Hansard, 2002-08-28

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) Mdm Halimah Yacob28 Aug- Mr Raymond Lim28 Aug- Mr Davinder Singh28 Aug29 Aug ABDULLAH TARMUGI Speaker Parliament of Singapore

The following Question stood in the name of Mdm Ho Geok Choo - 1. To ask the Minister for Education what is (i) the difference in the costs of subsidising undergraduates who are sent overseas for exposure to foreign entrepreneurial cultures and those who go through the normal course of study in our tertiary institutions; and (ii) the percentage of undergraduates being sent for such overseas stints relative to the total student population.

Question No. 1, Sir.

Mr Speaker, Sir, the Government has actively encouraged an entrepreneurial spirit among Singaporeans. Our universities - the National University of Singapore, Nanyang Technological University and the Singapore Management University - have responded to this call by promoting a culture of enterprise on campus by various means, for example, mounting relevant academic modules, establishing entrepreneurship centres and technology relations offices. These provisions are available to all students of the respective universities. The National University of Singapore has also launched the "NUS Overseas Colleges". This is a strategic programme aimed at providing a small number of select students the opportunity to be nurtured into dynamic and resourceful entrepreneurs by immersion in vibrant entrepreneurial hubs which are anchored by strong academic institutions. Students will be sent on a one-year stint to these overseas colleges to work as interns attached to high-tech start-ups, and attend entrepreneurship courses at partnering universities. NUS has to date set up two overseas colleges - in the Silicon Valley in partnership with Stanford University, and in the Bio Valley, in partnership with University of Pennsylvania. 38 students are currently in the Silicon Valley, and another 10 are expected to set off for the Bio Valley in January 2003. By 2010, NUS plans to send 250 students (or 4% of the average NUS annual cohort) each year to its overseas colleges. The additional cost incurred for a student who spends one year at an overseas college is about $35,500. About two-thirds of this cost is borne by the internship companies which our students are attached to. The other one-third is borne by the Government. Students on the programme therefore do not pay additional fees for the duration of their programme in the overseas college.

Sir, once the students return from their overseas stint, I would like to ask the Minister if there are any programmes in place to allow them to continue to nurture their entrepreneurial spirit or mindset. Is there any programme in place to ensure that in future when they graduate, this overseas stint would also be helpful in helping them to become entrepreneurs?

As I have explained earlier in my answer, the universities do have a variety of programmes to help students set up companies if they are interested in doing so. They have incubators, technology relations offices and so on. Apart from that, the various economic agencies also have a variety of programmes available for not just graduating students but other Singaporeans who are interested in starting up their own companies or venturing into their own enterprises to go ahead to do so.

asked the Minister for Education (a) what is the rationale for his Ministry's recent requirement that students who need special arrangements or considerations for national examinations (PSLE, "O" and "A" levels) will have their certificates annotated with special symbols; (b) on a nationwide basis, how many of these students who sat for the national examinations last year had asked and were given such special arrangements or considerations for their examinations; and (c) what proportion of the total cohort do these numbers represent.

Sir, before I ask Question No. 2, I would like to declare that I have a son who is dyslexic and is taking his PSLE examination this year.

Mr Speaker, Sir, in every examination, there is a set of pre-determined conditions, for example, the duration of the examination, to ensure that all candidates are assessed on a common yardstick. Special arrangements, however, are made for certain candidates to allow them to take their examinations and demonstrate their mastery of the subject being examined without being disadvantaged by the special difficulties that they have. By doing so, our intention is to open up opportunities for students with special needs to sit for and obtain qualifications at the various national examinations. And indeed, the number of such students who have been able to get such special arrangements has been rising. This will pave the way for them to proceed on to further education. The special arrangements that are made include giving the candidate additional time to write the examination, exempting him from aural/oral test and providing other forms of assistance that may be needed. In recent years, there has been a significant increase in the number of requests for special arrangements. For example, there was an increase of 39% in the requests received between 2000 and 2001, from 469 to 650. These requests come from candidates with a wide range of medical or psychological conditions of varying degrees of severity from mild to very serious. The determination as to whether a condition merits special arrangements, and the extent of special arrangements a disability merits, are not clear-cut, black and white decisions. The Ministry has therefore decided that an even-handed, transparent and fair approach be adopted. All candidates who have been granted special arrangements in an examination will have an annotation in their certificates. This annotation will indicate that these candidates have taken their examinations under conditions which are different from those who take the examinations under the normal prescribed conditions. The annotation will only state that the students sat for the examinations under special arrangements. No details of the special arrangements will appear on the certificate. The Ministry of Education will also not reveal details of the student's reasons for requesting the special arrangements unless the student authorises the Ministry to do so. This policy of annotation will ensure that even as we allow candidates who need special arrangements access to our examinations, we do so in a way that maintains transparency in our examination system and that the examination system is as fair as possible to those students who take the examinations under the normal prescribed conditions. And that it is also fair to those small number of candidates each year who do have medical or psychological conditions which are serious enough to merit special arrangements. Last year, there were 216 students from the PSLE and 434 students from the GCE `N', `O' and `A' level examinations who applied for special arrangements. Of these, all the students from PSLE and 382 (88%) students from the GCE `N', O' and `A' levels who applied for special arrangements were given such special arrangements. These numbers represent about 0.43% of the total candidature for the 2001 PSLE and about 0.63% of the total candidature for the 2001 GCE `N', `O' and `A' level examinations.

Sir, I would like to ask the Minister if the Ministry had considered the negative impact and consequences of annotation on these children in subsequent years, such as labelling and stigmatising, which could bring about a further reduction of opportunities for these children for mainstreaming and integrating into the society and hence, increase the obstacles for independent living, when all that such disadvantaged students are asking for is accommodation to help them level up. Secondly, did the Ministry discuss the issues with the relevant organisations such as the Society for the Deaf and DAS before implementing the annotation policy? Finally, besides the US, which are the other countries that practise annotation or flagging?

Sir, the Ministry considered the matter very seriously and we decided to adopt a balanced and open approach. We recognise that there are students who have medical or psychological problems who will be able to sit for and do well in their PSLE, GCE 'O', 'A' and 'N' level examinations. because we want to give these students an opportunity to take these examinations that we provide this accommodation. Sir, there is no question about not providing accommodation. The Ministry is prepared to provide accommodation where there is proper medical and psychological assessment and the Ministry considers that these reasons are strong and serious enough to merit special arrangements. That will continue. On the other hand, we have to balance this against fairness to other candidates who may not have asked for special arrangements to take their examinations under normal circumstances. The range of requests has increased over the years. In the early years, we have had very clear-cut requests - generally, physical disabilities for which there is very little doubt one way or the other. But in recent years, we have received a larger number of requests, mainly of a psychological nature for which the severity and the precise nature of the requests require much more judgement, and even the medical and psychological professionals do not always agree on them. So what we want to do is to balance this desire to accommodate more of such requests which are valid together with the need to be more open and balanced with regard to having agreed to these requests. We believe that this is a fair and open system by which students who have conditions which are serious enough will be able to get access to special arrangements and allow them to proceed on to higher education.

Sir, I would like to ask the Minister to comment on the number of students who have been asking for special accommodation which has increased over the years. Would it not be fair to say that previously, most parents would not be so informed as to the types of disabilities that our children could suffer from but with society maturing and becoming more sophisticated and informed, some of these disabilities which were previously not detectable or the parents would not know about it ---

Dr Khor, could you make your questions concise, please?

I would like to ask the Minister to comment that perhaps the Ministry could look at it from the point of view that the number has increased because of information access. My other question is: why did the Ministry actually implement the annotation policy at a time when the College Board of the US has just agreed to stop flagging the scores of disabled students who take the SAT under special conditions, such as extra time? From what I read about the practice of flagging in the US, one of the reasons for flagging is to prevent abuse by students who, in reality, have no real disabilities.

Dr Khor, you are making a speech again.

No, I am asking a question. This links to the question that I am asking now. If indeed one of the primary objectives of the Ministry is to prevent this abuse, can the Ministry consider instead to implement more stringent conditions under which a student can have special accommodation? For example, recognising tests ---

Dr Khor, if you do not ask your question, I will ask you to resume your seat.

Yes, this is the question. I would like to ask the Ministry if they can consider recognising tests from, say, accredited panels so that the Ministry can be assured that these are students who have real disabilities and are asking for special accommodation.

Sir, Dr Khor is indeed correct. As I have said earlier, there is an increasing number of conditions which have now been recognised for which students are asking for special accommodation. So, the increase in the requests for special accommodation do come from this wider range of conditions. Not all these conditions are completely well established. Even among the medical professionals and the psychologists, there may be some disagreement as to the impact of these conditions on the examinations which the student is taking, and they may well disagree also on the extent and whether or not accommodations are justified. So the Ministry is, in a sense, in a rather difficult position. And even the doctors, whom the parents who bring their children/students to, are also in a difficult situation, because the parents, obviously, would want doctors to certify their children/students and would bring such certifications to the Ministry. For some of these conditions, there is no clear-cut decision one way or the other. And the kinds of accommodations the Ministry can make have to be of a rather coarse nature. We cannot say that with this condition, we will give you two minutes extra time per hour. This other condition, three minutes, four minutes or five minutes. It is very difficult to make such fine adjustments. Basically, where there is a request for extra time, generally, we give a student about 15 minutes extra per hour. So this is a coarse assessment, and we are unable to make such fine assessments. The differentiation between mild, moderate and serious is very judgmental. Basically, what the Ministry has decided is that if the student feels that the condition is serious enough to merit special arrangements, and if that is the case, then we ought to annotate it, because the condition is serious enough. Dr Khor asked what other countries practise annotation. Annotation is practised in the UK as well. The UK Examinations Board does so. Dr Khor is right that the College Board which runs the SAT 1 in the US has recently been ordered by the courts in the US to stop annotation. Dr Khor is also correct that there have been concerns raised about whether this will cause abuse of the system. If I may quote from an article in the New York Times of 15th July by Tamar Lewin entitled "Abuse is feared as the SAT test changes disability policy". It says: "High school guidance counsellors have said that the elimination of flagging could set off a wave of new applications for accommodations, including some from students without disabilities." It goes on to say: "Some college admission officers too say they worry about how the change will play out and whether it will lead to so many requests for extended time that ultimately everyone will be allowed four or five hours on a 3-hour exam." So, there are real concerns about abuse, and it is very difficult to make a judgment on these situations. Because some of the conditions are quite new ones which are not completely well understood even by the professionals.

Sir, I would like to ask the Minister whether the Ministry is aware that in countries where annotation is practised, such as in the US, the level of special accommodation is generally higher. For instance, a dyslexic child is not only given 50% extra time, say, in the SAT test, but is also given a reader to read the questions, and a writer to write the answers as directed by the student. I would also like to ask whether the Minister could actually reconsider the accommodation provided to such students, to see whether the same level of accommodation can be given since annotation is here to stay. So, it is not just a negative impact that the disabled student would receive. In addition, he would be able to level up.

Sir, my Ministry is prepared to make special accommodations. And the kind of special accommodations which we are prepared to make include extra time allowance, modified question papers, exemptions from certain components of a subject, eg, aural/oral test, the use of readers and the use of practical assistants as well, particularly where a student has physical disabilities which make it difficult for the student to write or to manipulate a piece of equipment. We have Braille question papers; we have enlarged print and so forth. Basically, the objective is to try and make the examinations more accessible to students with these kinds of conditions. But, at the same time, we need to balance this with having a more open and transparent system, so that students who offer reasons which they consider serious enough to merit special consideration would also have this annotated in the certificate.

The following Question stood in the name of Mdm Halimah Yacob - 3. To ask the Minister for Health in view of a recent American report which cast serious doubts about the safety of Hormone Replacement Therapy (HRT), can his Ministry confirm whether (i) HRT is safe; (ii) there are studies done in Singapore to determine the impact of HRT on women and, if so, what are the findings; (iii) it has checked with the World Health Organisation on the safety of HRT; and (iv) there are HRT alternatives for women and are these made available at Government clinics and restructured hospitals.

Sir, Question No. 3.

Mr Speaker, Sir, Hormone Replacement Therapy (HRT) refers to the use of prescription drugs to "replace" the hormones that the ovaries stop making at the time of menopause. The short-term use of HRT to relieve menopausal symptoms and improve quality of life is established. This benefit is recognised by the World Health Organisation. There had been past studies which suggested that long-term HRT use could reduce the risk of heart attacks and hip fractures due to osteoporosis. On the other hand, there had also been studies which associated long-term HRT use to breast and ovarian cancers and pulmonary embolism. The Women's Health Initiative (WHI) study in the United States is the first randomised control trial, or the "gold standard" in studies on effectiveness, in the world to study the potential benefits of long-term HRT use. The study was terminated early as health risks exceeded health benefits. For every 10,000 women using combined HRT at the prescribed dosages in the study for one year, there would be seven more heart attacks, eight more breast cancers, eight more strokes and eight more pulmonary emboli compared to six fewer colorectal cancers and five fewer hip fractures. There have been no randomised control trials on HRT done in Singapore. The Ministry of Health will appoint a specialist group to develop practice guidelines for doctors on HRT. Depending on the indications for HRT treatment, there are alternative treatments available at polyclinics and restructured hospitals. The Ministry of Health advises women on HRT to consult their doctors regarding their treatment.

Sir, may I ask the Minister of State whether it is correct to say that many HRT products contain different compounds in different dosages? Therefore, should the WHI result, mentioned earlier by the Minister of State, be applied to any other HRT products other than the one investigated in the trial? Am I correct to say that market research confirms that the relief of menopausal symptoms is the number one reason why women take HRT? But the effects of the HRT product on menopausal symptoms and the quality of life were not measured in the WHI trial. Should this not be included in any comprehensive trial?

Sir, Dr Neo is correct that there are quality of life issues involved in the use of HRT, and the long-term treatment of HRT should be individualised to the patient. That is why the Ministry of Health feels that individual patients must consult their doctor regarding the appropriateness of the treatment.

asked the Minister for Transport (a) what are the difficulties his Ministry faces in ensuring that the public transportation needs of the disabled and an increasingly ageing population in Singapore can be met, as befitting a world-class transport system, and (b) what steps his Ministry has taken and will take to overcome the difficulties.

Mr Speaker, Sir, our public transport system strives to meet the needs of the elderly and the disabled. Wherever practicable, we ensure that the system is user-friendly and accessible to them. However, in making such an accommodation, we have also to take into account the needs of the large majority of commuters who require a speedy mode of transport. First, trains. For the Rapid Transit System, LTA has, since 1995, required all new MRT projects to comply with the "Code On Barrier-Free Accessibility In Buildings". This 1995 Code sets out the provisions and requirements of building facilities and fixtures, eg, ramps, toilets, lifts, public telephones, signages, to meet the needs of the disabled. Hence, newer stations, such as those coming up in the North East Line and the MRT Extension to Changi Airport are in compliance with this 1995 building Code. In addition, the LTA has embarked on a major exercise to retrofit the existing stations with lifts, ramps and toilets to make them user-friendly for commuters with disabilities. This exercise is estimated to cost the Government about $82 million. When completed, the entire MRT system will be fully disabled-friendly. In the case of public buses, LTA mandates that they must have low floor boards so as to facilitate easier boarding by the elderly and those with mild disabilities. Unfortunately, we are not able to require our public buses to kneel or come with special boarding equipment for those who are on wheelchairs. This is because our public bus services are meant for the rapid transportation of the masses. The priority is to speed up boarding and alighting. Making our public buses cater to the needs of the wheelchair-bound will impact this priority. This will affect the cost and service level to the large majority of the commuters. A better way to address the needs of the wheelchair-bound is to provide a dedicated service for them. The Ministry of Community Development and Sports (MCDS) has therefore set up an Inter-Ministry Workgroup to look into this problem. It is led by the National Council of Social Services. My Ministry and LTA are represented in the Workgroup. And I understand that the Workgroup is in the process of finalising its recommendations.

Sir, it is one thing to have the infrastructure, except for the public bus transport system, but it is another to make it affordable for the disabled and the increasingly ageing population to utilise the public buses. What schemes are in place for the affordability of those who cannot access the public buses and would have to take other forms of transportation, eg, taxis? Because the increased cost of looking after and maintaining oneself, if one is disabled, is compounded by expensive transport costs if no public transport means are available.

Sir, how we should assist Singaporeans who are disabled and, at the same time, financially disadvantaged is a larger topic. I think it is best addressed holistically. I believe this is the purview of my colleagues in MCDS working with NCSS and the various VWOs. Whether financial assistance for them is best focused on transport needs, medical treatment or skills training can then be examined on an overall basis. In my Ministry's primary focus, we have to target at the rapid transportation of the masses. We will as far as practicable accommodate, be sensitive and sympathetic to those commuters with disabilities. And I think we have been improving over the years, as I elaborated earlier.

As public transport operators, the bus companies, is there an obligation on their part to provide this service to the public at large, and that includes the disabled and the elderly? If so, what measures is LTA having to ensure that the obligations of a public bus operator include helping financially, or in other ways, the disabled and the elderly? Otherwise, the cost will be passed on to the individual families and the disabled themselves or the VWOs, who are already burdened with finding enough funds for the other services that they run.

