries. NSTB has therefore refined its mission to that of fostering world-class scientific research and talent so as to create a vibrant knowledge-based economy. It will pay particular attention to: (1) integrating public sector R&D with the development of industry clusters; (2) nurturing local R&D talent (with particular emphasis on our youth), in addition to recruiting foreign talent; and (3) promoting the exploitation of intellectual property created by our research institutes. To reflect this new mission, NSTB has been renamed the Agency for Science, Technology and Research or A*STAR, since 1st January of this year. The new name symbolises the organisation's role as an agent of change, and in providing the guiding direction for upgrading in science, technology and research for the development of Singapore's economy. The amendments to the NSTB Act thus reflect the refinement or re-focusing of the mandate, powers and functions of A*STAR, and also the new name. Let me now touch on the key aspects of the Bill. Change of Name Clause 5 effects the change of name to the "Agency for Science, Technology and Research" or such other business name as the Minister may by notification specify. The agency may carry out its functions and duties under the new name and the acronym A*STAR. This will give the A*STAR the flexibility to change its business name as and when the circumstances require, without having to change its legal name - Agency for Science, Technology and Research. Changes in Functions and Powers Clause 7 widens the mission and direction of A*STAR to include the following objectives: (1) to spearhead the creation of a knowledge-based economy by encouraging research and development and nurturing talent in research and development in the areas of science, engineering and biomedical sciences; (2) to promote the creation and management of intellectual property through research by the various research institutes under A*STAR and through collaboration with other research institutes, universities or industry partners; and (3) to provide and facilitate the commercial application of the intellectual property created by these research and development activities. Powers of the Agency Clause 8 empowers A*STAR to carry out its expanded functions, including a power to establish research institutes and councils. It also includes the power to provide grants and financial assistance for R&D and commercial applications in areas defined by the agency. Deletion of the Third Schedule Given the lapse of 11 years since the Science Council was taken over by the agency, all references to that transfer provided for by the Third Schedule are no longer relevant or applicable. Therefore, clause 10 repeals the Third Schedule. Mr Speaker, Sir, the proposed amendments to the NSTB Act will allow A*STAR to focus its energies on building a critical mass of research manpower and developing core capabilities in the fields of science, engineering and biomedical sciences. This nurturing of scientific talent and R&D capabilities will be crucial to Singapore's drive to move up the economic ladder and establish itself as a hub in the global knowledge-based economy. 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. - [Mr Tharman Shanmugaratnam]. Bill considered in Committee; reported without amendment; read a Third time and passed.

Order. I propose to take the break now. I suspend the Sitting and will take the Chair again at 2.45 pm. Sitting accordingly suspended at 2.15 pm until 2.45 pm. Sitting resumed at 2.45 pm

Order for Second Reading read.

Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." Sir, during the last Parliament sitting, the Second Minister for Finance, Mr Lim Hng Kiang, moved the Second Reading of the Currency (Amendment) Bill. The Currency (Amendment) Bill essentially made legislative amendments to the Currency Act to effect the merger of the Monetary Authority of Singapore and the Board of Commissioners of Currency, Singapore. As Mr Lim mentioned in his speech, the merger of BCCS with MAS would also require amendments to the Constitution of the Republic of Singapore. This Bill effects the necessary constitutional amendments to enable past reserves of BCCS to be transferred to MAS as past reserves, and to delete BCCS from the Fifth Schedule of the Constitution. The Bill also includes two other amendments, one concerning the disqualification of Members of Parliament under certain circumstances, and the other to extend the term of Nominated Members of Parliament from two to two-and-a-half years. Sir, I shall now explain the main amendments in the Bill. Transfer of Reserves Clause 2 amends Article 22B of the Constitution to enable a Fifth Schedule statutory board, whose past reserves are subject to the constitutional safeguards, to transfer any of its past reserves either to the Government's past reserves or to another Fifth Schedule statutory board's past reserves, without the transaction being regarded as a draw on past reserves. As BCCS and MAS are both Fifth Schedule statutory boards, this will enable BCCS to transfer all its past reserves to MAS. The transfer will not affect the total amount of past reserves that are subject to the constitutional safeguards. Next, as BCCS would no longer exist as a separate entity after the merger with MAS, clause 5 proposes the deletion of BCCS from the Fifth Schedule of the Constitution. The President has been consulted on clause 3 and clause 5 of the Bill, as these two amendments affect the custodial powers of the President. The President has agreed that I should inform the House that these two clauses have his concurrence. Let me now describe the amendments pertaining to the Members of Parliament and Nominated Members of Parliament. Disqualification of Members of Parliament Currently, a Member of Parliament is subject to disqualification under certain circumstances. These include becoming bankrupt, declared to be of unsound mind, being convicted of an offence that leads to a jail term of more than one year or a fine of more than $2,000, or being convicted of an offence in connection with elections to Parliament. When this happens, Article 48 of the Constitution gives Parliament a choice of either immediately vacating the MP's seat, or delaying the vacation of the seat to allow the MP to appeal against the Court's ruling. If Parliament chooses the former, it would not be fair to the MP, who ought to be given a reasonable opportunity to appeal against the Court's decision to retain his seat in Parliament. So far, Parliament's practice has always been to give the MP the chance to appeal. But this has given rise to the anomalous situation of a disqualified MP being able to continue sitting and voting in Parliament while his appeal is pending. There is no disincentive for the MP not to drag his feet with the appeal process. Clause 3 rectifies this, by giving the MP two incentives to expeditiously pursue his avenues of appeal. The first is to disallow him from participating in parliamentary proceedings while his appeal is pending. The second is to give him a reasonable time to exhaust his avenues of appeal. Clause 3 amends Article 46 of the Constitution to provide that an MP who becomes disqualified by reason of bankruptcy, unsound mind or criminal conviction, shall immediately cease to be entitled to sit or vote in Parliament until the outcome of any appeal against the Court's decision. The MP's seat will, at the very latest, be vacated after 180 days even if the appeal is still pending. An MP who succeeds in his appeal before the expiry of the 180 days will be entitled to resume sitting or voting in Parliament. We have set the period at 180 days because in vast majority of cases, the appeal process takes less than six months. This is also in line with the UK practice. In the UK, a bankrupt MP is immediately disqualified from participating in the proceedings of Parliament, but he is allowed to retain his seat for six months. If at the end of six months, his appeals to the Court do not result in his bankruptcy being annulled or rescinded, he must vacate his seat in Parliament. Extension of the Term of Nominated MPs Clause 4 of the Bill amends the Fourth Schedule of the Constitution to extend the term of NMPs from two years to two-and-a-half years from the date of appointment. In April, the House debated the motion by the Leader of the House to have Nominated MPs during the term of this Parliament. During this debate, the Leader informed Members that the present two-year term of NMPs was not ideal. If Parliament lasts the full five years, then we have to go through the process of selecting NMPs three times. Furthermore, the third time, after Parliament has gone through the whole process of public advertisements, inviting members of the public to send in nominations, interviewing them, and so on, the NMP would serve only for at most one year, before General Elections have to be called. In the last term of Parliament, these NMPs, in fact, served only 17 days and attended three sittings of Parliament. The Leader stated that at an appropriate time, the Government intended to propose a change to this two-year term to stretch it out to two-and-a-half or three years, so that within one parliamentary term of five years, we only need to select NMPs twice. Hence, this amendment to extend the NMPs' term from two to two-and-a-half years. Sir, I beg to move. Question proposed.

Sir, I rise in support of the Constitution (Amendment) Bill. I should just like to ask the Deputy Prime Minister some questions relating to the proposed changes to Article 46 contained in clause 3 of the Bill. First, the amendment provides for a situation where an MP may, for example, be disqualified due to his being adjudged bankrupt or convicted of an offence for which he is fined more than $2,000 or jailed for more than a year. He is then suspended from parliamentary proceedings even if he appeals. There is nothing wrong with this, and it is practised in many jurisdictions, notably England. However, I would like to ask a question relating to the 180-day limit concerning the appeal, after which a Member of Parliament must vacate his or her seat. What if the appeal had not been heard by then? What if subsequently the appeal is allowed? He would have vacated his seat already and there would be no opportunity for reinstatement. Is this really intended? Second, there is still a reference, I find, to Malaysian courts in the proposed Article 46(4)(c) where an MP may be disqualified if convicted of an offence by a Malaysian court. This is a historical issue. Why have we not taken the opportunity to take away this reference to Malaysia? Third, Article 45(2) refers to the removal of disqualification after, for instance, an MP has been sentenced and served his custodial sentence, and he is released. He is no longer disqualified five years after his release. He can stand for re-election. Sir, the question is, if an MP has been convicted of a serious offence or, for that matter, successfully sued in the civil court, for example, for breach of trust or such conduct which was manifestly dishonest and dishonourable, should he not be disqualified for a longer period or, in some really serious offences, permanently disqualified? Finally, Sir, the amendment may be seen by some in this House as well as outside that this was motivated by the treatment of the Non-Constituency MP in the previous Parliament, Mr J B Jeyaretnam, during his bankruptcy proceedings when he was allowed to participate in Parliament during the appeal. I am sure that this is not so and that, on the whole, the amendments to the Constitution are important in preserving the honour and integrity of Parliament. Sir, I give it fullest support.

Mr Speaker, Sir, I would like to touch on clause 3 of the proposed amendment which concerns Members of the House. A Member of the House adjudged or otherwise declared a bankrupt (Article 46(4)(a)) should have the same opportunities as any other citizens and be able to pursue avenues of compromise or settlement without any additional added pressure. This is particularly so in view of the high incidence of politicians being sued for defamation in Singapore. The Courts in Singapore are reasonably efficient, and there are procedures in our legal system to ensure that matters are dealt with expeditiously. In the circumstances, the proposed amendment to force a said Member to vacate his seat after 180 days, despite pending appeals open to the Member, makes a mockery of the legal system. Furthermore, Sir, when all attempts to appeal have failed, and the said Member is so disqualified from his seat, then the said vacant seat should immediately be put up for contest in a by-election. This should be done irregardless of whether the vacant seat is in a single constituency or GRC. After all, the constituents are citizens and taxpayers and they should be fairly treated and not stayed on as orphaned electorates, and especially not with step-MPs from other constituencies assigned to look after them. The choice of the constituents should be respected and every opportunity given to elect a new representative. Thus, Mr Speaker, Sir, I do not support the Bill in its current state.

Mr Speaker, Sir, I have no objection to the amendment relating to the transfer of past reserves between the statutory boards concerned. Concerning the disqualification of Members of Parliament, I believe the immediate suspension of a Member's rights, following the courts disqualifying the Member, is in line with the practice of other countries. I also have no objection to this. But my concern, like Prof. Chin, is about the 180-day cut-off where a Member is appealing against a conviction or his bankruptcy. If 180 days have passed without the appeal being decided, the Member will lose his seat. This will be irreversible even if his appeal is eventually successful and he is acquitted. Such a cut-off point for appeal may be necessary in countries where the court processes take a long time, and there may be a worry that the MP may be out of action for too long. However, do we have the same problem in Singapore? According to the Supreme Court's Annual Report 2001, the average waiting time for appeals against bankruptcy is 1.8 weeks whereas the average waiting time for appeals against a criminal conviction in the Subordinate Courts is about 6.1 weeks. We also know that the courts are nowadays very strict on postponement of cases. As what DPM has mentioned, we are efficient in our court system. So, if any case is postponed for more than 180 days, there must be a very good reason. Sir, currently, in Singapore, it appears that the Chief Justice is the only Judge hearing criminal appeals from the Subordinate Courts. I understand that sometime in 1998, the Chief Justice was on medical leave as he went abroad for treatment. This resulted in Magistrates' appeals not being heard for several weeks. If this happens again, would it be fair to the Member if the period of 180 days has expired because the Chief Justice is on medical leave? I also understand that the practice in Australia is to wait for the outcome of the appeal, as it would be jumping the gun to make the seat vacant if there is an appeal pending conviction. Furthermore, such an amendment is tantamount to presuming the Member is guilty if the appeal to the Court is being delayed for more than 180 days. Sir, I am not convinced that this amendment is necessary. It can also lead to unjust results, if the delay is due to circumstances beyond the Member's control.

Mr Speaker, Sir, may I address the points, first, on amendments to Article 46, particularly the 180-day rule which Prof. Chin, Mr Steve Chia and also Mr Low Thia Khiang have raised. The situation which they have described is not likely to happen because six months should be enough time for an MP to complete his appeal. According to the statistics, more than 80% of appeal cases are disposed of within six months. If an MP in question expeditiously pursues his appeal, there is no reason why it should not be completed within that period. Knowing that the MP has got this six-month deadline, the courts will no doubt accommodate the MP's schedule and fix an appeal for hearing as early as possible. It is only when the MP drags out his appeal that there is any chance of the process exceeding six months, in which case he only has himself to blame. We have to set a hard time limit because we have to avoid an MP deliberately dragging his case out and then repeatedly asking for an extension of time at the last minute, prolonging the entire process indefinitely. However, the six months is not an absolute limit. If, for extraordinary reasons, the appeal has not been resolved at the end of 180 days, the MP could raise a question under Article 48 on whether he has vacated his seat, and it is still possible for Parliament to invoke the proviso to Article 48 to postpone a decision on the vacation of the MP's seat. The main point of this amendment is to suspend the right of an MP to sit and vote while the appeal is in progress and to set a structured timeline for the MP to follow. And this is to put him on notice that, should he fail to meet the 180-day grace period, he should expect very little sympathy from Parliament, except under exceptional circumstances. In other words, the proviso to Article 48 will really be invoked for cases where the 180-day timeline applies. But if there is merit, it is available. Next, Prof. Chin asked about decisions in Malaysian courts. Why do we still need this? Prof. Chin is actually referring to Article 45(1)(e) of the present Constitution which is not the subject of any direct amendment in the Bill. But, nevertheless, the reason the Article exists is as follows. Given the close ties and links between Singapore and Malaysia, it is not realistic for us to ignore criminal convictions sustained in Malaysia. Many Singaporeans travel up to Malaysia for business and recreation frequently. Many of our citizens are either former Malaysians who have lived or worked for a period in Malaysia. And this uniquely close relationship between Singapore and Malaysia is not matched by Singapore's ties with any other country. The penal laws of Singapore and Malaysia are very similar. What is a crime is most likely a crime there, and this similarity is again unique. There is a similar situation, in fact, in the United Kingdom where the Representation of the People Act provides for disqualification for imprisonment in either the UK or the Republic of Ireland. So there is reason for this. Of course, I should add that the conviction which is outside of Singapore and Malaysia is not entirely without consequence because Parliament can still suspend the MP for dishonourable conduct under section 20 of the Parliament (Privileges, Immunities and Powers) Act. The third point raised by Prof. Chin is why disqualification after a custodial sentence is only for five years. This is Article 45(2). Again, this is not subject to any amendment in this Bill. But the purpose of the five-year disqualification is not to impose a further punishment on the MP beyond that period. It is de-linked from the severity of the offence committed. The five years starts after the release from prison. So, in fact, it is the period in prison plus five years. This is to impose a reasonable rehabilitative period between the release from prison and the resumption of his qualification to run for Parliament, so as to protect the integrity and image of the parliamentary election process. Mr Speaker, Sir, there was one last point from Mr Steve Chia on holding by-election for a seat vacated immediately should a Member be disqualified. Seats can be vacated for any number of reasons - disqualification is one of them, the Member may resign or pass away. I think that is a completely separate question which is not addressed in this Constitutional Amendment.

The Question is, "That the Bill be now read a Second time." A Division will be taken to ascertain that the Second Reading of the Bill is supported by the votes of not less than two-thirds of the total number of elected Members of Parliament, which is 56 Members, pursuant to Article 5(2) of the Constitution. Ring the Division Bells. After three minutes -

Before I proceed to start the electronic voting, Members are reminded that they are to press "Present" on their electronic voting unit located at the left armrest before indicating their vote. Those who fail to press "Present" will not have their vote recorded. Voting will be open for 45 seconds from the time "Voting in Progress" is flashed on the display board. Members are reminded to check their names and vote indications posted on the display board after the close of the voting. If a Member is of the opinion that his vote has been taken in error or has been recorded wrongly, he may rise and request the Chair to have his vote taken correctly provided that such request is made before the Chair declares the result of the Division. Question put, "That the Bill be now read a Second time." Division taken: Ayes, 78; No, Nil; Abstention, Nil. Ayes Abdullah Tarmugi Ahmad Khalis Abdul Ghani Ahmad Mohd Magad Ang Mong Seng Balaji Sadasivan Chan Soo Sen Chay Wai Chuen Chew Heng Ching Chin Tet Yung Chong, Charles Chong Weng Chiew Davinder Singh Fong, Arthur Foo Chee Keng, Cedric Gan Kim Yong Gan Lai Chiang, Andy Goh Chok Tong Halimah Yacob Hawazi Daipi Heng Chee How Ho Geok Choo Ho Peng Kee Inderjit Singh Indranee Rajah Iswaran, S. Khaw Boon Wan Khor Lean Suan, Amy Koo Tsai Kee Lee Boon Yang Lee Hsien Loong Lee Kuan Yew Lee, Warren Lee Yock Suan Leong Horn Kee Lim Boon Heng Lim Hng Kiang Lim Hwee Hua Lim Siang Keat, Raymond Lim Swee Say Loh Meng See Low, Penny Low Seow Chay Low Thia Khiang Mah Bow Tan Mohamad Maidin B P M Mohd Maliki Bin Osman Neo, Lily Ng Eng Hen Ng Phek Hoong, Irene Ong Ah Heng Ong Chit Chung Ong Kian Min Ong Seh Hong Othman Haron Eusofe Phua, Cynthia Ravindran, R. Seng Han Thong Shanmugam, K. Sin Boon Ann Tan Boon Wan Tan Cheng Bock Tan Keng Yam, Tony Tan Soo Khoon Teo Chee Hean Teo Ho Pin Tharman Shanmugaratnam Vivian Balakrishnan Wang Kai Yuen Wee Siew Kim Wong Kan Seng Yaacob Ibrahim Yao Chih, Matthias Yatiman Yusof Yeo Cheow Tong Yu-Foo Yee Shoon Zainudin Nordin Zainul Abidin Rasheed No Nil Abstention Nil

Mr Speaker, Sir, my name did not appear on the display board even though I pressed the button.

Did you press "Present"?

Yes.

We will take the vote manually. How did you vote?

"Aye", Sir.

The Second Reading of the Bill has been carried by the votes of not less than two-thirds of the total number of elected Members of Parliament. 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. - [Mr Lee Hsien Loong]. Bill considered in Committee; reported without amendment.

Third Reading, what day?

Now, Sir. I beg to move, "That the Bill be now read a Third time."

The Question is, "That the Bill be now read a Third time." A Division will be taken to ascertain that Third Reading of the Bill is supported by the votes of not less than two-thirds of the total number of elected Members of Parliament, which is 56 Members, pursuant to Article 5(2) of the Constitution. Ring the Division Bells. After three minutes -

May I remind Members to press "Present" on their electronic voting unit before indicating their vote. Question put, "That the Bill be now read a Third time." Division taken: Ayes, 78; No, Nil; Abstention, Nil. Ayes Abdullah Tarmugi Ahmad Khalis Abdul Ghani Ahmad Mohd Magad Ang Mong Seng Balaji Sadasivan Chan Soo Sen Chay Wai Chuen Chew Heng Ching Chin Tet Yung Chong, Charles Chong Weng Chiew Davinder Singh Fong, Arthur Foo Chee Keng, Cedric Gan Kim Yong Gan Lai Chiang, Andy Goh Chok Tong Halimah Yacob Hawazi Daipi Heng Chee How Ho Geok Choo Ho Peng Kee Inderjit Singh Indranee Rajah Iswaran, S. Khaw Boon Wan Khor Lean Suan, Amy Koo Tsai Kee Lee Boon Yang Lee Hsien Loong Lee Kuan Yew Lee, Warren Lee Yock Suan Leong Horn Kee Lim Boon Heng Lim Hng Kiang Lim Hwee Hua Lim Chun Leng, Michael Lim Siang Keat, Raymond Lim Swee Say Loh Meng See Low, Penny Low Seow Chay Low Thia Khiang Mah Bow Tan Mohamad Maidin B P M Mohd Maliki Bin Osman Neo, Lily Ng Eng Hen Ng Phek Hoong, Irene Ong Ah Heng Ong Chit Chung Ong Kian Min Ong Seh Hong Othman Haron Eusofe Phua, Cynthia Ravindran, R. Seng Han Thong Shanmugam, K. Sin Boon Ann Tan Boon Wan Tan Cheng Bock Tan Keng Yam, Tony Tan Soo Khoon Teo Chee Hean Teo Ho Pin Tharman Shanmugaratnam Vivian Balakrishnan Wang Kai Yuen Wee Siew Kim Wong Kan Seng Yaacob Ibrahim Yao Chih, Matthias Yatiman Yusof Yeo Cheow Tong Yu-Foo Yee Shoon Zainudin Nordin Zainul Abidin Rasheed No Nil Abstention Nil

The Third Reading of the Bill has been carried by the votes of not less than two-thirds of the total number of elected Members of Parliament. Bill accordingly read a Third time and passed.

3.20 pm

Mr Speaker, Sir, I beg to move*, That this House, taking into account the Report of the Entrepreneurship and Internationalisation Sub-Committee (EISC) of the Economic Review Committee and the press release by Temasek Holdings (Pte) Ltd on the new charter of the Government-linked companies (GLCs) and in view of the concerns of the private sector regarding GLCs, urges the Government to implement the recommendations of the EISC which define the new roles and positioning of the Government and GLCs in business and, in so doing, support the growth of private enterprise and entrepreneurship in Singapore.

Dialogues with industry Sir, this topic of the role of GLCs has been raised and debated in Parliament numerous times in the past. The reason that my parliamentary colleague, Mr Inderjit Singh, and I wish to table this Motion is because the EISC has presented a report on its recommendations on Government in business. Temasek Holdings has responded with a press release on its new charter. Therefore, I feel that it is a good time to take stock, and have a full debate in this House on the new roles of GLCs. The members of my GPC for Finance, Trade and Industry generally agreed to have this Motion tabled. They shall speak on this Motion airing their views. A thorough airing of the *This motion also stood in the name of Mr Inderjit Singh views will enable the Government to present its position on the important issue of Government in business. Sir, to gather views on GLCs, the GPC for Finance, Trade and Industry conducted two dialogue sessions with our Resource Panel members, representatives of the Chambers of Commerce, the Association of Small and Medium Enterprises (ASME), the Singapore Confederation of Industries (SCI) and other invited businessmen and professionals. They have given their valuable input and suggestions. I wish to thank them. GLCs' divestment history Sir, the first major review of GLCs was completed on 21st February 1987 by a committee chaired by Mr Michael Fam, called the Public Sector Divestment Committee. This was 15 years ago. The committee identified 15 GLCs for listing, nine GLCs for reduction of Government shareholding, and 17 GLCs for total privatisation, making a total of 41 GLCs recommended to be divested over a 10-year period. I regret to note that the actual divestment rate of GLCs has been painfully slow. A quick check will reveal that only about two-thirds of the GLCs recommended for listing have been done. In fact, on the contrary, several GLCs have continued to expand and became very sizeable companies. Contrary to shrinking and divesting, the GLCs had gone forth and multiply. There are now more GLCs in terms of size, number and coverage of the economy than before 1987. Has Mr Michael Fam's Report been totally forgotten? Meanwhile, over these years, the cries of the private sector against GLCs got louder and louder. Most of the complaints were reflected by MPs in this House. This is a perennial topic raised during the annual Budget debate and the Committee of Supply. The EISC report and Temasek's new charter for GLCs are therefore timely. They put in perspective the current stage of GLCs and what should be done in setting the policy forward for Government in business. Though not comprehensive documents by themselves, they serve as useful guide-posts to review and plan ahead. I shall delve further into these reports later in my speech. Definition of GLCs Mr Speaker, Sir, before I go on to set out the gripes of the private sector against GLCs, we should first define what we mean by a GLC. Generally, the public loosely considers a company to be a GLC if it has close ties to the Government, either in the form of direct or indirect shareholdings or having Government representation or control on the Board or management. A more precise definition has been commonly used nowadays. A GLC is defined as a company with more than 20% owned by the Government through Temasek Holdings of the Ministry of Finance, or by other Government Ministries, statutory boards and agencies. Temasek Holdings now wants to call them TLCs, to differentiate TLCs which are Temasek's stable of companies, against Government-linked companies which are owned by other Government agencies. However, I feel that, to make the picture more complete, when we should refer to Government in business, we should also include GLCs owned by Temasek and other Government agencies. I would like to include companies under the ambit of NTUC and the Singapore Labour Foundation as well. I shall explain. Let me coin a new acronym for NTUC and SLF-linked companies to be called NLCs. A Minister without Portfolio is head of the NTUC. The companies under the SLF are another NLC group headed by another Minister. Although NTUC and SLF-linked companies are technically not under Government shareholding influence, they are exerting the same nature of Government connections and clout like GLCs. Therefore, any policy rules or decisions on GLCs which are applicable to Temasek's TLCs, corporatised Government agencies, and subsidiaries of statutory boards, should also be applicable as well in form and spirit to the NTUC/SLF-affiliated companies, ie, the NLCs. Concerns regarding GLCs Sir, what are the concerns regarding GLCs? The concerns stem from the fundamental issue that GLCs have parentage that is linked to the Government. The Government, being a market regulator, is also the player, therefore, the Government is both referee and player. Therein lies the fundamental conflict of Government in business. In most countries, in the US especially, the government's role is to assist businesses to grow. It is a firm belief that a businessman, with his personal money at stake, will make better business decisions than government officials. The Government's share of the fruits of success is in the corporate taxes levied. In fact, from the private businessmen's point of view, it is rather ironical that the Government collects taxes from their profits, which could then be used by the Government to invest in businesses which compete against them. This is a dichotomy of Government in business. Essentially, the concerns regarding GLCs are three main aspects: (1) Unlevel playing field; (2) Crowding out of the private sector; and (3) Transparency and trust. Unlevel playing field Private-sector companies are very concerned about the unlevel playing field. Their concerns are that the GLCs have strong connections. They have chairmen, directors and CEOs who are former Ministers, top civil servants, generals and admirals. Besides these clout and connections, GLCs have strong finances. Hence, because of their muscles, they can edge out any SMEs. A common mistaken perception is that "all things being equal, the award of a contract will invariably go to a GLC". Sir, I recall that when I raised this perception of unlevel playing field to Deputy Prime Minister Lee Hsien Loong, in a debate in this House several years ago, his response was that the Government's policy was to lay out a level playing field. He suggested that we could measure it with a theodolite. The Government will make any playing field level for all players. I do not think that there exist rules that deliberately favour GLCs. Nor are there any hidden subsidies for GLCs. Since the Government is always above-board, this is not permitted. But compared to a private company, a GLC enjoys certain advantages. Firstly, in terms of finance, a GLC is usually stable and stronger financially, with Government as the shareholder. Secondly, GLCs have connections and old-boys network of the civil service, which are a distinct advantage. Thirdly, GLCs are favoured just purely because they are GLCs, being of the right pedigree and parentage. Others want to do business with them. In fact, Senior Minister Lee Kuan Yew said so himself in this House on 21st May 1996 during the debate on purchase of properties. Senior Minister, as usual, gave a long and commanding speech that day, six years ago. On a matter of perceived unlevel playing field, he said: "So let us be a little realistic and do not expect that the Government can force private sector to give the professionals a level playing field. No. It is their business. They want to get the best customer that will help them to sell the product and add value."

SM went on to say: "Ministers, Parliamentary Secretaries, MPs, you go to a hawker centre. If they give other customers one egg, they will give you two." He quipped: "I know because when in the 1950s, I used to go to Koek Road, the best char kway teow there, other people for 50 cents got one egg. I got two." That was what SM said. SM also went on to cite examples of his shoemaker and tailor giving him special service. So to be realistic, even if there is a level playing field in terms of the open rules, certain better, stronger and well-connected customers like GLCs will get favoured. Let me quote my personal experience from the receiving end of it. In 1995, I was involved in a private sector company that entered into a joint venture with three GLCs to develop a piece of land in Shanghai. The joint venture partners agreed to borrow from the banks using the land as collateral and each giving corporate guarantees for their share of the loan. Compared to the GLCs, we were informed by the banks that our private sector company will have to be charged higher interest rates for our portion of the loan. The reason is that though the collateral is the same, the value of our corporate guarantee is not the same. Crowding out of Private Sector Mr Speaker, Sir, this second gripe concerning the crowding out is even more serious. The Department of Statistics (DOS) did a study in March 2001 on the "Contribution of GLCs to GDP". It sets a clear definition of GLCs as those wherein the Government and all its agencies own directly or indirectly effectively 20% or more. DOS concluded that GLCs accounted for 12.9% of the total GDP in 1998. This is a very interesting study that is not well-publicised.

Mr Leong, can you pause for a while so that the motion for exemption can be moved? Mr Mah.

Resolved, That the proceedings on the business set down on the Order Paper for today be exempted at this day's sitting from the provisions of Standing Order No. 1. - [Mr Mah Bow Tan].

Debate resumed.

Mr Leong, you can proceed with your speech.

Sir, with your permission, may I ask the Clerk to circulate a table prepared by DOS on this study. [Table circulated to hon. Members.] Sir, this table shows the share of GDP in 1998. Let us take a look at this table. What I found significant is that, of the 100% share, the Public Sector, which is Government, in terms of providing schools, defence and various Government regulatory functions and services accounted for 8.9%. Of the remaining 87.5%, which is under the Corporate Sector, 41.5% was taken up by foreign-owned companies, with 46% by locally-controlled companies. And of this 46% locally-controlled companies, 12.9% were owned by GLCs and 33.1% owned by "others" which is, I presume, the private sector companies. What is shown here is that the total pie of the locally-controlled companies of 46%, one third was already owned by GLCs, leaving only two-thirds for the private sector. This percentage is indeed significant. If we look further into this table, add the 8.9% for public sector to the 12.9% of GLCs, we get a total of 21.8%. Compare 21.8% to the 33.1% which is owned by private sector, the comparison is about 40:60, which means Government in commercial business as well as Government in government business accounts for 40% versus 60% for local companies. Therefore, this is clear evidence that the public sector and the GLCs combined have invaded into 40% of our daily life, compared to the private firms, if we take away the portion owned by MNCs and the foreign-owned companies. No wonder the presence of the Government and GLCs is felt so strongly in Singapore. Many may feel very stifling, others may develop a dependency syndrome. It is assessed that the GLCs accounted for 12.9% of the GDP in 1998. However, now in year 2002, four years later, I expect the figure to be higher if we include a few large Government agencies that have been corporatised such as the PSA Corporation and PWD Corporation (renamed as the CPG group, I think). Then, if we include a few new subsidiaries of PSB, JTC and other Government agencies and statutory boards and several existing GLCs and NLCs that have expanded, the GLCs' share of the GDP will be larger. The Temasek Holdings' press release stated that seven listed GLCs account for 21% of the total market capitalisation of the Stock Exchange today. They have a total value of S$72 billion. This growth of the GLCs could have been at the expense of the private companies. Sir, at one-third share of the local business pie, the GLCs definitely are a very visible and pervasive group. Once I read an annual report of Temasek Holdings. What struck me most was that it was like reading the Economic Survey of Singapore. GLCs were in banking, shipping, electronics, semi-conductors, transport and logistics, food, property, hotels, retail, media and so on. Practically you name it, they are in it. I have said before in this House that if you throw a stone, you will very likely hit a GLC. Transparency and Trust To a lesser extent, the third refrain against GLCs is that some of them operate under a special cloak of secrecy or different rules because they are Government-owned to serve special national, defence or security purposes. This is the manner whereby the Singapore Technologies group first started. They were formed to undertake production and services for defence and ordnance requirements of Mindef. The public's perception is that these companies operated under strict confidentiality for defence and security reasons. In the early years, many were awarded Government contracts because of their special nature. Over time, they grew and grew, and finally became sizeable businesses. But for the purpose of growth and survival, these GLCs ventured into businesses that could well be undertaken by the private sector. The concern is that some GLCs, especially those which are not listed, operated under rules that may not be too transparent. There are perceptions, misconstrued perhaps, that they may be favoured for Government contracts. On the issue of trust, I recall that when I was a junior Administrative Officer in the Ministry of Finance in the mid-70s, my senior used to tell me that we cannot trust the local businessmen. Anything they asked for is for their own benefit. Therefore, we must say no to them three times. Only if they come back after the third no, then they may truly have a grievance and needed help. Of course, things have changed. The mistrust now may not be as pronounced. Nevertheless, it is good that Government can work hand in glove with the private sector to develop more mutual trust. On the other hand, some SMEs fear and mistrust the GLCs. They are afraid that GLCs could steal their ideas or swallow them up if they get too close to them. Therefore, there is a need to foster closer and better mutual trust between GLCs and private companies. This may be achieved by greater transparency. One method, if I could suggest, is for Temasek and the Government to publish an annual report. Comparison of Singapore and Hong Kong It was explained that the genesis of GLCs in the early years was to spur economic development. GLCs were formed to enter areas which the private sector was unable to do because of size, finance, risk or know-how. For contrast, Hong Kong operated differently from Singapore because of our different history. In each's own way, both Singapore and Hong Kong have found their own path to economic success in the last 50 years. They have no major GLCs in Hong Kong (at least not as many as in Singapore). Business is managed on a more laissez-faire manner. Currently, Singapore has a population of 4.1 million, whereas Hong Kong has a population of 6.8 million, that is, 66% more. Singapore's GDP in year 2001 was US$92 billion, whereas Hong Kong's GDP was US$163 billion, which is 77% higher. Hence, in a very simplistic contrast between Hong Kong and Singapore, it seems that Hong Kong's model without GLCs is marginally more productive and efficient than Singapore. However, the bigger contrast is that Hong Kong has a larger pool of successful entrepreneurs and business people. In the list of billionaires in Asia, Hong Kong has a total of 11 names whereas Singapore has only five names. Hong Kong has a long list of successful industrialists in diversified businesses, such as Li Ka-Shing, Michael Kadoorie, Patrick Wang, Peter Woo and others. Hypothetically, if the Government did not create GLCs in the early years in Singapore, I believe we would have a stronger and deeper spread of private entrepreneurs and businessmen now. In the early pioneer days, we had notable successful businessmen like Lee Kong Chian, Tan Lark Sye, Aw Boon Haw, Loke Wan Tho and Runme Shaw. However, I lament to note that there is a paucity of successful private sector entrepreneurs who could rise to prominence in the 70s, 80s and 90s. I call this the vacuum period. The most notable businessmen in current days are Lien Ying Chow and Wee Cho Yaw in the banking sector and Kwek Hong Png, Khoo Teck Puat and Ng Teng Fong in the property sector. There are no industrialists of eminence in Singapore. The only person constantly quoted is Sim Wong Hoo of Creative Technology. Reason for Dearth of Entrepreneurs I would attribute the dearth of entrepreneurs during the last 30 years to two reasons. One is the rise of GLCs in the 1960s till to-date. The second is the monopoly of the public service over the top brains arising from the successful Government scholarship programme. The top brains are given prestigious scholarships. Upon their return from overseas, they are channelled into public service and the SAF. Many are later released to run GLCs. Without scholarships and left to their own devices, I would contend that some of our Ministers, top civil servants and generals could have become successful entrepreneurs, businessmen and professionals. I can imagine that, if not for taking up scholarship and recruited into Government, for example, from the Ministerial rank, we could have a top IT business leader, a Singapore equivalent of Bill Gates in the person of DPM Lee Hsien Loong; a successful banker in the person of RAdm Teo Chee Hean; a successful MNC top executive in Mr Wong Kan Seng; and a prominent industrialist in BG George Yeo or Mr Lim Hng Kiang and many others. If we conjecture further, perhaps our Prime Minister himself, Mr Goh, could have become a top shipping magnate. Senior Minister, Mr Lee himself, no doubt would have been a top-notch lawyer in private practice. We never know. And we can muse about it. What if all these Ministers had not taken up scholarships and not gone into Government service? Perhaps, we would have more world-class local companies led by capable world-class entrepreneurs. EISC Report Mr Speaker, Sir, I shall now move on to make some specific comments on the EISC Report and the new Temasek Charter. I am in the fortunate position of not being involved in the preparation of these documents. I can be more critical. Unfortunately, my other parliamentary colleagues, Mr Inderjit Singh and Mrs Lim Hwee Hua, who are speaking after me, do not have such liberty, as they would have a hand in the preparation of these reports. As regards the EISC report, I must first say that it is a very well-prepared and meaningful report. May I commend Mr Raymond Lim and his Committee for the excellent work. It points correctly to the future directions of Government in business and the new roles of GLCs. Unfortunately, I have to say that the EISC report has not gone far and bold enough. The suggestion on urging the Government not to enter into any more new businesses if they appear in the Yellow Book, is well-meaning, but too late. The Government and the NTUC are already in most businesses in the Yellow Book. What is there left that they should not get into in the future, may I ask? As for its recommendations, I agree with all of them. In fact, I think the EISC should ask for more. For a start, I feel that the EISC should have explicitly asked for a curb on the proliferation of GLCs. How about the issue of crowding out and urging the Government to make more room and playing space for private sector? How about urging the Government to divest out of its non-strategic companies as soon as possible? Why not suggest a timeframe for divestment? I would prefer that the EISC recommendations be more specific and forceful. New Temasek Charter for TLCs Mr Speaker, Sir, my unhappiness with the new Temasek Charter is that it did not adequately address the basic issue, which is when and how should Temasek divest its TLCs. The press release contained many motherhood statements in its preamble on the Temasek Charter and new Mission. Instead of a clear divestment plan, it looks more like a Business Plan. Though this Temasek Charter is prepared in response to the EISC Report, I feel that there is not enough connect between the two documents. Whilst EISC recommends that Temasek Holdings should explore various ways of divestment, the Temasek Charter sets out to be an updated raison d'etre for TLCs, which is to champion the march overseas. Temasek Holdings has recruited a very capable person, Mdm Ho Ching, to be Executive Director to oversee the group. Instead of slowly divesting off the companies, we now see a new Charter that defines the expanded role of TLCs. Read from the private sector perspective, Mdm Ho Ching is a powerful and influential new figure to help mould and transform the stronger and larger TLCs to become substantial players in the international arena. Some may have secretly harboured the hope that Mdm Ho Ching would have worked herself out of a job, with the gradual divesting off of GLCs. Alas, she is putting her capable hands and talented mind to grow TLCs instead. I wish to express my worry over one particular statement in the Temasek Charter. In its last paragraph, it states: "Temasek may also, from time to time, invest in new business, in order to nurture new industry clusters in Singapore." Many local businessmen are concerned with this statement. This signals that TLCs may enter new business opportunities in Singapore in competition against them. Their old worries about the unlevel playing field, formidable financial might, strong network and influence of top officers of TLCs will surface again. Now, with Mdm Ho leading the charge, they are afraid that they could be eaten for lunch. Private Sector to be the future Engine for Growth Ask any businessman, bliss to him is a business world in Singapore without GLCs. If there were no GLCs, they would have less competition, and more room to build up their businesses. I urge the Government to be serious on redefining the new roles of GLCs and government in business. Does the Government need to be involved in so many types and number of businesses? This question should be asked of NTUC and statutory boards as well. Even internationally renowned consultants and thinkers agree on the need to review the role of GLCs in the remaking of Singapore. Speaking at a seminar in Singapore on 25th July this year, Professor John Doggett of the University of Texas pointed out that with the rapid economic changes facing the world, countries have to become more entrepreneurial if growth is to continue. He thought that it is urgent that Singapore starts moving towards being an entrepreneurial nation now, as other countries in the region are already powering ahead. In addition, he also mentioned: "If Singapore doesn't start producing more entrepreneurs soon, it will still be able to live an okay life for a while, but it will lose a lot of its vibrancy and its economy will be a flat line .. It will be a big challenge to remake Singapore in three to five years, or it will become irrelevant." The Prime Minister has mentioned this point during the previous Sunday's National Day Rally speech. He said that we have to nurture a more enterprising environment. He said, tongue in cheek, that we should perhaps allow "bar top dancing". Well, I say if "bar top dancing" can squeeze out creative juices from our normally straitlaced Singaporeans, I am all for it. Sir, at a Singapore Institute of Management seminar on 30th July this year, a renowned Harvard Business School don, Professor Michael Porter, said that thanks to the Government's strong support and a strategy of economic development driven by foreign investments, Singapore has attained an extraordinary level of prosperity today. But as the country seeks to remake the economy, the challenge is to jump to the innovation-driven advanced economy stage. The private sector needs to spread its wings and develop itself to take a leading role in the Singapore economy. I repeat, Professor Porter said, "The private sector has to take a leading role in the Singapore economy." Moreover, Professor Michael Porter felt that the Government must now move on to reduce its role in the economy in the next stage of development and grow more local world-class companies. He said, "We have to get the Government out of the way; it is moving but the pace is too slow." The common call is for Singapore to foster a stronger and larger pool of local businessmen to take on the likes of Li Ka Shing of Hong Kong; and nearer home, compete against the likes of Quek Leng Chan, Ananda Krishnan and Francis Yeoh of Malaysia. Mr Speaker, Sir, having said the above, I wish to bring this House back to the Motion of this debate. The wordings are crafted to reflect the concerns of the private sector. As elaborated earlier, the concerns are with regard to unlevel playing field, crowding out and transparency. The Motion goes on to urge the Government to implement the recommendations of the EISC, which define the new roles and positioning of the Government and GLCs in business. In so doing, it therefore supports the growth of private enterprise and entrepreneurship in Singapore. The final operative words in the Motion are therefore - supports the growth of private enterprise and entrepreneurship in Singapore. During our GPC's dialogue sessions with the Resource Panel members and industry representatives, the consensus was that it is acknowledged that GLCs have made great contributions in the past. Looking ahead, the Government should critically review the roles of the GLCs. As shown in the Department of Statistics study, GLCs already own one-third of the total GDP contribution of locally-controlled companies in 1998. Surely this cannot go on. There must be a point in time when the Government must stop encroaching into the private sector. GLCs should scale down and give more room for private enterprise. However, I can concede that some GLCs are here to stay. They have become an integral part of the Singapore business landscape. The question now is how to define their future roles, so that they can continue to play an effective part in Singapore's prosperity. Since certain GLCs are of such a large size and scale, they obviously can play pivotal roles in venturing overseas together with other Singapore companies. This is the new Temasek Charter. But as for lesser GLCs involved in businesses which can be undertaken by the private sector, I strongly urge the Government to divest them. Mr Speaker, Sir, may I move on to 10 recommendations that I have on how to shape the future roles of GLCs. 1. To curb the proliferation of GLCs I suggest that the Government should make a bold and outright decision that henceforth, no new GLC should be formed unless it is for strategic or security reasons. No new GLC should be formed without the explicit consent of the Ministry of Finance. And the Government should not venture into commercial businesses where local businessmen can undertake. This applies even if such business ventures are not yet available in Singapore. To spur the establishment of such new businesses, the Government, through an existing GLC, can only take a minority role and a minority stake. There should be a stated objective that once the new project is on-track, the Government will sell its minority share to other interested buyers. As suggested earlier, the Ministry of Finance and Temasek Holdings should publish Annual Reports for the purpose of more transparency. 2. Government to set a specific timeframe for divestment For the companies that Temasek Holdings has deemed to be non-strategic, I urge the Government to set a definitive timeframe for divestment. This divestment plan should be reviewed yearly and reported by Temasek to the Ministry of Finance. In addition, during the yearly review, Temasek should also review those GLCs which are classified as strategic. Times may have changed such that these strategic companies may no longer be necessary to be held by the Government. As internal reviews by its staff may be inward looking and biased towards self-preservation, an external consultant or review group could be appointed to study and make recommendations. 3. Government to outsource any commercial requirements Henceforth, the Government should set a clear policy that it would outsource any work or projects that the private sector can undertake. There has been a tendency in the past for Ministries, Government agencies and statutory boards to form subsidiaries to undertake work which could be easily performed by the private sector. This is introducing competition and obviously crowding out of the limited business space. If we look around, there are many examples. I wish to quote one example, Sir. For 39 years, the Singapore Confederation of Industries (SCI) used to be the most prominent publisher of trade directories. Tradelink is their flagship publication. About 10 years ago, IE Singapore (formerly TDB) put out a competing product to Tradelink called Singapore Exporter. Because of IE Singapore's reach and capability, the Singapore Exporter has grown faster. Today, IE Singapore's publication unit has expanded to 50 staff issuing 12 publications. This is not to say that IE Singapore has done anything wrong. In fact, it has provided excellent services. The point is that SCI felt that IE Singapore could have cooperated with SCI, instead of competing against it. 4. Review of subsidiaries under the statutory boards and Government agencies Besides the TLCs under Temasek, I note that there are several statutory boards and Government agencies which have formed many subsidiaries and joint ventures. Similar to the review by Temasek, I suggest that the Ministry of Finance do a comprehensive review of all such companies and joint ventures with a view to assess whether these GLCs should continue. All non-strategic companies should be earmarked for divestment. Thereafter, any new formation of companies and joint ventures by statutory boards should seek the consent of the Ministry of Finance. I strongly urge that there should be a curb on the proliferation of GLC formation, not just by Ministries, but by the statutory boards, Government agencies and existing GLCs as well. 5. NTUC/SLF to Review its Stable of Companies Mr Speaker, Sir, although NTUC-linked companies (NLCs) are technically not defined as GLCs, as I said earlier, the public views NTUC-linked companies in the same vein as GLCs. I would urge that a review should also be done on the need to continue to divest NLCs; and the same rule to avoid proliferation should be applicable. I can appreciate that the NLCs are formed with different objectives from GLCs. NLCs are formed with the social objectives to help union members, to help curb profiteering and keep prices low, or to provide recreational outlets for workers at low cost. These are very noble and laudable aims. I would suggest that for NLCs that have achieved a strong market presence to perform these social objectives effectively, such as the NTUC Fairprice, NTUC Income and the Pasir Ris Resort, it is worthwhile to retain such NLCs. However, there are some NLCs that are smaller and have limited market impact to curb prices or lower costs. I would urge the NTUC and SLF to do a critical review on whether to keep them. Some examples I can quote are the NTUC Denticare and NTUC Foodfare. I must confess that I do not know enough about these smaller NLCs, but I would suggest that nevertheless a comprehensive review of NLCs should be done. To service its union members, the NTUC can consider out-sourcing their needs. The NTUC could use its enormous experience in collective bargaining and the pooling of its demand from the huge number of union members to negotiate for lower prices from private sector operators. If the NTUC takes the route of creating NLCs, then they are competing instead of offering business to the private sector. 6. Give Priority to enacting a Competition Law Sir, I strongly support the recommendation of the EISC to enact a Competition Law. This law will help to set the ground rules on competition between all companies, ie, the GLCs, TLCs, NLCs, MNCs and private companies. It will ensure that the playing field is expressly level. It will also have the benefit of ensuring transparency of operations of all companies operating in Singapore. 7. GLCs to enlist more Private Sector persons into Boards and Management I would like to propose to the Government to appoint more private sector representatives on the Boards and Committees of GLCs. As for the appointment of CEOs and top management, Temasek should get the best person for the job, whether from the public service or from the market. From the public's point of view, we often have the impression that GLCs are the retirement resting place for ex-Ministers, top civil servants and MINDEF generals. I know this is not the intention. I recall that DPM Lee has said so in this House. But it does not help to clear this misconception each time we read about another ex-top civil servant or retired general being appointed to head a GLC. More private sector representation means that there will be closer mutual understanding and trust between the public sector and the private sector. Fostering this mutual trust is important. 8. Encourage more MBOs and divestments to locals I am very heartened to read about the progress of Mr Ang Kong Hua in leading an MBO to buy out NatSteel Limited from the shareholders. This is an excellent example of divestment of a GLC to good, safe and capable local hands. I would urge the Government to encourage more of such MBOs. Where appropriate, local Management Buy-Ins should also be considered. This is the reverse of MBOs where an external management group is allowed to buy in to take over a GLC. In addition, since one of the objectives of the GLCs divestment is to create and jumpstart a larger pool of local entrepreneurs, I would recommend that wherever possible, divestment should be into the ownership and hands of local managers or local companies. We should avoid divestment of GLCs into the hands of foreign fund managers or foreign companies, since they have different business objectives compared to the locals. 9. More GLCs and Private Sector Co-operation as Cluster or Consortium Sir, my ninth recommendation is to ask the GLCs and local companies to form clusters or consortia to bid for contracts and projects overseas. They can also co-invest as well. This is a very common practice in Taiwan, Japan and Korea. When a large Taiwanese company enters into a business overseas, such as into China, it will bring along a cluster of supporting Taiwanese companies to cover various aspects of the investment. This way, they operate as a very closely-knit business group. Japanese and Korean companies do the same. Since the new Temasek Charter has earmarked certain strategic GLCs that can spearhead Singapore's external expansion drive, I suggest that each of these GLCs form a cluster of local companies that it can cooperate with to compete for foreign contracts. When a large GLC invests overseas, they can offer co-investment, partnerships or supporting business to the members in their cluster. Such clusters of companies can be formed around large GLCs such as SingTel, SembCorp, Keppel Corporation, PSA Corporation, and others. 10. Regular Study by Department of Statistics on GLCs' share of GDP Sir, my final recommendation is that since the study by the DOS was done on GLCs' share of GDP in 1998, I would like to propose that the DOS be tasked to do regular study to update its report. It is important to continuously monitor the encroachment of GLCs into private enterprise. Sir, I have made a long speech and covered much ground. At last, I have released off my chest a whole host of issues and concerns I have regarding GLCs, TLCs and NLCs. These concerns I have expressed are to reflect the concerns of the local businessmen and the man-in-the-street. Members of this House will have more to say on this subject as I note that there are over 20 MPs wishing to speak on the Motion. Mr Speaker, Sir, may I conclude by expressing the hope that the Government leaders will heed our worries. I have spoken honestly and forthrightly of the fears of the private sector. I have also spoken sincerely with the interest of the nation at heart. I hope that the Government leaders will listen, take stock of what we have said, and give us satisfactory replies on the future roles of GLCs and Government in business. What we want is to do what is best for our national interests. We want to create world-class local companies led by capable world-class business leaders, who can compete against the best in the world.