Mr Speaker, Sir, I do not know whether the Member was in this House when we had a very robust debate about transport fares and the role of bus operators. I think we all know that they are commercial entities, they have to make ends meet. My Ministry is just a regulator of these licensees. They have to make ends meet, and whether they should subsidise a particular segment of their passengers or commuters, we know that finally the overall cost has to be borne by the rest of the commuters. If Singaporeans, the majority of the commuters, are prepared to cross-subsidise the other smaller segment of the population who are disabled, then that is a different consideration. But, as I said, the overall issue of how we should assist financially the disabled Singaporeans is a larger issue because their needs go beyond transport. There may be medical needs and there may be other occupational training needs. I think it is best looked at holistically and the appropriate Ministry to look at that, I believe, is MCDS. I am just a SMS, Ministry of Transport.

Under the directions of the Ministry in wanting a world-class transport system as well as a seamless transport system, how would the Ministry account for a good MRT system that is currently disabled-friendly in terms of those in wheelchairs? When they get out of the MRT, there is not a good public transport system as in buses to help them. Would the Ministry be looking into perhaps a greater advisory role where the PTC is concerned in this matter?

Mr Speaker, Sir, I share the Member's wish to make our system as user-friendly to all and sundry. After all, every Singaporean matters. If they are unfortunate, have certain disabilities, we hope that we can also include them in the transport system. I think that is an ideal that we should always strive for. But to achieve such an ideal requires the part to be played by many parties. It is not just Government. The corporate sector is also involved. The NGOs are involved. The people themselves are involved, and even within the Government, different Ministries are involved. MOT will play its part, but many other people will have to play their part too. The bottomline is this. If we look back today and, say, 10 years ago, I think we are a lot more disabled user-friendly now than 10 years ago, and we continue to make improvements. We cannot achieve it tomorrow, but we are making progress. As I said, the existing MRT stations which are not yet disabled-friendly, we are putting in a lot of resources to retrofit them. The whole exercise should be completed by 2005; so that makes MRT disabled-friendly. Bus is quite a different story because to load the whole requirements onto the entire bus service has major implications. I see two major implications. One, financially, because buses which are made to be wheelchair-bound friendly are more expensive than those buses which are not. So, that will translate into higher cost, and that higher cost has to be borne by somebody. It means the rest of the commuters. Secondly, the time taken to board and to alight by the wheelchair-bound naturally is longer. We can do so in MRT because MRT has many doors, so that at the same time the disabled and those without disability can board. The whole process takes two to three minutes, and it is not a problem. But for a bus, there is only one door. And one-at-a-time sequential alighting and boarding hold up the whole traffic. We are a very busy city. If you look at our bus lanes, there are many buses per hour. The frequencies are huge. So once you pile up, it causes other kinds of problems. And that is why it is not surprising that in many other big cities, whether it is New York, London or wherever, they do not fully load the wheelchair needs onto the public bus system, although they try to. But, at the same time, they supplement with dedicated bus services for the disabled. And I think that is where MCDS, working with NCSS, is working in that direction. I think that is the right direction to take. So, my message is this. It is good to achieve door-to-door, curb-to-curb user-friendliness for all, but everyone has to play his or her part. MOT will play its part.

I thank the Senior Minister of State for clarifying that an alternative to the bus system is being pursued with maybe a dedicated scheme, rather than this public at large scheme. With regard to that, the crucial aspect would be the cost of even providing a dedicated service. If you look at the National Council of Social Service's latest annual report, CommChest funds are used, that is, the public at large funds are used to provide a public transport scheme for the disabled. This is where the public is also playing its part. I am just wondering what part would public bus operators be playing. In the initial years when this was first broached, there was actually funding from the bus operators to start a fund for NCSS. But my understanding is that they have stopped providing this. So the whole burden is now loaded onto the individual, the family and the public at large. I know, but I may be wrong here, MCDS also has been trying its best to push this along but it does not seem to have much progress. My concern is that this dedicated service would end up an interesting exercise on paper. But when it comes to implementation, the wherewithal, the funds, would not be available. What would be the obligations for public bus operators to, at least, help in supplementing or complementing the funds required?

Mr Speaker, Sir, I really would not want to pre-empt the discussion about the inter-agency report, which is led by MCDS, because they are still finalising their recommendations. In due course, maybe we can have a discussion about it. In any case, NCSS does not come under MOT. It comes under MCDS. But the key point is this. Yes, I think for a dedicated service, funding is one of the key elements that has to be resolved. Let MCDS and this Working Group discuss through on how they want to bring them about. Obviously, it has to come from various parties. The Member is right. He quoted the NCSS' annual report about they setting aside a budget for transport needs. The current system is this. The various VWOs have their own individual systems to serve their own members. It is highly unsatisfactory because there are a lot of duplication and wastages. So I think what the inter-agency Working Group is working towards is some sort of centralisation, so that it can be a shared service and, hopefully, we can cut down on duplication and stretch our limited dollar longer. We hope that they can succeed. But, I think, implicit in the Member's supplementary question was, what is the role of the bus operator? The bus operator's role is to operate. It is an operator. We have a big debate in this House not too long ago. Let us acknowledge that different people play different roles. There is a regulator, there is a commercial player, and there will be NGOs with objectives to help and, of course, the passengers themselves who can be means tested. I think for a system to work properly, we need everyone to play his part. I cannot play your part, neither can you play my part. But I think when all of us play in harmony, we would have a marvellous system.

Just one point. The arguments that were put forth by the Ministry at that time about three or four years ago, on whether to allow MRT trains to become disabled-friendly, sound very similar to the arguments that the Senior Minister of State is presenting now. For the public bus companies too, we are talking about productivity, etc. But it was good news that finally the MRT opens its doors.

What is your question, Ms Braema?

Yes, I am coming to it. The Ministry, in the light of what the Ministry of Community Development and Sports is proposing, is also trying to look into flexi-hours. And from these PEC's recommendations, would the Ministry perhaps align itself to look into flexi-hours where maybe such provision will not affect productivity when it comes to public buses as the rush is not as severe?

Can I remind Members to make your questions concise? Please try to develop that skill, so that we can proceed with our Questions efficiently.

I do not know what transpired three or four years ago. That time I was up there in the gallery happily as Permanent Secretary (MTI). But from what I could gather from the Member's comment, she was saying that the arguments used by MCIT then against MRT being made disabled-friendly was on ground of productivity. By that, I presume she meant fast loading, boarding and alighting. As I explained, I think trains are quite different. A train is not a bus. One key difference is a train has many doors. So, at the same time, you can admit and alight passengers easily. Each train has to stop at a station for at least a few minutes. So, even though a wheelchair-bound may take up to two minutes, it is all right. It does not hold up traffic. But buses are quite different. Earlier I made the two implications - one is cost, and the other is time. These are serious implications. These are not frivolous that we imagine out of thin air. The problem, therefore, cuts two ways. Either there are a lot of such users who are on wheelchair, in which case, the cost will be better spread out. But if there are a large number of users, the problem of cumulative waiting becomes a big one. Or if the numbers are small, in which case the impact on queuing or the productivity she talked about is marginal. But in that case, the cost is high. So it is no wonder that mature cities like New York and London have come to the conclusion that they still need a dedicated service. Yes, they will try to make the routine bus service as friendly as possible, but you have to override that, you have to supplement it. In fact, more than supplement it, that is the dominant mode of travel. It is a dedicated service for those on wheelchair. Lest we get carried away, the disabled is a whole spectrum of people with different degrees of disability, from mild to severe, and wheelchair-bound. I think for the bulk of the disabled population, they can make use of our public transport. Years ago when I used to run more regularly, 10 km each time, I ran from my house in Upper Thomson to Newton Circus, and I would then pass the junction where the former Toa Payoh Hospital used to be, and the Association of the Visually Handicapped is located. So, very often, I will encounter them alighting from buses, crossing the overhead bridge, and the pedestrian crossings, and they can do so unaided. But I think what is more heartwarming for me is that, every now and then, I will see strangers who offer to help them cross the bridge, or the pedestrian crossing. I have played my part myself. And I think this is what it ought to be. We all want a user-friendly system for all, but everyone must play his part. MOT will play its part.

asked the Minister for National Development (a) whether the Housing and Development Board (HDB) Headquarters' move to Toa Payoh was well conceived as the vacated building in Bukit Merah is still unoccupied; and (b) as retail businesses in the Bukit Merah Central area are suffering as a result, whether HDB had anticipated the loss of business and planned possible measures to revitalise the area.

Mr Speaker, Sir, HDB decided in 1995 to move to Toa Payoh. There are several reasons for this decision. To provide better comprehensive and integrated services to its customers, to improve working conditions for its staff as there was a severe space shortage at the previous office at Bukit Merah; and, finally, to facilitate the comprehensive redevelopment of Toa Payoh. HDB has appointed five marketing agents to lease out the premises at the previous office at Bukit Merah. In view of the current economic situation, HDB expects the demand in the short term to be weak. Nonetheless, HDB will continue to actively market the vacated premises. The overall HDB retail sector has not been spared the problems that the local retail sector has faced over the past few years. These problems include a weak external demand due to the regional economic slowdown, leakage of spending by Singaporeans going overseas and keen domestic competition with the emergence of new shopping malls and hyper markets. The business of the eating establishments and the retail shops at Bukit Merah had also, to some extent, been affected by HDB's relocation to Toa Payoh, although they are still quite well patronised by office workers from the nearby Henderson Industrial Park, CMPB and SPRING. HDB will try to rent out the vacant retail premises to other retailers who complement the existing trades and who have a regional demand. In this way, we hope to increase human traffic and therefore have a positive spillover effect on the businesses of the existing shops.

Two supplementary questions, please. If one is to buy a new house, it will be seen logical and prudent to make sure that the old existing house is either being rented out or sold. So would it be seen as illogical and not too prudent in this context? The second question is what is the loss in rental revenue where HDB is experiencing at the moment for the past two months as a result of the vacancy?

The Member is quite correct that, obviously, there is an interest on the part of the owner of the building to ensure that it is rented out. However, this is a free market economy and all of us who have ever been in a situation of having to rent out our property will know that we cannot guarantee that there will be uninterrupted stream of tenants queueing up outside our door. The decision to move was made in 1995, seven years ago. At that point, things were obviously different. But even now, the real issue is: is HDB trying to lease out the vacant premises? We have appointed five marketing agents, and I am sure all of them are equally incentivised to find the right tenant mix for these premises. So it is not a question of HDB just sitting back and leaving it vacant because it can afford to leave it vacant. That is not the case at all. I do not have the figure that he is asking for as to how much it is losing over the last few months. In a sense, he also has to realise that, in a free market economy, the rental yields will fluctuate from time to time. So if you ask me, even if I were to give him a figure now, it would be an entirely notional figure. The proof of the pudding ultimately is how much whoever is going to come in to these premises is willing to pay. And we hope that, over the next few months, we will find a tenant, or several tenants, who will take up the vacant premises.

May I ask the Minister of State whether the old HDB headquarters in Bukit Merah Central has two towers and three podiums with an area of 7,000 sq ft and looking at a rental rate of $1.50 per sq ft per month, and this works out to be almost a rental income of $1 million per month? So is that figure worrisome when it is left vacant for the past few months and we do not know what would happen in subsequent months?

Mr Speaker, Sir, whether that figure is $1 million, or $1, it would still be a concern on the part of HDB and of the Government. The real question is: are we trying to lease out these premises? And the answer to that question is yes. Exactly how much it would be, the market will say. When someone will move in will depend also on the market. So there is a limit to how much we can try to flog a dead horse. In this case, the premises are not dead. The premises, as he quite correctly pointed out, are useable premises. And in due time, tenants will move in and they will pay a good market rate. When that happens, the shopkeepers who are in that vicinity will also experience an increase in their business prospects.

One final question. Has the Ministry explored the option of inviting GLCs, or even other Government authorities, such as the Land Transport Authority, to house their headquarters there?

We have certainly explored all the options that he has mentioned. Anyway, we hope this will also be part of the advertisement. Those of you, whether you are a GLC, private company, or any other business, who wish to use the premises at the old HDB headquarters, please apply.

Mr Speaker, Sir, I would like to take this opportunity to appeal to all relevant authorities, especially statutory boards and LTA, that when they want to vacate such large developments or shift bus stops, they should consider the impact of such action on the community. Like in this case itself, HDB has two or three blocks and the impact on the shopkeepers in the community is really very serious. In my case, they shifted a bus stop ---

What is your question, Mdm Phua?

They shifted the bus terminal which has also an impact on the community around it. So I ---

What is your question then?

We would like the relevant authorities to consider the interest of the community and its impact on the community when they decide to shift such developments in the neighbourhood centres.

Is that a question?

She asked you to consider. You consider then?

asked the Minister for Trade and Industry what actions are being taken by the Government to monitor price trends and to curb wanton price increases during this difficult economic period.

Mr Speaker, Sir, MTI monitors price trends constantly and publishes such data regularly. Inflationary pressure has been largely absent in the first half of 2002. Inflation was -0.6% in the first half of the year, with prices of most major items posting declines. Although the economy is picking up, inflation for the year as a whole is expected to remain weak at close to 0%. Understandably, some people are concerned about retailers raising their prices when GST is increased or even in advance of the GST increase. The increase in prices due to the GST is expected to be less than 2% next year, based on the experience in 1994. Nevertheless, to prevent the possibility of wanton price increases, we have set up the Committee Against Profiteering, headed by Mr Chan Soo Sen, Minister of State for MCDS and PMO. The committee comprises grassroots leaders, members of merchant associations, CASE, unionists, and MPs, including Mr Steve Chia. Local committees have also been formed at every constituency to address complaints by residents against opportunistic price increases. If there is evidence that the retailer is seeking to profiteer, these committees will apply moral suasion on them. Our basic approach to control inflation is to keep the Singapore dollar stable, and rely on competition and market forces to generate efficiency and lower prices. Since most of what we consume in Singapore is imported, a stable Singapore dollar will help to keep inflation under control. The Government will also continue to ensure that there is an adequate supply of essential goods and services so that businesses will find it difficult to profiteer.

Sir, does such monitoring services have the power to cover the TLCs, the GLCs and the statutory boards that provide public services too?

Mr Speaker, Sir, the monitoring by MTI covers all the goods and services in the composite CPI basket. Some of them are utilities, and I think the House has sat through many debates on various aspects of price increases in different utilities, including transport fares, which we had a debate on quite recently. Not all goods and services are under the purview of MTI.

asked the Minister for the Environment (a) what is the number of applications for hawker/canteen stall licences from 2000 till now; (b) how many of such applications have been successful and what are the criteria for success; and (c) what is the average waiting time for the issue of such licences.

Mr Speaker, Sir, the National Environment Agency (NEA) issues licences for stall holders to operate their stalls. This means a person has to secure a stall first before he applies to NEA for a licence, be it a hawker centre, canteen, coffee shop, or food court. Between January 2000 and July 2002, a total of 16,458 new licences were issued for stalls in hawker centres, food courts, coffeeshops and canteens. 788 licences were issued for cooked food stalls and 1,060 licences for market stalls in the various ENV and HDB hawker centres and wet markets. Another 13,620 licences were issued to stall holders in food courts and coffeeshops, and another 990 licences for school canteens. A licence to operate a stall is issued to the applicant after he has been inoculated against typhoid, passed a TB screening test if he is above 45 years old, and attended and passed a basic food hygiene course. Licences are usually issued to the applicants within the same day if documents are produced to show satisfactory compliance. During the period January 2000 to July 2002, only two out of 16,460 applicants did not meet the requirements because they failed their TB screening test.

asked the Acting Minister for Community Development and Sports what actions are being taken by his Ministry to help people severely affected by this period of economic difficulties from turning to petty crimes or suicide as a last resort. The Acting Minister for Community Development and Sports (Assoc. Prof. Dr Yaacob Ibrahim): Mr Speaker, Sir, the Government and the community have put in place a wide range of services and programmes to help people affected by the economic situation. The services range from short-term financial assistance to counselling to help Singaporeans deal with the difficulties. The Community Development Councils' (CDCs) social assistance schemes are able to relieve families in financial distress. In the last financial year, the CDCs assisted almost 15,000 households. Many families had short-term financial grants to tide over a crisis, such as retrenchment or unemployment. Others received grants to help pay rent and utilities charges or subsidies for child care centres or student care centres. Local CDC schemes supplement these schemes with such help as NTUC vouchers for basic provisions and bus stamps or Transitlink cards. Apart from financial help, the CDCs also provide job search and job placement services. The CDCs, together with the Ministry of Manpower, organise job fairs. Through the job fairs, job seekers can be better informed of various job opportunities and find out more about the nature of work and skill sets required. Those in financial difficulties may need counselling to get back on their feet. The CDCs will refer families who find difficulties coping with their current situation to the FSCs for counselling and support. The FSCs, which are neighbourhood-based facilities, are manned by social workers who are best placed to help individuals and families with relationship or emotional difficulties. The FSCs also provide a range of family support programmes. Those in genuine need should not hesitate to come forward to either the CDCs or the FSCs for help.

Mr Speaker, Sir, I would like to know whether there is a 1800 hotline number that members of the public who are at a loss can turn to and call for help, if required, and if there is, whether the number is well publicised.

Sir, I know that some of the FSCs have such hotlines. The CDCs also have such hotline numbers. Even Town Councils have such a service. These are made available in a variety of places, such as community clubs and Residents Committee Centres. I am not sure whether they are on the websites, but if the Member is interested I could provide the information.

Mr Speaker, Sir, I am referring to one national number that most people can recognise and remember. For example, if we need to call the police, it is 999; if it is the fire brigade, it is 995. Is there a national number like these that we can actually identify and call in case we need help?