Sir, unfortunately, I too have a long speech because I have got many issues to get off my chest, having spent a lot of time studying this issue as part of the Committee that Mr Raymond Lim heads. First of all, I would like to share with Members the reason why I decided to move this Motion together with Mr Leong Horn Kee. As I mentioned, since last year, I have been involved in one of the ERC Sub-committees and, specifically, I was asked to chair a sub-group to study recommendations regarding the role of Government in business. My committee, comprising key people from the private sector, GLC captains, SME businessmen and entrepreneurs, spent considerable time studying the many complaints and issues related to the Government's direct role in business and how GLCs have influenced the development of the Singapore economy. We concluded that while the route Singapore took for its economic development depended heavily on the Government's direct role in business, the results were not necessarily all that bad. While the brute force approach taken by the Government did yield the desired results, the question is, did the approach taken result in structural damages in the spirit of private enterprise and entrepreneurship? The answer we all felt in our committee was, to a certain extent, this damage was created. The next important question we asked was whether the same formula would work in the future and this round, the answer from all the committee members was a unanimous `no'. We felt that if we wanted to ensure good growth and economic development, we needed to change and the Government needed to reposition itself and there needs to be a different strategy from what we have been used to in the past, particularly by the Government and also how the GLCs operate. We then defined the new role and strategy and about 12 or so key recommendations to achieve success in this New Economy. New Charter of Government-linked Companies Let me come back to why I moved this Motion. Having released our report, we waited for the Government to respond. The greatly anticipated Temasek Charter was one key response we wanted to see and it came promptly. What I would like to see is a more comprehensive response from the Government to all our recommendations and therefore the purpose of this Motion. Because, if the Government does not give us convincing response to the serious recommendations put up by serious and concerned people of all backgrounds and which took us many months to develop, then I feel that we will lose our battle in ensuring the future growth and prosperity of Singapore, and the Government will lose its credibility in trying to remake the economy for Singapore. The second reason why I moved this Motion is because I feel that the Temasek Charter, while addressing many key recommendations of our committee, did however leave out a few very important issues which have yet to be addressed satisfactorily by anyone. Also, the Temasek Charter lacked in specifics, so no one knows whether the changes will come fast. Were GLCs Really Necessary for Singapore? Sir, the first question we asked is: were GLCs really necessary for Singapore? I have said it before and will say it again that GLCs did have a significant and positive impact on Singapore's economy. But the question is, was it the only formula for success? Mr Leong touched on this too. My contention is that it is not necessarily so. When I heard the key people in Temasek and some Government leaders say that without GLCs, there would be no major industries coming out of Singapore, I cannot help but to disagree. Perhaps, yes, but it is also arguable that had Government been a little more patient, many more private sector companies could have moved in and become champions of some of our industries. It is also possible that the Government moved in too early. Is it also not possible that had the Government given the same opportunities and almost the same protectionist measures to private local companies as it gave to the GLCs, many private sector companies could have survived, succeeded and even made it big? Is it also not possible that if the Government had played a developmental role, instead of a direct role in business, they could have helped many more local companies develop into global champions? Why did the Government have to favour only GLCs? Why did it not also favour private companies in the same way? I therefore disagree to a certain extent with the argument that had the Government not moved in as a result of market failure, private sector companies would not have moved in. And Mr Leong gave very good examples of Hong Kong versus Singapore to suggest that this view is not totally wrong. However, all this is history and is an argument not worth pursuing. Now having developed an economy so crowded with GLCs today, do we still need a domestic economy fuelled by the Government through its companies? I am sure everyone will agree with me that we can no longer live with a formula which depends on GLCs playing in a protected domestic environment and not allowing private enterprise to bloom and having local companies, particularly the GLCs, which cannot effectively compete with global companies outside our shores. The issue seems to be that we are being misled by our seemingly successful model in the past, and by the comfort of our domestic market and the fact that many GLCs have basically overstayed to the point that they are no longer capable in competing with foreign companies, either on our shores as our domestic market opens up or in foreign lands where true market forces rule and where the domestic protection no longer exists. Our GLCs are late in going global and they are facing the brunt of failing to compete successfully globally and by being `taken for a ride' in certain high profile acquisition transactions, in my opinion. If the Government fails to realise the negative impact of our GLCs overstaying in their old roles, we will see many more such sad stories of Singapore-based companies doing badly outside Singapore. Professor Michael Porter from Harvard Business School was in Singapore, and Mr Leong talked a bit about it and I will not go through it. I would just like to add that he also mentioned, and I quote him, "The historical strategy has played itself out and is no longer robust", in addition to saying that the Government should get out of the way. His point was that the Singapore economy now has to be management driven rather than state driven, as has been the case for Singapore for a very long time. This very well sums up the feeling of most people from the private sector and is the basis of many recommendations that my committee developed. We are not saying that the Government should suddenly back off. Neither are we saying that they should get out of everything that they have been doing. What we are saying, however, is that the Government needs to re-think and re-position itself with a brand new mindset so that Singapore can transform itself from a mainly `corporate driven economy' to one of an `entrepreneurial and innovation led economy'. If the Government succeeds in doing this, we will have a great future. If the Government fails to realise the need and fails to do something about this need to change, we will surely fail and collapse as did many economies and companies in all of history. What are the issues with GLCs? Why does Professor Michael Porter feel that the Government should reduce its involvement in business? Why are so many people from the private sector very concerned about the out-of-proportion role of the Government and Government-linked companies in Singapore? And what are the reasons for the failure of state-owned enterprises in other parts of the world? I would like to touch on some of the issues which arise as a result of the Government's involvement in business and which led us to the current state of affairs of having so few successful private companies. These issues will give Members a good feel of the type of discussions that my committee had when we looked at this issue. (a) Early Stages of GLCs Development The first one is how GLCs developed in the early stages. While I agree that many of our GLCs which are publicly listed are doing well and operate very well, particularly in the domestic economy, and one of them, Singapore Airlines, has also done well globally, the issue was really in the early stages of the establishment and growth of GLCs. The general view is that the Government made very heavy investments and allowed these companies an easy access of money at less than acceptable commercial terms. Such investments by the Government gave the GLCs so much of strength that the private companies could not even think of competing with the GLCs. By sheer brute force, we created large companies, further over-shadowing any local private company trying to compete with the GLCs. So the issue is that we have developed many of our GLCs using a lot of muscles rather than brain power or entrepreneurial thinking. After many years of such a funding practice and facilitation by the Government, we created giant companies - again, as I mentioned - with a lot of muscles but without the necessary entrepreneurial management necessary to create world-class companies. I have personally made assessments of a few companies that I know of and came up the way I described. I noted that when they have to compete and when they start competing where real market forces rule, and the companies that have been developing entrepreneurial type of path, they perform much worse than their competitors. Why is this so? Well, it is because of their well cushioned start-up and growth, and they never had to face the realities of life and they never learned to fight where a level playing field existed. In many cases, GLCs used the excuse of doing "national service" for the easier than commercial practices they took in running their businesses. Had the Government used commercial principles for such companies, this would not have been an issue today. But having been listed, I believe, they came on to market practices. But the issue was before these companies were listed, how did they come about? Sir, the second issue is one of incestuous relationship among GLCs and Government agencies and an unlevel playing field, which Mr Leong talked about. One of the problems which develops when the Government also gets into business, especially when the regulator also competes with companies it regulates, is the unfair advantage the regulator's related companies get. Similarly, the Government agencies seem to give many contracts to GLCs and some examples include the Singapore Food Industries supplying food to MINDEF, Singapore Technologies supplying equipment to MINDEF too and most of the Government agencies getting its computer and IT services from GLCs. The issue, whether perceived or true, is a big issue when viewed by everyone outside the Government and its agencies. The way tender documents are written could also be a reason why such contracts get issued. Another issue related to the unlevel playing field is how banks rate subsidiaries of GLCs when deciding on financing them, and Mr Leong talked about his personal example in the joint venture. While it is not a direct problem created by the Government, it does exist and private sector companies which may have better balance sheets than the GLC subsidiaries may not be able to get the financing while the GLC subsidiaries get such financing easily. The only suggestion I can make here is that Temasek and the Government must come out and make a very clear statement that none of its companies and subsidiaries will be rescued by them should they fail, and that banks must credit rate all the companies and subsidiaries on their own merit and not on the backing of the Government. Sir, this issue needs to be resolved by the Government and it is about time that we got a good explanation as to why many such relationships exist today and find a way to inject fairer practice. Statutory Boards Owning Companies Sir, the third issue is one of statutory boards owning companies, and this has been building up over the years. There are many examples of such companies under statutory boards, like JTC, IE Singapore, Spring Singapore, HDB, and a few more. And then there are also all the NTUC owned companies, which Mr Leong talked about. The issue is how is the accountability of such companies handled. No one gets a look at the practices, corporate governance issues and performances of such companies, except for the parent Government agencies. While we can accept that Temasek is trying to practise high standards of corporate governance and will insist on high standards for all its companies, how can the Government assure us that there is also a standard practice for all the companies owned by its agencies? For example, Temasek is now very closely watched by everyone, inside and outside the Government, and Temasek has also revealed its latest Charter and, in doing so, has promised a certain standard of performance. But what about all the other companies not reporting to Temasek? None of the statutory boards has issued a similar charter. The Government should be very concerned about this and get serious about either closing such companies under statutory boards, or to immediately transfer all existing companies to Temasek, so that Temasek can inject a higher standard of corporate governance into such companies. Currently, all such companies are flying, what I call, below the "radar detectors" and there is very little visibility and a lack of transparency and this is not a healthy thing. The Government should go one step further to disallow any statutory board from forming companies and if it becomes totally unavoidable but to set up a company under the statutory board, it should include a timetable for an exit, or a timetable for moving the company to Temasek for ongoing management at the point of time they decide to set up the company. This approach will inject some discipline into statutory boards when they try to set up their companies. People Running GLCs and Organisational Culture in GLCs Sir, the third issue is one of people running GLCs and the organisational culture in GLCs. This issue, while a sensitive one, needs to be discussed. I asked the question of whether we have an entrepreneurial management and a culture of innovation and risk taking among the people in the boards and management of GLCs earlier. The answer probably is that we have some who have the entrepreneurial approach and take the necessary risks as entrepreneurs would and these are people who have managed to change and make the switch from a civil service mentality to one of a private sector manager. It is difficult to believe that a majority of those running GLCs have the necessary mindset and skills to run companies, like private sector players, simply because for them, the GLC role is just another job posting for their career. Many have been handed the jobs on a silver platter and with all the necessary muscles to help them manage the business. There is very little incentive for them to make tough decisions and to take the necessary risks as entrepreneurs would. Why should they risk it, when their career path is being ultimately planned by the Government and its agencies? I feel that it is this culture and the lack of the entrepreneurial management I mentioned earlier which caused PSA to lose its business to a much more entrepreneurial Tanjung Pelepas and which caused SingTel some years ago to lose its deal on Cable and Wireless to Pacific Century of Hong Kong. Both took too long to react to the changing markets because of the strong mindset of a state driven culture. I feel that, along with the goal of making GLCs look more like private companies, Temasek and the Government should also make the changes in the way management and board members are selected for GLCs, and Mr Leong talked about this. Sir, in the last few months, we are starting to see many changes at the board and the top management level of GLCs as a result of the board level changes in Temasek. I welcome this move, but would like to question Temasek why it took them so long to do this. Obviously, we have lived with the problems for so many years and along with it, perhaps left the management weaknesses and inefficiency in place for too long. Can we afford to let Temasek do such housekeeping only once in 10-20 years? Surely, the answer is no, as Temasek should constantly be reviewing these things. It is critical that Temasek has a proper process in place to ensure it selects the right people to run its companies and has a good system to audit and review leadership in its companies. Crowding Out Effect Sir, the fifth issue is one of the crowding out effect that Mr Leong also talked about. The issue of the GLCs crowding out the private sector and stifling entrepreneurship and the private enterprise among Singaporeans is a big and real issue and should be addressed quickly. That is why Prof. Michael Porter's exact words were, and I quote, "we have to get the Government out of the way". Before the Government tries to convince Singaporeans that it is interested in promoting an entrepreneurial economy as opposed to a corporate economy driven by GLCs and MNCs alone, it must first settle the issue of whether it is willing to leave the battle field. My reading is that the Government has a half-hearted view on this and when key people in Temasek say that they will get even stronger and not weaker in the domestic market, it confirms my view of the half-heartedness. If this is so, we have almost lost the battle of promoting entrepreneurship. Even if we accept the argument that, in the past, the Government had to move into certain industries due to market failure and play a developmental role, is it not about time for them to be exiting these industries, especially when there are enough private sector companies which can do a better job? How many can really play effectively in our small market? How many are indeed thinking of going global? Who are the best to lead the globalisation challenge? Obviously, the GLCs are the ones as they have the muscles in place. In my opinion, if Temasek, or any one of the companies, wants to start a new business, the onus should be on Temasek to articulate and convince the public why it is in line with Temasek Charter and why there are no private sector companies capable of doing the same job. In this way, instead of GLCs using their time and resources to find ways to do more business locally and therefore getting into businesses like the roast ducks and the Delifrances, they should see how they can more effectively go global with the same resources. We know that, because of the sheer size and their resources, GLCs can beat many local companies in the same area they compete in, but is this really a useful exercise for the country because, at the end of the day, we are all playing for the same result? And how long can the GLCs continue to milk the domestic markets? New Role for Government in Business Sir, I have listed many issues which are a result of the Government's direct role in business. As I have stated earlier in my speech, we need to define a new role for the Government if we want to successfully restructure our economy. I am not saying that we should destroy the role or destroy GLCs, but acknowledge that GLCs do still have a role to play in the future. To be fair, therefore, we should not ask the Government to completely exit, nor destroy value which has been created over many years. Sir, instead of going into the specifics of the recommendations which are in the Report that was published, I would like to talk about some statements on how the Government should be positioning itself. The first and the most important commitment we need from the Government is that it is willing to change its mindset and to get out of the way where private enterprises can do an equal or better job and if they can do a job not better than GLCs, then help the private companies improve, rather than to continue to let GLCs grow. As I mentioned, the Government cannot be half hearted about this. A clear statement needs to be made. From a national perspective, effort put in to groom local companies has the same value as in trying to groom GLCs. With this mindset change, many more things can be done and these are the things that we have recommended in the report of the EISC under the chairmanship of Mr Raymond Lim. Secondly, instead of considering each other as competitors all the time, we should build a culture of trust and partnership among GLCs and local private companies. Until today, there has been too much of suspicion and distrust. If we could change this culture to one of partnership and cooperation, then together head towards global market as a team, our chances of success will be greatly enhanced. All companies, big and small, should focus on how they can leverage on each other's strengths as competitive threat to foreign companies in a global market. The Government could play a very useful role in facilitating this. Third, the Government should be focusing more on playing a developmental role rather than a direct role in business. In creating a conducive environment and allowing private companies to test-bed their products and services, it will go a long way in helping to create stronger local companies. Similarly, instead of taking the easy way out of creating a new division under a GLC, or to form new companies within the statutory boards, the Government should encourage the outsourcing of products and services as much as possible as is being done in many countries, including US and the UK. The current practice of GLCs creating subsidiaries after subsidiaries is no longer acceptable. Fourth, there is a great lack of risk capital available for private companies. The many VC funds we have in Singapore are focused on later stage financing. The Government could move in and play a role of a risk capital provider, either directly or indirectly through the GLCs. Instead of just focusing on creating companies, the Government and its agencies, including Temasek, should make more risk capital available to the private sector and focus on facilitating the development of new private sector companies. Temasek's Response and its Charter Sir, the final topic I would like to cover is my response to the Temasek Charter and on areas which I feel are not adequately addressed. The first one is that there is no statement of greater transparency in Temasek Charter. I was a little disappointed that nothing has been said about how Temasek will be much more transparent than it has been all this time. If the public is to have confidence that Temasek will be professional in running its companies and if we want everyone to feel comfortable that once Temasek is in charge of any Government created businesses, decisions will be made on commercially acceptable terms, then we must take the necessary steps to build the trust first. I therefore hope that the Minister for Finance will put in place sufficient mechanics to ensure that Temasek will remain as transparent as possible. If Temasek is indeed doing the right things, then there is no reason to fear and resist greater transparency. While I have the confidence in many of the people in Temasek, I also feel that it is a little too reckless for us to just depend on a few people for things which have a tremendous impact on the Singapore economy. I therefore again ask for more transparency and, along with it, greater accountability from the people in charge. Similarly, we must have greater transparency from GIC and other Government agencies managing public funds. Perhaps, Temasek should release, as Mr Leong mentioned, an annual "state of the GLC" report for Singaporeans to understand what goes on in Temasek. The real question is, while Temasek audits its companies, who audits Temasek? Is it good enough to leave it to a few people in Government to audit itself? And I think this traditional practice is no longer convincing to people. Divestment - Form and Timing Sir, the second thing that was not adequately covered in Temasek Charter was its policy on divestment - the form and timing of it. While Temasek has mentioned its desire to divest businesses which are non-core and which are non-strategic, it has not spelt out how it plans to do it and what the timetable is. I recall, when the EISC released its report suggesting a divestment strategy for GLCs, the first reaction from the members of the press was - so, what is new, and they were referring to a report, which Mr Leong also mentioned, which they called the Michael Fam report about divestment of GLCs. Their point was that there have been no significant divestments, some but not fast enough and, on the contrary, as Mr Leong pointed out, there are many more GLCs that have been created after that. I therefore would like to see a clearer statement from Temasek and the Government on its divestment plans, including divesting by non-traditional ways like MBOs and JVs. The NatSteel way was one example of such a non-traditional approach. Being fair to SMEs Sir, the third issue is one of being fair to SMEs. One complaint which has been brought up to my attention is the business practice of bigger companies, in particular the GLCs. The issue, among others, includes one of payment terms and paying on time. It is almost described as a "bullying tactic" by a number of people I spoke to, and this was brought up in some of the Feedback sessions that I chaired. As I studied this issue, I learned of two examples which should be role models for Temasek to follow, and for the Government too. The first, I realise, there existed a directive from the Prime Minister's office in Malaysia, instructing all its agencies to be fair to local companies and to pay promptly, and should local companies feel that they have been unfairly treated, the Prime Minister's office will investigate into the matter. The second practice, which is more widely known, is the practice of the oil giant, Shell, which has a special audit committee which ensures that all its suppliers are paid on time and fairly treated. I was told that in Shell, business units find it so tough dealing with this audit committee that they rather spend their time treating their suppliers fairly than to face the brunt of this committee. Sir, I am not suggesting that the "bullying phenomenon" is rampant in Singapore and is being widely practised by the Government agencies, but it would be prudent to set up a similar committee in Government and one in Temasek, so that we send a strong signal that the interests of private companies are well taken care of. Sir, in conclusion, I would like to urge the Government to give a concrete response to the EISC recommendations and to address the missing gaps which I have mentioned. I feel that if we are indeed serious about making the transformation from a corporate to an entrepreneurial economy, the Government should immediately resolve all the issues which have been raised, and to operationalise the many recommendations the EISC has made.

Mr Speaker, Sir, thank you for allowing me to join in the debate. I would like to declare my interest as an employee of Temasek Holdings. Sir, the Motion is, in essence, a discussion of the role of Government in business, whether the Government is a regulator, promoter or a participant. This is an important discussion, but it derives meaning only when it is made in the context of the realities of the marketplace that Singapore competes in. I would like now to offer my take on two harsh realities. The first reality is of increasing globalisation. Increasing globalisation of the marketplace is not an option nor a passing fad, but is a reality that we have to address head-on as an on-going challenge. Globalisation has real significance for us in Singapore as we do not have our own hinterland, unlike major markets like the US or Europe. The lack of a hinterland is most keenly felt by Singaporean entrepreneurs and companies who have already ventured abroad. We have no critical mass of our own and cannot pretend that we can sustain businesses purely domestically. Some Singaporeans have asked if we can pump prime our economy or consume our way out of a recession, and the answer is no. Our economy depends too much on external demand for us to be able to prop the economy up by merely raising expenditure. Hence, to sustain economic growth, not only do we have to ensure there are enough inbound investments, but we have also to source growth potential from outside Singapore as well. Imagine if Singapore Airlines were to just fly mainly Singaporeans from Singapore to other destinations, and no one else, nor from anywhere else, then it would not have half the chance of Ansett and would have folded up long ago. Or that if Singapore Telecom were to just cater to the domestic market, growth would require organic expansion domestically and increased usage of telecommunication services or, in simple terms, we all need to talk a little more over the phone. Or that if Yeo Hiap Seng had remained in Singapore, with our low population growth rates, how many more tins of chicken curry and packet drinks can Singaporeans consume? In short, expanding outside Singapore is no longer a wish but an imperative for most businesses, regardless of ownership. We have to get out of our comfort zone. We must now think GNP (Gross National Product) and not GDP (Gross Domestic Product). Sir, the second reality is one of intensifying competition. Increasing globalisation brings with it pressure to break down protectionist barriers, and hence heightened competition. In a free market such as ours, fierce competition from all players, big or small, local or foreign, has already been felt. This is most evident in the retail sector. Take the supermarkets, for example. I recall, when I was young, going to the NTUC Welcome Supermarket at Beo Crescent was a real treat. Nowadays, it is almost a must for most working couples. It is therefore almost inevitable that the smaller provision shops will find it tougher to compete unless they offer that something special. We may think that NTUC Fairprice, as it is called now, has it easier. But they too have to compete against foreign-owned players like Cold Storage. So what is our response? In the face of these externally-driven challenges, we need not despair. However, we need to examine our position from the following two perspectives: 1) What are our skills and strengths that we can leverage on to get out of our comfort zone; and 2) How do we position Singapore? Who are the players here and how can they relate to each other? Firstly, on skills and strengths. Over the years, we have built up substantial expertise as a services hub in airport and seaport management, telecommunications and financial services. Hence, we should be actively seeking ways of exporting these capabilities abroad. For example, we should not centre our airport management services around yet more terminals at Changi but at other regional or Asian airports. Likewise, whatever seaport management expertise we have built up over the years, eg, in vessel connectivity, should be actively promoted elsewhere as well. Our human capital should not be ignored too. As a people, we have been respected for our integrity and diligence. These are useful values to build management and the labour force at large upon. We should certainly not be arrogant but be prepared to explore foreign postings as part and parcel of our working lives. Getting out of our comfort zone is not easy, but if we accept that it is not only inevitable but that it can also be a rich experience, I believe we can all become better contributors. Sir, the flip side to identifying our strengths is the need to validate the tried-and-tested success formula. Industry and market conditions are now changing with a vengeance. Hence, we need to constantly check our assumptions. What has worked well before in terms of achieving pure efficiency may now be a value-for-money proposition. This is well illustrated within the logistics area where value is sometimes defined as "getting goods off the balance sheet" rather than shipping to the destination in the fastest possible time. In a nutshell, we must test every assumption. Secondly, identifying roles of players. Sir, the Motion revolves around the role that each sector should play in building GDP. According to the official statistics, the table of which was circulated by the hon. Member, Mr Leong Horn Kee, the MNCs accounted for a 42% share, followed by an implied 36% share by the non-GLC private sector, 13% by the GLCs, and 9% by the public sector. However, unlike Mr Leong Horn Kee, I do not think it is complete to discuss the relative shares of GDP on a locally-owned basis, as it ignores the role that MNCs play. We should not limit ourselves to the many possibilities that the MNCs can interact with our own enterprises. In light of the significant role that MNCs play, the EDB's efforts in promoting investments must continue full steam ahead. Last year, the EDB managed to secure some $9 billion worth of investment commitments. This is no small feat and demonstrates that Singapore has indeed been nimble-footed. We must continue to have this mindset, both the Government as promoter and the people as human capital. Whilst investments by MNCs have helped spur and will continue to spur the development of supporting cluster services, we need to build up our own capabilities, our own enterprise, for both GLCs and the non-GLCs in the private sector. Some of the GLCs, as we all know, have evolved with Singapore's history. They nonetheless still need to hold their own in the global marketplace. They must do this by building on their core competence to continue to expand outside Singapore. Sir, the imperative is equally applicable to the non-GLCs, as the marketplace does not differentiate between ownership, whether it is Government, private, local or foreign, but only the level of competitiveness. Pooling of interests can therefore be mutually beneficial. Towards this end, given our limited resources, collaboration must surely be the name of the game. But collaboration can only exist and be meaningful if mutual benefits can truly be derived. I would urge both GLCs and non-GLCs, especially the small and medium enterprises, to identify common areas of focus, say, within a cluster, where collaboration is possible. Similar collaborations between MNCs and local companies should also be actively structured and pursued. I would also urge the relevant Government agencies to be more focused in their promotional efforts and to emphasise substance over form. For example, do not be too preoccupied with the degree of participation in trade delegations but with the number of concrete business ventures or relationships that result from a trade delegation's visit. On that note, Sir, I support the principle of promoting private enterprise and entrepreneurship in Singapore. However, Sir, whilst we should certainly spend time and effort to address specific concerns of the private sector, we should take extreme care not to quibble excessively over domestic space, as the world may just pass us by.

Mr Speaker, Sir, I have listened with great interest to the speakers before me. I guess nothing more wonderfully concentrates the mind than to have a Motion that debates the recommendations of a sub-committee in which the paternity ultimately lies with oneself. I would however like to thank but not implicate Mr Inderjit Singh for the work that he did as Chairman of the Focus Group on Government in Business. The EISC released the part of its report dealing with Government in Business on 30th May this year. The Temasek Charter took this into account. The full report of the EISC recommending ways to strengthen the spirit of entrepreneurship and innovation in Singapore and to foster the growth and internationalisation of Singapore-based companies will be released in September. Sir, I thought it would be useful to give Members some perspectives on the thinking that went into the EISC's recommendations. But, first, let me deal with one recommendation that was strongly urged on the sub-committee but which we did not adopt. This was to recommend a huge sell-off of the GLCs to the private sector, or what the press has dubbed a "Great GLC Sale". If we had done that, then we would have gone far enough and bold enough, I think, in their view. The principal case for rapid privatisation is that it will significantly improve the performance of the GLCs. To support this contention, its proponents often cite anecdotes of under-performing state-owned enterprises, rather than systematic studies. Anecdotes are, of course, better than nothing, but they are weak foundations to base economic policy prescriptions. The problem with anecdotes is that the contrary case can always be cited. For instance, the argument here is that there is something inherent in Government ownership which causes state-owned enterprises to under-perform. Singapore Airlines is a company with substantial Government ownership but, as we all know, it is one of the best airlines in the world. Then, there is Changi Airport, which is wholly owned by the Government, but that has not stopped it from being consistently voted by business travellers as the best of the breed. Anecdotes often reflect the fashion of the times. When I was a student in the 1970s and 1980s, the prevailing school of thought then was that the state should play a leading role in the market. It was called "governing the market", and Japan and Korea were cited as stellar examples of this. Lester Thurow wrote a book "Head to Head" in which he predicted that unless America took a leaf out of Japan Inc's strategy book, it would be cleaned out by the Japanese in the global marketplace. That book topped the best-seller list and, for an economics book, that was really quite an achievement. Today, if we were to suggest this, we would be dismissed by derisive laughter. The fashion of the 1990s had been privatisation and market liberalisation. This Washington Consensus has led the IMF and the World Bank to urge developing countries to privatise rapidly, privatise even when critical complementary conditions are not present - competition, hard budgets and commitment. The result is not pretty. So, before we rush off and join the chorus that "Government ownership invariably leads to inefficiency, and private ownership is the way to raise the performance of the GLCs", we better ask ourselves what is the empirical evidence to support this policy recommendation. I have plowed through the literature and the bottom-line is that there is no conclusive finding that this is indeed the case. The World Bank commissioned a study which was released in 1995, "Bureaucrats in Business" and it said that in competitive markets, there was an edge to private ownership. "An edge", not a mountain of evidence that private ownership would indeed enhance efficiency in state-owned enterprises. Why is it not more decisive? The reason lies with the basis of the argument for privatisation. At its heart, the privatisation argument posits that private owners, unlike Government owners, have a greater economic incentive to maximise shareholder value, as they would benefit more directly from such actions. Unfortunately, this is not necessarily the case with large enterprises. Large enterprises - private or Government-owned - suffer from the same incentive problems. In a large private company, the separation of owners and control leads to substantial management autonomy that allows managers the discretion to act in their own rather than shareholders' interest. To begin with, there is a significant information asymmetry between the owners and the managers. The managers will be able to run circles round the shareholders as they have the information advantage. The acquisition of the requisite information incurs economic costs. This problem is then compounded by the fact that good management is a public good. If one shareholder acts, then all benefit. And in the nature of such a good, this free rider problem would negate the incentive for a small shareholder to monitor the firm's executives. To ignore information costs in an analysis of organisational behaviour is like having Hamlet without the Prince. We need look no further for evidence of this than in the corporate scandals that are now rocking Wall Street. Has there been, in recent times, any destruction of the public interest greater than that by the senior executives of Enron of their shareholders? Yet Enron was a company that was owned by private shareholders, not the US government. If we were tomorrow to divest completely the Government's stakes by issuing shares in GLCs to all Singaporeans, this will not lead to enhanced performance of these companies. People's capitalism, as some Eastern European countries had practised since the wall came down in Berlin, suffers from the fact that there are few shareholders with sufficient amounts invested in the companies so that they have a strong enough economic interest to ensure that the firm is well-managed. This was why the EISC did not recommend a "Great GLC Sale" as some had hoped. Privatisation may have the edge in raising efficiency but it is not a given and it raises the question as to who the GLCs should be sold to, so as to ensure direction and control. In any case, as Mr Inderjit Singh has said, the way we saw it, the central issue was the proper role of Government in business in this innovation-driven world. In the early post-independence years, the Government was the entrepreneur as it took entrepreneurial risk by investing in companies such as Singapore Airlines, Neptune Orient Lines and the shipyards. There was then a dearth of private capital to embark on these kinds of project. As both Mr Leong and Mr Singh have said, today, with well-developed markets, the case for direct Government involvement in business is much less compelling. This was the basis on which we recommended that statutory boards should adopt a Yellow Pages rule. This means that statutory boards should not set up enterprises when there are private sector players that are providing or able to provide the service. In fact, statutory boards should seize such opportunities to provide business to the private sector. It may well be that companies owned by statutory boards, with proper incentive structures, could provide the service as efficiently as the private sector but the issue is what should be the role of these boards. Our view is that if the market can provide it, then these Government bodies should concentrate on regulation and promotion of business activities rather than be in business themselves. Some have criticised this Yellow Pages rule on the ground that some of these statutory board-owned companies fulfill social goals. Like all rules, there can be exceptions to it but I would be slow to make them as even when there are social objectives, this can be written into the contract for the provision of these goods or services by the private producer. For example, take broadcasting. If it is deemed desirable that all television stations must have a news segment, this can be written as a condition of the licence. If additional public service broadcast programmes are deemed desirable, then rather than for the Singapore Broadcasting Authority to produce them, it can provide for them by paying the broadcasters to do these. This is, in fact, what the SBA is doing, rather than going into the business of public broadcasting itself. In the case of the GLCs, it does not make sense for the EISC to recommend that they abide by the Yellow Pages rule. As Mr Leong has said, the horse has already bolted from the stable. It is in this context that we recommend that Temasek divests its non-strategic assets so that it can concentrate its resources in areas where it can make the most difference. However, the key, we believe, to pressure GLCs to perform is competition. It is telling that our two Government-owned world-beaters - SIA and CAAS - operate in a globally competitive environment since their inception. Hence, we started our report by recommending a competition law. Competition provides the incentives for individuals and companies to perform. It allows a benchmark to assess performance so that proper rewards and penalties can be instituted. But competition will only pressure GLCs if they face a hard budget constraint. This was why we argue that there should not be subsidies, privileges or other forms of soft capital that will enable them to compete without improving efficiency. A hard budget will also address the oft-repeated concerns of private firms that they face unfair competition from the GLCs. Now, competition and hard budgets will only work if there is a Government commitment that the GLCs are to be run strictly as commercial entities. This means that the Government must not interfere with the operations of the GLCs such as hiring and firing managers and workers and stopping money-losing services. Social and political goals that the Government might have should not be part of the objectives of the GLCs. These are the enabling conditions that the EISC felt would help enhance the performance of our GLCs. Though the evidence may be slight when it comes to whether privatisation alone makes a difference to GLCs' performance, it is unambiguous that a comprehensive strategy of divestiture, competition, hard budgets and commitment, pursued as a whole, will help create the conditions necessary for growth and performance. Thus, to those who argue single-mindedly for a "Great GLC Sale", they may wish to note that "there are more things in heaven and earth than are dreamt of in their philosophy." 4.52 pm

Mr Speaker, Sir, the Government's involvement in private sector business started way back, almost about the same time as Singapore's industralisation effort, soon after the British withdrawal in 1968. To handle the growing Government's involvement in business, Temasek Holdings was established in 1974. Presumably, flushed with success, Government's involvement in the private sector continued to proliferate. To address the public concern, the rationale for Government's involvement in private sector was laid down by Dr Goh Keng Swee, DPM and Minister for Defence, at the Income's AGM on 20th June 1977. Typical of Dr Goh, he gave the reason in very simple terms and to the point. I would like to state them to refresh our understanding of the basic rationale. Firstly, he stated that Government's involvement was to encourage the private sector to take the plunge through joint ventures. He gave the example of National Iron and Steel, Jurong Shipyard, National Green Elevators, Sugar Industry of Singapore and so on. And as the economy grew, the Development Bank of Singapore and Intraco were established to fulfill what Dr Goh referred to as new needs. Secondly, to meet specific needs, Primary Industries Enterprises was set up to process agricultural products by local farmers - a pretty old industry, I must say. Falling into this category of specific needs, we find the Mindef companies established to meet the needs of the SAF. Thirdly, to handle the odd case here and there. Dr Goh gave the example of Singapore Food Industry to tackle the problem of corrupt practices among cooks employed by Mindef leading to the failure of the tender system in sourcing for meat and vegetables. Presumably, Dr Goh raised this matter in public to address some of the public concerns. It is interesting to note that the principles laid down by Dr Goh are ingrained in Temasek Holdings' latest Charter as well where it has classified its companies into Group A and Group B. In Group A, we find companies where Government would like to retain control and ownership for strategic reasons and in Group B, we find companies with regional and international potentials. Sir, despite Dr Goh's assurance in 1977, Government-linked companies continued its expansion into the private sector. In August 1983, in this House, Dr Toh Chin Chye put the question to the then Minister for Finance, Mr Hon Sui Sen, during Question Time as to whether the Government companies should be allowed to crowd out the private sector. Of course, Dr Toh did it in his very colourful language, referring to the case of PIE flying in 1,500 breeding pigs by jumbo jets. Apparently, Dr Toh must be referring to the fact that PIE was engaging in some activities that the private sector could perform which contravened the principle laid down by Dr Goh. Unfortunately, there was no definitive response from Government in that particular exchange. Clearly, I think, by then, the tentacles of the GLCs have grown so numerous and so pervasive that no one single agency has total control or oversight on the reach of the GLCs. Sir, public complaints about Government's involvement continued through the years with the pitch rising during times of economic slowdown and adding in times of economic booms. After the formation of the Feedback Unit in 1985 under my good friend, Dr Tan Cheng Bock as Chairman, there exists now, in its archives, a collection of public comments on this particular topic. I would like to give a sample of these comments to indicate the gist of public complaints over a period of the past 20 years. Sir, in 1985, Dr Dixie Tan, then MP for Ulu Pandan, in a note to Matthias Yao, Head of Feedback Unit then, wrote, "Government companies are competing with local companies in every area and with unfair advantage. Even abroad, private companies have to compete against Singapore Government companies." In the same year, Mr Tan Tuan Seng wrote a letter to the Feedback Unit regarding the uphill task of budding entrepreneurs in Singapore facing stiff competition from GLCs. Under the heading, "Better Entrepreneur", he lamented that the playing field was uneven with GLCs having all the resources and all the work references. Sir, now I would like to share with you some of the more recent comments received by the Feedback Unit. In July 2001, a contributor commented that the SME and the coffeeshop network is filled with complaints about GLCs and Government statutory board corporations. Is there a need for Government to compete with the citizens for jobs? If GLCs and these corporatised statutory boards exist to complement the economy, they should take this time to outsource more of their jobs to locals. Why corporatise statutory boards like Civil Service College, PSB, IPT and many others? The complaints are greatest now if the Government is the regulator and the player in the market. Again, in August 2001, on the feedback on PWD Consultants, a commentator said so, "The Government is releasing public jobs that account for 70% of the construction work now to ease the slowdown but these jobs are headed for GLCs that have a moratorium in a way. Such public works should be distributed to the private sector to ensure that the private sector stays afloat. In recent years, the moratorium has increased from two years to five years and now more and more GLCs are being privatised to compete in the private industry." Mr Speaker, Sir, I took time to bring up this example to highlight that over a 20-year period, the views expressed were basically the same. In other words, nothing very much has changed despite all this feedback. It is also disturbing to me that it took the more severe recession in our history to make the Government sit up and set up the EISC, and then pay attention to this complaint. It is pertinent to note that many of the recent comments received by the Feedback Unit were made before the formation of the Economic Review Committee. Sir, regarding the work of the Feedback Unit, I would like to point out that there is a group within the Feedback Unit known as the Economic Development Group. It was set up under the leadership of Dr John Chen, the former Chairman of the Feedback Unit. It is a loose association of feedback contributors who gather about once a month to discuss topics of interest. The Economic Development Group formed a sub-committee on developing a pro-enterprise environment in the new economy. It submitted a recommendation in April 2001. That report talked about how to create an environment that is pro-entrepreneurial and pro-business. And in the 2002 annual conference of the feedback group in July this year, Mr George Abraham presented a paper on the remaking of the Singapore economy incorporating the work of the Economic Development Group and the SME Feedback Group. It is interesting to me that many of these views were reflected in the recommendations of the EISC Report. It is heartening that the views expressed by the feedback contributors have found sympathetic ears in the EISC. I believe that the Feedback Unit has contributed to the review of Government's stand on this matter. I would like to thank the many contributors who have played a part in moulding public opinion on this topic. Mr Speaker, Sir, next, I would like to explore whether the EISC Report, the new Temasek Charter as well as this debate on the Motion will be effective in curtailing Government's involvement in business. Based on the behaviour of the Government in establishing GLCs over the past 20 years, I must say that I am not optimistic. I am not saying so because I think we are not serious about doing what is best for Singapore. I am saying so because there are factors involved. Firstly, I believe that when good times come back, this issue will also recede from the public consciousness, and the pressure will not be that great. Furthermore, Sir, I think we have to go to the fundamentals and perhaps try to understand the forces that have been driving the ever increasing Government involvement in business. Unless we understand these factors and take the appropriate steps to mitigate them, I think Government will continue to spin off companies. Just by observing the outcomes, it seems to me that there are powerful forces pushing the various Government departments, agencies and statutory boards to spin off companies. I am not saying that there is a directive of the Government to do so. But it is just that doing so is a well beaten and tested path. What are these forces? Firstly, spin-off allows the various Government departments to shed excess manpower. It seems to me that Government departments, like everyone else, need to stay young and relevant, and they do so by recruiting younger staff and inducting Government scholars. Therefore, spinning off groups to form private companies helps to keep the total number of staff small which is, as we all know, an objective of the civil service guidelines. Secondly, hiving off assets helps to reduce the asset base of these organisations. Of course, such assets were assessed at the proper values and the Government did not suffer in privatisation. However, in the books of the parent departments and organisations, that base is reduced. Two recent examples come to mind. Firstly, Acasia of JTC and, secondly, PWD Consultants. Both organisations were granted moratorium from competition to entice staff to leave the comfort zone of the civil service, and to take the plunge into the private sector. Mr Speaker, Sir, I have also, on a previous occasion in this House, touched upon the public perception regarding the existence of corporatised entity helping the rejuvenation of the civil service and the SAF through parachuting senior officers into such GLCs. I understand from the DPM that the employment of all these staff by the GLCs is through the market force. However, this perception remains. Sir, I think these factors driving the formation of GLCs are powerful ones, and they are unlikely to go away just because of this debate in Parliament and the adoption of the EISC Report. I believe it will require a strong commitment from the Government to stop the continuous encroachment into the private sector. Whether the Government would do so will depend on the answer to the next question I have in mind. The question is: is the existence of GLCs contributing to the dearth of entrepreneurs in Singapore? We do not have definitive answers but I believe there are sufficient indications that this is so. For instance, many young and capable people will be asking themselves why should they take the risk to start their own companies if they could become CEOs of GLCs just by going through the academic route - be Government or SAF scholars, perform well in the public sector and serve their term. My friend, Mr Inderjit Singh, has mentioned that the career path will be taken care of and the system will take care of them, and they will become corporate captains of large corporations sometime down the road. At least, that is what many young men and women will conclude by observing the career path of the many CEOs of GLCs today. Sir, is this perception good for Singapore? In my mind, it is doubtful whether men and women who are used to a command and control environment would necessarily make good entrepreneurs. Some of them would make it, but perhaps after some very painful experience at the expense of public money. I believe many of us could think of examples that illustrate my point. On the other hand, several of the really successful companies that continue to do well in this recession in Singapore are small companies started by entrepreneurs, and I could name a few - Hyflux started by Olivia Lum who is now an NMP, Osim started by Ron Sim and Accord Express, a company mentioned by PM in his National Day Rally speech. These are true entrepreneurs and Singapore would do well to have more of them. Thus, while creating more GLCs might be the expedient thing for the Government to do in the short term, it might actually be detrimental to the long-term viability of Singapore in a fast changing world. Only when we are convinced that this is the case would the tendency and propensity to create more GLCs in the future be curtailed. Sir, while I am supportive of the new Temasek Charter and the recommendations of the EISC, it is important for us to address the fundamental questions I raised. Only when we accept the answers honestly and with a clear mind would we be able to avoid the pitfalls of Singapore evolving into an outwardly private sector economy but actually dominated by the GLCs, an economy which we affectionately refer to Singapore Incorporated, an economy that will perform well but will flounder and look for guidance in bad times. To me, Sir, how the Government decides on this particular matter will determine whether Singapore will evolve into a high performance entrepreneurial economy or will always remain an economy that is tied to the umbilical cord of the Government.

Mr Speaker, Sir, Mr Leong Horn Kee spoke about the differences between Hong Kong and Singapore, how Hong Kong has become a nursery of entrepreneurs while Singapore is really a desert. I would like to continue this analogy between Singapore and Hong Kong and set the substance of my debate in this context. Singapore and Hong Kong are successful city states. We are the envy of countries big and small. Every time a country like East Timor gets independence, they say they want to be like Singapore. We have arrived today at our positions by very different routes. I need not elaborate. Hong Kong grew with minimal governance - a bottom-up approach - while Singapore largely prospered because of Government's top-down approach. Hong Kong is trying to be a bit like Singapore. Singapore is trying to be a bit like Hong Kong.

5.10 pm Today, after 30 years of relentless economic growth in both city states, we have reached a crossroad. Hong Kong and Singapore are pausing, taking stock and both are scratching their heads, but I think these questions of how to go forward from here focus the minds of both governments. But in the case of Singapore, fortunately, because of our industrial policies, much criticised no doubt, I think we have more levers to pull than Hong Kong - more levers to pull for entrepreneurs, more levers to pull for all Singaporeans. Our decisive advantage is really the GLCs, and here I confine myself to the Temasek Holdings companies and not the NTUC companies, which really serve the domestic market. I want to talk something about the NTUC-linked companies a bit later on. Because only Temasek has the clout to anchor Singapore to the world beyond our shores. We have many entrepreneurs in Singapore. Some of them are sitting in this House. But for them to reach out beyond our shores is really one leap too far. Only Temasek can give us what I call the GNP effect - the GDP plus net foreign earnings. What for? To compensate for a slowing GDP which is almost inevitable, because of an aging population and a declining birth rate. Madam, back to Hong Kong. The laissez-faire economy in Hong Kong has always been paraded as the utopia of entrepreneurs. Mr Leong proudly said that Hong Kong has 12 billionaires. Singapore has five billionaires. The fact is that they are richer than us. They have double our population notwithstanding. But whether they are entrepreneurs of the breed that inspire confidence and envy is quite different. I will quote an Economist article entitled "Face Value - Asia's superman swoops again". Basically, it is about Mr Li, but the opening paragraph is instructive. It is worth reading. It says: "In all honesty [in typical Economist style] most of Asia's tycoons no matter how illustrious they appear at home are really keepers of glorified mom and pop shops. The exception is Mr Li Ka Shing." I will talk about Mr Li a bit later on. So, how did they become billionaires? There are many reasons. The Economist went on to say: "Among many reasons, they were developers who simply rode with land prices." The reality in Hong Kong today is a noisy market place, crowded with thousands of entrepreneurs who are, in the final analysis, owners of SMEs and glorified sweat shops. They perform useful roles. Please do not get me wrong. They provide employment for the masses. They provide hope. But the world has changed. In the economic food chain of the WTO, the new regime, it is a big fish eat small fish scenario. Hong Kong's cousins, their brethrens, from mainland China, are beginning to eat Hong Kong SMEs and sweat shop owners as fish feed. The truth of the matter is this. In Hong Kong, a few tycoons and their gargantuan holding companies, like Cheung Kong and Hutchinson Whampoa, dominate the Hong Kong economy. People do not see that. Together, these companies and the tycoons employ hundreds of thousands of workers, and their decisions influence the destiny of Hong Kong and HongKongers. These tycoons own an eclectic group of businesses, sometimes totally unrelated. They are like the mini-government of Hong Kong. Some say the only government of Hong Kong. These tycoons own what? They own banks, the ports, power stations, telecommunications, the media, retail, yes, supermarkets and, of course, real estate. They are the economic equivalents of our Temasek-linked companies. But the similarities end here. They are powerful. They are rich. GLCs are rich, but GLCs are not powerful. The Hong Kong tycoons and their companies are answerable to no one, but themselves, their shareholders and their boards of directors. But usually they have the biggest chunks of shares in their own companies. So they are basically answerable to shareholders of which they form a large part. And they are very profitable companies. The profits only accrue to the shareholders. In contrast, GLCs are not powerful. Today, we are debating the role of Government-linked companies, Temasek-linked companies in this House. TLCs are answerable not only to shareholders, because some are listed, and their boards of directors but, of course, to Temasek Holdings, which has to answer to Government. That is why we are here today. And Government has to account to MPs who have to account to their constituencies. So, talk about transparency, talk about accountability, our GLCs, our TLCs in particular, are extremely accountable. Anybody can move a motion or file a Question. In my 10 years here, I have heard several questions and answers on why these TLCs went into this business, why this business failed, and the Minister for Finance dutifully stood up and gave an answer which, I think, most of us accept, while some disagree altogether. I am using this example to drive home the first of many messages in the New World, in the new regime of WTO. And this first message I want to drive home is this - that TLCs are not villains. In a global economy, a few companies dominate. This happens in Singapore. It happens to be GLCs because of our history. It happens in Hong Kong. A few tycoon-dominated companies control and run Hong Kong. And the rest of us, SMEs, sweat shop owners, have to feed off these TLCs, tycoon-owned businesses. It is the same everywhere. Unfortunately, too many Singaporeans love to hate our Temasek-linked companies and now that has been extended to NTUC-linked companies. They blame TLCs for the death of local entrepreneurs. They say, dismantle the TLCs, and then everything will be fine. All entrepreneurs will mushroom. They will grow, they will flourish, and then they will be big. But I wish it were true and life is so simple. Mr Leong Horn Kee and Mr Inderjit Singh, please take a look at Hong Kong and tell me, where are the Bill Gates? Tell me, where are the Jeff Bezos, where are the Dells, where are the Intels, where are the HPs? You do not find them. None. They are not there. The gatekeepers of Hong Kong are really small entrepreneurs. They are the unsung heroes of the economy, but the people underpinning them are just a few big tycoon-dominated companies. You will not find a Bill Gates in Hong Kong, but you will find a Mr Li Ka Shing. Hongkongers love him, and they call him "Superman", chiu yan (in Cantonese). Chiu yan means Superman. Mr Li's hold on the economy is formidable. His two companies - Hutchinson Whampoa and Cheung Kong - dominate the economy of Hong Kong. But unlike some of our CEOs of GLCs, Mr Li is revered, respected and worshipped. Here, Singaporeans blame TLCs for being too big and crowding out businesses. But, think again, Mr Li is held up as a model entrepreneur in Hong Kong even as his eclectic empire grows. Some people are saying in Hong Kong that he is also crowding out entrepreneurs. But, by and large, this is a voice from the minority. Mr Li is a hero in Hong Kong and not a villain. He provides jobs, thousands of jobs, for Hongkongers. And Hongkongers believe in Mr Li. In fact, Hong Kong is worried every now and then that he might just move his Hutchinson Whampoa and Cheung Kong offshore. Each time Hongkongers feel that he might be doing so, he came out to reassure them. But our TLCs have never said they want to move overseas. Our TLCs have said they want to go overseas to do business and bring the money back. The question of TLCs rooting themselves with the Singapore economy and providing jobs for Singapore has never been an issue here, which I am glad. The issue of Hutchinson Whampoa moving overseas has always been rumoured and always dispelled by Mr Li himself. But Mr Li, although he is a superman, is not infallible. His company has made some less than good investments. Or even today, Hutchinson Whampoa's share has been hammered from the high. Before the year 2000, it was something like HK$120 per share. Today, it is something like HK$60. I do not know the rate today. But, last week, I saw it was hovering below HK$60. In the 1980s, Mr Li's investment in a Canadian oil company did not live up to market expectations. It under-performed for many years. Mr Li's investment in Rabbit, if you remember, a telephony company in Britain, was another flop, a failure. But few remember his failed investments. We all remember his successes, and so it should be, because he is a very successful businessman. This example brings me to a second message which I want to bring home - that Singaporeans should be a little bit more forgiving, if some of our TLCs have made some bad investments in the short term. Even a highly successful company, like Hutchinson Whampoa, has made bad investments. Singaporeans, in fact, should be worried if our TLCs make no investments and think short term. There is a third point in my comparison, and this is not a major point I want to make, but I thought this is the mood of the day, and I would say it. Singaporeans are having so much angst over foreign talent policy. If TLCs were dismantled, for example, who do we sell to? Well, possibly sell them to some foreign investors maybe, who have the money and the interest. If so, there will be a lot more foreign talents in Singapore. Both Hong Kong and China regard Mr Li as a patriot, but Mr Li did not grow his stable of companies by employing Chinese and Hongkongers for a long time. For as long as I can remember, Mr Li has always had a policy of hiring the best, and his most senior management are foreign talents, and foreign talents I mean Caucasians. In Hong Kong, they say kwai lao. Here, in Singapore, we have a few foreign talents in GLCs, TLCs, and already Singaporeans are feeling the heat. Actually, we should have more. Because if you want TLCs to be global companies of distinction, we really need to harvest the best from around the world. So I asked those people who are lobbying for the dismantling of TLCs, are you sure you want to dismantle TLCs? Because, you know, what they say, be careful of what you wish, you might just get it. I hope I have put into perspective a world without TLCs. Still, I think it is right that Temasek Holdings is determined to sell some TLCs even if it wants to grow others, find partners for others and merge others. But we are reassured, through the Temasek Charter, and the statements in the press, that there will be no fire sale. We are not going to sell. We should not sell the TLCs for a song. Our national assets are not for lelong. And this brings me to my last point. The management of Temasek Holdings has come up with a Temasek Charter. At the top of its Charter, it says, "Temasek Holdings holds and manages the Singapore Government's investments in companies for the long term benefit of Singapore." I find this most reassuring. How many companies can put up that kind of mission statement? The Temasek Charter makes it clear from the very outset that every Singaporean has a stake in Temasek even if we do not hold a single share in any of the Temasek-linked companies. I think we should be proud of Temasek. Temasek really is our future. Our SMEs, our small mom and pop shops do deserve encouragement. They should be encouraged to grow. We should level the playing field. But they are unable to reach out and anchor to the big powers, the big players in the West. When we were young, we all know this refrain in essay. The teacher always says, "Singapore is a small island with limited resources." I think, today, we can tell the teacher to tell Singaporeans that "Singapore is a small island with Temasek". If Temasek is our future, we should chart its future together. And for this reason, I really welcome this debate on Temasek Charter in this House moved by Mr Leong Horn Kee and Mr Inderjit Singh. In some ways, I agree with them. For too long, Temasek has been a passive holding company. Its mode of operation and its mission were a little bit opaque, a little bit over our head. I hope that it is slowly changing. I think it is changing. And this new management is a catalyst for change. I have a dream that one day Temasek will be a General Electric with a diversified stable of businesses, each of which is a world or, at least, a regional brand name. It will take Temasek decades to reach this goal. It took Jack Welch a good 20 to 30 years to finalise the shape of General Electric that we know today. Certainly some companies should be divested; some merged; some acquired, but that is best left to the management of Temasek. But reading the Charter, I am confident that Temasek management has the ambitions and determination to succeed. With this Charter, Temasek is really chartering into uncharted waters, because there are no MBA case studies for Temasek to emulate and analyse. Temasek Holdings will have to write its own MBA case study, for somebody else to study in the decades to come. In time, we will know how Temasek has remained faithful to the Charter, how it has linked the future to Singapore, and how it has performed against its own benchmark. I think today's debate is useful. We should revisit this debate in the next few years. But, Mdm Deputy Speaker, before I end, I hope I have time to talk about the NTUC-linked companies. Actually NTUC-linked companies are not part of today's Motion. NTUC-linked companies are largely formed for Singaporeans and, in fact, NTUC-linked companies - I know it, because I had been in NTUC for sometime now - were formed precisely against the Yellow Pages rule. The Yellow Pages rule says that if the name is in the Yellow Pages, let us, say, a supermarket, it should get out. But when FairPrice was formed, there were few supermarkets. NTUC FairPrice went in basically because the price of basic commodities was too high. And NTUC went in to provide competition against the local retailers. The results, after 20-odd years, I think, prove that it has succeeded. NTUC prices today are among the lowest prices in the retail scene. Not every item but, by and large, if you look at a typical basket of items, NTUC has the cheapest basket in town. NTUC companies are not funded by Government. Government does not put money into NTUC. NTUC's seed capital comes from all of us. It is a cooperative, and the money comes from small timers like you and I who buy shares, $1 a share, over the last many years. I am not sure if we divest, let us say, FairPrice, we will quell the public discontent. If FairPrice were to be sold, sold to whom? That is the first issue. The second issue is the person who inherits FairPrice would want to make it even bigger, and he will crowd out even more local retailers. The presence of FairPrice in any new town is welcomed, I tell you, because it brings down the cost of living in that town. It has what we call the Wal-Mart effect. Every time a Wal-Mart opens up a big supermarket chain in some parts of America, the residents welcome it, because it lowers the cost of commodities by a huge margin. But, of course, shopkeepers around the town would be upset. It is something we have to live with. In Malaysia, they have found that by allowing big retail giants, like Carrefour, to operate, for example, retail shops went out of business. So unless you say that you want to limit the number of supermarket outlets, it is not going to help even if FairPrice were divested from the NTUC family. One last word about academic advice. I have left the university for the last 10 years now, and of course not as well known as Michael Porter and all that. Listen to their advice, they have a lot to offer us, but please listen with a pinch of salt. Many renowned academics over the years, when you look back at their advice, their advice sounded foolish. In the early years of independence, in the 60s, the advice of the renowned academics around the world to all developing countries was to close your doors, be self-sufficient, do what is best for you. So many countries, like India, Malaysia, African countries, closed their doors. Singapore went against the advice of these eminent economists. We opened up, we linked up to the world, we succeeded. Because we went against the advice of the day, we succeeded. I am not saying that we should go against the advice of these renowned academics. But think again. We are here, we know our business better. We are here because our destiny is here. They are in Boston, they are in London. Their business is to write papers, to gain a world-wide audience, to win the Nobel Prize. Our duty is to provide for our future, for our children's future.

Madam, I wish to thank you for giving me the opportunity to participate in this debate. And in fact, I would also like to thank the movers of the Motion, my parliamentary colleagues, Mr Leong Horn Kee and Mr Inderjit Singh, for tabling this Motion. In doing so, I think they have provided this House with a great opportunity to debate on a topic which is obviously of great interest to Singaporeans and which is also important for our future growth and development. Indeed, I have listened very carefully to the comments and viewpoints made by the speakers before me on this issue. Generally, I do not disagree that we must help our local enterprises to develop and grow. And to this end, we should examine existing schemes, policies and regulations to determine whether there are any impediments standing in the way of full participation by our SMEs, of which we place them at an unfair disadvantage compared to GLCs and MNCs. In this respect, the recommendations of the EISC should be seriously looked at and the Government should seriously consider implementing useful and practical suggestions that will strengthen our economy and make Singapore even more competitive globally. I am all for a level playing field. But I believe that we should not have protectionist policies, not only for GLCs and MNCs, but also for our own SMEs. As such, protectionism will not, in the long term, help our domestic industries to be resilient and to compete globally. Madam, having listened to this debate, I am not sure whether we are identifying the issues correctly. There is a tendency to compartmentalise GLCs and SMEs into different boxes and to assume that one can only grow at the expense of the other. To me, the issue is not whether GLCs should be competing with SMEs. But of greater significance is the issue of how Singapore companies, whether they are GLCs or SMEs, can compete in a very competitive world economy which has become even more aggressive with the admission of China into the WTO. Recently, with my colleague, Mr Nithiah Nandan, we led the SLF model workers delegation to Shanghai and we visited the Philips optical storage factory there. The plant's General Manager, who briefed us, told us that the operating environment in China is very flexible and fast, and there is good support from the authorities. The factory was sited on a huge piece of land and the huge factory took only one year to build with the workers working round the clock come rain or shine. He said that in Europe, it would have taken two to two-and-a-half years to build a similar factory. The education system, according to him, is good and among the non-production staff, almost 90% are degree holders. And of these, 15% are PhDs. Among the production staff, the average level of education is at least upper secondary education. The point I wish to make is that, instead of debating about how GLCs are crowding out local companies and to add to that, I must add NLCs, a new term that has just been developed today, perhaps we should concentrate more on how GLCs, NLCs and SMEs can partner each other as one united force to compete in the international market and to be more efficient and productive domestically. From the workers' viewpoint, what is important is not so much whether companies operating in Singapore are GLCs, SMEs, or foreign-owned. Rather, of greater significance to us is whether such companies create jobs, incomes and bring in new technologies and skills, in other words, whether more jobs are created through such investments and whether these are well-paid jobs. Madam, it is a fact that, overall, GLCs and MNCs provide greater job stability to our workers and offer more attractive terms of employment. This is because they are generally bigger, have more resources and are more professionally run. In my view, promoting GLCs need not be at the expense of SMEs. In fact, there is no guarantee that pulling our GLCs from certain sectors would automatically result in a mushrooming of more and stronger SMEs. What may happen, instead, is that the vacuum would be very quickly filled up by bigger, more competitive and globally-savvy foreign competitors. This is evident by looking at the retail sector. In Thailand, for instance, the competition comes not from the State-owned enterprises but big foreign retailers, such as Carrefour and Taxco. There are local companies, but they are weak and not competitive. In Taiwan, the supermarket scene is all foreign, with Carrefour being the biggest. Madam, let me come to another point which has been raised by previous speakers. I think it is unfair and unwise to brush the NTUC companies in the same stroke as other private enterprises. In the first place, NTUC companies are, in fact, cooperatives set up by the workers. The capital for each and every one of our cooperatives comes from shareholders which are our trade unions and individual members. Hence, these cooperatives belong to the unions and workers, and not the Government. We do not receive Government funding or capital to set up any one of our cooperatives. The priority of NTUC cooperatives must be the ordinary consumers, and the 400,000 or so Singaporeans, many of whom are low income workers, who collectively own the cooperatives. How many of our workers could afford to invest in companies and hold shares on the same basis as their management counterparts, or better-off Singaporeans? NTUC cooperatives will be measured by whether they have helped to make a difference to the lives of ordinary Singaporeans. Our responsibility is to help workers stretch their hard-earned dollar and improve their quality of life. Madam, in fact, our NTUC cooperatives too face intense competition from major foreign retail chains many times their size. It also has to contend with business alliances by private sector players. Since the 1980s, for instance, FairPrice had to tender for sites in open competition. In new suburban malls, FairPrice would not get a chance to even put in competitive bids, as some developers prefer to award the tender to supermarket operators with whom they had special relationships. Residents, as Prof. Koo Tsai Kee has said earlier on, have complained to their MPs when they do not have an NTUC FairPrice outlet near their home. This is clearly evident that people, ordinary Singaporeans, average workers, support the idea of cooperatives and find them useful and meet their needs. Madam, it is true that NTUC appoints some Government Ministers, Members of Parliament and Government officers on the board of directors of our cooperatives. But this is to enable our cooperatives to benefit from the experience and expertise and, not as implied, to gain any undue or unfair advantage compared to other businesses. In fact, NTUC also appoints prominent businessmen on the board of NTUC cooperatives and many have, to their credit, willingly served on our boards which have benefited not only the NTUC cooperatives but, in many ways, have contributed towards a conducive industrial relations climate, as such co-option of business leaders has provided the opportunity for business and union leaders to integrate and understand each other's position better. The fact that many prominent businessmen agree to serve on our boards indicates that they too subscribe to the social objectives of NTUC cooperatives and want to contribute towards this larger community objective. Madam, NTUC cooperatives are truly mass movements and we play a social role by providing real and tangible benefits to Singaporeans. During good times, the NTUC cooperatives moderate cost increases by setting benchmark prices. And during bad times, they help workers tide over the difficulties, such as the 1998, 2001 and 2002 relief packages. In fact, they collectively provided $26 million in relief package in 1998 and $52 million in relief package in 2001 and 2002. NTUC cooperatives are not set up for profits alone although, in order to stay viable, they have to be profitable so that they can continue to contribute to society. Wherever possible, NTUC cooperatives also strive for win-win strategies by working with small businesses to help them grow. For example, FairPrice and Healthcare work closely with small retailers through their franchise schemes. Madam, recently, the cooperatives, such as FairPrice, Foodfare, Healthcare and Childcare, have also announced their commitment to help cushion the impact of the GST increase on Singaporeans next year. Since 1999, we have been publishing a set of social indicators together with our statement of accounts. This is an example of the transparency requirement, which was mentioned by Mr Inderjit Singh earlier on. Just as companies account to shareholders each year, in terms of equity, we publish social indicators to show that we are not just businesses, but that we believe in social responsibility and will do our part to help improve workers' lives and ensure that their basic needs are met. Although our cooperatives belong to the workers and unions, shareholders do not profit from our cooperatives. In fact, under the Cooperative Societies Act, the maximum rate of dividends that cooperatives can pay is capped at 10%. This means that whatever benefit is reaped by the cooperatives, these are largely ploughed back to consumers and society. Madam, I am proud to be associated with socially responsible employers who care not just for their bottomline, but also enlarge their role to care for the community. Cooperatives can serve as a check against the excesses or failures of the market. They are bound by their admission, values and traditions to consider the wider interests of society. Each and every cooperative that the labour movement has set up is founded upon a clear social objective. For example, NTUC Income was set up in those days because there is no insurance company that is prepared to provide low cost, low premium insurance coverage for workers. NTUC FairPrice was set up in those days because there was rampant inflation and profiteering, and that was eating into the hard earned cash and money of the workers. The presence of our cooperative movement has contributed towards social stability. It has helped to mitigate the effects of a widening wage gap as it helps to level up workers. Madam, NTUC empathises with the problems faced by small retailers. Without sufficient economies of scale, they will find it difficult to operate. However, it is unfair to place the poor prospects of small neighbourhood retail shops on the growth of NTUC cooperatives. In the absence of NTUC cooperatives, small retailers would face the same competition by other big retailers, including the foreign ones. Of the supermarkets, only Sheng Siong and PRIME are owned by Singaporeans. The rest are foreign owned. We do not think that dismantling NTUC cooperatives would improve the position of SMEs, or that it would promote greater innovation and entrepreneurship among local companies. There are clearly many other factors that are at play, such as access to capital expertise and size which affect the growth of our local companies and not because of the presence of NTUC cooperatives or NLCs. Mdm Deputy Speaker, someone has suggested that some of our cooperatives are too small and have little impact. In this case, is the answer not to grow bigger, to develop the clout? But if we do so, then we will be accused of crowding out the local companies. Even so, a small player, such as Denticare, exerts an influence. Denticare executives have been asked from time to time to raise their prices so that other dentists can follow suit. Does Denticare crowd out other dentists? It cannot be so, as the people in Denticare are themselves dentists. If other dentists wish to compete with Denticare, they are free to grow together and offer the public prices lower than the table of rates set by the Singapore Dental Association. There is nothing to stop them. And the public would applaud them, and so would I. Perhaps, I would also go and visit them, when I need dental treatment. Mdm Deputy Speaker, in conclusion, I agree with the Motion that we should examine all ways to ensure that our local SMEs stand a chance and can benefit from Singapore's economic growth. I do not think that the debate should be about either promoting GLCs or SMEs, but rather on how both can partner each other and compete in the global economy. Both have a role to play, and they can certainly complement each other in order to promote and strengthen the Singapore brand. Most certainly, NTUC cooperatives will and must continue to play the role of a social leveller and guardian of the interests of the vast majority of Singaporeans who have benefited from our presence in the market.