There is no one national number that one can use in case one needs financial help, but there are numbers which are available for them with respect to the FSCs and the CDCs. We have found that such a scheme is adequate.

asked the Minister for Home Affairs in view of the rise in petty crimes during this period of economic difficulties (a) what actions are being taken by his Ministry to tackle this problem; and (b) whether his Ministry has undertaken any study recently to understand the profile of these petty crime offenders.

Sir, in the first half of this year, there were 7,130 cases of petty crimes, an increase of 9% compared with the first half of last year. Shoplifting constituted 93% of this increase. There were 2,060 shoplifting cases for the first half of this year, an increase of 34% compared to 1,530 cases in the corresponding period last year. Sir, petty crimes are minor and opportunistic. Most could have been prevented if the victims had taken precaution. To address this, Police has reinforced its public education efforts through various channels, such as the popular Crime Watch series, crime prevention exhibitions and talks. In addition, Police works closely with representatives of the hotel, retail and other industries where these petty crimes occur. I have previously stressed in this House that community involvement is critical if we are to continue to keep our neighbourhoods safe and secure. Police will continue to raise the level of community awareness and involvement through the Community Safety and Security Programme. As to whether we have undertaken any study recently to understand the profile of petty crime offenders, let me assure the House that Police has a system of capturing relevant data so that crime trends and behaviour can be identified early and corrective actions taken expeditiously. The general profile of petty crime offenders has remained largely similar to that in previous years, with local male offenders comprising the majority. Of note, however, is an increase in the proportion of juveniles, ie, those aged between 7 and below 16, arrested for petty crimes from 15% to 20% in the first half of this year compared to the same period last year. To address this, Police collaborated with the Ministry of Education on an anti-shoplifting education package prior to the school holidays. Other on-going programmes, closely monitored by the Inter-Ministry Committee on Youth Crime which I chair, include the Honorary Voluntary Special Constable Scheme for teachers and the Guidance programme for teen shoplifters. Sir, despite the increase in petty crimes in the first half of this year, Singapore remains one of the safest countries in the world. We have been consistently ranked in the World Competitiveness Report published by Political and Economic Risk Consultancy (PERC) as one of the top three safest countries in the world for four years running. Let me take this opportunity to assure the House that the Police will spare no effort to keep Singapore a safe and secure home for all.

asked the Minister for National Development, in view of the recent incidents of shattered shower room tempered glass doors installed by the Housing and Development Board (HDB), what are (i) the measures being taken to prevent such a recurrence and (ii) the number and percentage of these incidences in HDB flats.

Mr Speaker, Sir, HDB has identified three possible causes for the breakage of tempered glass shower screens in HDB flats. (1) Rough usage and improper renovation works by the flat-owner, which may cause chipping of the glass. Over time, the chips may develop into cracks, causing the glass to break suddenly when they widen to a certain crack width; (2) Deterioration or damage of the fitting accessories, such as the hinges or sliders, which may cause the glass panel to detach and break; and (3) Presence of minute impurities within the glass that render the glass more susceptible to breakage. Based on current technology, the formation of such impurities during the manufacturing process cannot be totally eliminated. Though the causes of the breakage cannot be ascertained conclusively, HDB's building contractors have replaced, and will replace, the glass doors within the defects liability period. Also, as a precautionary measure, HDB contractors have started to inspect all HDB flats that were installed with tempered glass shower screens. The glass doors and other fittings will be replaced, if necessary, at no cost to the lessees. Lessees of these units have also been provided with a usage and maintenance guide to advise them on the safe and proper usage of the shower screen. In addition, they are given the particulars of the original installer of the shower screen to facilitate future maintenance of their shower screen, if necessary. Since May 2000, 58 incidents of shattered tempered glass shower screens in HDB flats have been reported. This constitutes less than 0.2% of the total number of sets of shower screens installed.

Mr Speaker, Sir, may I ask the Senior Parliamentary Secretary what are the tender specifications for this tempered glass? Are the specifications for HDB shower screens different from those for private condominiums? Why are there fewer cases of shattered glass screens in private condominiums? Secondly, are there any safety standards which these tempered glass screens must comply with? If there are, is there a breach of these standards? Thirdly, will the HDB replace not just the glass screens which have shattered but all those in the same batch of the contract as well?

Mr Speaker, Sir, the hon. Member asked three questions. Let me take the last one first. HDB started putting in glass shower screens since 1999. We have installed something like 30,000 shower screens in 15,000 flats. Usually, there are two showers in each flat. We will inspect all the 30,000 shower screens, every single one - the fixtures and the glass doors - before the end of October this year. Improper fixtures will be replaced. If we can detect any glass impurities within the expertise of the contractor, we will replace the tempered glass doors at no cost to the lessee. So, I hope Members are reassured of that. And we are replacing them expeditiously, as fast as we can. Secondly, I think the hon. Member is under the misguided notion that private condominiums do not suffer the same fate. They do. In fact - without mentioning names - in a condominium somewhere in north-east Singapore, we have a 1% breakage of glass doors; HDB's record is 0.2%. The contractors kept quiet. Of course, I can give Members the list of names, etc, privately. Shattering of glass screens is not uncommon. HDB is late in the game. It only started building glass shower curtains in 1999, and tempered glass screen doors only came in lately. We did a search of the Internet and found that this subject is something that has been published in the New Scientist. I will circulate it later on. It shows that such things happen. Even high quality tempered, hardened glass doors shatter in different parts of the world randomly. Are there any standards imposed? HDB, of course, has the specifications. I do not have the detailed specifications. The specification is that they must stand up to a certain usage. And the contractors who supply these glass doors to HDB, supply the same glass doors to many of the condominiums in Singapore. But I will give the hon. Member the specifications.

Sir, may I know what is the warranty period for these shower screens in HDB flats? If the residents prefer not to install tempered glass shower screens but prefer plastic or any other type of material because they have senior citizens or children at home, is that also permissible? Will HDB replace them, also at no cost?

If the glass shatters within the defects liability period, ie, one year after taking possession, we will replace them with no questions asked. If it happens after the one-year period, please let us know and we will see what we can do. So far, all the shattered glass screens have been replaced at no cost. The second question was that if the lessees want a different kind of replacement, eg, a plastic door, yes, we are accommodating. But sometimes there is a cost differential. So, if it is cheaper than a glass door, of course, no charge - FOC. If it is more expensive, then it is reasonable for the lessee to top up the difference.

Mr Speaker, tempered glass is not supposed to shatter, that is why it is called tempered glass. It has certain reinforcements in the glass. It is supposed to just have a crack, unless some direct force is applied. So, I do not understand what are the causes for the shattering of tempered glass in those units. Also, knowing the activities, normally the specifications will specify the thickness and whether armour-shield or tempered. So, if the cause is due to impurities, that means that the whole 30,000 glass doors may shatter, and that could be a safety problem. Secondly, how can the HDB check the integrity of these glass doors for the shower rooms? It is very difficult to check the impurities in glass. Thirdly, as to the 1% breakage in private condominiums, the private developer concerned may be one of the not-so-up-to-quality developers. The HDB should not use that as a benchmark.

Mr Speaker, Sir, I do not know which discipline the hon. Member comes from, but he does not know much about tempered glass. I hate to give a technical presentation on how tempered glass comes about, but I will just read a paragraph from the New Scientist. It reads: "Tempered glass is found everywhere from cars and bus shelters to the windows, walls and roofs of thousands of buildings around the world. It is easy to see why. This glass has five times the strength of standard glass, and when it does break, it shatters into tiny cubes rather than large razor-sharp shards. Architects love it because large panels can be bolted together to make transparent walls, and turning it into ceilings and floors is almost as easy."

What is it made of? "It is made of heating a sheet of ordinary glass to about 620oC to soften it slightly, allowing its structure to expand, and then cooling it rapidly with jets of cold air ..."

It goes on and on. I can give a copy of the article to the hon. Member. "The problem starts when glass contains nickel sulphide impurities. Trace amounts of nickel and sulphur are often present in the raw materials used to make glass ...."

It is inherent in the glass. What is glass made of? Nickel and sulphide. And they are impurities. The second question is how is it possible to detect glass doors which might crack? We do our best. The percentage of shattering is very miniscule. We will carefully check for fine cracks. Many of the glass doors shatter not because of impurities. Some of them are due to wear and tear. We do not know. Once it is shattered, we cannot trace whether it is wear and tear or whether it is due to impurities. So, we look for fixtures - whether they are properly installed. We know it can. The contractors have experienced installing hundreds of thousands of glass doors throughout Singapore, and HDB is actually a small player in this game.

Mr Speaker, Sir, may I ask the Senior Parliamentary Secretary what is the purpose of installing tempered glass in shower screens? What is the tempered glass supposed to perform in the shower screens? He still has not given the answer as to what are the causes of the glass shattering. If you look at the photograph in the Straits Times, they were really shattered. Maybe he can explain how HDB inspectors or contractors inspect the rest of the shower screens and give an assurance to the residents that after inspection or testing by the checkers, they will be all right and they will not shatter.

My answer is: trust us. We have to trust the contractors because they have the experience. Will the glass door shatter after inspection? Unlikely, but it can happen. There is no 100% assurance. But we will do our best. We must remember that there are potentially thousands of defects in a building due to wear and tear and we cannot guarantee that none of these defects will occur at all.

Sir, my question is: will tempered glass shatter? We have an engineer by training here who says that tempered glass should not shatter but the fact is that it has shattered. So will tempered glass shatter?

Tempered glass should not shatter but because of the intrinsic traces of nickel and sulphur, it can shatter in a small number of cases. It does not happen just in HDB flats. It happens in private condominiums. It happens all over the world, in Britain, Australia and America.

Sir, I think the Senior Parliamentary Secretary has not answered my question on what is the purpose of tempered glass as shower screens. What is it supposed to do? Why not ordinary glass? Why tempered glass? He has not answered the question.

In fact, tempered glass is safer than ordinary glass because when ordinary glass cracks, it cracks in fairly huge pieces with sharp razor corners. If you are not careful, when you lean on to it, it cracks and it can pierce you. In the case of tempered glass, when it cracks, it cracks into thousands of pieces. Of course, it can still hurt you once in a while but it is safer. It is hard, it is safe. When it does crack, it shatters into thousands of pieces, just like your car windscreen. Why do the car manufacturers not use ordinary glass? Because in an accident, they will shatter and it will not pierce you. You might still be hurt by the shattered pieces, rather than sharp triangular pieces that will pierce your face. That is the answer. In fact, tempered glass is safer than ordinary glass.

Mr Speaker, Sir, in view of what we have heard in the House now, would the HDB reconsider future installation and use other alternative means until this issue can be resolved?

For the new contracts, we are using a new kind of glass called framed, laminated safety glass. We will frame the outside so that the edges will not crack and we will laminate it. So if it does crack, the thousands of pieces will be held together by the lamination. We are also reconsidering the use of glass per se. We may move on to acrylic. Acrylic is expensive, and also over time, it loses its transparency, it becomes yellowish. We have to weigh all these consequences.

Sir, can I check whether HDB has done any test on tempered glasses before they were actually installed at the units? Were they tested by SPRING or any other authorities?

HDB's specification is no different from the specification of private contractors. In view of these incidents, HDB, as I have said, will review the use of tempered glass altogether.

In view of the introduction of this framed, laminated glass, is it possible to replace those glasses in the 30,000 units that have been mentioned earlier on with this framed, laminated glass instead of the usual tempered shower glass? The other question is I read in the Straits Times yesterday that they had some tests for this kind of glass. I think it is a kind of stress test. Does HDB also conduct stress tests on some of these products? Because it appears that some contractors, to reduce costs, actually import sub-standard products and some of these products may get into the HDB flats.

Shattered glass screens henceforth will now be replaced with heat-soaked tempered glass. We soak the plates in the water for a few days and those containing even minute traces of impurities will crack. We will then know it is defective. But it does not eliminate completely the presence of nickel and sulphur altogether. In other words, the possibility of cracking will be reduced. That is the test she is talking about. That is the test that she read in yesterday's papers - the heat soaked test.

Before this goes on and on, Dr Teo, can you ask your last supplementary question? After this, we will go to the last Question.

I know there are no known Singapore standards for tempered glass shower screens. I still would like to find out what HDB has specified in the contracts for these shower screens. There is an American, Australian or Indian standard or whatever standards. What sort of standard has HDB specified which the contractor must comply in order to make sure that the tempered glass can perform? What sort of compliance standards were specified in the contract?

I do not have the details of HDB's tempered glass specifications. I can find that out for him. But HDB has told me that the specification is the same as those specified for private condominiums. I will find out for him.

asked the Minister for National Development whether his Ministry will allow divorcing couples to remain as joint tenants of their flats until their children turn 18 so as to reduce custody disputes.

Under the HDB Home Ownership Scheme, having a family nucleus is one of the prerequisite eligibility conditions that applicants need to satisfy before they can qualify for an HDB flat. Examples of such a family nucleus include a married couple, a single staying with his or her parents and a divorced parent with legal custody of the children. When a married couple divorces, the Family Court usually addresses the issue of legal custody of the children, if there are children, and the question of division of assets, including the HDB flat as this is the matrimonial home. As the parent who obtains legal custody, care and control of the children is considered to form a family nucleus with the children, he or she is allowed to retain or take over the ownership of the HDB flat. Where a couple who jointly owns the HDB flat is divorced, it would not be appropriate to allow them to continue to jointly own the flat since that couple no longer constitutes a family unit and is really not likely to be living in the same flat. It is therefore not practical for outgoing divorcees to retain ownership, since this would render them ineligible to buy another flat in the future. And in any case, there is also no guarantee that granting such joint ownership of HDB flats to divorcees would really make any difference as far as the reduction of custody disputes is concerned.

Order read for resumption of Debate on Question [27th August, 2002], "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.". - [Mr Leong Horn Kee]. Question again proposed. 1.55 pm