Mdm Deputy Speaker, the EISC Report and the New Temasek Charter are fundamentally sound. The recommendations in the Report and the express intention to wean off companies by Temasek Holdings augur well for our nation's transition from an investment-driven phase to an innovation-driven phase in our economic development. The call by many is that this is the time when the Government is to take a back seat and allow companies to take an active role in shaping the business environment and lead development through innovation and creativity. The Government will lead the way in divesting non-core businesses, partner SMEs, form alliances, merge with or acquire stakes in both local and international interests. All these are happening in a difficult global market environment. An array of different strategies and conditions must now prevail in order that Singaporean companies could rise to the new challenge. For example, local demand and a challenging marketplace must develop as a source of new ideas for product and service innovations. Other imperatives include companies rethinking their traditional assumptions, management techniques, business leaders redefining their roles and their initiative in moving into new territories. Madam, Singapore boasts an excellent track record in rising to challenges. The Government has already taken several measures to equip Singapore in this transition. The issues are how soon and are our companies ready? To what extent is our infrastructure ready or accessible to the SMEs in terms of loans, funds and network? Are GLCs totally irrelevant in this new economic era? Why should we still be holding on to some of them? What flexible model can we initiate as strategies that will continue to anchor our flagships? Madam, we have built the Singapore economy into what it is today, largely through local talents and by constantly growing and strengthening our key economic institutions such as the GLCs. GLCs and the assiduous cultivation of our local talents for public service and, in recent years for the private sector, have been the cornerstones of our economic growth. We should not be too hasty in wanting to do away with what has worked well for us and to adopt some other strategies which may sound fashionable but have not stood the test of time. According to the World Bank, more than US$700 billion in assets have been privatised around the world in the last decade, most of which occurred in what economists call "emerging economies". There is a definite trend around the world towards privatisation of government-linked companies or what, in some circles, is called state-owned enterprises. The rationale for the privatisation of these enterprises are many and varied. Some of them may be relevant to the GLC situation in Singapore, others not. Before we join in the rush to divest some of our prized-assets, it is important for us to understand some of those reasons that lead some countries to undertake privatisation of their GLCs. This will avoid a doctrinaire approach to this issue of privatisation. One of those reasons has to do with agency theory. This says that because GLCs belong to society as a whole, it is an agent without a real principal. As a result, the performance of these GLCs is sub-optimal because they have rather vague goals, as opposed to the profit-maximising goals of privately-run outfits, like the MNCs. Fortunately for Singapore, our GLCs are run on an arms-length principle, in that the Government does not directly interfere with the daily operations of these companies. In actual fact, they are run on purely commercial lines. There are instances where the Government may have invested money into these GLCs for long-term strategic reasons without seeing an immediate prospect of making quick returns. However, this does not mean that Government ownership of these GLCs is not commercially-sound. It just means that there are instances where the market fails to identify long-term opportunities which Singapore is well placed to exploit. Another reason why privatisation has been the order of the day in many countries is because these enterprises have not been competitive enough to take on world-class competitors in an era of trade and investment liberalisation. Is this situation symptomatic of Singapore's GLCs? Some GLCs may need to be partially or even completely privatised so that they can attract foreign technology transfers, managerial expertise, and capital. The latter will also help boost our efforts to enlarge the capital base of our stock exchange and the increase of foreign portfolio investment in Singapore. However, there are GLCs with substantial Government ownership which are doing quite well already on their own. Brand names like SIA, DBS and PSA Corporation spring quickly to mind in this regard. To further divest Government's holdings in these companies may not necessarily improve the competitive advantage of these enterprises. If the Government were to relinquish more control of these enterprises, what compelling rationale is there to guarantee that they will be a better run outfit than what is already the case? SIA has consistently been one of the most profitable airlines in the world. PSA Corporation is likewise one of the most profitable port operators in the world and has sustained Singapore as the second largest port worldwide in terms of shipping tonnage. We should endeavour to create more PSA Corps and SIAs out of the more promising GLCs, instead of contemplating to hand over control of these companies to foreign interests or appoint foreign proxies to run them for us. Because we are small and vulnerable, human capital is our most precious asset, and we must continue to build up our own core of national talent to be in ultimate charge of our key resources and institutions. We cannot depend on nor expect foreign managers and investors to take ultimate control of our key economic institutions and expect them to make a living for us. That will be the end of Singapore as a sovereign nation. Still yet another reason why some countries join the privatisation mania is because they are faced with balance-of-payments or fiscal crises that compel their governments to sell off state-owned enterprises in order to raise money to cover shortfalls in other areas. Surely, this is not the case in Singapore, as we all know how prudent our Government has been in the stewardship of our nation's reserves. This is not to say that we should not open up our market and companies to foreign investors and expertise. To remain competitive, we must continue to attract the best management and business talents to Singapore to supplement our national talent and, if possible, absorb them into our citizenry to enlarge our core national talent pool. We can enlarge our domestic talent pool by making Singapore a global metropolis attractive enough for foreigners to want to live and contribute to Singapore's prosperity. Giving up ownership and control of our key home-grown industries that are strategic to our prosperity and survival as a nation is like cutting off a healthy limb from a healthy body. Is it then necessary or wise for the Government to privatise substantially or completely all its GLCs? Proponents for the divestment of our GLCs argue that GLCs present unfair competition for both local and international players, given the Singapore Government's backing in these companies. For this reason and the perceived sensitivity that this may pose to the national security of other countries, it is argued that the GLCs will not be welcomed in the international market place. Similarly, because the profit objective of our GLCs may be compromised by Government's social and political imperatives, they will be shunned by international funds and investors. Last but not least, there is also a perception that because they are GLCs per se, there is a lack of will on the part of the Government to ensure that the best possible management is in place. But the catch here is that those arguments are mostly propagated by our competitors and by pundits who make a living from espousing trendy and esoteric management theories. How, for example, could any of our GLCs be seriously considered to be competing at an unfair advantage in terms of financial muscle in the international marketplace merely because the Government has the controlling interest, when not even one of our GLCs can be found on the Fortune 500 Global List? While our GLCs should be competitive and profitable world-class players, it is also a legitimate objective to ensure that profit maximisation is not at the expense of national interest. GLCs should not only generate financial gains for their shareholders, but they should also serve our national interests in contributing to the peace, prosperity and security of Singapore. Moreover, our GLCs are subject to the same rules that apply to others in the international free marketplace. Instead of being defensive about Government involvement, our GLCs should robustly rebut unfounded criticism from vested interests and stake their claims strongly as legitimate participants in today's increasingly globalised marketplace. Madam, PSA Corporation and SIA have become world-class companies in their own right, consistently outperforming many privately-controlled and managed ports and airlines of international stature. The Government need not be apologetic about their achievements and contributions to Singapore. All businesses, without exception, are subject to the fluctuations of business cycles and world economic upturns and downturns. So, for example, if SIA is not making a profit for the first time after decades of sterling performance, this should not be the reason for it, or a sizeable chunk of its equity, to be handed over on a silver platter to some seemingly savvy international fund manager. What assurance can we have that they can perform better than SIA? By all means divest ourselves of all long-standing non-performing GLCs or even close them down. But for those that perform or are strategic to our national interests, such as in defence, it makes little sense for us to throw out the baby with the bath water. The recent announcement of the PSA Corporation model of opening up berths to foreign and private operators to manage on their own shows a savvy customer service response. The open invitation by PSA Corporation to shipping companies to participate in port management and operations is a clear signal of its open and flexible approach in striking up new alliances. Let us examine some of our assumptions underlying the intention to divest before proceeding to do so. To what extent must Government sell off its holdings before investors are sufficiently assuaged that these enterprises are really bottom-line concerns? Another related issue that ought to be raised is that the manner in which privatisation is carried out is just as important as the rationale for divestment. Firstly, if we decide on privatising some of our non-core, non-strategic assets, we should do so gradually, and not go for a quick sell-off, especially in times like ours when the market is still soft. To do a quick sell-off under today's market condition is unwise for obvious reasons. If we decide to let go of some of these assets, we should do so in a staggered manner, selling off tranches at those points in time when the market is on the upturn. Studies in other countries show that by gradually releasing its holdings over time, the long-run revenue resulting from the sale of these shares will be maximised. This is because, as investors gain confidence in the privatisation programme, the value of these shares will tend to rise. This, in turn, will benefit all Singaporeans. Secondly, I feel that instead of selling large chunks of these holdings to foreign investors, we should sell them to large groups of small, dispersed investors. SIA and SingTel are good cases in point. In this connection, the rule for the disclosure of any take-over bids by powerful investors and fund-managers should remain, and not be diluted further by a further reduction in the need for the disclosure of any take-over attempt. Alternatively, we can consider selling off these holdings to the management of these firms if they are able to raise sufficient funds to buy the shares on offer. This will help increase the sense of ownership among these managers, and it will also help to retain critical managerial know-how in these firms and give our managers a chance at injecting the entrepreneurial spirit in these firms. The Ang Kong Hua-led proposal to buy NatSteel is a case in point. As far as the GLCs are concerned, the Government's policy of divesting them to the private sector when they no longer serve a useful strategic thrust to the economy is a correct one. And, should the Government continue to play a lead role in identifying strategic sectors for Singapore? There are two fundamental forces at work here. One is that the Government should devolve itself from running state enterprises. The other is that the Government should take the lead in identifying key sectors that will do well in the future. Which of these two do we want? Are we sure that the Government can always be spot-on to identify areas of growth in so prescient a fashion as was the case in the past? The proposal to consider other ways of involving the private sector is a good one provided that we involve the private sector in a continual process of sectoral growth-identification. Madam, the Report's recommendation on having a generic law on anti-competition is good. It is to prevent collusion, anti-competition and the like. In other words, in so far as it pertains to the encouragement of entrepreneurship and competition among Singapore companies, it is truly commendable. I can envisage potential instances where MNCs or even subsidiaries within MNCs collude to keep price high or merge among themselves to corner a large segment of the international market. Do we seriously want to keep them out of Singapore because they indulge in such practices? What if Singapore companies collude among themselves to corner a slice of the foreign market? Indeed, the proposed law can prevent such instances from occurring. Madam, another dimension which has been mentioned by my colleagues is the role of statutory boards and their effects on competition in Singapore. To reiterate, if the function of statutory boards in Singapore is to help provide an institutional environment where private businesses can compete on a transparent and level-playing field, then it stands to reason that these boards ought not to be involved in the competition themselves or else they will lose their standing as impartial guarantors of a free and fair regime in the various sectors they are supposed to be responsible for. Many today are questioning the commercial aspirations of spin-offs of statutory boards. Two better known ones in the manpower industry are the Civil Service College and the PSB Corp. Consultants and training providers are asking why these two entities are vying for the same commercial pie. They are providing similar management training and consultancy programmes to a near saturated market. Madam, this runs against the original function of the statutory boards, thereby detracting from what they are supposed to do. Do these spin-offs function to facilitate and enable the private operators in enhancing the cluster of related and supporting sectors? If their objectives are contrary to one of the key thrusts in transitioning into the innovation-driven economy, then we ought to hold the brakes and urge a review of their directions. This is to avoid the Government from being alluded in competing in an unfair manner when it enters certain sectors of the local market that should be best served by the private sector. Perhaps, a charter similar to the New Temasek Charter should be considered for statutory boards with spun-off commercial set-ups. This is to better scope their functions and ensure that if at all for any useful contribution, they serve to enhance the cluster and related supporting industries. Madam, on this note, I would like to support the recommendations of the EISC to promote private enterprise in Singapore.

Mdm Deputy Speaker, I support the Motion. The EISC proposals and the Temasek press release are timely and welcomed by many Singaporeans. GLCs have been a subject of much debate and controversy for sometime now. Among the many issues that have surfaced, there are two that have generated much attention; first, the question of competition that the GLCs provide to local non-GLC enterprises and, secondly, and one which is related to the first, the role and management of the GLCs. I have, in this House, consistently maintained the view that GLCs, if they are worth their salt, should play an active role in helping Singapore develop a strong external economy. A well-established network of successful investments and strategic acquisitions outside Singapore, particularly in areas where GLCs are able to leverage on for the purpose of technology transfer, would help provide the platform for local industries to grow and for local employment to be generated. I agree that GLCs venturing overseas could well partner local enterprises to help them expand beyond local shores. Similarly, where we are able to develop our external wing successfully, we can afford a little inefficiency in our domestic economy without having to worry too much about external competition. Our local workers, for instance, can, through some tax incentives or otherwise, or even indirect subsidies, continue to work in areas traditionally occupied by foreign workers without having to earn their kind of salaries. Madam, we are a small country and our resources are limited. We need to harness every resource we have to ensure our long-term survival. The GLCs, because of their larger capital resource, depth and breadth of experience in various businesses and better command of human talents, are best positioned to lead the charge for Singapore into the world economy. The EISC report and the proposed Charter by Temasek have both taken a step in the right direction when it recognised that increasing focus must be placed on divesting non-key assets and placing our bets on strategic investments overseas. I do not think that anyone in this House will take exception to the stated intention contained in the documents. However, while no one would quarrel with the clarion call to divest and venture overseas, the devil, as they say, is in the details. There are issues and, hopefully, some of these issues will be dealt with in the course of this debate. First, as with the others, the GLCs. Mdm Deputy Speaker, we all know that GLCs here serve the specific purpose of not only providing the appropriate vehicle that allows Government to invest the public funds. It also, and more importantly, serves as tools that allow us to take the economy into strategic areas that are of vital economic interest to Singapore. It is no surprise therefore that the main protagonists in financial services, infrastructure and industrial development, utility services are GLCs. GLCs that are engaged in businesses are therefore not only driven by the necessity to ensure that they are not insolvent, but also to ensure that the overall needs of the country are met at the same time; which raises the question of whether GLCs ought to be treated strictly as private sector companies, to be left to shareholders to decide, or be treated as hybrid companies which, because of the public interest that they serve, not only owe a duty to the shareholders, but also a duty of accountability to the wider public. Our Government has in the past consistently maintained that the strict line of accountability of the GLCs should be to the shareholders as these are private sector bodies and Parliament is not the appropriate body to undertake any oversight function. Madam, the time has now come perhaps when we should review the stand taken. Over the years, and much to their credit, the GLCs have successfully transformed our economy and helped build up Singapore, as we know it today. It is for this reason that your typical GLC is not just your mom-and-pop neighbourbood shop but huge conglomerates with interests that span from healthcare and telecommunications to utilities and aviation. These are companies that command very substantial capital resources, a large part of which is the taxpayers' money; your money and my money. These are also companies that have intruded into our lives via the services that they provide; that any adjustment to the rates that they levy, whether it be hospital charges or bank charges, will affect a very wide segment of Singaporeans. Should they therefore be in the private domain or the public domain? Should their concerns be matters which should be left entirely to the shareholders or the wider public? Mdm Deputy Speaker, our investments for the moment are safely watched over by Cabinet leaders or ex-Cabinet leaders through Temasek and GIC. We have no doubt that the present leaders are exercising their watchdog function effectively. However, one would say that the present safeguard also depends very much on the honesty, integrity and, to a large extent, the trust which the present leadership enjoys. On the other hand, one would argue that there is very little by way of institutional safeguard, which could serve as a check against abuses and excesses. The question is: who watches over the watchdog? At the moment, the public does not have complete access to the accounts of some Government investment companies; neither does the public have any knowledge of the web of companies that the GLCs control. Mdm Deputy Speaker, while I can understand the need for confidentiality, the absence of an appropriate institution for independent accountability is not acceptable either. Our entire parliamentary system is dedicated to the proposition of accountability of the Government to the people. If public and open accountability is neither feasible nor practical for a variety of reasons, I would strongly suggest and urge the Government to consider setting up a council made up of prominent Singaporeans and parliamentarians to perform the task. The council may be charged by Parliament to perform the task of providing additional comfort to the public so that the business of Government in the private sector is prudently managed to the highest standards. The function of such a council would be no different from the Public Accounts Committee or the Audit Committee in the context of a listed company. Additionally, if the Government represents the interests of the taxpayers through indirect holdings in these companies, it should be prepared to engage in more Parliamentary debates, as it has done in the past, on some key policies taken by the GLCs. One would suppose that ultimately, the overriding principle should be greater openness on the part of Government as far as possible. With openness, there would be greater accountability, and with greater accountability, one would minimise the possibility of abuse by those on whose shoulders rest the responsibility of being the trustees of the people's assets. Next, performance measures of GLCs and its Board. Currently, the performance of GLCs is partly measured by Economic Value-Add (EVAs). In its application, EVAs seek to determine, as I understand it, the value-add of the enterprise business activities in relation to the capital employed. This yardstick as a measure of the company provides the spurs for these GLCs to perform. However, while the use of EVAs may be well-meaning, the application could perhaps be refined further. At the moment, EVAs do not make any distinction as to whether the value-add to the companies came from domestic business or foreign business. What is important in the final analysis is that EVA is a reflection based on the sum total revenue of the enterprise. As a result, the application is not satisfactory in its present form. GLCs, desperate to perform to improve its performance, may well be forced to unfairly compete head-on with the small and medium enterprises for business or even to acquire them; a complaint that is commonly heard. It is no wonder therefore that the roast meat business was on the menu for GLCs some years back. If we accept the broad principle that GLCs should concentrate and focus their energies overseas, while leaving the domestic economy to be substantially handled by the small and medium enterprises, it would make more sense if the performance index of GLCs be tweaked to take into account successful investments overseas. And to refine this further, we could base the determination of the EVAs of the respective GLCs on industries that these GLCs belong to. For instance, it does not make sense if SingTel were to go overseas to become the best food court operator. It does not work that way. This brings us to the next point and that is, measuring the performance of the board of GLCs. Under the current proposal, the Corporate Governance Code will be fully implemented in 2003 by the listed companies. Non-listed companies will be encouraged to adopt the same. Under the Code, the Board is expected to set up functional committees such as the Nomination Committee and the Remuneration Committees to determine the nomination and compensation of directors, among other things. The recent disclosure of generous pay-outs to both executive directors and directors of a union linked transportation company has put the spotlight on the issue. On what criteria should directors be appointed and remunerated? Should directors of GLCs be allowed to give themselves generous pay-outs, including stock options? Do Government appointed directors to GLCs operate under any directive or remuneration and standards, and if so, what formula is this based? Should executive directors or Chief Executive Officers of GLCs that are non-performing be asked to go? I have, in my previous speeches, said that the boards of GLCs must and should never be a place where retired civil servants and politicians fade away. Every director who is appointed to the boards of these companies must be able to hold their own appointment to these boards. They must be effective contributors to the business of the company and not just coast along. While Temasek is set about bringing out a charter that will guide its business, it will also be helpful if Temasek could also publish its guidelines on the appointment and remuneration of their directors as well. Mdm Deputy Speaker, our Government has always lamented the fact that there is a dearth of talents for the appointment to the boards. It seems that every time an appointment is considered, the usual list of suspects is taken out and reviewed. It does not seem as if all Government appointed directors have limited tenure of appointment or are replaced by other younger and equally capable persons who may well be qualified to do the job. If the policy on Permanent Secretaries is to limit their term of office, the Government should perhaps consider such a similar policy in respect of appointment of GLC directors. Similarly, when executive appointments have been extended to foreigners, although many, I understand, are presently resigning as fast as they are appointed, GLCs should perhaps, in their internationalisation efforts, consider appointing more experienced foreigners to their boards, or to an international advisory panel set up for the purpose of advising the board. Such a policy, Madam, would give the Government the benefit of adding breadth and depth to the experience and expertise of the boards of GLCs. And I am sure such appointments do not cause as much rift and resentment in our society as the appointment of foreigners to executive offices of our GLCs. Next, divestment of GLCs. The Temasek Charter, as we note, sets out the basic principle that our Government intends to divest investments that are non-core business, in the sense that I understand it, it does not have international growth potential. Such a move is welcomed as it dovetails into the broader plan of successfully creating an external wing for our economy. However, in as much as the intention is easy to spell out, the role to implementing it is not. First, we are not told how businesses are going to be classified into whether or not they have international growth potential. Let me take a simple example of a fish-ball business. I believe that Temasek has already expressed the view that if it is the business of fish ball soup, then they are not interested. One would immediately recognise the practical difficulty of going through such a classification exercise. While the person selling fish ball soup may not, at first glance, seem like a hot candidate for a world-class business, who is to say the fish ball seller does not have the potential if his fish balls are the best in the world, and that he could potentially be a world-class supplier of fish balls and related products. Maybe fish balls are too remote an example. To use a more familiar example, Breadtalk. One would have to admit that, at first blush, it does not seem likely that a bakery is in a position to put itself in a list of companies that Singapore can hold out to the world as successful examples of entrepreneurship. Yet, Breadtalk, and Dr George Quek in particular, is able to overcome the initial prejudices and is in the process of developing a brand name that is not only recognised locally but in the region itself. And to its credit, it has just won an SME award recently as being a well-known brand name in Singapore. Madam, who is to say that Breadtalk does not have the potential to grow its business internationally? Would McDonald's not qualify as an international brand name? If GLCs were to a priori classify business with potential, it would be in no different position of possibly throwing the baby out with the bath water. I am concerned that by openly expressing their preference for certain types of businesses, the officers of the GLCs at the lower level may have inadvertently turned a blind eye to some businesses with very good overseas potential, and this may have the negative effect of stifling the entrepreneurship potential or initiative. Turning to a more serious issue, I note that the Government is intent on selling or divesting of business that does not fit into its present overall game plan. I am grateful to learn from Prof. Koo earlier that the Government, in its desire to divest, is not about to do a fire sale of its assets. This certainly would not be in our interest. We must remember that some of these non-core assets are precious jewels no less in our collection, even if they are up for sale. There are several methods of disposing and valuing assets. I shall not delay our colleagues here with the different techniques, save to say that in any sale and purchase situation, valuation of assets on a willing buyer and willing seller basis is never easy. I shall just name one example. The subject of management buy-outs featured very prominently recently when Temasek decided to put NatSteel up for sale. In an MBO situation, what is clear is that the information flow between the management and the shareholder is never symmetrical; in other words, it is asymmetrical. What it means is that the knowledge of the value of the company is not shared equally between the shareholder and the managers. Logically, it can never be, as who, other than the managers who are engaged in the day-to-day running of the company, are better acquainted with the business and the value of the company. In an MBO, any price that the managers put to the shareholders will always result in a net gain for them. It can never be that, in the case where the company is on the whole generally profitable, the managers are prepared to risk more than $300 million of their own money on a gamble. In the present context, it is arguable that risk money is directly proportional to the returns and inversely proportional to the risk that they assume. The question then is, if the managers are going to make money from the exercise, how much will it be? At best, the potential value of the company can only be an estimate. Of course, it has been said that tenders were called for and the proposals of the various interested were evaluated. However, it should be noted that price fixing in buying and selling is almost as much of an art as it is a science. What parties would typically do in order to ascertain the value of the company is to conduct a due diligence exercise on the company to verify the accounts and the corporate books. Again, anyone who has undertaken work in the area of mergers and acquisitions will readily tell you that no amount of due diligence is going to put an outside party on par with the managers in knowing and understanding the true value of the company. So, the point is while a tender may be called for, it will not always result in the seller ascertaining the correct value of the company. There is therefore a general perception that the sale of Government assets, in this case, if it went to the managers, is going to make some Singaporeans very rich. The greatest travesty on enterprise and entrepreneurship will come if the managers are able to asset strip the company for a handsome profit after they have acquired it from the Government. The question then is in selling State assets to the managers, can the Government provide the assurance that these buyers will continue with the business and give comfort to the employees that their jobs will be secure; that the buyers will not asset strip the company; that if asset stripping was the intention, a better way to do it would be for the Government to do it itself; that the sale to the managers is the best way to maximise the value of these assets? In the final analysis, while the Government is intent on divesting non-core assets, it should not do so in a hurry and, in the process, run the risk of selling these assets on the cheap. My final point is on the small and medium enterprises in Singapore. The complaint that one often hears within some circles, and was referred to in this afternoon's debate, is that the presence of GLCs stifles much of the ability of the SMEs to compete and grow their businesses. While there may be some merits to the argument, one must not forget the converse side to the argument, ie, the entry of the GLCs to their business turfs has helped to raise the standard and quality of the business services. Think of what the quality of motor workshops would be like today if a GLC had not entered into the same arena. Small and medium enterprises should not think that it is their God given right not to expect competition from the bigger boys. In this debate, I believe the issue is not whether GLCs should enter into the business of small and medium enterprises. For, if this was the case, the absence of GLCs is not going to prevent other bigger boys from entering the scene. The issue is whether the bigger boys, and in this case the GLCs, are able to dominate the business of the small and medium enterprise simply because of unfair competition. Are the rules and the practices of the market place stacked in favour of the GLCs? Here, I welcome the proposal of the EISC that there should be some form of competition law to ensure that the playing field is a level one, irrespective of whether you are a big or a small player. The point is that the small and medium enterprises should not expect free rides from any quarters. They must earn their spurs by competing in the market place and survive. Only then can they hope to nurture any aspiration of competing on a bigger world stage.

Mdm Deputy Speaker, the effectiveness of Government-linked companies (GLCs) and Government agencies in driving the economic development of Singapore since independence is undeniable. A report by the US Embassy in Singapore recognised Singapore GLCs to be well run, efficient and profitable, unlike typical state-owned enterprises in many other countries. It also acknowledged that the major GLCs, including Singapore Airlines, Neptune Orient Lines, Chartered Semiconductor, Keppel Corporation and Sembawang Corporation are publicly listed and among the best known corporate names locally and regionally. Indeed, we should be proud of our GLCs and Government agencies which contributed about 13% and 9% respectively to our Gross Domestic Product in 1998. However, the very success of the GLCs and Government enterprises has reached a point where private enterprises feel crowded out of local businesses and has sparked calls for a refocus of the role of Government in business. An open and competitive economy like Singapore will need to have rules to curb excessive economic power being concentrated in and wielded by any particular group, thereby resulting in inequitable conditions and stifling of competition and choice. A spread of economic clout is necessary to ensure a balanced, healthy and sustained growth of the economy. It is thus timely that the Entrepreneurship and Internationalisation Sub-Committee (EISC) has made several recommendations that seek to promote a level playing field and provide fair competition and fair opportunities for all enterprises, big and small, Government and private, to succeed. Similarly, Temasek Holdings' declaration of its Charter is a positive move that provides better clarity and transparency in Government philosophies and dealings. Madam, my vision and hope is that, over time, we will create an open, competitive economic environment: (a) where GLCs and SMEs will work closely together and symbiotically to build a vibrant and thriving economy, both domestically as well as externally, where each has a stake and each plays a complementary role, and where one is comfortable dealing with the other, because of mutual trust, understanding and respect; (b) where GLCs understand and focus on their core businesses, strengths and competencies and tap on, partner, groom and nurture SMEs to break new ground, develop innovative ideas and technologies and venture into new businesses, markets and customers together; (c) where the distinction between GLCs and local enterprises become increasingly blurred, as these terms become interchangeable when GLCs get divested, publicly listed or bought out by management or private equity, and budding local enterprises and start-ups form joint ventures with GLCs or get acquired by GLCs, groomed, nurtured and get spun off again. However, based on the comments and anecdotal stories told by local private business people of their encounters with GLCs and Government agencies, I fear that we are still a long way from reaching and achieving such a happy state of coexistence. I sense that there may be a divide between the management of GLCs who pride themselves in having a strong culture, good corporate governance, transparencies and checks and controls, and the bosses of SMEs who feel proud being brash, daring, nimble and entrepreneurial. A lot more needs to be done and must be done to bridge the divide. Otherwise, the divide will widen into a gulf filled with misunderstanding and distrust, where each side refuses to work with the other nor share information or resources and prefers to work with its own kind, or simply goes its own way and does its own things. This is divisive. We will not have a cohesive front to tackle our economic challenges. On the whole, we will end up the poorer for it. More needs to be done for GLCs to actively engage SMEs and gain their trust, and for SMEs to improve and upgrade to secure the confidence of the GLCs that they are up to the mark and will be able to deliver. What is the situation existing today? Today, more so than ever before, I find that our local private enterprises are fearful of the competition coming from not just the GLCs but corporatised Government agencies and larger companies as the domestic market place becomes increasingly crowded and keenly competitive. The common complaint is centred on having an unlevel playing field and being crowded out. Our smaller local companies find it hard to compete against the GLCs who have, over the years, as a result of financial prudence, sound management and proper controls, grown even stronger, leaner, hungrier and better managed than ever before. I recall that at the millennium conference held a couple of years back, when asked by a member from the audience about competition from GLCs, Senior Minister of State Khaw Boon Wan, who was then Permanent Secretary of the Ministry of Trade and Industry, replied, "We put good men to run our GLCs well. If a GLC does not perform, we change the man." I think that sent chills down the spines of many of the private sector bosses present then. But having well-managed and competitive GLCs is not necessarily a bad thing. Our GLCs are not necessarily a bad thing to building internationally competitive Singapore companies. It was mentioned that, in the past, we did not have sufficient private capital to fund the likes of SIA and NOL, and therefore the Government had to step in to provide the necessary funding. And that times have changed and therefore the Government should not be involved in business nowadays, and should leave it to the private sector. But if we think about that, even today, if we see the future is in wafer fabrication, which non-Government related industrial conglomerate can come up with the money to take up a meaningful equity stake in a billion dollar wafer fab plant? Can our wafer fab initiative be left totally to the private sector? And if not for the group of Hong Kong investors SM persuaded to invest in the Suntec City, which local group would be daring enough to invest in a Convention Centre the size of Suntec City at that time? Madam, I think the Government and the Government-linked companies continue to have an important role to play even today, to build world-class international companies. If, for example, there is good business in a particular area, should we identify a GLC, promote it, manage it properly, so that it grows to be substantial enough to compete with the best in the world, and then later divest it? Or should we promote a private sector company instead? There is no one common strategy that fits across the broad range of industries. Some industries, like wafer fab, port management and airlines, must at least for now be left to the GLCs or statutory boards. Others like pastries, security systems and trade directories should clearly be left to private enterprise. The question is, where and how they should be involved and still allow room for creativity and private enterprise and entrepreneurship to flourish? And the objectives and rules must be clearly spelt out and be made transparent, and certain anti-competitive practices must not be condoned. My colleague, Mr Ahmad Magad, will tell you that a few years ago when he was planning to set up a factory for his company in the Suzhou Industrial Park, the authority that issues the construction permit hinted to him that if he were to use a related design house and contractor, the permit would be issued in a matter of days. But if he were to choose to use his own designer and contractor, then the permit may take much longer, and even months, before it is issued. It seems that in our regionalisation drive and software transfer to other countries, some of such bad practices have been brought back into Singapore and have slowly crept into our business environment. This is not rampant as yet, but I think a larger company can quite easily say to a supplier, "If you want this business from us, then you must also use our sister company for other services." We must not allow this practice to develop and must nip it in the bud. This is beginning to happen in some sectors, and I hope that we will take the initiative and take firm action to nip it in the bud. While a case can be made out on why the continued presence of GLCs is necessary, it is very difficult to convince the public and rationalise why statutory boards are now entering the market to compete with private enterprises. With the move towards privatisation, liberalisation and deregulation, the Government must maintain a neutral position in order to be effective as a regulator and national agency. Is it not incongruous that SPRING Singapore which spearheads SME development and upgrading owns two subsidiaries (PSB Corporation and PSB Certification) that compete with the private sector? These two entities operate as commercial organisations offering training, consultancy, technology and testing services and certification, leading to complaints of unfair advantage that these subsidiaries have against the private sector consultants. Is there a real need for statutory boards to form companies for them to achieve its mission? A*STAR, the new name for the National Science and Technology Board, formed Exploit Technologies Private Limited, which the Agency has termed as its commercialisation arm. Should CISCO, as a statutory board, venture beyond its armed protection services to compete head on with the private sector to sell alarms and security systems, services and facilities? Madam, what local SMEs greatly need is to have GLCs help open doors for them, particularly overseas. The GLCs have the advantage of brand reputation, network, contacts, connections and deep pockets. The SMEs are looking for a small piece of the action. The feedback from private bosses is that GLCs want to bao chek, that means to take all, and bao yian, that means to win all. If they learn a good idea from the SMEs, instead of working with the SMEs, they would take the idea and do it themselves. GLCs should work hard to dispel and correct this misconception. On the other hand, local businessmen have told me that the MNCs are more open to tapping the local support industries and outsourcing non-core activities to them. Take Hewlett Packard, for example. Throughout the years, it has certainly provided many opportunities to our local businessmen in the electronic manufacturing services and support industry, and given them a crucial leg up to help them start on their way to becoming world-class companies. Not until recent times, when market consolidation pushes GLCs to focus on their core businesses, GLCs were aiming to be conglomerates, growing and expanding into all kinds of businesses with no regard to their strategic relevance. GLCs can gain in harnessing the creativity and entrepreneurship initiative of the local enterprises by partnering them in developing solutions that have market potential. It can be a win-win proposition for both the SMEs and GLCs as a partnership of complementary strength can be forged. Many of the budding technology companies lack the opportunity to build a track record to commercialise their solutions. GLCs and Government can provide the test bed for the solutions to gain recognition. Some of these companies are even willing to forgo commercial gains to build up their track record or even offer options for the companies to take up stakes in these companies. But not many got any headway as most of the GLCs and Government agencies prefer to take the option of DIY (do-it-yourself) or use the tried and tested. If major corporations of Singapore do not support the SMEs, how can we expect them to convince potential overseas buyers? The Government has various grants and financial assistance schemes in place to foster innovation. But what is lacking is the creation of an environment where local enterprises can easily find opportunities to deploy their solutions. Developing project or client references is important. It is also through larger scale deployment and commercialisation that the innovative solution can be tested for its robustness and effectiveness, and stimulate continuing improvements. Madam, local business associations' response to the SME 21 has been lukewarm. The feeling is that SME 21 will follow the fate of its predecessor, 1998 SME Masterplan, which lost its momentum when the Singapore economy picked up and the MNCs returned to Singapore. There is therefore a need to dedicate special attention and focus on SMEs, even though the economy is starting to pick up. In many advanced countries, like USA and Japan, the government agencies set up to look after the interests of SMEs solely. Therefore, this debate on how we can support the growth of our private enterprises and entrepreneurship in Singapore is timely. I believe Singapore entrepreneurs and businesses too have big dreams. The Government and GLCs can act as a catalyst to unleash the potential of the Singapore Enterprise. By supporting the SMEs, we are nurturing a culture and a mindset of innovation and creativity that marks the making of a great nation.

Mdm Deputy Speaker, the Temasek Charter raises an issue which the Minister of State for Trade and Industry, Mr Raymond Lim's Entrepreneurship and Internationalisation Sub-Committee (EISC) dealt with in their recently released report. The main focus of the report is the role of the Government in business. Public discourse has, of late, focused almost exclusively on the issue of CPF after Senior Minister of State for Trade and Industry Mr Tharman Shanmugaratnam's sub-committee released its report. However, I submit that the issue of the role of Government in business deserves equally intense scrutiny from Members of this House and the public. This is because it raises very fundamental questions about the Government's position with regard to the nurturing of local enterprises, the responsibility it places upon itself for shaping Singapore's economic landscape and hence, the nature of government and its relation with the body politic. In my view, the Temasek Charter cannot and should not be divorced from the broader context of what the EISC document discusses. This is also in line with the essence of the Motion before this House. Moreover, it is noted that parts of the Temasek Charter, especially the section on the raison d'etre of GLCs, are in fact similar to those in the EISC document. I therefore would like to deal with both the Temasek Charter and the EISC recommendations in my speech, under what I term as the four "Ds" of the Government in business. The first "D" refers to delineation. We need to delineate clearly the markers for Government in business. This would, among others, help reduce allegations from the private sector of encroachment and crowding out of their businesses by GLCs. The EISC's recommendations regarding the Government's role in business cover not only Temasek Holdings but also individual Ministries and statutory boards. The EISC report is an excellent, well-thought-out and generally balanced report. There are a good number of wise and highly quotable statements from the document, three of which are particularly memorable to me and which provide good rules of thumb for delineating the boundary conditions of Government in business. These are, firstly, "We should not corporatise for corporatisation's sake." I strongly support the EISC's recommendation that statutory boards should as far as possible not corporatise regulatory functions because these are often monopoly functions and will lead to rent seeking behaviour by the enterprise. There would be a natural tendency for the public to perceive, rightly or wrongly, that the enterprise will resist simplifying rules and regulations as this could lead to a loss of revenue in fees and charges. Hence, the often heard refrain that the Government's fees and charges are high and should be cut. The IRAS, for instance, was previously criticised, in The Straits Times of 9th January 1997, for announcing its staff increments and bonuses took into account the amount of tax revenue collected. This led the public to infer that the IRAS staff had every incentive to maximise its tax collection! Like the EISC, I submit that it will be better to keep activities of statutory boards that are strategic to their missions as public functions, even if the activities can be organised to attract commercial returns. We should not corporatise for corporatisation's sake or just because everyone is jumping on the bandwagon. In this respect, if corporatisation is deemed necessary, the EISC mentions the use of the National HealthGroup model, which I wholeheartedly support. The second rule of thumb, as recommended by the EISC, is, "Temasek Holdings should compel GLCs to scale up their core competencies to build global businesses, as opposed to concentrating on the local market to build a diverse range of unrelated businesses." Some GLCs (such as SembCorp Industries and NOL) and corporatised enterprises of statutory boards (such as Ascendas) have already initiated this aggressively. Other GLCs and corporatised entities should also strive to do the same. Their reliance on the local market should be reduced and the temptation to invest in a diverse range of unrelated businesses to improve their bottomline or simply to justify their existence should be resisted. This would minimise the crowding out effect by GLCs which many SMEs complain they suffer from. Over the last three decades, GLCs have proliferated and taken on a life of their own. As noted in Business Times, 3rd June 2002, Singapore Technologies, for instance, has spawned so many subsidiaries that if its new Chief Executive, Peter Seah, were to visit one a day, it would reportedly take him up till 2005 to complete his rounds. Hence, any major attempt to divest or rationalise the GLCs could trigger a chain reaction, upsetting an entire apple cart of entrenched interests, institutional arrangements and corporate culture and agenda. Fortunately, as noted by the EISC, many GLCs are professionally run, profitable, listed on the bourse, and own reputable and thus valuable brand names that should not be destroyed purely to silence the large contingent of GLC critics and cynics. Nevertheless, history does contain some lessons for us. The 70s and 80s were the era of the conglomerate. It became fashionable among businesses in the US to integrate vertically, horizontally, or even sideways, to cover the entire, or even out of the value chain. The result was a mish-mash of business units often unrelated to the original function. The holding company of the conglomerate, in effect, became a kind of internal stock market, allocating funds to its subsidiaries on the basis of financial performance. By the late 80s and early 90s, it became evident that this strategy created large unwieldy corporate creatures without the agility to compete against more nimble firms that chipped away at their respective businesses. Research in the US has shown that the decline of these conglomerates stems from the enormous difficulty of managing a diversity of unrelated operations. The reaction was to return to "core competencies" and a painful dismantling of these large business units. The semi-conductor business, for example, now organises itself around chip designers and foundries which are, in fact, sub-contractors to the former. There is a danger that GLCs and Government agencies may sometimes fall into the trap of acting in the manner of the now discredited corporate conglomerates. I speak from my personal experience. During the heydays of the property market boom in the mid-90s, not a few non-property GLCs were tempted by the astounding profits one could make from property investment. To be fair, GLCs were not the only firms to succumb to that temptation. On hindsight, property investment could indeed have delivered superior shareholder returns, but most firms did not exit quick enough. Thus many of these firms came to grief when the bubble burst, causing them to abandon their grand plans to turn into property players. Many of them have since unwound or are unwinding unrelated businesses to focus on what they do best, for instance, Delgro and NatSteel. Madam, I hope that GLCs will be ever mindful of this chapter of their history and not turn back the clock. The third rule of thumb refers to the well known "Yellow Pages" rule. Instead of endorsing the EISC's recommended Yellow Pages rule, the Temasek Charter has, instead, chosen the opposite route - seeking to build on the best attributes of Singapore's unique GLC's model. Rather than destroying the value of GLCs which first took shape more than three decades ago, Temasek has chosen what is probably a more pragmatic incrementalist approach and eschewed the idea of privatisation for privatisation's sake. Instead, GLCs are to be run as commercial entities. This is not unlike the EISC's recommendations that GLCs should not do national service and only people who can contribute to the businesses of GLCs should be appointed to the boards. The GLCs are to shape up and perform. Otherwise, they may have to be shipped out or, in the words of Temasek's Executive Director, Mdm Ho Ching, be prepared to be had for lunch. GLCs are to focus on core competencies, divest non-core businesses, but more importantly, they are to build significant international or regional business. Businesses that are no longer relevant or have no international growth potential are likely to be divested. I will talk a little bit more about the internationalisation aspect later. Nonetheless, the "Yellow Pages" rule proposed by the EISC would still be relevant in the case of statutory boards, who should adopt this rule to set up enterprises only if the private sector is not providing or is unable to provide a particular service. And I think this was affirmed earlier by the Minister of State, Mr Raymond Lim. In the past, the private sector was underdeveloped and thus unable to provide a host of much needed and vital services. The private sector has now become much more sophisticated and reached a degree of maturity, as evidenced by the likes of Creative Technology and City Development. They have proven to be highly versatile at adapting to and exploiting evolving market trends and technologies. Statutory boards must religiously adopt the principle of not setting up an enterprise unless all avenues to involve private sector enterprises are exhausted. Even so, statutory boards could still seek to be involved with the private sector through joint ventures, or what is currently a global corporate favourite - outsourcing - instead of setting up an enterprise by itself. This would help to create more space and opportunities for the private sector. In light of the above principles enunciated by EISC, I fully endorse the three-fold rationale stated in the Temasek Charter for the Government to be in business. And these are to manage strategic, critical resources, such as water, power and gas; to pursue public policy objectives, such as healthcare, housing and education; and to enable Singapore to sprout a second wing - an external wing - so that we, as a nation, can compete beyond the narrow confines of Singapore's geography, or perhaps to quote some famous words from "Star Trek", "boldly go where no man has gone." Many large, as well as non-listed, GLCs fall into the first two categories - Group A which is what is referred to as Group A businesses - media, water, power, sea and airports. Additionally, many non-Group A category GLCs are already loosely defined in category (3) and referred to as Group B businesses. Let me now deal a bit more with the internationalisation aspect, or what I call, the second D, and that is, Diaspora. I submit that, with some exceptions - notably firms, like the Millennium and Copthorne Group - private enterprise will probably not attempt to enter, much less, conquer, lucrative overseas markets without some nudging from the Government and GLCs leading the way. Hence, Group B GLCs will undoubtedly play a key role in the internationalisation of Singapore's private firms. However, a word of caution is in order here. GLCs must be constantly reminded that they should not internationalise for internationalisation's sake. Based on Singapore Inc's track record till date, Singapore companies that have succeeded in international markets have been rare, and profitable international expansion has even been rarer. But the value of the Singapore brand is undoubtedly high, as experience in rapidly developing countries, like China, demonstrates. There are thus wonderful opportunities for a Singapore Diaspora. GLCs must be mindful that the promotion of the external economy is only justifiable if it generates higher returns than the potential growth rate of Singapore without the external economy. The burden must be on the GLCs to deliver superior returns on the external economy to justify their course of action. Expanding aggressively but blindly into international markets could, instead of improving our economic bottom line, do it more harm. In my view, the quest for a more diversified earnings base by overseas expansion is a necessary but insufficient condition for category B GLCs to internationalise. IE Singapore, whose role is to grow our external wing, should make every attempt to link these GLCs up with suitable local private sector firms willing and capable of expanding overseas in the chosen markets. This way, definite benefits will accrue to both parties, private and public sectors. The third D refers to Detachment. The Temasek Charter has emphasised the commitment of GLCs to be run as commercial entities, detaching ownership by Government from commercial-minded management. Furthermore, they are to strive to be truly international businesses, with clear strategies on how to get there. Similarly, the EISC's recommendations also favour a commercial approach for GLCs. Indeed, Temasek's choice of the term "TLCs" to describe its large and formidable stable of companies seems to reinforce its desire to de-link itself from the Government. But the question is: "Can it really do so?" As the EISC notes, Temasek should make a conscious effort to cast a wide net to attract world-class managerial talent into GLCs, foreign or otherwise. Indeed, Temasek could bring more private sector directors on the boards of its companies and management to ensure a good mix of people, able to give different perspectives and ensure that the companies are run on sound commercial principles - delivering commercial returns. To allow a good mix, Temasek should avoid appointing too many Government and SAF scholars - undoubtedly highly intelligent, driven and capable people - to the ranks of senior management of these companies. Undeniably, many of them have subsequently carved out sterling careers in the private sector. However, even though these people are placed in the private sector, they may not necessarily be of the private sector. Scholars carefully groomed by the system and attuned to the culture of the public sector, parachuting into key positions in GLCs, may have a propensity to carry with them a Government mindset that does not sit well with the workings of the private sector. I submit that there should be a greater degree of intermingling of public and private sector talents in GLCs. It must never be construed as a zero sum game when a public servant is lost to the private sector, and vice versa. Indeed, the intermingling will serve to enrich both. The fourth and final D refers to Divestment. While supporting the spirit of divestment where appropriate, the Temasek Charter does not spell out any definite divestment timetable, as some of my parliamentary colleagues have alluded to earlier. Instead, Temasek notes that it has been progressively divesting its stake in non-strategic companies and listing some companies to broaden their ownership base. It also states that it will continue to rationalise and consolidate its shareholdings where it is opportune to do so. The argument for the lack of a definite divestment programme is the need to achieve the best price for the unit being divested. If market conditions are not right, it makes no commercial sense to do so. Mdm Deputy Speaker, whilst I agree that this is largely a reasonable path to take, and I am certainly not advocating a great GLC sale, we have to be mindful that the cost for not divesting soon enough could be even higher, and that is the killing off of private enterprise. As a compromise, I suggest Temasek perform an annual divestment audit, taking into account other than the usual factors, like capital market conditions, strategic relevance and likely price, the impact on the private sector of divestment or otherwise. Further, subject to suitable safeguards, the divestment audit could be tabled in Parliament for debate. This is another way of putting in place what the EISC has itself recommended - mandatory periodic housekeeping. In the divestment programme, Temasek should also not be averse to the dismantling of its companies. Size, though useful, is not always a competitive advantage. Specifically, there should be a proper cost-benefit analysis to determine if the break-up value from the different logical parts of the business exceeds the value of the entity as a unified whole. In saying this, I must state that I am not against size for its own sake. I also recognise that the competition law that the EISC speaks of, operates only to break up the abuse of monopoly power, not monopoly itself. But quite apart from what the future competition authorities can and will do, Temasek itself, as arm of the Singapore Government, should proactively ensure that the actions of its subsidiaries do not stifle private enterprise through the sheer weight of its size and market power. Another model I support is the management buy-out which has been proposed in the recent case of NatSteel. There is a need for Temasek to act more decisively in its divestment programme, lest the Charter be construed as mere talk without action. In conclusion, I would like to applaud the efforts of the relevant parties in preparing both the EISC documents and the Temasek Charter. Since Temasek was formed in 1974 as the Government's investment holding arm, it has grown to include more than 60 major companies, with subsidiaries and associate companies in almost every economic sector, with a workforce of some 150,000. This is more than twice the size of the entire civil service, which is currently reported on the website as about 60,000 strong. Furthermore, the top 22 GLCs are reported to account for 13% of the country's gross domestic product in 1998. GLCs are thus indeed very significant and play an important role in Singapore's economy. Madam, I submit that times have changed. GLCs will need multi-industry knowledge, technology assessment capabilities, and financial expertise well in excess of what it now has. Recall the lessons of the conglomerate and its demise. Recognising that the private sector provides the best seedbed for enterprise and innovation, it will need all the space it can get - physical, financial and economic. In this regard, the business of government is ultimately not government in business, but government for business - planting, watering, pruning, nurturing - to grow and nurture the future heroes of capitalism that will spearhead the next stage of Singapore's economic development and, in the process, we could convince more would-be quitters to be stayers. Madam, I therefore support the Motion. 7.05 pm

Mdm Deputy Speaker, I rise in support of the Motion to implement the recommendations of the Entrepreneurship and Internationalisation Sub-Committee (EISC). I fully support the recommendation to redefine the role of Government in business and to call on the Government to support local private enterprise. I particularly like the idea that Government-linked companies should work in collaboration and partnership with small and medium enterprises to complement their business rather than to compete with them. Much has already been said in Parliament as well as outside as to how GLCs stifle and crowd out private enterprise. However, I would like to say that it is equally important that we do not over exaggerate the negative side of GLCs because, by and large, they have not done too badly. They have done quite a good job. They are run professionally, efficiently and also profitably. They provide a lot of jobs for our people and they also contribute to a significant part of our GDP, some 13%. A handful of them - I am glad that bouquets have also been thrown at GLCs - have helped Singapore establish its international brand name. And it is because of the good reputation caused by GLCs, a lot of local enterprises have been helped in their marketing efforts overseas. Because of the hue and cry and criticisms levelled at GLCs, some of them have already begun the process of collaborating with local enterprises. The logistics arm of SembCorp Industries teamed up with Goodpack to make use of their specially developed metal containers to international bulk carriers. We also have CapitaLand with Kinderkids World providing childcare services at their properties abroad. All these are positive developments and ought to be acknowledged. Of course, a lot more can be done and a lot needs to be done. Whether private enterprise would have flourished without GLCs is a moot point. But it is clear that GLCs were formed at a time when private enterprise was either unwilling or unable to get into businesses which GLCs went into. Of course, there are many instances where GLCs slipped their fingers into one pie too many. But most of that is the past, and I think they are also embarrassed. So, let us not harp on it. Let us move on and find the proper solutions. The recommendations of the EISC as well as the New Temasek Charter recently unveiled are all steps in the right direction. There is a recognition that Singapore today is not quite the same as it was many years back and, in the new situation, the role of Government in business needs to change. This role, however, need not be changed so quickly and so drastically. Some of us may think that the remaking of Singapore is all about turning Singapore upside down and inside out, but life is not quite so simple as that. Some things can be done, some things cannot be done, short of shooting your own foot. GLCs, because of the magnitude of their presence in the marketplace, it would be imprudent to have a sudden divestment of businesses worth billions of dollars, involving hundreds and thousands of jobs. This will surely destroy shareholders' values, and shareholders are Singaporeans. It will destroy shareholders' values and it will destroy jobs. This will not be good for us and clearly, it will not be the right step to take. So, we need a much more well-managed and organised approach towards divestment, and I am glad that the EISC as well as Temasek Holdings are taking the positive and right steps in this direction. What is much more important is the development of the entrepreneurial spirit. This is not an easy task, but steps are being taken. They are pushing this goal, but we have to recognise that it is going to be a long haul because we are starting fairly right from the bottom. At this juncture, I would like to share with the House a report published by Global Entrepreneurship Monitor (GEM), which is an international body which tracks entrepreneurial activity worldwide. In its 2001 report, it compared some 29 countries. We fared not so well. We were ranked 27th out of 29. In its 2000 report, we were 19th out of 21. So we are quite far away from the Number 1 position which we would like to occupy and boast about. Why is this so? Critics of GLCs would probably jump at this and say, "I told you so! GLCs are crowding off local private enterprises." But the real reasons are quite complex. The GEM report recognises that Singapore has a rather unique challenge and handicap. This is because, as Mdm Deputy Speaker has said, we have a rather small domestic economy. This means that, by necessity, businesses must venture overseas in order to acquire a size that matters. Businesses may argue that if they have had the entire domestic economy to itself, small as it may be, it will give them that start-up advantage. But we have to remember that we operate an open economy. If we do not compete against GLCs, then we will have to contend with MNCs. So, in a way, the GLCs provide a check against MNCs. But, whatever the reason might be, there must be a recognition that because of the smallness of our economy, businesses must, by nature, strike out and acquire a size that matters. The GEM report also noted that the Government has already promoted entrepreneurial activity in the technology area. This is a good practical approach, because it is in the cutting-edge of technology and life sciences that we have the greatest chances of success. But even this approach has its pitfalls, as the Internet bubble has taught us a few painful lessons. But the point here is that by playing safe, focusing on a few technology companies, we are actually also going against the grain or the spirit of entrepreneurship, which is not being afraid to fail. Therefore, I would like to urge the Government to promote greater entrepreneurship. It is not just about high-tech; it should also be medium-tech, low-tech and no-tech, because the whole spirit of entrepreneurship is also about the spirit of self-reliance. If we look at the products and services we use everyday - the food we eat, the clothes we wear, the chairs we sit on - these are no-tech businesses. These are services and products provided by businesses with a few thousand dollars or millions of dollars of turnover. But one thing is common. They are started up by entrepreneurs, either out of necessity or out of a passion, ie, their ability to know that they can do something better than others. So, whatever their motivation, it is important that we encourage and support them, because it is out of a large pool of entrepreneurs that some superstars can emerge. We can use the analogy in football, I suppose. Brazil has won the World Cup a few times, and this is because an entire nation is just crazy about football. So, they have a lot of footballers to choose from. All young Brazilian boys play it on every piece of land that they can find. We also celebrated a trawl of four goals in the recent Commonwealth Games. We won in table tennis and badminton, games which are not entirely popular with Singaporeans. But we won because of imported foreign talent. That is not so bad. And this is the same formula which has won us many goals for our economy. We won because of foreign direct investments, and this has helped us to achieve remarkable growth. But this is not quite the same. We could have continued this strategy, but the landscape has changed. So it is important that we grow more local entrepreneurs. But it has to be also noted that there is a direct correlation between foreign direct investment and entrepreneurial activity. The GEM report noted that, in the case of Belgium - only Belgium and Japan were ranked below Singapore - it was a country whose economy is very highly dependent on foreign direct investment and international trade, its entrepreneurial activity is abysmally low. So, critics said that this was due to the fact that foreign direct investments just make entrepreneurial activity less attractive. But the GEM report also noted that Belgium did not quite help itself in terms of entrepreneurial training to help shape attitudes and behaviour. So, entrepreneurial training was only present at the undergraduate and graduate level, but it was totally absent across the system relating to primary, secondary and pre-university level. Therefore, it just did not stimulate the attitudes which were so vital for an entrepreneurial mindset and environment. So, perhaps, we too can look at our own education system. Our schools now focus very much on academic results, and our vocational institutes, on technical skills. This orientation has obviously served us well for many years. We will continue to require brilliant academics, competent technicians but, at this stage, we need something more. So we need to weave into our education system creativity, entrepreneurial attributes like dare-to-dream and dare-to-fail. That way, we can develop and shape attitudes amongst our young. I would like to end by looking at which are the countries which are ranked well, and what are the lessons we can draw from them. The dark horses were Australia, New Zealand and Mexico. I call them dark horses because they do not really have exactly high-profile economies. But they were ranked very highly in terms of entrepreneurial activity. And this was attributed to the fact that there was a high level of government awareness in this area, promoting entrepreneurship and having an active engagement with entrepreneurial leaders as well. In the case of Mexico, its economy was very much dominated by large public and private monopolies, and yet entrepreneurship is very much alive and thriving. This is because these large public and private companies actually outsource their activities to the small independent businesses which are able to run in a much more agile manner. Hence, the point made on outsourcing many times over. Korea was also ranked very highly and this was due to the fact that it was able to address the problems surfacing from the 1997 Asian economic crisis very well. It was able to develop very specific measures, in particular to develop new businesses. As we remake Singapore, I think there are lessons to gain from the Korean experience. Lastly, the great entrepreneurial star - the United States of America. It has been a star for many, many years. This is because its culture embraces change and opportunity seeking. Entrepreneurship is very much regarded as an accepted and highly respected occupation and failure is regarded as an accepted learning experience. I think we too can develop a culture which embraces change and opportunity in a big way. We too can make entrepreneurship an accepted and highly respected career and we too can make failure an accepted learning experience. Along the way, we must have Government incentives and support. We must have laws and regulations lightened. We must have the GLCs now working more and more in collaboration and in support of local enterprise. More than that, we need a complete transformation of the entire nation's attitude towards entrepreneurship. It is a good start. It is a long haul but it is very encouraging. On that note, Mdm Deputy Speaker, I support the Motion.