Mr Speaker, Sir, thank you for allowing me to join in the debate today. I would like to declare my interests. I am the Group CEO and President of the Hyflux Group of companies, established in 1989 as Hydrochem (S) Pte Ltd. Hyflux has progressed from being a small establishment providing integrated water treatment systems to a membrane specialist company, listed on SESDAQ in January 2001. From this perspective, I would like to share my thoughts as a Singaporean, as an entrepreneur and as a business person. This debate, I feel, has focused a lot on GLCs' predominance in the Singapore business scene. I would like to offer some business perspectives of GLCs. Compared with the average stated-owned enterprise worldwide, our GLCs are amongst the finest and best-run in the world. They are highly organised, transparent, accountable and profitable. From our nation's founding years, our GLCs were part and parcel of what made Singapore the success it is today. Indeed, our GLCs were originally the main engines of growth and development in many sectors, including infrastructure and industry. They provided the much needed employment and stability for our country and our citizens. For all these reasons, we, as Singaporeans should and must always be appreciative and grateful. The big question is not whether our GLCs were the right engines of Singapore's original growth which, in many ways, I personally believe they were, but whether they are still the right engines for Singapore's future economic success in an increasingly competitive global arena. If they are, we need to define in which areas. If they are not, again, we need to define which particular areas and how we should move forward. If we sincerely believe that one of the most significant engines of growth in a new age economy is budding entrepreneurship and private enterprise, we need to examine whether our GLCs in various instances, are indeed crowding out and stifling these engines we need to support and grow. The fact of the matter is that if truly provided with a level playing field, and Singapore entrepreneurs still cannot fight and beat the GLCs at contracts on home ground, and in their own field of expertise, it is unlikely that they would succeed against far more aggressive foreign players in a global market and vice versa. This same rule applies to our GLCs as well. With that in mind, we must still always remember the war is out there, not here in Singapore. We need the Government to provide a level playing field and a good business platform for all, not only SMEs but also MNCs, GLCs, TLCs and NLCs. This is why I would like to congratulate the EISC for having thoroughly considered and completed the excellent report on Government in business. The recommendations are as comprehensive as they are diverse, and they have left almost no stone unturned. At the same time, they reflect a very serious grasp of the issues at stake, and propose solutions that are both practical and responsible. As such, I fully endorse the motion to implement the recommendations of the EISC. I would like to offer my compelling reasons why I fully support the motion, particularly at this time in Singapore's history. First of all, there is an urgent need to quench the thirst of the local SMEs and private enterprises. Let me elaborate on my first point with an analogy of the desert, thunder and rain. We have just been through one of the worst patches in our economic history. The economic downturn has hit many enterprises in an unprecedented manner, especially among local SMEs and many are still hurting. If I were to describe to you the Singapore business landscape through the eyes of the business community, particularly the private sector, you will see a desert - a parched and dried up desert in which many are now thirsting for something real, something concrete, something to believe in again, and then to move forward. Taking my analogy further, the desert has been caused by a multitude of factors, including MNCs following the exodus to greener pastures in low-cost manufacturing countries such as China. It has been worsened by global cost cutting and consolidation. Let us move on to thunder before the rain. I would really describe the recommendations of the EISC as thunder before the long-awaited rainfall on our parched and drying desert of private enterprises. To the weary businessman and to the budding entrepreneur, these recommendations are indeed like thunder. I choose the word "thunder" with much deliberation. Thunder announces the onset of much needed rainfall to refresh and rejuvenate parched soil. Let us move on to the rain. Unfortunately, to the sceptics and cynics, thunder may not always lead to rainfall where it is needed. Winds of change could indeed sweep away the clouds of promise to other areas. Local SMEs and the private sector in general are hoping and waiting for the rain. The rain that they are longing for is the implementation of the recommended measures. That is all that is needed - this window of opportunity - speaking as an entrepreneur, speaking for the private business community. All true blue business persons know how to capture the rain and to use it, store it and harness its productivity, and maybe recycle it. And I dare say, even bring some of this water in their journeys far and wide, searching out new lands of promise. I have often heard the following: "If you have a good idea, a good product, or a good technology that can surely make money, do not let the GLCs and statutory boards find out about it. Or they will try to get hold of your technology or idea and compete with you in Singapore. And how to compete with them?" Recently, I spoke to a friend to encourage him to start his own business. But his father discouraged him saying that in Singapore, he would lose to the GLCs. It would be better for him to either be employed by them or join an MNC. The above views reflect the general perception among some Singaporeans, even though they are unjustified in many cases. In Singapore's drive to encourage entrepreneurship, this perception is counter productive but, unfortunately, real. In a rapidly changing global environment, the private sector has a much bigger role to play in reacting to innovation and rapidly changing market trends. The Temasek Charter has refocused the role of our GLCs. It encourages the GLCs to focus on their core business, and expand globally. This is a much awaited move. This move will help convince the SMEs that GLCs would not encroach into the already highly crowded domestic market. I endorse the Yellow Pages rule that Government agencies should not set up enterprises in areas where private sector players are able to play a part. Instead, the Government agencies should see these as opportunities to provide business for the private sector. An equally compelling reason for the speedy implementation of the EISC recommendations is the urgent need to groom and grow our own local global champions. The truth is that in whatever global business you are involved in, you must be either number 1, 2 or 3, by sheer size and strength, or through agility and superior knowledge, failing which you have to redefine your niche in that sector and then strive to become number 1, 2 or 3 again. Failing this, you have to redefine or create a new sector in which you can excel. Failing all of the above, you need to admit defeat and bow out. Your guess is probably as good as mine how many and which Singapore companies will eventually emerge as global winners. We honestly cannot predict whether it will be the GLCs, SMEs or larger private corporations that will emerge as champions. But we do need winners urgently, and I believe we should cast our net as wide as possible. Let the GLCs try, let the SMEs try, and let everyone try. We do know that market forces dictate that enterprises which respond the fastest to change, which can continue to renew themselves, will survive and thrive in this knowledge-based economy. We have to move fast or we will be left behind. We cannot afford to lose these few good years as we either capture our share of the market or risk losing our position. As aptly put by journalist, Mr Lee Han Shih, "Time is a luxury Singapore can't afford." Take the city of Shanghai, for example. Anyone who has been to Shanghai over the last 3-5 years will see how rapid the development there has been. Private Chinese enterprises are moving with equal speed and resolve. A prime example is China's Hai'er Group. One of the largest household domestic appliance vendors in China, Hai'er is something of a local hero among economic reformers. It is known for its dramatic revenue growth and market-driven approach through its strong service network. Even major foreign players such as Dell and Compaq have to reckon with Hai'er as a keen competitor in the huge Chinese PC market. Traditional household appliance manufacturers such as General Electric and Ariston now have to sit up and take heed of a once unheard of brand, even in their home markets of the USA and Europe. In Singapore, we have a very limited base of enterprises. Besides having to compete with established names, we now have to even compete with fast rising newcomers such as Hai'er. In Singapore, we have always done things the Singapore way, and rightly so, simply because every country's journey on the road to success is different and unique. Singaporeans share an unusual heritage as a nation. We always trust the Government to look after us, do the best things for us and at the right time. Many have criticised this over dependency on the Government. Though most would not readily admit to it, we know that it is this relationship between the Government and the people that has made Singapore what it is today. It is precisely because of this that the business community has overwhelmingly come forward to work with the Government on the remaking of our economic future. What they are looking for is not simply hand-outs but for the Government to create more opportunities. I believe that the time has come for the private sector to take on a more significant role in building corporate Singapore. I believe we are ready and we have to be, not only because private enterprise in Singapore needs this but perhaps, more importantly, corporate Singapore urgently needs to be relevant in the global business arena. More than ever before, the private sector needs the space to grow and, in return, I believe the private sector will not disappoint in taking up the challenge. The Singapore business community is urging the Government to implement the recommendations of the EISC speedily in order to help quench the dry ground. The community surely does not want thunder without the promise of rain. The rain which comes needs to be in sufficient volumes to penetrate the dry earth. It cannot be a passing drizzle. It must be sustainable and must last long enough for the ground to absorb it, and for new seeds of enterprise to germinate. Therefore, I urge the Government to implement the measures recommended fast. I believe that if the rain comes, we will all look back at this milestone and, in its place, find an oasis that has moved us along in our nation's journey to success.

Mr Speaker, Sir, thank you for allowing me to join in this debate. I declare my interest as an independent director of SMRT Corporation, a subsidiary of Temasek Holdings Limited. The hon. Members of this House have debated eloquently on the two issues, firstly, the role of Government in business and, secondly, supporting private enterprise and entrepreneurship, as reported by EISC and its recommendations on Government in business. Sir, I think this must be set against the bigger picture of the remaking of the Singapore economy, and as we face squarely the challenges of the great uncertainty of the world economy and fierce competition ahead. Sir, I believe that many of us in the private sector will agree with EISC that the Government should only be involved in business where it achieves its strategic objectives, such as managing critical resources, public policy objectives and developing new growth engines. And that such involvement should cease when the private sector has developed capability and is ready to assume such role. I also believe that EISC has clearly defined what type of business the Government should be in and what it should keep out of, and therefore setting clear markers within which the GLCs should operate henceforth. EISC has adequately addressed the concern of crowding out private enterprise by the over dominance of GLCs. The private sector will be relieved to note that EISC has stated that the Government no longer needs to take a hands on approach and should encourage private sector to be in the forefront of developing new business ideas. Sir, several Members of the House have spoken with passion on the considerable public unease and concerns over GLCs. Whilst some of these concerns are based on facts and some on perceptions, but whether facts or perceptions, they are real issues with the private sector, as we have earlier heard from Ms Lum. The EISC Report, if adopted by the Government, will certainly help to allay the major concerns of the private sector. It will give a lot of comfort to the private sector to know that they do not have to compete head on with GLCs in the domestic market. The generic competition law to be introduced and an independent Fair Competition Authority to be set up by the Government will go one step further to ensure a level playing field and fair competition. However, I think we must all be aware, as businesses are aware, that a level playing field does not mean protection from competition - domestic, foreign or from GLCs. When there is money to be made, the Starbucks, the Ikeas, the 7-Elevens of the world will come in and compete against our home-grown coffee clubs, furniture and provision shops for their market share. The competition, whether from GLCs or others, will be keen, and if our private enterprises cannot stand up to this competition, they will perish. On the other hand, notwithstanding competition from GLCs and overseas investors, our private sector has proven its resilience and ability to stand up to competition. Today, the SMEs are providing 70% of the jobs for our workforce. The challenge for our Government is to support the private sector and encourage the entrepreneurial spirit to flourish, so that the private sector will continue to be the pillar of our economy and will succeed in their efforts to expand overseas. At the end of May, Temasek's top seven listed companies accounted for 21% or $72 billion of the Singapore Exchange market capitalisation of $342 billion. The top 22 GLCs, as we have heard several times, contributed 13% to Singapore's GDP in 1998. Despite the many misgivings over GLCs, I would like to see the GLCs as one of our important assets, and a very powerful tool that the Government has, and can use and must use to expand our external economy. The Hai'er group in China that Ms Lum just mentioned is one of the state-owned enterprises that has been privatised. They are not only successful in the Chinese market itself but they have since expanded their manufacturing base to America. Sir, I think there are many of these examples around, and our GLCs can be the Hai'er of Singapore as well. Skills, core competency and financial muscle matter most in venturing overseas successfully. It is a tough world out there, and for those of us who have been overseas, we all know that there is really no level playing field. It is true that GLCs have their fair share of failures expanding overseas in the past. There are lessons learnt, and it is part of business. If we expect our GLCs to be the driver for our external economy, we must also expect a fair share of failures from them. For GLCs to successfully lead our international expansion, they also must have the same entrepreneurship spirit and the ability to take risk, which means, to accept some failures. Since the publication of the EISC report, Temasek Holdings has responded with a new Temasek Charter. Some have felt that this new charter may not fully reflect the recommendations of the EISC. In particular, it is silent on divestment of non-strategic business. I am sure that if the Government accepts this report, and I am an optimist, it would then become the Government's responsibility to ensure the compliance of GLCs to operate within its new role. I am also sure that Members of this House will make effective monitoring of the work of GLCs and also of its divestment of non-strategic business. Sir, hon. Members have commented that there is a need for greater transparency for GLCs. I believe that GLCs do have a corporate image problem, as they seem to ring-fence themselves. I think perhaps it would help, especially for listed GLCs, to become good corporate citizens, to be more involved with community, for example, to actively support sports, arts and culture. Maybe it is a good start with football or badminton. Senior executives of GLCs can also follow the footsteps of those in the private sector and become volunteers in community service. Sir, in January this year, as Chairman of Network China, I led a business delegation to Beijing, Qingdao and Jinan to explore business opportunities arising from Beijing hosting the 2008 Olympic Games. The delegation consisted of 72 companies, 100 businessmen and women and senior executives from both the private sector and GLCs, with staff support from IE Singapore. Some of the companies went belong to the ST Group. Some of those from the private sector were BreadTalk, Hyflux. There were engineers, there were construction firms. We were introduced to many projects and potential, eg, in infrastructure, transport, communication, environment protection. While there are plenty of opportunities, the delegation also found that many of these potential projects require a huge capital investment or capability and skills beyond that of a single company. Delegates themselves and, in some cases, with encouragement from IE Singapore, form partnership and pool resources to compete. This is indeed a good example of GLCs and private sector companies working together, with IE Singapore acting as a catalyst. When I see them working together, I do not really see a great divide between the GLCs and the private sector. I see a group of Singaporeans working together, sharing the common objective of fighting for business opportunities. I understand that these companies continue to network and work quite closely together, even after their return to Singapore. Sir, the culture of partnership as envisaged by EISC is important to Singapore companies if they wish to compete successfully overseas. I agree with EISC that IE Singapore and SPRING have important roles to play to identify and catalyse the development of specific industry classes for our international expansion. Sir, I support the Motion.

Mr Speaker, thank you for allowing me to participate in the debate. I have been sitting here in my corner in Parliament listening to the debate as it goes along. And I am not sure that this debate about GLCs versus private sector is really the correct issue. The Motion is that, having regard to the Temasek Charter and the EISC report, the Government should implement the recommendations in the EISC report. The way the debate has gone seems to suggest that there is some inconsistency between the two. Frankly, I see no inconsistency. The EISC report recommends that Temasek Holdings scale up their core businesses, not enter into unrelated business, that they should expand internationally, explore divestment, attract world-class talent into the GLCs, follow the Yellow Pages rules, do not corporatise or privatise the regulatory functions, conduct mandatory periodic housekeeping, outsource Government's functions and define specifications more broadly to provide opportunities for SMEs. The Temasek Charter, as far as I can see, is quite consistent. It talks about having Government ownership and control for the critical or strategic businesses or areas. It talks about going international and regional, when necessary, to grow, and it is open to partnering other companies to regionalise or internationalise, and it also talks about divestment. So, I do not see any inconsistency between the two reports. So, what is the fuss about GLCs versus private sector? As I understand it, the thrust of the arguments appears to be that (1) Government should get out of business; (2) GLCs are squeezing out the local companies because they are bigger and have more financial muscles; (3) GLCs have more connections, they have the old boys' network, and all things being equal, contracts will go to them; (4) GLCs are sucking up all the talent; and (5) GLCs are inefficient. Now, when you make an argument like that and you put forward suggestions to remedy these evils, you have to have an inherent consistency in your argument. And I have some serious difficulties with the arguments that have been put forward in support of these arguments. If you run through this list and you wonder why its sounds very familiar, that is basically because it has a Star War theme about it. The GLCs are the evil empire and the private sector is the struggling rebels, I suppose, fighting against the evil empire. Let me just examine a few of these propositions that have been put forward. First, it was suggested that GLCs are sucking up the talent. If we did not create GLCs, we would have a larger pool of entrepreneurs and the rise of GLCs has led to the death of the entrepreneurs and monopoly of top brains by the civil service. But I do not know about you. I refuse to believe that the only brains here are the civil service and that the private sector is completely stupid. It cannot be because half the time in Parliament, we are always telling the civil service where they have gone wrong. So it must be that on this other side of the House and in the private sector, there are some smart people. I do not think that the private sector should sit down, wring its hands and lament that the other side is, "They so smart." You should be sitting down and saying to yourself, "I no stupid." It is over the question of attitude. It is a question of approach and it is a question of how you view the competition. Mr Leong Horn Kee suggested yesterday that perhaps we should have more of the Government leaders in business and who knows, if some of them had gone into private enterprise, where would we be now, he asked. Perhaps, if SM had become a top lawyer, where would we be now? I am not sure about the others, but I can tell you, we would not be a sovereign independent state and we would not be discussing PSA Corporation because it would be called Tanjong Pelepas! So I think what we really need is talent across the board - in Government, in GLCs, in private sector, SMEs, wherever it is - but you need talent everywhere. It is not a question of challenges being located in a certain place. The private sector should have faith in itself and believed in itself, and we do have a private sector that is good and intelligent, and it should not adopt the attitude that, "Oh, I can't compete", just because somebody else has more strength. Competition is all about finding out how you can go ahead and compete against others. The other suggestion that was put forward was that Government should help by, through existing GLCs, taking a minority stake in new firms and should sell off its shares once the new business is on track. I examine this suggestion rather carefully. You want them to put in money or to take a minority stake, what you are basically saying is, we want Government money but you do not want them to have any control. You do not want them to have any say. And you say that they should sell off its shares once the new business is on track. In other words, give you the money, and once we are profitable, go away. I do not think that is very fair either. It is definitely not the basis on which investors put in money through any company. More than that, I think we have to realise that if we want the Government to put money in through an existing GLC and hold shares in the company, you become a GLC too, because you become a subsidiary. So, it does not quite work that way. You have to go according to the rules of how business is conducted. The next comment that was made was perhaps you should have more private sector representatives appointed to the GLC boards. But, then, on the other hand, the argument was Government should get out of business. So I do not understand which is it. You want them in business or you want them out of business. You want them in business, then, you should allow them to run the companies the way they want to. If you are saying that you should be appointed to the GLC board, that means you want the GLCs around. What you are really saying then is you want the GLCs, you want to be on their boards, and you want part of the old boy connection or network. That is really what is being said. Again, I have a certain problem with the logical consistency of that. Then, it was suggested that they were inefficient. Mr Inderjit Singh said that our GLCs are late in going global and the consequences of it can be seen in the failure to compete successfully and in being taken for a ride in certain high profile acquisition transactions. On the other hand, we have also heard that all the top talent is going to the GLCs. So all the top talent is working hard to produce this inefficient result, in which case I do not understand why do we want them in the first place. It cannot be right. So when you are going and competing, you have to make a distinction between the local market and the foreign market. When you are competing in a foreign market, it is not a question anymore of us competing against the GLCs. It is a question of how all of us can compete against the foreign companies. If the small companies in Singapore are not able to compete by themselves, you cannot complain about the GLCs because they are bigger, they have more financial muscles, and they are more likely to be able to compete globally. The other suggestion made was that they should form clusters and bring local businesses along, which again means you want the GLCs but you want them to bring you along. And that means that there is a certain amount of good that they can bring to the economy. You see, at the end of the day, the local market is too small. The local market is too small for both the GLCs and the private sector to be fighting over the limited market that we have here. It is not a question of GLCs versus private sector. It is about Singapore Inc versus the rest of the world, and it is something that we have to do together. There is a role for the GLCs simply because of their connections, because of their financial muscles, but there is also a role for the private sector and the SMEs. It is a question of how each one can find its place in the international market and make our mark regionally, because the local market is just too small. This is not to say, of course, that I do not have issues with the EISC Report. What I am saying is that, as far as the Temasek Charter and the EISC Report are concerned, they define a role for the GLCs and the way business should be done in Singapore, and I heartily endorse that. But one thing that I did notice about the EISC Report which was not highlighted was the issue of cost. A lot of Singapore companies have complained that they have difficulty in competing because of cost. Some of the costs are necessary. But I think that it is possible for the Government and Ministries to review their rules and regulations to see how we can cut down the cost of doing business in Singapore. Two examples. One is the recent PTC regulations for private bus operators. When I looked at the news release from the PTC, they said that SBS and TIBS have a duopoly. They felt that there should be more competition in bus services. And they said that, in introducing competition to feeder services, certain principles should be observed. First, the new operator and incumbent should compete on equal footing; second, the regulatory framework would not be as tight, and, third, their role will be one guarding against anti-competitive behaviour. But, of course, what they do in the new rules and regulations is that they stipulate certain minimum standards for the private bus operators, and, that is, the entrances and exits must have a minimum of 1.2 m and installed with safety device, and the first step height must be not more than 36 cm from the ground, whereas for most private buses, the first step is 42 cm from the ground. When you make regulations like this, you immediately make them uncompetitive. Because in order to comply with your regulations, they are going to have to buy new buses, or adapt the existing ones, which is not such a good idea. As I understand it, the ones that satisfy the rules are the continental ones, such as the Volvos, which cost about $250,000, which are about $50,000 or $100,000 more than the Japanese models which are currently used. When you are making a rule and you say that you want somebody to be competitive, yet you make a rule that immediately makes them uncompetitive because they have to buy these buses, what do you think will happen to the fares? They have to pass the cost on to somewhere. So that is the first example. The second example is the SBF charges. I had asked the Minister previously what was the reason for making such charges mandatory. The answer was that it was SFCCI's recommendation as there was an earlier practice of voluntary membership and it had not been effective, and compulsory membership would ensure that the SBF had a strong membership base and the mandate of the entire business community. I read the Today paper on 22nd August 2002 which said that about 8,000 business units had paid, but 16,600 businesses are delaying payment and a few thousands are appealing for their fees to be waived. That does not look like a mandate to me. It looks an awful lot like opposition. That is because you are just adding cost on to doing business. If you use the $500,000 paid-up capital criterion, it is like a blunt instrument. Because in many companies which do not do active business, like investment holding companies, they have to pay. I imagine that the GLCs have to pay as well, but they do not need the SBF. So it is cost like that which we are layering on and we are making the business community bear this cost and, at the same time, saying that they have to be more competitive. I would urge the Government and Ministries to review their rules and regulations to see how they can make businesses more competitive, in terms of cost. And at the end of the day, it is not about GLCs versus private sector. It is about how we, Singapore as a whole, can go out and get more of the international pie.

I want to clarify a point made by Ms Indranee. I did not suggest that SM should become a top-notch lawyer. I said that he would be, if he did. In fact, he would give very stiff competition to other lawyers, if he did. Everybody is glad that SM had decided to become a political leader to lead Singapore to become what it is today.

Mr Speaker, Sir, I have the benefit of working in the civil service in the early years of my career. And now, I am working in a private sector company which was once upon a time a GLC, until late 1980s, when Temasek divested NatSteel. Temasek's stake in NatSteel now is less than 10%. Therefore, I have the benefit of looking at the issues from many different angles, from the Government, from the GLC's point of view, and non-GLC's point of view, as well as the process of the transition. Sir, the issue of Government's direct involvement in business has been a regular topic for debate in this House. The question has been focused around whether the Government should play an active role in owning and operating businesses, or should it stay out of business and focus instead on macro economic policies. Many have argued that the Government's presence, through the GLCs, may have an adverse impact on the ability of the local small and medium enterprises to develop and mature. The sheer size of the GLCs meant greater economies of scale and this coupled with the availability of Government funding may have given them an advantage in competing with the SMEs which have to be run commercially and with limited resources. Many even suggested that the GLCs have scooped up whatever talent that was left after the Government has taken the first bite. After all, they take up a big chunk of the capital market in Singapore and contribute significantly to our GDP. Sir, we must take a balanced view. We must first recognise that Singapore's economy is somewhat unique in many aspects. We do not have a huge domestic market. We do not have a large pool of talents. There is little room for error when it comes to economic development and industrialisation programmes. In this respect, the GLCs have played a pivotal role in spearheading our economic progress in the past. However, the recent economic slowdown has put additional pressure on our SMEs and this has once again rekindled the debate on the role of GLCs. It is therefore timely for the EISC to release its findings and recommendations on the role of GLCs. Its report serves not only to remove some of the scepticism and reservation people may have on GLCs but also as a guide post for Government's future involvement in business. Sir, I would like to share my views on three specific aspects in the report. Firstly, I support the Committee's recommendation that GLCs should aim to be international players. They must play a key role in developing our economy's external wing. I am not saying that private enterprises cannot become global players. In fact, there are many examples. Creative Technology is just one of them. But given the size of GLCs, as well as their financial and management resources, they are well positioned to compete internationally and have a better chance of eventually becoming global players. We do have some success stories. Singapore Airlines, for example, is not only a global player but a global leader in the airline industry. SingTel and DBS Bank, on the other hand, are fast becoming regional players and, hopefully, in time to come, they too will attain the same global standing as SIA in their respective business sectors. It is important for us to develop our external wing quickly. As technology advances, the world is becoming smaller and more competitive. Geographical distances and national boundaries are no longer effective barriers. Soon, we will not be competing with immediate neighbouring countries any more but, instead, all of us will be competing against emerging economies, such as China and India. If we do not develop our external wing quickly, we may miss the opportunities that these fundamental shifts in world economies offer us. Developing an external wing will not only give us access to global business opportunities but may also help us in attracting foreign talents. For example, I am sure that, with SIA's international standing, it would have no problem attracting the world's best talents in the airline industry to work for them. Even if they are not physically resident in Singapore, their expertise will be available to us through our global network. Instead of directly recruiting foreign talents, GLCs can consider partnering global players through mergers and acquisitions, or through strategic partnership, and as a result bring their management talents within its group. Given the urgency of developing an external wing for Singapore, we must impress upon the GLCs their role in this respect and that they must set their sight on global business in the long term. In fact, I would like to urge each GLC to go beyond mere mission statements and to formulate a clear road-map and broad timetable to transform itself into global players over the next 5-10 years. Granted that some of these things cannot happen overnight and the timing may not be within our control, it is still important to set our major milestones to demonstrate our intent and commitment. Secondly, I think GLCs must share in the responsibility of helping the local small and medium enterprises. I am glad the Committee has recommended the encouragement of a culture of partnership among GLCs, MNCs and SMEs. However, I feel that GLCs must go one step further and go beyond mere partnership. Given its dominant position in our economy, they should adopt the leadership role by showing the way for our SMEs to upgrade and transform themselves to remain relevant and competitive. Furthermore, I would urge them to also consider providing direct assistance to SMEs, whether be it in the form of financial investment, technological know-how, management expertise, or otherwise. In particular, as they venture overseas, SMEs would need a lot of hand holding in unfamiliar environment which is often hostile. GLCs which have made inroads into overseas markets will be in a good position to help. One of the main concerns of the local SMEs is that GLCs tend to inadvertently squeeze them out by their sheer size and might. Such concerns may well be a perception issue. It will surely help to correct this adversarial approach if GLCs can go the extra mile in helping SMEs, especially those which have the potential of becoming a major international player one day. The GLCs need not look upon this as national service. The truth is that many of these SMEs are suppliers or contractors of GLCs. It is in the commercial interest of GLCs to ensure that they have strong and competitive suppliers and contractors that can support them in their effort to globalise. They are strategic partners and they are interdependent. They will play a crucial role in the GLCs' successful transformation into global players. Thirdly, while GLCs go through its restructuring and repositioning process, they must do so cautiously. Success or failure of a good plan often depends on its process. While it may be inevitable that some GLCs or their subsidiaries need to be divested or, in the worst case, liquidated, the decision must take into account not only economic factors, but also several other factors, including its repercussion on the supporting industries that may depend on it to survive, especially in this difficult period. Some of the restructuring process may also entail retrenchment leading to even higher unemployment rate. Therefore, while the restructuring process is necessary, the GLCs must manage the process carefully to minimise disruption. This is especially sensitive at this time when unemployment is still high. It is also important for GLCs to communicate the process carefully to the stakeholders, not just the shareholders, but also the employees, customers as well as suppliers, and use their best efforts to help them adjust to the changes. In this way, it will minimise misunderstanding and ill feelings. Mr Speaker, Sir, the recommendations of the EISC have been very comprehensive and I must take this opportunity to congratulate the Minister of State, Mr Raymond Lim, for the Report. Assuming that the Government adopts the main recommendations perhaps after some refinements, I would like to urge the Government to implement them as soon as possible and to take great care in communicating to the affected parties to minimise any adverse effect that may negate our effort to restructure our GLCs. On this note, Sir, I support the Motion.

Mr Speaker, Sir, thank you for giving me this opportunity to join in the debate. Sir, the key point of our debate is whether the Government should be involved in business, especially in areas of business where the private sector is already capable of providing those services. If that is the focus of our debate, then I am utterly puzzled why NTUC cooperatives were brought into the discussion. This is because NTUC cooperatives are not Government-linked companies. The NTUC cooperatives are not owned or managed by the Government. Perhaps, this erroneous perception may have arisen from the fact that some NTUC leaders are MPs of the ruling Party. But if we go on this basis, then we also have the ruling Party MPs in this House who work for large companies and business groups in various sectors. Surely, we will consider it absurd to call their companies Government-linked. Sir, I feel strongly that parliamentary debate must be based on correct facts. Only then can we have proper and useful debate. If we know that a particular view, even if it is one that is widely held in the public mind, is an erroneous one, then we must seek to correct it rather than to repeat it and to add to the misunderstanding. Leadership is not about running ahead of the mob. Given that NTUC cooperatives are not GLCs, then I would suppose that their inclusion for mention in this debate must be because of a perception that they can be big, or that there are NTUC cooperatives in different areas, or that NTUC cooperatives may have unfair means of edging out smaller competitors. Let me take each argument in turn. If we say that the problem with NTUC cooperatives is that some of them are big - as if bigness is itself a sin - then we have to broaden that to include all big players in all economic sectors. For example, our property sector is dominated by a small number of big players, TLC and private sector alike. So, what are we going to do to level that playing field for the smaller developers? But that discussion is for another time, because the Motion today is not about curtailing potential excesses by big business but on the role of GLCs in the Singapore economy. Or, perhaps, the misgiving about NTUC cooperatives is that they are present in a number of different sectors. We make no apology for this, because NTUC cooperatives are set up in areas where the common man needs value-for-money services for everyday living. And wherever NTUC cooperatives are present, they have the effect of moderating prices and improving quality through providing benchmarking. By our sincerity and hard work, we have earned the trust and patronage of our members and customers. Our cooperatives compete for the support and business of our customers every business day, against strong competition from both local and foreign players. Our members and customers know that NTUC and NTUC cooperatives care, that we do not take them for granted and that we are not some cold, opportunistic, profit-crazy outfit out to squeeze the last dollar out of them. As Mdm Halimah Yacob said yesterday, for several years now, we measure the performance of NTUC cooperatives by a set of social indicators. And the NTUC publishes this report card each year. Our cooperatives also publish their social indicators in their annual reports, and table them at their annual general meetings. Sir, we have seen the excesses of the free market, in the wake of globalisation. It is not just the Enrons or the barons of bankruptcy. We are seeing banks in free-market economies not wanting to provide services to the low income, or those living in small villages in developed countries. We see tens of millions not covered by medical insurance, when it is left to the private sector. In the drive to maximise shareholder value, millions of workers have been retrenched around the world. This has evoked a response, a backlash. Workers are disenchanted. Unions and NGOs campaign against globalisation. What should be our response? I believe we should adopt the free market and embrace globalisation. But we would have to instill a greater sense of social responsibility. How? By encouraging the small men to fight back and compete well. This they can do through cooperatives. And cooperatives can act as the counterweight against unbridled greed. This then is the big difference between our cooperatives and private-sector business. Private-sector companies are profit-driven, to return the highest value to their shareholders. This is their mission. Our cooperatives are driven by the goal of providing the best value for the customer. That is our mission. We do well in order to do good. Today, this role is growing in importance. In a recent survey, 74% of Singaporeans surveyed were very satisfied with the role that NTUC cooperatives play to moderate the cost of living for them. These Singaporeans and households will want to know the rationale behind any proposal that seeks to deny them these savings and the convenience that they enjoy. So, unless moderating prices and creating value for money for the common man is something objectionable, then I cannot understand what the problem is. In any case, if we say NTUC cooperatives are in different sectors, we must also note that it is not uncommon for business groups to have businesses in different sectors. For example, if we look at property developers again, they may also have subsidiaries that provide for finance, maybe even make drinks. The final possibility may be that there is a perception that NTUC cooperatives have special privileges that guarantee them choice of location or other perks. But the fact is that all NTUC cooperatives have to compete for all the business that they get and all the business locations that they do business in, just like all their competitors. And, just as they have been successful in some bids, they have also lost other bids. NTUC FairPrice, for example, lost the bid for store space at Changi Airport's Terminal 2 to a competitor during a recent re-tender exercise. It was outbid. The lessons are, firstly, that neither the Government - in this case, the CAAS - nor any private-sector property owner can be expected or will give any special consideration to NTUC cooperatives; and, secondly, that what replaces a NTUC FairPrice store is not going to be the mom-and-pop shop, but another retail chain, most possibly a foreign-owned one. So, let us face facts and not delude ourselves. All Members who spoke want to develop local enterprise. I share that same sentiment. But I must point out that NTUC cooperatives or - as some Members have called them - NLCs, they are local enterprises, and they are successful local enterprises. So, why do we not support them? Some Members have bemoaned the lack of capital for local enterprises. Perhaps, our local enterprises can look at the experience of the NTUC cooperatives and see how they have raised their capital. Let me give some examples. The early cooperatives faced much more difficulties than SMEs today in finding capital. So, union leaders aggregated the funds the hard way - persuading workers, one worker at a time, who have very low incomes - to buy shares in these cooperatives. That was how NTUC Welcome, the predecessor of today's NTUC FairPrice, started. Today, FairPrice is a household name in Singapore, and perhaps it is the only local supermarket chain that can withstand and compete against foreign supermarket retailers. NTUC Income was started the same way, collecting a few dollars from each union member. So, too, NTUC Comfort, which is now divested and listed on the stock exchange as the Comfort Group. Some Members have called on NTUC cooperatives to help small businessmen. And they have. As Mdm Halimah Yacob explained, Denticare is indeed a cooperative of dentists. They share the revenues. NTUC Foodfare operates food courts, but the people who run the stalls are the hawkers themselves, who rent the space. NTUC Income uses its website to provide a matching service between handymen and homeowners, between tutors and school children. NTUC FairPrice, NTUC Healthcare, NTUC Childcare cooperatives operate franchise schemes in order to share opportunities with the business community. Sir, I believe that the crux of today's debate is about fair competition and how to better promote it. This is important. This must be our focus, and we should keep our focus. Listening to some speakers, one may get the impression that behind the phalanx of accusations lie local businesses scared of public-sector GLCs because they are big, angry with competition in the private sector because they are big, and then suspicious of one another, not quite wanting to work together, just in case the other one might grab the secret formula and become big. This will not do us any good. Singapore - if we look at our natural endowments - is indeed a SME among nations. And we have no one to complain to. But we got to where we are today not because the international stage is a model of fair play, not because the big boys imposed a moratorium on themselves to give us a leg up, but because we as a country took the hard decisions - and I would say some rather unconventional ones relative to the received wisdom of their time - and worked hard to build the necessary capabilities, capacities and attractiveness in order to compete well. If we look at the NTUC cooperatives, how did they get to do well? By following the advice of Dr Goh Keng Swee, ie, employ good professional managers. There is no reason why our SMEs cannot follow that same formula - pool resources and employ professional managers. That was very good advice that local SMEs pooling resources can note. Sir, I hope that this debate can help focus Singaporeans' attention on what is fundamental, namely, on how to help SMEs strengthen their leadership, vision, competitiveness and resourcefulness, rather than confuse the debate with red herring. Life is not about avoiding competition or defining away the competition. And to reinforce any such tendency would indeed be the ultimate disservice to our SMEs and to all Singaporeans.

Order. I propose to take the break now. I suspend the sitting and will take the Chair again at 3.20 pm.

Sitting accordingly suspended at 3.00 pm until 3.20 pm.

Sitting resumed at 3.20 pm

Debate resumed.