Mdm Deputy Speaker, I would like to support the Motion by Mr Leong Horn Kee and Mr Inderjit Singh and share in their request for the Government to consider the implementation of some of the key recommendations of the EISC on Government in business. The other speakers ahead of me had spoken persuasively on the merits of the recommendations and also commented on the need for Singapore to encourage the development of entrepreneurship and local enterprise and I need not elaborate again. The GEM report has accumulated evidence from their research over several years that documents the significant relationship between entrepreneurship and national economic adaptation and expansion. From the GEM report, it does appear that in less-developed and developing countries where the economy is less dependent on international trade, where there is less extensive social welfare system and the women are less empowered in the economy, necessity entrepreneurship dominates and it is positively related to the state of economic development. India ranks very high in this score. On the other hand, in the more developed countries, opportunity entrepreneurship dominates. The GEM report finds that the rate of opportunity entrepreneurship is higher where there is reduced national emphasis on manufacturing, less intrusive Government regulation, higher prevalence of informal investors and a significant respect for entrepreneurial activity. In this aspect, the USA is a case in point. As my colleague had mentioned earlier, Singapore has one of the lowest rates of entrepreneurial activities amongst the GEM 2001 countries. Many unique national features were earlier cited to explain the lower level of entrepreneurial activities in Singapore. These features are embedded in our social and economic systems and we need to actively implement some of the key recommendations of the EISC report so as to create the necessary mechanisms and structures to improve our rate of entrepreneurship activities. In view of our national goal of creating a more vibrant and more diverse economy, we need to increase the rate of public and private investment, devoted to entrepreneurial activity so as to accelerate innovation, technological development and job creation. In the Singapore economy, there are 103,000 SMEs which make up some 90% of all establishments and employ 50% of the workforce. These SMEs contribute only 35% to our GDP, whilst MNCs contribute 45% and, as I understand earlier, the GLCs contribute some 13%. This formula had worked in the past but we need to continuously improve the share of private entrepreneurial activity and create an environment whereby local enterprise can develop the capabilities, resources and size that would allow them to compete in the regional, if not, the global marketplace. The creation of such an entrepreneurship society can only benefit Singapore's economic development. As Singaporeans, we are heartened at the success of our GLCs, particularly in their ability to move into the knowledge, technology and capital intensive sectors, both locally and also in the international arena. GLCs were set up to spearhead the development of the Singapore economy and they had fulfilled their mission. That said, I hope that the GLCs would continue to play a role in spearheading the remaking of the new Singapore economy. We appreciate that Temasek Holdings had come forward and shared their new defined Charter and articulated the role of the Temasek-linked companies to all Singaporeans. However, I would like to urge the other sectors of the GLCs including the labour-linked companies (LLCs) (some of my colleagues call them NLCs), the statutory board-linked companies (SBLCs) and the press-linked companies (PLCs) to follow the example set by Temasek and share their strategic roadmap with Singaporeans. I believe that such communication would address the anxiety of the local enterprises in terms of the perceived unfair competition from GLCs. TLCs had communicated and informed Singaporeans that they intend to spearhead the development of enterprise and to partner other non-TLCs, including local SMEs, when venturing into more knowledge-based activities and regional markets. TLCs, in this instance, can play the role of the big brother or sister, where the case may be, to invest value-add and partner with the private sector to groom viable local enterprises to compete effectively in the regional arena. I am sure that local SMEs would look forward to further dialogues and exchanges with TLCs to work out effective and profitable collaborative arrangements. I also hope that over time, our local entrepreneurs will associate TLCs with the acronym, "tender, loving care", signifying a more pro-business Singapore. There is a renewed marked shift globally towards private-public partnership (PPP) as an engine for growth. PPP recognises that both the public and private sectors have certain advantages relative to the performance of specific tasks. Thus, by allowing each sector to do what it does best, public services and infrastructure can be provided in the most economically efficient manner. In the United States, over the last couple of years, there have been much renewed intense discussions on how the Government can work better and cost less. Recently, this focus has led to discussions as to whether or to what extent the private sector should be performing many of the functions currently performed by the Government. With budget deficit reduction and the downsizing of Government agencies, the American attention on privatisation, competition and efficiency has greatly increased. In Ireland, PPP has been widely implemented, initially through modestly scaled projects, with the aim of combining the best of public and private sector expertise to create value for money and quality outcome. PPP has been encouraged through many economic sectors, such as housing, education, healthcare, local service, public utilities and transport. According to the GEM report, Ireland has the highest total entrepreneurial activity within Europe. The World Bank has also articulated their emphasis on private sector participation as engines for growth. In recent years, the World Bank has encouraged private participation not only in infrastructure development but also in human services, most prominently in education, healthcare and social security. As Singapore faces major technological transformation and a maturing economy, both the public and private sectors must share the responsibility of defining new national strategies that would unleash human creativity to enable us to innovate and adapt technologies and opportunities to our own needs. Singapore needs to build our own model for public-private partnership. Thus, it is also timely for our public sector to review the potential of PPP in their activities and to share such visions with Singaporeans. However, the experience of other countries has reminded us that though the opportunities for privatisation are plentiful, the path to successful business relationships and implementation of PPP nevertheless would face many challenges. I believe that for PPP to work in Singapore, we need to realistically identify the hurdles to successful PPP implementation, to develop the administrative structure to enable PPP to put into practice and to formalise an incentive system that would foster collaboration and cooperation between the two sectors for the benefit and long-term needs of the nation. The success of PPP in Singapore would depend to a large extent, on a well-thought out charter and plan that is effectively communicated to different stakeholders such as the one articulated by Temasek recently. I hope that the other GLCs and relevant Government agencies would also share their plans with us in the near future. Unlike TLCs which would primarily play the role as the co-investor, other public sector agencies can participate in many other forms of PPP which may include outsourcing, contract services, build, operate, transfer, and many other types of PPP. Successful PPP can only result if there is commitment from top public officials who are willing to be actively engaged and support the concept and taking a leadership role in the development of such partnerships. Equally important is that the private sector partners must have the relevant skills and experience in the specific area of partnership being considered. Once the partnership has been established, the public sector must remain actively involved in the programme or project not only in terms of monitoring, but also in value-adding. As such, PPP will provide the platform for the creation of more opportunity entrepreneurship, thereby enabling Singaporeans to continue to expand our economy through increased entrepreneurial activities. I would like to reiterate, Mdm Deputy Speaker, my support for the Motion proposed for debate this afternoon.

Mdm Deputy Speaker, thank you for allowing me to speak on the Motion. Perhaps I would start by giving an analogy which encapsulates my opinion on the debate on GLCs and the SMEs. In an ecosystem, there is a dynamic complex of plants, animals and micro-organisms and their non-living environment interacting as a functional unit. Each, regardless of size, has a role to play in the web of life. For example, in the ocean ecosystem, the oceans support a wide variety of plants and animals which co-exist in relative harmony, each fulfilling a specific niche and role they have in the ecosystem. While in any ecosystem there is competition and survival of the fittest, there are also symbiotic relationships. The ecosystem is really a matrix of inter-relations, not just a singular approach or formula. Take, for example, the little cleaner fish in the ocean. How does it survive? Often, tiny micro-organisms fasten themselves to a big fish and make sores on its body. When this happens, the big fish goes to a coral reef where the cleaner fish lives. The cleaner fish hunts all over the fish body, and helps the big fish by eating all these tiny micro-organisms and, in this way, the cleaner fish gets fed and the bigger fish is spared the discomfort. An economy is similar to the ecosystem. As such, there is a place and role for large corporations and smaller enterprises. The difficult part is how do we go about this balancing act. Let me share with the House my thoughts on this. Rather than just levelling the playing field in Singapore for the SMEs, there should be more constructive ways to help them grow, compete and survive beyond our shores. The Chinese proverb - give a man a fish, and he would eat for a day; teach a man to fish, and he would eat for the rest of his life - is very true. There is no level playing field in the economic world anywhere. So, why create an artificial environment that will only ensure local survival? What is at stake is continued and global survival. Here, I believe there are two key elements which are critical to any GLC versus SME debate. The first is the definition of our economic ecosystem. We must realise that the playing field is not just the domestic market. Rather, the economic ecosystem is well beyond Singapore. We must not run the risk of debating how we should compete locally, ie, keeping the balance in our pond ecosystem while the larger ocean ecosystem, which is globalisation, washes us over and leaves us in its wake. In our discussions, we must be mindful that the mission is building establishments out in the world for our descendants, so that wherever we decide to stake out, there is always HQ Singapore. To have such global ambitions, we need a strong home base, just as the SMEs want to build a strong home base, so we should not deny the GLCs the same. A strong home base will better prepare our companies to take on the world. There is an incessant cry that SMEs are being crowded out. When faced with Goliath, David may have just cause to cry foul. But, paradoxically, organisational ecologists have observed empirically that increased dominance of large firms actually creates an environment that is hospitable to the entry of smaller specialist organisations. The August issue of Stamford Business further reported that this is seen in industry after industry - breweries, airlines, auditing, music recording, newspaper publishing, manufacturing of hard disks, etc. As large generalist firms tend to go for the market centre, niches appear around the periphery. In beer parlance, the small craft brewers moved in to provide consumers with a wider variety in taste, colour, form and serving temperature. The vibrancy of the local business landscape is borne out by the statistics. In the 10 years, from 1988 to 1998, the number of SME establishments grew by 59%. The same organisational ecologists also subscribe to the red queen theory. Remember the red queen in Lewis Carol's fairytale "Through the Looking Glass". The red queen seems to be running but actually staying on the same spot. What it means is that competition is good, in that a company is forced by direct competition to improve its performance, in turn, pressurising its rivals to do so, thereby creating a virtuous cycle of learning and competition. A research has revealed that a lack of domestic competitive experience is a critical disadvantage when a firm is thrust into global competition. Hence, a competitive landscape must be nurtured. So, it is not a question of snuffing out the big boys, neither is it that the SMEs do not have a role in embracing and enhancing Singapore's competitiveness and economic growth. Rather, let us see how we can harness the strengths of the GLCs to nurture and promote the SMEs, so that they can also get bigger, stronger and fly the Singapore flag in the world. Coexistence of the GLCs and SMEs would have to be the way forward, honing our capabilities within our shores, so that once we foray abroad and leaning on brand Singapore, which is one that is already recognisable, one with high regional and global awareness and standing for efficiency, fair dealing and transparency, we will have a much better overall chance of success and survival. Competitive coexistence Here are some of my suggestions. First, let us network and talk. So, what is so difficult about this especially where we proactively do this with overseas businessmen and potential partners? Strangely enough, I suspect that we do not do enough of this between the GLCs and SMEs. We need a bridge to connect the GLCs and SMEs. Through this bridge, ideas can be exchanged, lessons learned can be shared, new business thoughts may spring forth and partnerships may blossom. These partnerships may be between GLCs and SMEs or even among the SMEs themselves. Perhaps IE Singapore can be the business SDU to bring these parties together. Or the Chambers of Commerce and industry associations can act as catalysts. A forum needs to be created. Just as our successful SDU has dinner talks, tea parties, social activities and match-making capabilities, this business SDU can do the same for GLCs and the SMEs. Secondly, GLCs can play an active role in helping SMEs venture abroad by partnering them when they seek new pastures. A business associate, which I think was also mentioned by an earlier colleague, shared with me the observation on Taiwanese businesses venturing into China. When these businesses have identified opportunities in China, they bring along their suppliers with them. Together, they almost replicate their entire supply chain in China, ensuring a better chance of success. They work with people they know best. They link hands and venture out together. It is a united approach with all parties benefitting - an interesting business model worth considering for us in Singapore. Our GLCs have a strong home base and are better placed to venture abroad. They also have the management and financial capabilities. So, what is stopping these GLCs from bringing along their local suppliers along with them? It may mean to be more proactive in identifying good SME suppliers with potential to be part of a winning combination. It may also mean helping these suppliers by equipping them with the know-how to improve their efficiency or management, so that they are more ready to weather the perils beyond our shores. This will help shorten the SMEs learning curve by being able to piggy back on the GLCs. In SME 21, the often mentioned structural weaknesses of the SMEs tend to be centred around inefficient use of technology, outmoded methods of production, limited ability to tap economies of scale, shortage of professional and technical manpower, insufficient management know-how and professionalism. I believe the emergence of a partnering culture between the GLCs and the SMEs would mitigate, to a large extent, these structural issues. It has to start with the building of trust. The SME 21 plan intends to treble the number of SMEs with sales turnover of $10 million or more to 6,000. With such growth, I believe that there are great opportunities that exist, and these cannot remain untapped, just because no one makes the first move or we are focusing our energies on only competing amongst ourselves. IE Singapore's Network China has been successful and Network India is being set up. Can the GLCs not partner some SMEs and tap into these markets together? Perhaps IE Singapore can play the matchmaker, and it must have mechanisms in place, so that the concern of appearing to be partial whenever one SME is being selected over another does not hold back initiatives. Clusters created to foray overseas must be based on good business case with the best chance to win. To consciously make this happen, we should reorientate our view of GLCs and judge them on how much their business is derived offshore and how many local SMEs they have spawned or partner with in their ventures. Singapore is an economy that has seen a rapid transformation from third to first world in one generation. It is unparalleled. We are unique with unique strengths and constraints. In short, we learn from others but we need to adapt. In trying to transform, we must not throw out the baby with the bath water, as this is said three times today. We must not slay all our sacred cows and then discover that the alternatives are stillborn. In conclusion, we must remember that we are Team Singapore. In a team, there are defenders, midfielders and attackers. The ultimate goal is that Singapore should win. In-fighting amongst the players to get choice roles will just jeopardise our chance of winning. We are Team Singapore and in the SME 21 plan, which is characterised as a partnership between Government, Chambers of Commerce, industry associations and the private sector, it should also be expanded to include the GLCs as well. We are no longer only playing home matches. We are in a global match. And in the away games, we must train to win. While the debate is on GLCs, I think there is and must have resolve to ensure that the momentum behind SME 21 does not fizzle out. We must stay the course. As in the ecosystem analogy that I started with, a symbiotic relationship with competition in specific niche areas will have to be one of our formulae for going forward. So, in the Motion which supports competition, which nourishes the spirit and culture of partnerships, and which squarely sets the sight on the external wing, I am supportive.

Mdm Deputy Speaker, thank you for allowing me to join in this debate. The raison d'etre of GLCs and Temasek has been well documented. The reasons for the GLCs' existence was when the SMEs were not able to access capital on their own, or there were insufficient entrepreneurs that had the capacity to risk large quantum of capital. Singapore then needed the GLCs to build up the strategic industries to put Singapore on firm economic, social and even political pedestals. It was for the sole reason of survival, and the GLCs have done a good job. In fact, they were so good at what they do that, over the years, the GLCs have grown to cover a multitude of business enterprises - many of which are perceptibly to be in direct competition with the private sector. After 37 years of independence and rapid economic growth, our private sector is also a lot more mature and capable. Coupled with the challenges of the new economy in the global playing field, we need to re-examine our modus operandi, and make relevant the roles of both the GLCs and the SMEs, so that we, as a nation, can strive and thrive. Interestingly, I also have an analogy which is based on the ecosystem. Since we are an island, please allow me to use the analogy of fish and water. The GLCs are like fishes that were originally introduced to a pond to promote life, to promote growth. Over time, it keeps spawning and while the pond can still maintain an ecological balance for coexistence, it remains placid. However, when the spawned fishes begin to grow and become overwhelming, the ecological balance within the pond is disturbed. It has now reached the point where the pond has become too small for this growing ecosystem. In order to survive, the big will eat the small fishes and even compete with its own kind to survive. The ecological system is out of balance. Scepticism and Distrust: Playing Field Madam, the private sector reckons the GLCs to be the fishes that have multiplied and grown to a monstrous size in a small pond. Willy-nilly, there appears to be a two-way scepticism and distrust between the big fish (GLCs) and the small fish (SMEs). In fact, some SMEs avoid contact with the GLCs whenever there is a business opportunity for fear that the GLCs may muscle them out of the business. This may well be true as GLCs function as a profit organisation, and have often demonstrated that new entities can be created whenever they want to take advantage of an opportunity. Without the necessary financial muscles and network, the SME simply cannot replicate companies with the same speed or size that GLCs can. To illustrate, we have a GLC that prepares, manufactures and distributes food, ranging from chilled meat, ready-to-go meals and even right up to hog auction and abattoir. The original raison d'etre of this GLC was one of strategic defence. But how does the slaughtering of hogs contribute to the defence of Singapore? GLCs are also found in other non-strategic industries, for example, Internet Service Provider, travel agency, supermarket, real estate development and management, IT and business consultancy, systems integration, outsourcing networking, e-commerce, and so on and so forth. Even more recently, HDB, via its subsidiary firm, HDBay, is also getting into the Local Area Network business! In fact, if we include the NLCs, which is a term coined by Mr Leong Horn Kee, they provide goods and services from cradle to grave. Can we really blame the SMEs for keeping a distance from the GLCs? Perhaps, to be fair to the GLCs, such companies were created so that the GLCs can have better control and it could be part of the risk management strategy. But this is also precisely where the problem lies. If we want to cultivate entrepreneurship, then this mindset must change, both on the SME side and GLC side. Some things are indeed much better left to the private sector. And we need to have more faith in the market forces. Foster Culture of Partnership Beyond SMEs, beyond GLCs, we as a nation in challenging times must come to sell all enterprises as valuable to our economic aspirations. We need to see a vibrant culture of cooperation and partnership between GLCs and SMEs. They both can and must play their role in the remaking of our economic thrust and should receive equal facilitation and support from the Government. To continue on my imagery analogy of the fish and water, I would like to see the Government, and perhaps even Temasek Holdings, provide the lead to ease the congestion in this small pond, by digging a trench that would provide alternatives to the contents of this small pond into the open sea of the global economy. Once the monstrous fishes in this small pond enter the open sea, they may no longer be that big. This is where the GLCs and SMEs can come together, support each other and assert themselves in the new environment. I urge the Government to adopt the recommendation of the EISC to "encourage a culture of partnership between GLCs, MNCs and SMEs and adopt a cluster approach when venturing overseas; and raise the profile of the Local Industry Upgrading Programme (LIUP) and expanding it to promote internationalisation." We need a paradigm shift, we need to promote partnership as a multiplier, and not a zero sum game. In fact, as Mr Inderjit Singh had also said, we need to leverage on each other's strength, in order to grow. The SMEs, given their business instincts and acumen, can sniff out the business opportunities while the GLCs can also support with their know-how and process expertise. The GLCs, with their good brand name, can also pull the SMEs along while establishing a beach-head on foreign soil. Madam, I urge that the Government also urgently facilitate outlets for these monstrous fishes and guide them towards the open sea. The movement of these monstrous fishes would stir the seabed, throwing up planktons and living organisms to feed the smaller fishes. In time, these smaller fishes will be able to grow, be able to fend for themselves and even establish their own pedigree, their own brand. I do not support the exodus of GLCs, but that GLCs should stick to their original reason for existence, and divest the non-core businesses at a reasonable price over a reasonable period of time. May I also add that any drastic movement may also upset the ecosystem in question. I also agree with Mrs Lim Hwee Hua's point that we should focus on the GNP and not just the GDP. I am, however, also mindful that part of the GNP must also originate from the domestic sector. Hence, there is a need to find a place for our private sector, the SMEs and the MNCs, on the continuum between the maximum position of crowding out the private sector and the minimum position of non-interference. A place between the two where we can find the optimum. In a world of rapid changes, this continuum is dynamic, and so is the optimum point. Only when we look at the reason for existence can we then find the optimum point between the two extreme points. I submit to this House, Mdm Deputy Speaker, that unless we consciously and continually seek this equilibrium or this optimum point, we will eventually lose our private sector's creativity and competitiveness. It would be worse if the private sector allows their perceptions, whether rightly or wrongly, to fester and lead to a culture of cynicism. It may lead to an outward movement of not just capital, but also people. May I suggest that we do not let the GLCs take the wind out of the sails of the SMEs, but to help them build and direct the sails to catch the wind instead. Perhaps the GLCs can take some of our SMEs under their wings and start a mentorship programme. Impart their experiences and know-how to the private sector and provide a springboard for our private sector to leapfrog the learning curve. The question, of course, is if both are for profit organisations, then what is in it for me? Why should the GLCs do so? I think besides being a good corporate citizen, GLCs can also profit by taking a minority stake in these companies. In turn, the stake money will enhance the capital base for the SMEs. When the SMEs are successful, they will then in turn give a return to the stake money of the GLCs. This process can also be vice versa where the SMEs could take a minority stake in the GLCs. It could be a win-win strategy. I also support Mr Wee Siew Kim's call for a bridge to be built between the GLCs and the SMEs, perhaps a forum as well and even his call for a business SDU. And I suppose, even if the business SDU can bring together some marriage of convenience, it would have served its role. Another often heard feedback from the SMEs is the lack of support when venturing overseas. Can IE Singapore then act as a facilitator for our SMEs in linking up with our embassies, trade missions or even trade stations abroad, to serve as a launch pad for our SMEs' foray into the foreign market? Our embassies and trade missions are well placed to give an insight, at least, into the culture and local knowledge in these foreign lands. Just like foreign companies coming into Singapore can obtain one-stop information and help from EDB, could IE Singapore or any other Government agencies provide appropriate information and database to facilitate some of these overseas ventures? This would serve our SMEs in good stead, giving them a competitive edge with reliable support and good grade information. If the GLCs have to compete with the private sector, let it then be the objective of bringing up the standards of our private sector. If there is a need for the GLCs to compete, let it then be out of a need and not greed. If there is a need for GLCs to compete, then let it be from without and not within. Mdm Deputy Speaker, I would like to conclude by referring to the latest debate on stayers and quitters. I have had opportunities to speak with many of our corporate citizens who are actually SMEs. These are corporations that have grown over the years. I have sought their permission to quote them. Some of them I am referring to are System Access Ltd, Technology and Apex Systems Pte Ltd and this company called Lindeteves Jacobsberg Ltd, which is one company that specialises in electronic motors, and they are the third largest supplier to Europe. For these companies that I have quoted, they derive the majority of their revenue, in some cases, 100% of their revenue outside that of Singapore. However, they are maintaining an office in Singapore. In fact, there is no compelling reason for them to do so, but they did. The refrain from these corporations was that Singapore is their own. This is the place where they have sunk their roots and this is the place where they would like their children to grow up in. They are here because their hearts are with Singapore. However, they also expressed that if the issues that were brought up by the EISC Committee are not properly addressed, then in the long term, there may not be a lot of stayers purely because it is no longer economically viable to stay in Singapore. Once they start to venture abroad, make their stake abroad, what may happen is in the process, they will start to lose touch with Singapore. And the heart stops where survival is choked. So when they leave Singapore for economic gains, they asked not to be blamed. Quitting is not a sudden decision, but it is a process that may lead to that decision. In the light of these views, I support the Motion.

Resolved, That the debate be now adjourned. [Dr Lee Boon Yang].

Resumption of debate, what day, Mr Leong?

Tomorrow, Madam.

So be it.

Mdm Deputy Speaker, I beg to move, That Parliament do now adjourn. Question proposed.