Mr Deputy Speaker, Sir, thank you for allowing me to join in this debate. First of all, I would like to declare my interest as a Director of the Energy Market Company, a subsidiary of the Energy Market Authority. The GLCs have provided much needed jobs and supported economic growth during the early years of Singapore's independence. With a growing private sector today, we must now address the role of both these two groups of companies. Much has been said about the pros and cons of GLCs during these two days of debate. Mr Deputy Speaker, Sir, allow me to make some comments on a few of these points. The Entrepreneurship and Internationalisation Sub-Committee (EISC) has made some recommendations to the Government to help promote private enterprises. While this would be good for Singapore as businesses driven by the private sector will have a better chance of meeting their challenges in today's rapidly changing environment, there is still room for GLCs and SMEs to co-exist. I believe together, they will be able to adapt to the different sectors of the economy, thus responding better and faster to market changes as demands from consumers would increasingly be a constant factor and businesses would have to cope with such short-lived demands. The constant factor will not be a factor which will be long-lived. Some examples of short shelf-life are electronic products such as televisions, cameras and some household products. Cultivating and strengthening the private sector are critical to the proposed restructuring efforts unleashed by the Government. The success of Singapore economy to-date has been based on a pro-investment and export-growth model. A high level of savings has allowed such a policy to reap results. It is based on the belief that saving is the factor to wealth creation and that savers are the impetus to wealth creation and the nation. While it is good to hold these values, we must however recognise that today, challenges are different. It is the risk-takers and not savers who spawn wealth. I urge the Government to actively promote private sector initiatives in the production of goods and services that are competitively healthy and can be done effectively by private enterprises. It should minimise undue influence of GLCs and big foreign players in such markets where the growing local companies will not stand a chance of competing, for example, in the building construction industry. That way, local companies get to grow, be stable and be able to provide jobs to the people. The Government may even wish to even consider providing seed money and tax incentives to the private sector to encourage the birth of new businesses that may require a long gestation period before profits are seen, as in life sciences. I urge the Government to also look into strategies to sustain local businesses. I would suggest a review of the cost of doing business by the private sector and, if necessary, for all of us to change our mindset. Many corporations face great difficulties in coping with hostile business conditions. One major factor is the rigidity of the local wage system. Wage cost forms a major challenge of the total cost of a corporation. If we are able to allow corporations more leeway in shedding costs, we will end up with a more efficient private sector that will be able to react to hostile market conditions. Looking beyond, local companies can and must be encouraged to become multi-national corporations. As world globalisation takes off, small countries will be able to ride on this wave to overcome the disadvantage of its limited domestic market. Singapore is no different. Local companies, which by nature are more entrepreneurial in character, may not necessarily follow the traditional multi-national structure, with a corporate headquarters in Singapore controlling subsidiaries around the world. These companies have a network character that allows them to take advantage of the new opportunities presented by the inter-linkages of the global economy. Our corporate governance guidelines may not also necessarily be applicable. For example, with a minimum of internal bureaucratic machinery, Acer, which started out as an assembler of IBM equipment, quickly moved to selling its own computers. It has been able to move quickly to take advantage of opportunities. This company's understanding of local demands and developing markets overseas are good because of their network with locals in the foreign lands. This example also suggests that it may not be advantageous to partner a larger GLC when venturing overseas as the company culture to be adopted may not suit the GLCs. The cluster approach, as recommended by the EISC, whereby GLCs, MNCs and SMEs together venture overseas may not be a good idea where market conditions are volatile. In addition to efforts to nurture and strengthen local companies, I feel that levelling the playing field between the GLCs and the private sector is as important. On the one hand, as we spend efforts to nurture new local businesses, we must not put obstacles in its path that will lead to its ultimate demise. I urge the Government to allow the private sectors space in the local market to grow and excel. Government policies on land and labour must be cost-effective and should apply to GLCs as well. For a start, Government agencies controlling such important factors contributing to the success or failure of business must be conscious of not pushing up costs through their pricing policies. Instead, they should seek only to service the public with a minimum of fees necessary to cover their services. It is equally important that GLCs should concentrate on the external wings of our economy and not be perceived by the people as the big fish out to gobble up the market share or to take over the smaller fishes on their home turf. Mr Deputy Speaker, Sir, please allow me to highlight the success of GLCs extending its external wings to build global businesses. Keppel FELS, Energy and Infrastructure is a world leader in the building of harsh environment jack-up rigs. It designs, builds and repairs the complete range of mobile offshore drilling units, floating production systems and specialised vessels. In 1996, it has 60% of the world's jack-ups on order. Another example is SembCorp Logistics which has formed a strategic alliance with Kuehne and Nagel, one of the leading global freight forwarding and logistics providers with offices in 85 countries. The success of these two companies only serves to highlight the salient advantage of competing in the international arena. It raises the overall value-added to the industry concerned and acts as a catalyst to other related trades and services. The Government should, while seeking to remain in businesses that are strategic to the country, such as the supply of water, electricity, banking, aviation and other facilities and services that are low in competition, continue to improve the performance of the GLC sector. Their business decisions, including acquisition or divesting businesses, should be based on increasing the shareholder value and return on assets. But where economies of scale of non-strategic businesses can be harvested and given to an external service provider, GLCs should readily do so to nurture the local sectors. In conclusion, we need to enhance the value of our private sector businesses by keeping them trim, efficient and focused so that they can maintain their competitive edge. These measures are necessary antibodies for Singapore to build up and have an immunity against the ever changing global economic conditions. GLCs have a national role to play in building a robust economy for Singapore. And since Star Wars was mentioned, may I borrow a phrase from it - may the force be with you?

Sir, I rise in general support of the Motion. I think there are a few key elements of the Motion and the debate which have particular resonance for me. First, Government's involvement in business ought to be circumspect and carefully calibrated. This is the recommendation of the EISC, and it is really difficult to have any issue or quarrel with that. It is a sound principle to guide Government's decision-making going forward. The second is supporting the growth of private enterprise and entrepreneurship in Singapore. Again, I think this would have little problems finding support in this House or elsewhere. The third element is, of course, greater symbiosis between big and small companies, whether they are GLCs, MNCs and so on, on the one hand, and SMEs on the other. Ultimately, all these principles are important elements in guiding the way Singapore remakes its economy, restructures itself, in order to face the challenges ahead. However, in the course of the debate, the issues that struck me the most was that I thought there were some broad guiding principles that we ought to use, not just in the way we present ideas but in the way we analyse them. Allow me to illustrate that. The first is that we ought to be quite discerning in the way we categorise the various entities we have in our enterprise ecosystem. We have used the term "GLCs" as a kind of catch-all, and we have put in there labour cooperatives, the private companies under the care of Government, the listed companies under the care of Government, etc, etc. Many speakers before me have pointed out the special nature of labour cooperatives. In general, the DNA of all these companies is very different. If we compare a labour cooperative with a private or listed company, say, under Temasek Holdings - and here I must declare my interest because I am an employee of Temasek Holdings - we will find that the mission and objectives vary. Therefore, the strategies will differ. And even the stakeholder groups are different for each of these categories. So we must guard against adopting a very generic broad brush approach in talking about these companies, because each faces its own constraints and its own set of circumstances in pursuing its ultimate objectives. The second point I would like to make is that we ought to guard against being too theological or doctrinaire in our approach to issues of business or management. Markets and analysts are always given to fads. If we just think back to a few years ago, dot-coms were in. All companies were being told either you "e" or you would be eaten. And now things are very different. If we also look at it from the angle of business theory, there have been ebbs and flows. And in a sense, we can argue that unless there are these ebbs and flows, management gurus and business schools will be out of work. In the history of companies, for example, there has been a discussion about whether decision making should be centralised or decentralised, and the accordion has moved in and out quite a few times. And there are other examples like that in the area of business. So the key point here is that we ought to keep our eye on the ball and take a pragmatic approach in dealing with the issues. Let us take the example of business models. Some of our Members talked with some disdain about the model of conglomerates. It is true that in the 70s and 80s when businesses in the US, for example, were expanding horizontally and vertically, they were straying quite a bit, and becoming large, unwieldy conglomerates. Then, in the 90s, there was a move back to core competence, and there was a stress on core competence. If I want to summarise the point, it would be this way. There are conglomerates though that remain extremely successful. General Electric is a good example, one of the most admired companies in the US, but it has 18 different business groups. There are also companies which have got a single focus, which also do very well. Coca Cola is a good example of that. And we also have good examples of companies, both conglomerates and single focus, which have failed. Global Crossing is a good example of a single focus business. Sir, the point is that we cannot be influenced by just general trends and fads. I think the underlying value of a company is determined by many factors - its corporate culture and values, its strategy, the people and, ultimately, the execution of the business. There is no such thing as one size fits all. And in this House, when we are discussing these issues, let us bear that in mind. Another question that has been debated quite a bit in this House is: should a company diversify into new businesses? Particularly, let us talk about the listed companies. In general, I think we would all agree that we want companies to stick to their knitting. You know the business, you know the customers, the various channels, and so your core competence lies in that area. And I think that is a very important guiding principle. But citing old and hackneyed examples like roast duck, I think is a decoy. Because we are highlighting an obvious outlier and dodging the core question, which is whether a company can diversify into new businesses successfully, leveraging on skills and assets it has built up in perhaps other business areas. And I think this is worth thinking about. I am not suggesting that the company should stray and pepper its resources in many different directions. But there are some good examples of companies that have, over time, evolved and developed some new areas, and we do not have to go too far away to find out. For example, look at CDL. CDL is a listed company in Singapore. Its primary core business is properties. But over time, it has developed an excellent hotel business under the Millennium & Copthorne label. By all accounts, it is attributed to the entrepreneurial flair of Mr Kwek Leng Beng. The question to ask is: do we want to encourage that or discourage that? Is that good or is that bad? So, again, in talking about diversifying businesses, we need to have some level of measurement and not put all the companies that do so in the same basket. Sir, the point about size has been raised, and I want to make a few comments on that. In my view, there are really two inexorable forces that are compelling the issue of size - globalisation, which is reducing barriers for the flow of goods and services, and people, to a large extent, across countries. The second is technology. Both of these are enablers. They are enabling companies to access new markets, across geographical barriers and to get into new areas. But, at the same time, both of these pose immense new challenges, because what it means now is that companies have to invest quite a lot in technology in building up their infrastructure to deal with global challenges, and therefore they need the economies of scale in order to achieve reasonable returns on their outlay. How big are our companies really? In Japan, an SME would have a turnover that is in billions of not Yens but US dollars. That is an SME in Japan. And comparing our GLCs or TLCs to local SMEs is a convenient way of invoking the David and Goliath imagery. But I am not sure it is actually a fair representation of the facts. Talking about 21% of the market capitalisation in SGX, yes, but let us look at the broader picture. If we take SingTel, its market capitalisation is US$16 billion. This is based on last week's numbers. And if we compare SingTel with Deutsche Telecom, $48.3 billion. That is more than three times the size. If we compare it with, say, Verizon, which is a relatively more recent player, $88.2 billion. That is 5-6 times. The scale factors are immense, but they are playing in the same field. When we talk about SIA, we are very proud of the company because of its international success. But if we want to compare SIA, its turnover is about $5.1 billion. Compare that with, say, Lufthansa or British Airways. Lufthansa is about $11 billion and British Airways about $10 billion. So the order of magnitude is two times or more, and that is not even talking about things like fleet size and how they cover the routes and so on. The issue of size is a factor and we could say that our Temasek-linked companies or GLCs, whilst they may look like very big fish in our small pond, once we look at the big ocean, actually, they are, at best, medium size. To grow, they have to do one of two things. They have to either grow organically or they have to make acquisitions, locally or internationally. If we look at the electronic manufacturing services sector in Singapore, for example, many of our companies have been acquired by international players, precisely because of the scale. Solectron acquired NatSteel Electronics about two years ago. Celestica acquired JIT about a year ago. All of these are driven by the same factors. They needed scale in order to be able to leverage on the mass orders they get and keep their overheads down to a bare minimum. All I ask is that when we think about these issues, we talk about level playing field, but let us give the GLCs or TLCs a level playing field as well. Let me give an example. The local banking sector has seen consolidation. UOB acquired OUB. That would be cited as a good example of private sector market forces consolidating in response to forces that are changing the industry. If the same transaction had occurred where DBS had acquired OUB, would that be seen as a positive example of consolidation or a bad example of crowding out? Let me take another example. Mr Inderjit Singh pointed out SingTel failed in its attempt to acquire HK Tel, and he said that SingTel moved too slow. Who moved faster? PCCW, and where are they today? So, is that an example of the winner's curse? If they had done it, they would be damned. If they had not done it, which is the case, they are being damned. Let us give them a level playing field. Let us treat this fairly. Subsequently, SingTel goes on to buy Optus. Then the acquisitions are different. I think we ought to take a fair line on these matters, and not just take the line that is most convenient to our point of view.

Mr Iswaran, can I interrupt for a while?

Yes.

Section Name MISCELLANEOUS;Title;Clause;Column 1030;Mr Chew Heng Ching(Mr Deputy Speaker);

On behalf of hon. Members, I welcome Senator the Hon. Dato Ghazi H. Ramli of the Parliament of Malaysia who is present is our Gallery today. [Applause].

Debate resumed.

You may continue, Mr Iswaran.

Sir, I also wanted to make some comments on the issue of divestment. There have been repeated calls by several Members that there should be a specific timeframe for the Government to announce how it is going to release or divest its interests in various companies. I was thinking about this. From whose point of view is it desirable for the Government to commit to such a specific timeframe? From the point of view of the employees of the company, who would then be filled with uncertainty about their future? From the point of view of the customers of these companies, who will then need to know what is going to happen to their supplier or service provider? Or from the point of view of its shareholders, who will then have to wonder whether this company they have shares in is in play, and what they would do about it? The other aspect of divestment is who to divest to. There were some comments that maybe we should divest it to private equity houses or large pension funds. I think there may be some merits in that, but certainly not as a way to argue a case that this is superior necessarily to Government shareholding. I think that remains to be proven. Yesterday, Minister of State, Mr Raymond Lim, made an eloquent point on this, and I do not wish to repeat that, other than to make the point that it is not an axiom that when you privatise entirely a company, its performance necessarily improves unambiguously. If you look at the history of privatisation, in Singapore's case, privatisation was not the result of under-performing state-owned enterprises which were put into the private domain, in order to subject them to greater disciplines and, therefore, higher performance. If you look at the comparison with, say, UK, a lot of the privatisation was because the state-run enterprises were not performing. So we need to keep that in balance. Who else can we divest to? Strategic partners? And I think that is a good idea, but it would take time, and it needs to be calibrated because you need to choose and work out the issues, before it is done. Finally, management. I thought this deserves particular comment because this issue of MBOs was raised by several Members. I thought it was interesting because it came from two points of view. Some Members, like Mr Sin Boon Ann, said that MBO is perhaps not a very good idea, and he cited the fact that MBOs mean that management, which has got an information advantage, would be able to prevail and take advantage of the situation. In other words, there is information asymmetry which works to the disadvantage of shareholders. The question to ask: is this not true of all MBOs? So, do we then say that all MBOs as a class of transactions are a bad thing? Another group of our Members here have pointed out that the MBOs should be encouraged because it is a way to entrust some of these assets to local management in order to kick-start the local entrepreneurship drive. Is that really the basis on which we want to consider MBOs? The right approach really ought to be that an MBO is one way of divesting, just as there are numerous other ways. And what we ought to be looking at, if we are going to debate such issues in this House, is how we can realise the best value for the shareholders and act in the best interest of the company. I think that really ought to be the governing principle for these issues and as a result, there would be a rigorous evaluation of alternatives. Sir, in all these questions, I think the key point is ultimately, who should be the judge of a company's business strategy, its approach to divestment or any of the other commercial decisions. Should it be the Government? Should it be the employees? Should it be this House? I would submit that whilst all these groups have got an element of interest as stakeholders, ultimately the only real point of decision, the only court of opinion, for listed companies is the community of shareholders. Why? Because they have skin in the game, and they are the ones who will make the decision whether to put money in, take it out, and so on. So we have to be mindful of that. And I think Government, no matter how large or small shareholder it is, in any enterprise, cannot ride roughshod over the interest of other shareholders. As a final point, I just want to say that the debate has been perhaps cast as a zero sum if not negative sum game. In other words, if the GLCs grow, the SMEs are deprived. And if we cut down on the GLCs, the SMEs will grow. I think this is a little bit different to the spirit of the Motion which, when I first read it, I thought it was very conciliatory and positive. But the debate itself has had a slightly different tone, in my view. What we ultimately want is an enterprise ecosystem that affords the space and opportunity for all species of companies. If you take a rain forest, for example, you want the giants who will reach for the sky and they will compete with the other giants. We also want other companies who will look at the slivers of sunlight and other possible advantages in order to carve themselves a niche and grow. And then you will have others who will be on the forest bed, who will find their own area of operation and flourish. And I think if this debate can set that mindset for us, so that we have a new way of thinking of a relationship between all the elements of our enterprise ecosystem, then it would have been a positive exercise.

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. 3.51 pm

Mr Deputy Speaker, Sir, I thank all the Members who have spoken. It is now my pleasant task to summarise the arguments which they have very eloquently made. I do not feel like Darth Vader. I am trying to look like Yoda. The story of how GLCs came about has been well told by all the MPs. So, I do not have to repeat the historical background. But, today, the value-added of Temasek companies accounts for some 13% of Singapore's GDP. If the Government had not got involved in business, most of these companies would not exist today. If you allow for the fact that the Government itself consumes 9% of the GDP, then the non-GLC private sector, which means the local companies and the multi-nationals, makes up 78%, which is more than three-quarters. Our objective is to expand this total pie, of which the larger part is the non-GLCs. And that means expanding the productive part of the economy, namely, the sum of both the GLCs and the non-GLCs, while keeping the Government share as small as possible, because the Government share really is a consumption. It is a necessary burden, but it should be kept small. The question is: do GLCs have a contribution to make in this process? Will growing the GLCs be at the expense of the non-GLCs? More importantly, and a different question, will growing the GLCs be at the expense of the overall economy? I think those are the questions we have to consider. Everyone agrees that in our earlier phase of economic development, the GLCs made a contribution. But now that the GLCs have grown, now that they exist, what should we do with them? Should the Government exit from all the businesses? If so, how? Hence, we have had a long debate in the EISC, chaired by Mr Raymond Lim, and also within the Government on the role of the Government as a shareholder in these companies, and what the Government hopes the GLCs will achieve. The result, after extensive debate, has been the Temasek Charter. The Charter sets out Temasek's role - to nurture the companies with the potential to grow into successful international businesses. It defines the types of businesses which Temasek will hold and those that Temasek will exit and divest. Temasek will have no interest in companies that will only serve the domestic market, unless these are strategic industries, for example, broadcasting, the electricity grid or the port. The GLCs are important players in the Singapore economy. There are very few non-GLCs with the size, organisational strength, or the technological depth of Singapore Telecom, SIA, Singapore Technologies or PSA. The closest would be the banks - UOB and OUB, or now UOB and OCBC, and the property companies, eg, CDL. But these are not technology companies. We can argue whether had the Government not built up these companies, more non-Government private enterprise would have grown, and the Singapore economy would have been more dynamic and entrepreneurial. But the Government decided on a strategy, and it worked. We are convinced it is right. Maybe you are right and we are wrong, but that is Monday-morning quarterbacking. Now that the GLCs have been created, the Singapore Government has a responsibility to make sure that they are well run, grow their business, and contribute to the economy. This may mean tougher competition for the non-GLCs. But so long as the competition is fair, it is good competition, it is good for the economy, it is good for Singaporeans. The policy question is whether GLCs should continue to go into new businesses. Mr Leong Horn Kee wants to curb the proliferation of GLCs. He asked that no new GLC be formed without the explicit consent of MOF. Mr Leong's question has to be addressed at two levels. For the listed companies, which Mr Iswaran has just discussed, the decision to enter into new businesses is for the respective board of directors to take. The board has to act in the interests of all the shareholders, including the minority shareholders. We cannot forbid a listed company from doing certain activities, just because the Government happens to own shares in it. It is wrong both legally, because the directors have a fiduciary responsibility to all the shareholders, and also from a policy point of view. GLCs, especially the listed GLCs, have to operate commercially. It does not mean that DBS will go into manufacturing semi-conductor chips, or PSA should start an airline business, or even a shipping business. The decisions must make business sense, and they must fit the companies' business strategy. But there is no original sin attached to being born a GLC, which taints a GLC from birth and prevents it from doing certain types of business. As for investments by Temasek itself, we are in a different situation from the early days. There is now less need and, I think, fewer opportunities for the Government to go into new businesses on its own. We are not likely to start a new airline, or another bank. But we cannot completely rule out the possibility that the Government may need to invest directly in new businesses. These could be businesses which are exceptionally risky or which have long gestation periods, or where the private sector is not willing to go in. Most of the time, if the private sector is not willing to go in, I would say we should conclude that the business fails the market test, and should not be launched at all. But once in a while the Government may need to impose our judgment and override the verdict of the market. One recent example is the Jurong Island project. The Government felt that it makes sense for us to reclaim seven islands, fill in the land, sell the land, develop a petrochemical complex, not by building the plants ourselves but by encouraging and persuading MNCs to come and build the plants. That is an entrepreneurial business decision, although in that case the decision was made by JTC, and it was done through JTC with the help of EDB, rather than by forming a new Temasek company, which we could have done. Hence, the clause in the Temasek Charter to allow Temasek, from time to time, to invest in new businesses, in order to nurture new industry clusters in Singapore. There will be other occasions when Temasek will need to go in. On the one hand, Mr Leong Horn Kee wants the Government to stop forming new GLCs; on the other hand, he wants GLCs to help the SMEs by co-investing in them. Indeed, as Ms Indranee pointed out, there is a certain tension between these two arguments. Temasek will indeed invest in SMEs, where it makes business sense. But if we did this, please remember and accept that these SMEs, by definition, will become GLCs! Another hot issue which MPs have pressed on is the divestment of GLCs. The Government will divest those which do not have the potential for international growth or serve no strategic purpose, and these are mostly the smaller ones. Michael Fam's Report in 1987 recommended divesting 41 GLCs over 10 years. Mr Leong Horn Kee said only two-thirds of these have been divested, fully or partially. That is true. But, at the same time, we also divested some 30 GLCs which were not listed in Michael Fam's Report. So, overall, since the mid-80s, we have divested some 60 Temasek companies, either completely or partially, more than what Michael Fam's Report recommended. Temasek will continue to consolidate and rationalise its stable of companies. It will divest those that are no longer relevant to its mission, but this must be at the right time, at a fair price, in a way which does not unsettle the market and which ensures that the GLCs continue to be properly managed after divestment. Mr Inderjit Singh and Mdm Ho Geok Choo urged the Government to consider management buy-out (MBO), as a method of divestment. An MBO is certainly one of the methods which the Government will consider and which, indeed, we have used on occasions to divest companies. But, as Mr Sin Boon Ann correctly pointed out, information is not symmetrical in an MBO. Management knows more about their company than the board or the shareholders. Indeed, if they did not know more about the company, something is wrong. But this causes a problem. So it is not so simple to ensure that the shareholders receive full and fair value for their shares in an MBO. The purpose of the MBO is not to sell the company cheap, but to derive full value for the shareholders and act in the best interest of the company. But we do not entirely rule out MBOs either, and each case will be evaluated on its merits. There is no reason for the Government to sell off GLCs below their fair value, regardless of market conditions, by a specific deadline. Why should we do that? We do not need to raise revenue through asset sales. We are not selling off the family silver and the last Canaletto painting that MacMillan said about the British government asset sales. If we sold off the GLCs in a hurry, we will no doubt have a debate in the House and MPs would rightly criticise us for not safeguarding the interests of Singaporeans, and rightly so. Therefore, it would be unwise to publish a list of companies that would be divested within a fixed timeframe. The act itself would depress values, alarm customers, demoralise employees and cause viable businesses to run to seed. Some people have argued that, since the GLCs are not doing well, we should divest them in order to improve their performance. We do not agree. Firstly, most GLCs are performing well. Over the long term, GLCs have amply returned the Government's initial investment. For example, DBS and SIA were transferred to Temasek in 1975. At that time, DBS was valued at $49 million, SIA at $91 million. Today, Temasek's share of DBS' and SIA's market capitalisation is $2.3 billion for DBS and $8.2 billion for SIA. So if we take a longer timeframe, the companies have done very well. In the nature of things, not all GLCs will do well all the time. Where GLCs are not doing well, the management has to sort out the problems. If necessary, the board may need to make management changes, or the shareholders, including Temasek, may need to make board changes. Keeping businesses in good health requires tough decisions and clear mindedness, and Temasek has to have that, and do that. Secondly, I agree with Mdm Ho Geok Choo that most fund managers do not take an active role in building up the companies which they hold shares in. They buy the shares as portfolio investments. They sell the shares when they see the company doing badly, or even when the shares are merely under performing. And if the company is doing well, they may also sell the shares to make a good profit. They are trading, they are not long-term shareholders. Therefore, selling GLCs off to some fund manager, or new shareholder, will not magically solve the problem. The way to upgrade a business is to assemble an experienced board, build a strong and cohesive management team and do the hard work of improving systems, changing management cultures, developing new capabilities, opening new markets. Having the Singapore Government as the shareholder does not stop companies from doing this, provided the Government takes a rigorous commercial approach, and entrusts the task to a capable team. Others have argued that the Government should simply divest all its GLCs regardless, because as a matter of principle, the Government should not own companies. We do not agree. As Mr Raymond Lim highlighted yesterday, despite the recommendation of the World Bank and the IMF to privatise rapidly, the benefits of privatisation are not a given, especially if it is not done under the right conditions. For many of the GLCs, the Government is the major shareholder. If we are to let the companies go, as Prof. Koo Tsai Kee asked, to whom? Which private companies or individuals are in a position to take over SingTel, SIA or PSA? Not just financially, which is difficult enough, but in terms of management oversight. Can we really just distribute the shares to Singaporeans and expect the companies to naturally prosper? Looking at the success stories of companies around the world, great companies are built by committed, long-term shareholders holding major or significant stakes. And this is especially the experience in Asia. But even in the US, after Enron, it is not so clear that having a diversified shareholding and no major shareholder effectively in charge at all is a good formula. Bill Gates still owns a big share of Microsoft. He makes sure it does well. A major shareholder has a substantial amount of his own money at stake. He will take the trouble to find the right people to run the businesses, set the directions, and make sure the business is run properly. Without a major and active shareholder, it is much harder for many small shareholders to get together to do this, as Mr Raymond Lim pointed out. Hence, the Government has the responsibility to promote and ensure good governance in the GLCs. In Singapore, there are very few local individuals or companies with the resources and the capability to buy over and drive the performance of the large GLCs. In Hong Kong, there are tycoons, like Mr Li Ka Shing or Mr Robert Kuok, who own and run major companies. In fact, among the tycoons, they own and run a large part of the Hong Kong economy. Perhaps, over time, such people may merge in Singapore. But remember, a Singapore in which the commanding heights of the economy are controlled by powerful, private shareholders will be quite a different economy and quite a different society from one where the major companies are professionally-run GLCs, and the ownership ultimately comes back to all Singaporeans. Let me reiterate that this does not mean that the status quo is frozen, and that the Government is not going to divest any GLC. We will restructure the GLCs, we will sell off the pieces which do not fit. We will consider mergers and acquisitions which make business and commercial sense. That is the way to make the most of a valuable asset and to realise the full value of the GLCs we have built up. Next, let me address the question of crowding out. Mr Inderjit Singh and also Mr Leong Horn Kee had complained that the GLCs are entering businesses which the private sector is fully capable of doing. Let me assure them that we have no intention of doing that. For example, the famous roast duck company, again recited by Mr Inderjit Singh, had been acquired incidentally as part of a larger acquisition in 1991, and divested in 1994 purely as a business decision. It is an immortal duck! The Temasek Charter is oriented towards companies which have the potential to grow internationally, or are strategic to Singapore. In the EISC, Mr Raymond Lim proposed a 'Yellow Pages' rule. Statutory boards should not set up companies to do things which can be found in the Yellow Pages. I agree in principle with this. If you can look it up in the book, why do you want to start a company to go and compete with the private sector? However, applying the Yellow Pages rule will require judgement. We must expect times when the Ministry or statutory board judges the private sector not to be adequate, but the private sector disagrees. In fact, quite understandably, the more competitive the GLC is, the more unhappy the private sector is going to be. It is in the nature of things. And if the private sector is not up to the job, it is most unlikely that any of them will stand up and say, "Sorry, I am not up to it, please carry on." For example, PSB Corp which runs training programmes and certification for ISO 9000. Private training service providers protest at this. But the former PSB Corp, which is now SPRING Singapore, started the industry when there were no private providers. The industry did not exist then. PSB created the market because of the national reason that we wanted to promote training, upgrading, productivity. And the private service providers then entered the market. Now, the private service providers say, "PSB is competing unfairly." But now that there are private service providers, it is no longer necessary for SPRING Singapore to continue to do this. And so SPRING Singapore has hived off the function to PSB Corp. PSB Corp is a corporatised entity which will subsequently be privatised. I will give you another example. Hdbay, also mentioned in the debate, was set up by a wholly-owned subsidiary of HDB - CESMA International - as a web portal for the renovation industry in January 2001. HDB did this to help raise the standards of the interior design and renovation industry. Because we get complaints, such as contractors making a hole in the ceiling, damaging the structural pillar, so HDB set up Hdbay to try to upgrade standards in the industry. HDB deals with Hdbay at arms length, but still the renovation industry questions whether HDB needed to create Hdbay at all. Well, maybe the renovation industry is right. It is arguable. But far better for us to have civil servants and officials who have the drive and enterprise to start new activities than for civil servants to sit back and do nothing. Of course, now Hdbay is up and running, HDB will consider divesting its interest in the company. But that is a different matter. At least, I have a company and there is something which we can talk about. Mr Leong Horn Kee says bliss to a businessman is a business world in Singapore without GLCs, because there will be less competition and more room for the local businessman to build up his business. Would that be worse? If the local companies were not competing against GLCs, they would still be competing against powerful multinationals, or large local companies in private hands, which is what happens in Hong Kong. Life would not be easier. As Mdm Halimah pointed out yesterday, in many privately developed shopping malls, FairPrice does not get in because the private developers have brought in their own partners, their own private companies, their own friends, which are in the retail business, and not SMEs, nor FairPrice. So without GLCs, you would still have competition. And if we did succeed in reducing competition, which is what Mr Leong really wishes, this would result in a less competitive private sector, and fewer choices for consumers. It is worse for consumers. Far better to have keen competition in Singapore to build strong SMEs which are internationally competitive. And I think Mr Leong acknowledges this because, after his eloquent argument, finally he says he supports FairPrice. Whatever the argument, the conclusion was not wrong. And related to crowding out is the issue of unfair competition. There are different ways in which you can interpret the word "unfair". It could be unfair market practices. It could be an insight track, an unlevel playing field. It could be cheap financing. It could be size. Let me take them one by one. On unfair market practices, which means cartels, predatory pricing, abuse of dominance, the Government does not condone these, whether by GLCs or by private companies. MTI intends to enact a competition law and all companies, including GLCs, will be subject to this law. There will be some sensitive activities which should be exempted from the law, as in all competition regimes around the world. Enterprises which feel that they are facing unfair competition can then take the matter to an independent Competition Commission and it will be adjudicated and there will be a redress. As to whether GLCs enjoy an inside track, our policy is clear. The Government will not tolerate this, we do not do this. We expect GLCs to compete on a level playing field. Ministries and statutory boards will maintain an arms-length relationship with the GLCs, and the GLCs must operate commercially and efficiently, and not receive special subsidies or favours. Of course, the corollary of this is that we must also not expect GLCs to do "national service", whether it is to do a favour to SMEs, lower prices, or provide non-economic services. To favour GLCs at the expense of other companies is to do harm to the economy, and to encourage GLCs to be less competitive and efficient. For example, MAS supervises the banks. One of the banks is DBS. But if you ask DBS, they will tell you that they do not enjoy any special privileges or forbearance. They are treated just like any other local bank. In fact, DBS sometimes feel they are treated more than just like any other local bank. But that is how we have to deal with it. So, Mr Inderjit Singh is mistaken that SMEs will similarly succeed if only the Government would give them the same special treatment it extends to GLCs. The truth is that GLCs enjoy no protectionist measures from the Government. Sometimes, companies which have been spun off or set up by statutory boards still do business with their parent. For example, Ascendas with JTC. In such cases, the perception is harder to dispel, and we have got to make a special effort to be transparent and above-board in the dealings. For example, any asset transferred has to be properly priced, and if a company competes for business with the parent, then it should be through open bidding or tender. Sometimes, we will need to corporatise a Government department or statutory board with a moratorium. For example, CPG Corp, which used to be called PWD Corp, or Jurong Consultants. The moratorium helps the corporatised entity make the transition into a private-sector player and, in cases where the corporatised entity was the sole supplier to the Government, it gives the Ministries time to adjust. I fully agree with Members that moratoriums are not desirable, and they should be avoided wherever possible. They are messy, circumstances change and you wished you had not done it. But a moratorium is no worse than the department or statutory board remaining a Government agency. To help make the transition, sometimes it cannot be avoided, because a cold turkey cut over may be neither practical nor wise to ensure the retention of expertise and the continuance of service to the Government in the transition. In other words, it is not just the company which may not be ready if you cut over cold turkey, but the customers, the clients or the Government departments may not be ready because, all of a sudden, instead of having a regular contractor, architect or engineer, they have got to prepare specifications, call for tenders, evaluate tenders, and supervise. That takes time to learn. Hence, what we did with PWD Corp. Since the corporatisation of PWD in April 1999, CPG Corp has been awarded only about $250 million worth of new Government projects. In contrast, private-sector consultants received 118 Government projects worth $1.3 billion during the same period. Had PWD not been corporatised, these 118 projects would have been undertaken in-house by the Government. So, by corporatising, we have created business for the private sector. The part kept to facilitate this transition is a minority - one-quarter or one-fifth of the business. But because people do not notice this, they say PWD Corp, has a moratorium and an unfair advantage. The facts speak for themselves. Mr Leong Horn Kee says that GLCs enjoy cheap funding because of their perceived links to the Government. The Government does not provide any guarantees to the GLCs. The banks and the markets have to make their own assessment of the credit worthiness of the companies they lend to, and the bigger and stronger companies will generally enjoy better credit ratings and better spreads. However, it is not automatic that GLCs will enjoy loans at lower rates. The lenders and analysts rate the companies, and their credit ratings vary from company to company and from time to time. For example, Moody's put a negative outlook on SingTel in June 2002, fairly or unfairly. SingTel considers it unfairly, but Moodys makes its assessment and it has implications on SingTel's borrowing costs. I do not know why the bankers in Mr Leong Horn Kee's project in China preferred to lend to the three GLCs and not to the one non-GLC which was there. But Mr Leong Horn Kee's explanation that the bankers were favouring the GLCs irrationally is not the only possible one. Mr Inderjit Singh claimed that GLCs succeeded because of the huge investments the Government had made in them, and because they made use of their links to the Government to get ample cheap funding. This is simply not true. The GLCs were started with only seed capital. The rest was internally generated over the years through the GLCs' own efforts. I gave you the example of SIA and DBS just now. Let me cite another example - also recently mentioned in despatches - Singapore Technologies. Mr Inderjit Singh mentioned this as an example of a company with "murky beginnings" - I think it was his phrase. Cloak-and-dagger.

No. Not me.

Not you.

Someone else.