8.00 pm

I am sorry to keep the House at this time of the evening, but we have no choice and I will get straightaway to the business. Thank you, Mdm Deputy Speaker, for giving me the opportunity to speak on the professionals in the social service sector. I thank the Minister for hanging on right up to this moment. Madam, I would like to highlight the work of these professionals, drawing special attention to their status, their professional growth and the current system in which they operate. First a glimpse into the situation as it stands today. There is a shortage of social workers and we all know that. Just to illustrate the severity - two recent reports in the newspapers attest to this - Straits Times in January and another in June in the NewPaper. Both carried reports that only four out of 10 in every cohort of graduates from the Social Work and Psychology Department at the National University of Singapore actually enter the field to work as social workers. And I am told that in three to five years' time about half from each cohort of these graduates who enter the field to work as social workers then leave the service, often citing burn-out as a reason. Yet, it is estimated in the same Straits Times' article that, each year, 40 new positions go a-begging for social workers. This figure does not take into account the number of vacant positions due to resignations. What do these figures mean in reality? The National University of Singapore admits about 150 students each year major in social work at the Department of Social Work and Psychology. Almost 50 new graduates, qualified in social work, go on to become social workers - that four in 10 figure. Of this group, in three or five years' time, perhaps, only 25 will remain in the workforce as social workers. This is a shortage. It is worrying. Add to it, another dimension. Looking at the nature of the degree in social work under the current modular structure and the liberal arts approach within the Faculty of Arts and Social Science at the National University of Singapore, students can graduate with a degree in social work by fulfilling a minimum quota of eight core modules out of the 24 modules offered by the department. This is well and good for students who wish to diversify and keep their career options open. But when these same graduates enter the social service sector to work as social workers - listening to what academics and practitioners on the ground have told me - they are still lacking in skills that will give them the depth to deal with clients effectively. Hence, the dilemma. A tight labour market where the social workers scene is concerned and new graduates who cannot prepare to go on to further immediate training to become more competent in this field. In fact, figures from MCDS and the National Council of Social Service in newspaper reports two years ago showed that 30% of its 550 professionals in the social service sector do not have social work qualifications. Add to that the current group of community development officers, who number between 10 and 40, at the five CDCs, who work in the community to help the less fortunate, with very few among them trained in social work. So not only do we have a shortage but we also have a situation where some social workers, new graduates, already need more training to function more effectively. Let us also look at another group of professionals who are making their inroad into the social service sector, the much needed group of - the psychotherapists, family therapists, counsellors, psychologists. While these individuals enter the field with the best of intentions, there must also be a way to ascertain the nature of their qualifications to maintain standards within the social service sector. I am told that some of the post-graduate degrees, doctorates and certificates, come from institutions that practitioners do not totally endorse. Moreover, such professionals have many entry points into the service - being appointed by voluntary welfare organisations, schools and other institutions, which having the autonomy make such appointments and peg their salaries to the qualifications and experience. While it is good to have this autonomy it also gives rise to approval of a range of qualifications which has already raised questions at the ground level. Hence, it is my suggestion that the four organisations catering to the different professionals in the social service sector, namely, the Singapore Association of Social Workers (SASW), the Psychological Society, the Society of Marital Therapists and Psychotherapists and the Singapore Association of Counselling, work with the Ministry of Community Development and Sports and the National Council of Social Service to build up a common registry and an accreditation scheme for both short-term and long-term courses, such that officers will be well-qualified and can be employed with similar salary packages pegged to their qualifications that are approved, and come under an approved scheme. I would also like to suggest that the Ministry of Community Development and Sports could also look at infrastructure and beef up an existing organisation - The Family Resource Training Centre - or work with the National University of Singapore to restructure the Department of Social Work and Psychology into a faculty on its own or a training/research centre on its own, akin to the National Institute of Education, that trains teachers. Let me just elaborate the advantage in that. With such a centre, curriculum can be well-planned. There will be enough scope and expertise to expand on programmes, such that existing officers can come back to upgrade their skills and, at the same time, it can also bring on board quite a number of counsellors out there and upgrade them all to a certain set of standardised course skills. After all, what is there to stop this. Because, right now, teachers have NIE, the lawyers-to-be have their own Law Faculty, the medical students have their Medical Faculty. Why should social workers be any different? Such a one-stop faculty, or centre, can handle all matters related to training and accreditation for all professionals. This centre can be modelled after the well-reputed George Warren Brown School of Social Work, an entity unto itself at the University of Washington to which, I think, the Ministry sends quite a number of its officers for upgrading skills. Mdm Deputy Speaker, let me now move on to the second issue here of how we recognise and reward those who stay in the profession. A new social work graduate receives a median monthly salary of $2,114 as the starting salary, according to the Ministry of Manpower's Report on Wages in Singapore 2000, as was reported in the newspapers. A check with VWOs on the National Council of Social Service suggested wage rates show that a social worker with a general degree starts off with a gross salary of between $1,844 and $1,972. A teacher in training gets between $1,967 and $2,144 for the same qualification while training to be a teacher at the NIE. A nurse with a degree in nursing has his/her starting salary as $1,800. The social workers lot is a tough lot, as every profession would say. But I think when you are dealing with the vulnerable in society, it can be very tough on the individual social worker. Hence, the burn-out. Hence, the drop-outs. Hence, the attrition rate. Going further, while these salaries are there, let us look at the workload. Although salaries are perhaps not as attractive as other vocations, the workload of the social worker is not diminishing. In fact, it is increasing. A check with five FSCs for the month of July alone shows that each centre now handles between eight and 10 new cases a month while each social worker manages between 30 and 40 cases per month. About a fifth of these cases are to be closed in a year by the social workers. Social workers average about four at each of these centres. They said their time-consuming cases are those dealing with marital and parenting problems. They said that the cases, especially in the first half of this year, have also doubled because many clients are coming in with their financial problems. So that is the current situation. Going further to policies that have been implemented in recent years. With greater enlightenment and appreciation, the courts today rule mandatory counselling for juveniles beyond parental control, violent spouses and couples going for a divorce. All these cases do land at the social workers door. Going by statistics on social trends, we can see the potential increase in workload for social workers - the number of divorces or separations has doubled in the last 10 years from 1.3% in 1990 to 2.5% in the year 2000; the number of juvenile delinquents had risen last year to 31.4% per 100,000 young people, though arrests have fallen; violence in the home still averages at about six cases every day, according to police statistics. With greater awareness, there will be more reports on rapes, incest, etc, cases that cannot be wrapped up in five counselling sessions, cases that make a demand on the individual social worker on his/her own emotional and psychological make-up and energy. And then there are our national trends. Also, with an ageing population and a widening income gap, all this will just mean more at the social workers door. So what then can we do about all these? To deal with such cases and with rising sophistication in a Singapore client, it becomes very important for the social workers to keep abreast of the latest counselling skills. And also, the MCDS advocates family interventionist programme to handle clients effectively. These are time consuming. So if we just look at all that impinges on a social worker, increased case load, time consuming cases, cases that are becoming more complex, skills that you want to acquire but are too tight for time to acquire and not so favourable salary package, I do not think things sound so rosy at all for the social worker. Coming back to the situation where the salary is concerned, I am told that, currently, the social worker's salary package is a 10% lag behind those senior officers in the civil service. Bear with me, I know time is ticking by, just to study the background a bit on how the salaries have been pegged for the social workers. In 1995, the salaries of social workers were aligned to that of the civil service's Senior Officers' Scheme. In 2000, voluntary welfare organisations (VWOs) adopted the NWC wage adjustment scheme used by the civil service. But then the civil service moved ahead again and further implemented salary revisions for its superscale and timescale officers. Performance bonuses were also introduced. Currently, VWOs are grappling with what it means to have performance bonuses and an appraisal scheme that should follow that. So with all these schemes that the civil service has put in, social workers have to catch up all the time where salaries and performance bonuses are concerned. As social workers work in different fields - in hospitals, in schools, in VWOs and also, now, in CDCs - their salaries are adjusted by the various institutions that they work in. There are disparities, and social workers do compare which institution is providing better for them. This does not augur well for the social workers. It is perhaps timely that the Ministry of Community Development and Sports, NCSS, MOE, MOH, as well as the PA, could come together to plan the career development structure for social workers, as has been done for teachers under the Ministry of Education, look at the salary structures that they should be having as well as the training schemes that they can enjoy and look at a massive recruitment drive, such that this shortage can be weaning the way in the next few years. This, I am sure, the Ministry is already thinking of from what I hear. I would like at the same time to emphasise that recruiting males must also be a top priority here. Because we have a lot of cases of spousal violence, children who need that kind of male role modelling even within the social service sector, male social workers whom spouses can talk to, etc. Currently, we have too few males in the social service sector. So this career development plan, which is in the making I hear, should also look into ways of recruiting males into the service too as their help is needed to offer counselling to violent spouses, many of whom are males. The Ministry is already making some headway. Its efforts are appreciated in that it has increased funding through a VWO Capability Fund of $30 million and recently another $7 million was added for 80 VWOs to run programmes. All this means staff can be paid to run programmes and staff can be retained. Yet, without a systematic structure defining a social worker's career path, the training needs and a revised salary structure that can be applied across employers, these gestures run the risk of becoming band-aids, short-term solutions. Professionals in the social service sector are not volunteers, and it is not morally right of us to look into this issue without trying to give them the best deal when they are coping with a very vulnerable community within our society. In this revision, may I also suggest that the Ministry needs to re-examine its 50-50 co-funding structure that it shares with the National Council of Social Service, the reason being that when it is pegged at 50-50, the Council does not have the flexibility to reward social workers adequately and the cycle is perpetuated. Since I am at liberty to suggest a ratio, I would like to suggest that this be 70-30 or 80-20, so that the whole scheme can improve from a bottom-up approach. The next area which I would like to draw attention to is the role of the social service professional. Because of this shortage, social workers are often functioning as just doers, meaning appraising client needs, sourcing for help, and counselling them. However, we are ignoring a greater and more fundamental role of the social worker - preventive programmes. They are the professionals in the field, with more experience and energy that we can tap on to design programmes. We can use their management skills, etc, to further develop the non-profit sector, get deeper into research, such that the social worker can become a stronger advocate, commenting on the community's needs. We need more Laena Thambyahs to talk about the needs of children with special needs, more Anthony Yeos to remind us about what life is worth, and more Ron Chandran Dudleys to remind us of the needs of the disabled. Their voices must be heard, and the social worker is that advocate for the less privileged and less fortunate in our community. But when there is not enough time and too much work, they run the risk of just becoming doers, and so we do ignore the pleas from people whom we do not normally hear about. I would also like to suggest that we can tap the expertise of the social workers to develop joint curriculum projects with the various Ministries, especially the Ministry of Education, such that communication skills, one of the fundamental problems always faced by social workers, are put into place within the school system in a directed manner. Lastly, I would like to suggest to the Ministry that there is right now a window of opportunity to plug the gap where the shortage is concerned, by enhancing and developing a para-counselling layer with help from NUS, Nanyang Polytechnic and the unions. Using the Skills Development Fund and the Lifelong Learning Endowment Fund, retrenched workers of sound character who can be assessed to be fit candidates ---

Order. Ms Braema, you have used up your 20 minutes.

Can I just wrap up in two points?

No, you have used up your 20 minutes. Dr Yaacob.

Just two points. I will wrap it up. I am not reading. I am just wrapping it up.

Just one minute, then.

Yes. Just that the funds can be used, and I know that there is already one fund for the diploma programme. But the certificate level for Nanyang Polytechnic too can be enhanced.

Thank you, Mdm Deputy Speaker, for allowing me to respond. I would like, first, to thank Ms Braema Mathiaparanam for raising all the suggestions. I do agree with her that social workers are an important professional component in the social service sector. I would like to assure her that as I may not be able to answer all of her queries tonight, we will look into her suggestions and that my Ministry and NCSS will consider actively the suggestion she has made in areas such as social workers' career development and professional upgrading. And to consider some of the suggestions that she has made as we develop a master plan for the social worker community in Singapore. Let me just touch on a few things first, beginning with the last, because that is the first thing that one can remember. The hon. Member spoke about the role of social workers beyond merely being part of the social delivery system, but their expertise and knowledge can be tapped. I certainly agree with Ms Braema that we should look towards the social workers in terms of getting direct feedback and knowledge on the problems they face and the kind of skills that they need. I understand that this is something that is on-going between the VWOs and NCSS where there is constant dialogue and discussion. As to whether or not we can tap their expertise in terms of her first suggestion, of developing a curriculum, I think we should consider it. I am not clear about the format, but it is something which we can certainly work towards. With regard to Ms Braema's point about plugging the gap by ensuring that there are enough para-counsellors, I certainly agree with that. I am not familiar about the certificate programme that she mentioned, but I would certainly look into that as I do know that some organisations have actually looked into training their own para-counsellors because of the shortage of social workers. Mdm Deputy Speaker, the first point the hon. Member has raised is a very important point - the shortage of social workers and how we recognise them. As Members might know, we have launched the VCF $30 million fund. Just to clarify: the $7 million annually is an increase in funding that we gave to VWOs this year. So there is money that is available to the VWOs at this point in time for them to use in terms of research, training, etc. We have also launched, with the Ministry of Manpower, the Strategic Conversion Manpower Programme in order to train people who wish to convert from whatever occupation they were in, into social work. Hence, we do have a plan in place to address these issues. Overall, I agree with Ms Braema that there is a need for a master plan, which NCSS is looking into. We need to develop something which is more comprehensive from the point at which they graduate from NUS, to the point that they begin to work, and the sort of training they will need. This is something which we will have to build up over time. Ms Braema mentioned about FRTC, which is a good example of a setting within the VWO to provide training for social workers. There have been some suggestions about setting up a social service training institute. This is also currently being studied as to whether there is a need for a training institute for people to go to get new skills and new knowledge about what is going on. As mentioned by Ms Braema, there are now social trends which are developing, and social workers need to be kept abreast. The master plan is not ready yet. The thrust of the master plan is to look at the overall development of the professional social worker, from the time he graduates to the time he goes out into the field, and how he works his way through the VWOs. I cannot promise that we can get male social workers. We will try our very best. As Members know, we have tried to address the problem of shortage of social workers by providing scholarships to NUS for people to gain some expertise in social work, both at the undergraduate and the Master's level. These are some of the efforts that we have put in place. As to whether or not we can develop a system where we have a common registry and accreditation, we have to look into the building blocks first. Do we have, firstly, a comprehensive training programme? Are we clear about what are the core competencies which are needed in the various areas? Ms Braema mentioned about aging. That is a new phenomenon. What exactly is the competency that we need? So, in areas such as gerontology counselling that we are now looking into, what are the sorts of skills that we need? Some VWOs are in discussion with some foreign experts. I can be very candid. They have come to see me to discuss some of their suggestions. These are areas which are evolving, and we will certainly want to understand how best we can fit in this particular expertise that is needed because this is a phenomenon which will come in 2010 and beyond. So, we have to understand the core competencies which are needed and then identify what are the training requirements for them. As Ms Braema rightly pointed out, when they graduate from NUS - I am sure Prof. Ngiam will agree with me - they are more generalists rather than specialists. They will have to go through some form of training. Ms Braema also mentioned about recognition - in this case, remuneration. She is right that NCSS has looked into the salary scheme to follow very closely the salary scheme of the civil service. As to whether they can match the kinds of schemes that are in place for teachers and nurses, this is best left for NCSS to discuss with the VWOs. Having said that, I would like to assure the hon. Member also that, to a large extent, it is up to the VWOs to pay their social workers. Some are able to pay more using their own funds. The manpower cost is already incorporated in our funds to VWOs. We will continue to adjust our funding to VWOs on a yearly basis to take into account inflation, rising costs, etc. We also take into account the need for wage increases. But in terms of whether the wage structure is consistent with other professionals that Ms Braema has mentioned - be it teachers or nurses - this is best left for NCSS to study further, because we have to evolve as we go along. So, rather than looking at remuneration, I would prefer that we look at the other parts of the building block first, whereby we have a system that they can go through in order to receive the training in the core competencies. Thereafter we can set out to determine the appropriate salary level. Key issues concerning social workers such as attrition and burn-out rate have to be addressed. Like all paid personnel, they are basically still professionals who are working, who have a life of their own, families to look after during weekends, etc. So this is something which we have to work with the VWOs to look at how they can plan the workload and use some of the worklife initiatives that we have introduced to make sure that the workload is more evenly spread. I agree with Ms Braema that we cannot predict accurately the workload. But, to a large extent, if there is a human resource programme in place at the VWO, that would actually be very helpful, in terms of how they can adjust the workload. These are the things that we are discussing with the VWOs. So, let us look at the overall system that we are trying to put in place. We have increased funding to VWOs. We have set up a VCF fund so that they can use that money for training, research and even scholarships. We are now looking into how we can identify the core competencies needed for various professionals. Do we need a training institute to ensure that social workers undergo some training while they are even on the job? That is being studied at this point in time. Once we have that, something comprehensive, then we have to look at what is the right and appropriate salary scale for the social worker professional, primarily because, as Members know, the area of social work is diverse - from FSCs to eldercare, to counselling, violence, abuse, etc. There is a variety, in terms of the work that they do. At the end of the day, it is about dealing with people. But we must also understand that running a student-care outfit is slightly different from that of an FSC or dealing with eldercare. So we have to sort that out first. This is something that will have to evolve. As I said earlier, we are looking into a master plan for social workers in terms of their career development, training needs, etc. When that is out, I will be most happy to discuss this with Ms Braema, and have a discussion on what are the things that we really need to understand better. Ms Braema suggested some changes to the funding and felt that the 50-50 ratio restricts the ability of the VWOs to pay the social workers. I am not quite sure that I agree with her on that point. For the 50-50 funding ratio, there is a certain philosophy of co-sharing that we want to encourage. What we are trying to do now is to put a system in place called the Programme Evaluation System (PES). This would allow VWOs to be more efficient and, hopefully, with greater efficiency, they will have greater savings. The 50% funding is basically decided on every year based on how much they need. If they work smarter or more efficiently, there will be a lot more savings, and they can use that money to pay bonuses and salaries. So far, what we have seen is that the 50-50 basis has worked quite well. I am not prepared at this point in time to promise that we will change it. Let us look at other parts of the system where we can try and improve so that at the end of the day we can at least address some of the problems that Ms Braema has mentioned. Mdm Deputy Speaker, I think I have addressed most of the concerns, and I would like to thank Ms Braema again for raising some of those points. As I said earlier, I cannot address all the issues, but I promise the hon. Member that we will certainly look into her suggestions.

Order. The time allowed for the debate has expired. The Question having been proposed at Eight o'clock pm and the Debate having continued for half an hour, Mdm Deputy Speaker adjourned the House without Question put, pursuant to the Standing Order.

Adjourned accordingly at Half past Eight o'clock pm.

asked the Acting Minister for Information, Communications and the Arts whether he will consider preserving the old Parliament building and its chamber as a museum for national heritage and education instead of allowing it to be converted into a food and beverage-cum-retail development.

The Old Parliament House and its Annexe building were gazetted as national monuments in 1992. It is our intent to preserve as much as possible their physical architecture and historical character. One key objective is to preserve our constitutional history in these symbolic buildings. The National Arts Council (NAC) is spearheading this project, jointly with the National Heritage Board (NHB). The plan is to convert the Old Parliament House into an arts and heritage centre. There will be heritage tours and arts education programmes for students and the general public. Let me highlight the main elements of the plan. First, we will use the walls within the Old Parliament House to display both the history of the building, as well as the constitutional history of Singapore. Second, we will mark several important rooms within the Old Parliament House with informational plaques, to tell visitors of significant events which took place in these rooms. For example, Members may remember the Committee Room of the Legislative Assembly on Level 2, next to the Members' Room. This was where SM met the "Plen" in 1958. We will find a way to tell this important story. Third, we will preserve the Parliament Chamber even as we convert it into a 160-seat performance venue for chamber music, choral singing and small drama productions. There will be minimum changes. For example, we will keep the seats in their original position. They will serve as audience seats. Fourth, we will convert some of the functional rooms into public spaces for the arts and heritage. The Library will be turned into a 120-seat blackbox. Part of the ground floor office space will be converted into a 72-seat film theatrette. We will turn the Committee Room into an art exhibition space. Finally, we will set aside some spaces for food and beverage and shops. The public entrance lobby and porch can house a restaurant with al fresco dining. The previous computer and store spaces will make way for a book-cum-souvenir shop. The ground floor of the Annexe Building will house another restaurant with a good view of the Singapore River. In total, not more than 20% of the total gross floor area is set aside for these ancillary services. These are necessary for visitors' comfort and convenience.

asked the Minister for Law (a) what is the average timeframe for the Singapore Land Authority (SLA) to settle a compulsory land acquisition case; (b) in cases where an appeal is made against the compensation awarded, whether SLA makes an interim payment to the affected party; and (c) whether any party had been made bankrupt by a mortgagee bank due to the low compensation amount awarded.

The average time-frame to settle a land acquisition case depends on whether the property owner agrees with the compensation offer by the Singapore Land Authority or SLA. If he does, the case is settled quickly and he receives the compensation monies early. In recent years, about 94% of them were settled within two and a half years from the date of gazetting the acquisition. These owners' cases were settled by SLA and were not heard by the Land Acquisition Appeals Board. The remaining 6% which were heard by the Board were mainly settled within 2-3 years from the date of gazetting the acquisition. Within 4 to 6 months of the gazetting of the acquisition, the property owner receives 20% of the compensation offer from the Singapore Land Authority (SLA) when he surrenders his title deeds. This is to help him relocate. He receives this amount whether or not he appeals to the Land Acquisition Appeals Board. Once he vacates the premises, he receives the remaining 80%. We have no knowledge of any land owner who has been made a bankrupt by the mortgagee bank because of the compensation amount awarded. Indeed, in cases where owners face hardship arising from the acquisition, Government extends ex-gratia payments to ameliorate their hardship. Over the years, Government has expanded the ex-gratia scheme to allow more affected owners to qualify for ex-gratia payments.

asked the Minister for Health (a) what is the standard of service that patients can expect from specialist clinics in public sector hospitals and polyclinics; and (b) whether doctors at these clinics are overworked.

Polyclinics provide a comprehensive range of preventive and primary care services. They are able to manage acute illnesses like the common cold as well as the more chronic problems such as diabetes and hypertension. Other services include health education, family planning, antenatal and postnatal care, childhood immunisations and developmental assessment of children. We have about 200 doctors manning 17 polyclinics. About one-third of them have postgraduate qualifications in family medicine. For patients with more complicated medical problems, a full range of specialist outpatient clinics are available in the various restructured hospitals and specialty centres. We have about 640 specialists covering the 29 specialties with outpatient clinics, ensuring a high quality of clinical services. Apart from professional standards, my Ministry also recognises the importance of service quality such as waiting time and good communications. Polyclinics are well-used by residents as fees are affordable. The majority of the patients are walk-in cases who do not have prior appointments. The waiting times can therefore be longer because of the bunching effect. During the morning peak hours between 8 and 11 am, patients may have to wait up to 90 minutes to see a doctor. Waiting times could be improved if patients were to visit the polyclinics during non-peak hours. My Ministry is monitoring this situation closely, and the polyclinics are also working to ensure that their patients do not have to wait unnecessarily long. For the specialist outpatient clinics, our target is for at least 50% of our patients to be seen within 30 minutes of their appointment times, and for 95% of the patients to be seen within 75 minutes of their appointment times. Currently, not all specialist outpatient clinics are able to achieve these targets. My Ministry commissioned an Operations Research study in April 2001 to look into the causes of this, and to recommend measures needed for the clinics to achieve these targets. The study is expected to be completed soon. In ensuring clinical and service quality standards, the Ministry and hospitals monitor and ensure that doctors are not unnecessarily overworked. At polyclinics, doctors work 45 hours a week, excluding lunch hours. This is comparable to a private-sector General Practitioner who works an average of 43 hours a week. Doctors in hospitals work an average of 60 hours a week. The working hours are longer because most hospital doctors, as part of their work, perform night calls. However, the working hours of our doctors are comparable to those of doctors in other developed countries. While public-sector doctors generally see more patients than a General Practitioner every day, hospitals and polyclinics also ensure that their doctors have sufficient time with patients so that quality of care is not compromised.

asked the Minister for Health (a) whether there has been an increase in demand for wards with higher subsidy and, if so, why and (b) what is the range of waiting time for Accident and Emergency patients before being assigned to a hospital bed and the steps taken to reduce the time.

Demand for wards with higher subsidy has increased in the past two years. In 2000, 70% of total inpatient discharges in restructured hospitals were from the heavily subsidised Class B2+, B2 and C. This proportion increased to 74% in first quarter 2002. Singaporeans could have become more cost conscious as a result of the economic downturn and our recent efforts to encourage them to spend more prudently on healthcare. Despite the higher demand for subsidised wards, restructured hospitals are able to give Singaporeans timely access to subsidised healthcare services. Accident and Emergency (A&E) patients are given prompt treatments at the A&E Departments. Moreover, more than 90% of A&E patients who require admissions are allocated a hospital bed within 1 hour. For the small minority who has to wait more than 1 hour, our hospitals are looking into ways to speed up the allocation process. For example, on days when demand for beds of a particular ward class is exceptionally high, the hospitals will allow patients to occupy a bed in a higher ward class first, until a bed in the ward class of their choice becomes available. They need only pay the rates of the ward class of their choice for their stay in the higher ward class.

asked the Minister for Education whether the new Scholastic Assessment Test I, which will be used from 2005, will serve the original objective of his Ministry in introducing an additional mode of assessment for admission into university.

The objective of including the SAT I for university admission is to introduce a reasoning test as an additional mode of assessment for university admission. The use of SAT I, a reasoning test, will help our universities assess a candidate's analytical thinking skills. This complements the `A'-level examinations, which is a rigorous and effective measure of content knowledge. Coupling these two modes of assessment will allow our universities to select the right type of students, and signal the type of graduates Singapore needs for us to succeed in the knowledge economy. In June this year, the College Board, while announcing the changes to the SAT I, stated that the new SAT I will remain a test of reasoning and thinking skills. Notwithstanding this assurance, my Ministry has set up a taskforce consisting of MOE, NUS and NTU representatives, to study in depth the changes that College Board is making to SAT I and to determine how best the new SAT I can be used to serve the universities' objectives. The taskforce is expected to complete its review by the end of 2002.

asked the Minister for Transport what is the rationale for the Land Transport Authority's decision to charge second-hand car buyers a transfer fee of 2% of the vehicle's market value.

A transfer fee is levied when a vehicle is transferred from one owner to another. It comprises two components - a small administrative fee and a tax. The administrative fee is $3 for motorcycles and $10 for all other vehicles. The tax, which is also referred to as an Additional Transfer Fee, is set at 2% of the assessed value of the vehicle and is part of our national taxation framework. It goes into the Government's Consolidated Fund, which funds the various Government programmes for the benefit of all Singaporeans.

asked the Minister for Manpower whether he will make it compulsory for workers at construction sites to undergo more intensive training in safety before they are allowed to work at such sites in view of the rising number of fatal accidents involving construction workers.

Currently, it is already a requirement for all workers to undergo compulsory safety training before they start work in a construction site. Under the Factories (Safety Training) Order, any worker employed in manual labour to carry out construction work in a building operation or work of engineering construction site shall attend and successfully complete an approved safety training course for construction workers. This course, the Safety Orientation Course (or SOC), is a one-day programme, and is designed to introduce workers to common hazards associated with construction activity. The workers are instructed on what they should do to protect themselves against these hazards. Typical hazards such as falling from height, falling objects, electricity and hazards associated with use of machinery are highlighted to the workers. They are then taught of how they could protect themselves from these hazards. The Course also teaches them how to use Personal Protective Equipment properly. To help construction workers benefit more from the safety-training courses, the Ministry has prepared a booklet that gives in pictorial form, details of the lessons they would learn during the course. This booklet, available in 6 languages including English, Mandarin and Bangladeshi, is issued to all workers attending the course. The current safety training course will provide workers with basic safety knowledge for work. Other than the compulsory course, under the law, employers are also obligated to further train their workers, if these workers are engaged in operating machines, or working at processes which may cause harm to them. Workers must be instructed on the dangers associated with these machines or processes, and be informed of the measures that they need to take to protect themselves from harm.

asked the Minister for Manpower whether his Ministry will allow the transfer of CPF monies between cash-strapped divorcing couples to help them retain their current flats and reduce the need to downgrade.

In cases where the ex-spouse who is to retain the property has the required amount of CPF savings, the CPF Board does allow the transfer of his or her CPF to refund the CPF savings used by the ex-spouse. This is no different from using one's CPF savings to buy over the share of the property from the ex-spouse. Alternatively the spouse who gives up the flat can also choose to use cash to reimburse his or her CPF so that the property can be transferred over to the ex-spouse. There are other alternatives for cash-strapped divorcing couples who want the property to be transferred. For example, the spouse taking possession of the flat may approach HDB to seek an additional housing loan to refund the CPF account of the ex-spouse. HDB will consider these on a case-by-case basis and provided that the applicant meets HDB's loan conditions. If the spouse is unable to service the additional loan for the current flat, and transferring CPF monies between ex- spouses to meet the CPF obligation is not an option, the more prudent and effective alternative would be to downgrade to a smaller and affordable flat.

asked the Minister for Health whether there are measures where a person with mental illness, who is known to neighbours and community leaders to be causing a disturbance to their neighbours, can be made to submit to psychiatric examination with a view to treatment and commitment to an institution.

The neighbours and community leaders may want to persuade the family members to bring the person for voluntary psychiatric treatment in the first instance. Failing this, there are provisions in the Mental Disorders and Treatment Act for the apprehension of mentally disordered persons. Any person, who believes someone to be mentally disordered and dangerous to himself or others, may report him to the police. The police will investigate the matter and if necessary send the mentally disordered person, with a report of the facts of the case, to Woodbridge Hospital. If the doctor at the mental hospital believes such a person to be mentally disordered or to require psychiatric treatment as an inpatient, he is empowered by the Act to admit and detain him for 3 days in the first instance. There are procedures established under the law to extend the period of detention incrementally for a total of 13 months. Any further detention will be decided by a magistrate upon the recommendation of visitors appointed by the Minister to the mental hospital.

asked the Minister for Law (a) how many claims for non-maintenance have been filed by ex-spouses each year over the years 1999 to 2002; and (b) in such cases, what are the actions taken against the defaulting spouses.

Based on figures provided by the family courts, the number of enforcement applications filed by wives, ex-wives and guardians of children to enforce orders for spousal or child maintenance from 1999 to 2001 were 3,820, 3,843 and 3,973 respectively. Complaints filed by ex-wives are not classified separately. From January to July this year, there were 2,460 such applications. Under section 71 and Part IX of the Women's Charter, if an ex-spouse fails to make maintenance payments, the court may make the following orders: (i) Firstly, the court may direct the amount due to be levied by seizing his assets and selling them to pay the maintenance arrears; (ii) Secondly, the court may sentence him to a term of imprisonment not exceeding one month for each month's allowance remaining unpaid; (iii) Thirdly, the court may make a garnishee order. By such an order, the court may direct a debtor who owes a debt to the ex-husband to pay the sum owed to the complainant instead of the ex-husband, to discharge the maintenance arrears; and (iv) Fourthly, the court may make an attachment of earnings order. By this order, the court directs the ex-husband's employer to deduct the maintenance amount from his salary and pay the money to the complainant. Besides these orders, if the complainant is agreeable to giving time to the defaulting ex-husband to pay the maintenance arrears or the court is satisfied that more time should be given to pay the arrears, the court may direct the ex-husband to pay the arrears by instalment payment.

asked the Acting Minister for Community Development and Sports, in view of the number of reported cases of new-born babies being left in rubbish dumps, whether he will consider (i) constructing repositories at special designated places in Housing and Development Board estates and at strategic convenient places where abandoned babies can be left safely and (ii) if necessary, making supporting statutory provisions.

The MP has asked if my Ministry will consider setting up a repository for abandoned babies in residential areas or designated places. While the objective is to protect the baby from danger as well as the anonymity of the parent who abandons the baby, such repositories remain controversial, even in countries where they have been introduced. Such repositories, also known as `Baby Drops', may save a life, but they also make it easier for a parent to abandon an infant, thus indirectly encouraging or sanctioning child abandonment. Under Singapore law, it is illegal to abandon a baby. This is to underline the inalienable responsibility of parents for the safety and welfare of their children. The `Baby Drop' scheme could unwittingly instigate a parent to commit an offence. Legalising such a scheme will not overcome the problem of encouraging child abandonment, which will, in the long term, put far more children at risk. While we recognise that mothers who cannot care for their babies need help, there are avenues for them to seek help for themselves and their babies without resorting to abandonment. My Ministry prefers to engage the mother, inform her of her options and assist her, through counselling with her partner and parents, to make an informed and socially responsible decision. Currently, there are several avenues where unwed mothers or those who feel they cannot care for their babies can turn to for help. These avenues are social service agencies, the hospitals and the Child Protection and Welfare Service at my Ministry. These services include counselling on available options, the provision of shelter pending delivery and assistance in placing the baby for adoption. If the unwed mother is a teenager, my Ministry or any social service agency will work with the girl, and if possible her parents, to provide the necessary support and guidance needed. Shelters for unwed mothers or mothers who wish to give up their child are available in Singapore. A welfare organisation, Rose Villa, provides a 24-hour hotline and crisis shelter to handle emergency cases. Unwed mothers may also walk in to Rose Villa to seek further assistance and support and are assured of confidentiality. The Pertapis Centre for Women and Children also provides a safe environment for counselling, support and adoption placement for unwed mothers. My Ministry is currently working with another two Voluntary Welfare Organisations to provide shelters for unwed mothers so that there are ample options and services for mothers who find themselves in such a predicament. Over the last 3 years, the number of abandoned babies has dropped from 7 cases in 1999 to 4 cases last year. This is largely due to the Ministry's public education efforts and the good work of social service agencies to increase awareness about where to get help. This arrangement of involving the people sector has been working well. There is no need for additional statutory provisions.