Someone else. He does not know the history of ST. ST, in fact, is an excellent example of how GLCs have grown and how we have pragmatically evolved our own solutions. We are not like the US, where the defence industries are largely private-sector firms. We also did not have economies of scale, especially at the beginning. Yet, we needed to build up our defence industries, for strategic reasons, to support the SAF. We did not do this by throwing money at the problem, or by using our muscles instead of our brains. I think this quote is from Mr Inderjit Singh. MINDEF set up the defence industries as companies instead of as Government arsenals, so that they would be subject to market discipline and would be able to operate efficiently. The defence industries did not get a free ride. They had to tender for MINDEF projects against foreign competitors - often, subsidised foreign competitors - and match their prices. Over time, they built up their capabilities and scale. They made profits, which they reinvested in the business. They grew, using internally-generated funds, not cheap Government funding. They diversified into non-MINDEF business, most of it abroad. Today, many of them are listed, including ST Engineering and Chartered Semiconductor. Could ST companies and managers have done this, if indeed they had not used their brains or had been bereft of entrepreneurship? Could the private sector really have stepped forward and filled this role, if MINDEF had not set up CIS, ODE, Singapore Aerospace and so many other companies now in the ST Group? Let me now turn to the question of size. In some industries, the advantage of size is, unfortunately, a fact of life. For example, in banking and telecoms, size is critical. Larger companies have more resources, more capacity for risk and more staying power. For Singapore companies in these industries to be competitive, they must build up their size to enjoy the economies of scale, build up the depth of management expertise, attract talent and grow the company. As Mr Iswaran has pointed out graphically with figures, our big companies are very small by international standards. Small companies will have a much tougher time competing against the large players. We cannot tilt the playing field in these industries in favour of the small players. In fact, on the contrary, sometimes we will need to encourage the small players, nudge and persuade them to merge and to become bigger and stronger. In these industries, unhappiness with GLCs really is unhappiness at having to compete against a larger and more powerful player. But that is the way the world and the industries are evolving. On an international comparison, we know how small we are. So, we cannot solve this problem by shrinking the GLCs or divesting them. Of course, this is not the case in every industry, and SMEs form an important part of our economy. In many businesses, the small companies enjoy a nimbleness and an entrepreneurial drive and flexibility which help them to develop new products and markets, and to exploit changing conditions faster than larger companies. For example, Microsoft started from scratch when IBM was already a giant, and swiftly overtook IBM. Dell and Compaq also started from scratch when IBM said the PC is a commodity business, and they have built themselves up into big Fortune 500 companies. So, I agree with Mr Wee Siew Kim that SMEs can act as "support firms" to GLCs in a cluster approach when pursuing overseas ventures. This is why Temasek and EDB have set aside some private equity funding to invest in promising local enterprises. For example, Temasek has a small stake in Osim International, and is represented on the board. When you rest in the Members' Room and sit on the Osim chair, please think of Temasek! Moving forward, the issue for us, therefore, is not so much managing the competition between the big and small companies in our domestic economy but, as Ms Olivia Lum and several others point out, encouraging them to collaborate in competing internationally. That is why the Government set up the Local Industry Upgrading Programme (LIUP), as well as a whole series of assistance packages for SMEs offered through MTI, eg, the Local Enterprise Financing Scheme (LEFS), the Business Upgrading through Inter-Linkages Development (BUILD), and so forth. There are almost more schemes than there are SMEs. The EISC has recommended that the Government oursource more Government functions to the private sector. We agree. Ministries and statutory boards already outsource certain services to the private sector. These include IT software development, systems and facilities maintenance, provision of medical services in prisons, provision of legal advice in certain specialised areas, such as international trade law. Our intention is to outsource as many functions as possible, provided it makes economic sense to outsource and the outsourcing arrangement is sustainable. However, remember that this does mean handing out cushy Government contracts to SMEs. It means fiercer competition for Government business, which will make suppliers more efficient, and save taxpayers money. Public-sector agencies are already allowed to contract start-up companies with no company track record, for IT and technology projects of up to $5 million. This is to help the SMEs have a chance and build up their track record. In addition, we have got procurement guidelines which allow Ministries to decide, based on their assessment of the potential market and the attendant risk, to lower the tender evaluation criteria in terms of the financial status of tenderers. Then, SMEs can participate in larger Government tenders. We will continue to make it easy for SMEs to participate in Government contracts, but we should not give SMEs an explicit advantage over larger firms in Government business, or handicap large firms in order to give the SMEs business. Some countries do this, eg, Germany, Japan, but the result is inefficiency and higher cost for taxpayers. SMEs have to be competitive to survive and prosper, just as GLCs and MNCs have to be competitive. Otherwise, we will wake up one morning and say, "Who stole my cheese?" As Ms Olivia Lum said, SMEs want opportunities, not handouts. And there are opportunities and many successful SMEs. Examples include Qian Hu, started in 1985 from the conversion of a pig farm into a fish farm, which is now a major exporter of ornamental fish in Singapore, with customers in more than 45 countries, a turnover of $41 million, and net profits of $3.4 million last year. That is enterprise. They gave me two fish. I gave them to my children, they took a liking to the fish and bought dozens more, some of which probably from Qian Hu. There is Food Empire (Coffee) listed on the main board of SGX. It makes and markets more than 90 instant beverage products, frozen finger food and confectionery, eg, MacCoffee, Klassno and MacCandy amongst others. And they are in exciting parts of the world, not just the US, UK, China or Australia, but according to their website, also in Russia, Eastern Europe and Central Asia. They are not depending on Government hand-outs. Old Chang Kee, a franchise owned by a Singapore firm, Ten & Han Trading, has outlets in eight countries, including Malaysia, India, South Africa and China. They started off selling 300 curry puffs per day in 1956. Now they sell 18,000 per day just in Singapore alone. It is now looking to export Singapore-made curry puffs to countries like the US and Britain. The problem is, if the SMEs are successful, they grow big, they are no longer SMEs, then you have to look at new SMEs and new champions, new entrepreneurs. But they are there, they will come. Mr Leong Horn Kee suggested that the Government and Temasek publish an annual report of GLCs for greater transparency and to foster trust of the GLCs. I am not clear why he should distrust GLCs. GLCs do not operate under a cloak of secrecy. Most of the major companies which are held directly by Temasek are already listed, so their annual reports are readily available and, in fact, GLCs regularly win prizes for having the most comprehensive annual reports. ST Engineering, which holds many of our defence industries, is listed and so is subject to market demands for transparency. As for unlisted companies held directly by Temasek, such as PSA Corp, Singapore Power or MediaCorp, we have plans eventually to privatise them too. In fact, Singapore Power and PSA Corp already publish their annual reports. Accounts for the smaller statutory board companies are also available from the Registrar of Companies and Businesses. There is no need for a consolidated report by the Government. Much of the public unhappiness has not been over the major GLCs, like SIA, DBS, but the small ones, mostly the statutory board companies. We have considered preventing statutory boards from starting companies without MOF's permission. My staff put it up, we have discussed it. We concluded that it was not practical. They may simply provide the service in-house, which is not better. Identifying out-of-bound areas a priori is also difficult because each statutory board's situation is different and the circumstances themselves change with time. However, the Government will review and cull the list of statutory board companies regularly. We will particularly consider the need to separate the statutory board companies from their parent, especially where the parent is the regulator, while the statutory board companies are regulatees or are somehow related to the statutory board business, thereby giving the perception that the statutory board companies have an unfair advantage, like in the case of HDB. Members will be happy to know that the Ministry of Finance will be issuing a set of guidelines to Ministries and statutory boards on the factors which they should take into account when they are thinking of setting up statutory boards. They should only form companies that serve a strategic role integral to the mission of the statutory board or that do not breach the 'Yellow Pages' rule. Companies should also not be given names that bear relation to the parent or predecessor, thus creating confusion. I used to know what PWD Corp was. Now, I have to remember CPG Corp and so will Members. But maybe that will be fairer. But overseas, where the names PWD Corp, HDB or JTC carry weight, they will be allowed to carry those brand names. And even when statutory boards set up companies which meet these criteria, they should do so with an ultimate view to divest them. Let me now talk about talent, an important subject. Mr Leong Horn Kee attributed the dearth of entrepreneurs in Singapore to the monopoly of top talent by the Government. Unfortunately or fortunately, the Government does not monopolise top talent. Every year, the Government awards about 300 scholarships, which is less than one-third of the top students in the cohort with 4As. Many of these scholarships are intended for economic activities, such as those given out by EDB, A*STAR and IDA. They come in, they serve for a while with the statutory board, they go out to the industry. If we exclude them, then we are talking about even fewer scholarships, only about 200 out of 1,400-1,500 top students. Of all the scholars who have returned to serve their bonds, only 40% remain in service today. Amongst them, about half are young officers in their first four years of service. Many of them will end up leaving the service before their bonds are up. Typically, a scholar these days leaves after 3-5 years of service. Those who come in expecting to serve till they retire are a minority. They will serve their bonds. They will fulfil their obligations but they do not see themselves serving one lifetime career in the Government. They want to go out and they do go out. So we let them go and we bring others in. Therefore, there is no monopoly of top talent in the Government. If the Government stops giving scholarships, the impact on the private sector talent pool will not be enormous because we are talking about 300 people out of 1,500, not for life but for 5-10 years. In fact, not giving scholarships may make things worse. Without scholarships, either many of our young talented people cannot afford to study overseas, or if they pay their own way, they may decide not to come back at all. And the Government must get its fair share of able people, both in politics and in the civil service. Mr Leong Horn Kee suggested that Mr Lee Kuan Yew should have remained a lawyer, Mr Goh Chok Tong a shipping executive, Dr Tony Tan a banker and I too should not have been in Parliament and then Singapore would have a more vibrant private sector. We thank him for the compliments but let us ask: if we had all done this, who would then be the Government? Would we have a Singapore today? Ms Indranee said that perhaps PSA would today be called PTP. I would ask: think, who might be the Prime Minister? So, the "private sector not stupid". The key issue here is not whom we should favour in a public and private sector fight for talent, but how to encourage a healthy circulation of talents between the public and private sectors. We need to develop our young, including through scholarships, to provide the education and the opportunities to fulfil their potential. We do not ban Government scholars from leaving the Government service for the private sector if that is their inclination. In fact, we have now introduced a gap-year programme, so scholars who complete their courses can hunt around for a 6-12 month attachment, either to a super-national, such as the UN, the World Bank, the IMF, or to a merchant bank like J P Morgan Investment, Morgan Stanley or to a multi-national such as Intel, British Telecoms. He spends 6-12 months to learn about the business world and come back and be a better Government officer. One day if he goes out, he will have business sense, honed at a young and impressionable age and he will be able to make a contribution. The challenge for the civil service is to attract private sector talent to contribute to the civil service, and at the same time, to adopt forward-looking policies to manage and groom all our talents so that a stint in the public service is a value-adding experience for the officers. There are various private sector companies which also offer scholarships or sign-on bonuses at the point of graduation to attract talent. But the companies, having attracted talent, have to manage and develop them, test them out, give them opportunities and move them up as rapidly as they deserve. Unfortunately, this is far harder to do than just to bring in the talent and when it is not done, the scholars get discouraged, demoralised, leave, and the organisation stagnates. Sometimes, they also say that the Government took all their talent. But it is not a simple matter of giving fewer scholarships. It is a matter of managing the talent, bringing them in and keeping the organisation fresh and that is a top management or board responsibility. The Temasek Charter and the Government's attitude towards divesting GLCs are fully consonant with the recommendations of the EISC on Government in business. The Government fully supports in principle all those recommendations. Mr Leong Horn Kee went beyond the EISC proposals to make 10 recommendations of his own. I have already dealt with most of them but let me recap briefly: (i) To curb proliferation of GLCs. I agree that the GLCs' growth should be disciplined but I cannot agree never to start or grow GLCs; (ii) Government to set up a specific timeframe for divestment. We cannot agree; (iii) Government to outsource any commercial requirements. I agree in principle; (iv) Review of subsidiaries under the statutory boards and Government agencies. I agree; (v) NTUC/SLF to review its stable of companies. This is for NTUC/SLF to decide. Mdm Halimah and Mr Heng Chee How have already explained eloquently NTUC's views. There is nothing much I can add except to make an appointment to visit Denticare; (vi) Priority to enacting competition law. I agree; (vii) GLCs to enlist more private sector persons in boards and management. GLCs need to seek the best talent, whether it is the private or public sector; (viii) Encourage more MBOs and divestment to locals. MBO is one method of divestment to be considered, but whether it is the best approach depends on particular circumstances of the GLC and the specifics of the MBO proposals; (ix) More GLCs and private sector cooperation as cluster or consortium. We agree in principle; and (x) Regular study by the Department of Statistics (DOS) on GLCs' share of GDP. I agree. Finally, I ought to thank Dr Wang Kai Yuen for giving us a historical perspective on this subject and reminding us that these same issues were debated 20 years ago and probably our successors will still be debating them 20 years from now. We need to try to rise above the situation. Do not assume that the problem for SMEs will go away if we do not have GLCs. As Assoc. Prof. Koo Tsai Kee and Mdm Halimah Yacob pointed out, without them, the vacuum would be filled by the large private companies or MNCs and the SMEs would still have to face fierce competition. The EISC recommendations on the Government in business will help to define the Government's role, foster the growth of private enterprise and entrepreneurship. The Temasek Charter will guide the Temasek companies on what Government, as shareholder, expects of them. As for the private sector's concerns on the GLCs, the Government will tackle those problems whenever they arise. As I have said before, and I offer it again, if you know of specific problems, let me know, e-mail me, I will look into it, after removing your name from the e-mail. I have done so. Sometimes, there is a reason and it has to be put right; sometimes, there is an explanation and that has to be conveyed. But the Government will exit from businesses that are no longer relevant although it cannot do this overnight. The solution is not to dump the GLCs altogether or to handicap the GLCs and prevent them from competing fairly but robustly against private companies. GLCs, private companies and SMEs all have roles to play in growing our economy and developing our external wing. They will sometimes compete, but they should also cooperate with one another. As Ms Indranee and others have said, the issue is Singapore Inc. versus the rest of the world. Government's overall thrust is thus to grow the private sector as a whole, whether GLCs or non-GLCs. And as Mrs Fang Ai Lian pointed out, the issue is also entrepreneurship, because it is the spirit of enterprise that will help us to adapt and grow as the world changes. As the economy grows, and as the private sector expands, the shape of the Government in business will change. The key is not whether the companies are Government-owned, but whether they are well run, entrepreneurial and profitable. We have every intention of ensuring that GLCs are as well run, entrepreneurial and profitable as private companies. That is the way to build an efficient and vibrant economy. In this spirit, Mr Deputy Speaker, Sir, I support the motion. [Applause.]

Mr Leong, do you want to wrap up?

Mr Deputy Speaker, Sir, I wish to thank all the 24 Members, including the 22 PAP MPs and NMPs, MOS Raymond Lim and DPM Lee Hsien Loong, for speaking on this motion. I have listened very carefully to all their speeches, particularly by MOS Raymond Lim and DPM Lee Hsien Loong. They have all made very good points. I wonder why none of the Opposition MPs and the NCMP spoke on this motion. Perhaps, they thought that this motion is not very important enough for them to debate on it. I do not agree with them. Sir, I would like to thank the Minister of State, Mr Raymond Lim for his considered reply. I am pleased to hear from him and, as explained by him, there will be no "Great GLC Sale". As to the response by DPM Lee Hsien Loong, I would like to thank him specially for his very thorough and robust reply. He has set down clear policies on GLCs and the basis for Government in business. He has put across the total picture in a very clear perspective. I would like to especially thank him for the clarity of his reply and explanations. Sir, just on a few points about the comments that I have made. I want to clarify that in the case of the joint venture with three GLCs and a local company, I did not mean to say that the bank had made an irrational decision. In fact, the bank had made a very rational decision. In contrast to the private company, the three GLCs are much larger and stronger and therefore given lower interest rate. As the DPM has said, it is a question of size. For a smaller private company, our corporate guarantee was deemed to be of lesser value. Sir, the other point I would like to clarify is that the annual report to be prepared by the Ministry of Finance and Temasek Holdings is meant more for the non-listed companies, and is meant as an avenue for the Government to take stock, perhaps every year. On the point about Ministers in private practice or professional business, I did not say that they should go into private practice or into professional business. I said that if they had been, they would have made very good entrepreneurs or good businessmen - "if they had been". I agree that we are glad that they did not go into private business. For the sake of Singapore, we are pleased to have very good Ministers in charge. I just want to make the point that because of being scholars, if they had not taken up the scholarship, they could, on their own merits, have become great entrepreneurs. That was the point I was trying to make. Finally, on the 10 recommendations that I made to the DPM, I did not count because he was going through them very quickly. I think I got about 6-7 right. So, it is above the passing mark! Sir, I wish to say that much criticism had been levied on the GLCs. I wish therefore to put into perspective the values of GLCs. I agree that they have several plus factors. They have contributed to the economy, and given employment. They are mostly efficient, well run, and they are clean and non-corrupt. Of course, some GLCs, like SIA, have helped to put Singapore on the world map. Some people actually asked me why am I knocking the GLCs. I would like to explain that I am not complaining about GLCs per se. What I am debating is the fairness and the benefits against the evils of Government in business. All of us have friends, relatives and constituents who are working in GLCs. Sir, to emphasise the point on the need to reinvent for the success of Singapore, a comparison can be made between Korea and Japan. During the Asian financial crisis in 1997, Korea was badly affected and nearly went bankrupt. But now they are bouncing back strongly, because they have changed everything. They have changed their constitution, changed their President and changed the way their economy is run. In contrast, Japan's economy was drifting for over a decade, because it was unwilling to make painful but necessary changes to its economic structure. Japan is still languishing today. Sir, during the debate on this Motion, much has been said to clear the air and the smoke about GLCs. The concerns started about 15 years ago which resulted in the Public Sector Divestment Committee under Mr Michael Fam. Fifteen years later, we are still having this debate on GLCs. I do hope that with the EISC Report and the Temasek Charter, and the explanations given by the Deputy Prime Minister, there may not be a need for debate 15 years later. Sir, I wish to conclude by agreeing with the DPM that going forward, GLCs will coexist side by side with private companies, each playing a vital role, each helping and supporting the other to grow. The ultimate objective is to create world-class companies for Singapore. It does not matter really whether they should be GLCs or privately owned companies. We should have a good mix of both. Above all, we want to have a system, an economic and industrial model, which is the best for Singapore. We want a model that can take us into the future. Finally, I wish to thank the Speaker and you, Mr and Mdm Deputy Speakers, for your patience and indulgence.

Question put, and agreed to. Resolved, 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.

Resolved, "That Parliament do now adjourn to a date to be fixed." - [Mr Mah Bow Tan]. Adjourned accordingly at Ten minutes to Five o'clock pm to a date to be fixed.