Hansard, 2003-03-15

Order read for consideration in Committee of Supply [3rd Allotted Day].

Head W (cont.) - Resumption of Debate on Question [14th March, 2003], "That the total sum to be allocated for Head W of the Main Estimates be reduced by $100." - [Mr Chay Wai Chuen]. Question again proposed.

Sir, I had three cuts relating to the taxi industry. I spoke on one yesterday. May I proceed to the other two?

Proceed with the other two, please.

Sir, my cut relates to taxi fares and the pricing mechanism. Recently, during the debate on the Road Traffic Act amendment, we heard from the Minister for Transport that we had the highest number of taxis per capita among major cities of the world. That taxi should be considered as a premium door-to-door service but our fares are relatively low that it makes sense for two or three persons to take a taxi, instead of the bus or MRT. Soon after that, on 13th February 2003, there was a major article in the Straits Times agreeing that our taxi fares were too low. Now, is there a hint that taxi fares are likely to increase in the near future? But what will cause fares to increase? The Government no longer sets taxi fares. Under the present circumstances, judging by the popularity of taxis, commuters are generally happy with the current fare structure, taxi drivers are still making a decent income although some are grumbling that income has declined. There are many drivers queuing up to drive taxis and taxi companies are raking in huge profits. It seems that the only unhappy party may be the Government, as it means that taxi service is not priced properly leading to a loss of potential revenue for the Government. I wonder whether that is good enough reason for an increase in fares. Although the Government does not set fares any more, it can still cause taxi companies to increase fares by increasing their cost of operations. The new licence fee of $25 per taxi per month imposed recently is a small component. If it wants to, there are many other areas where the Government can levy charges and fees, such as COE, diesel charge, etc. At present, taxi drivers are charged about $60 per day to rent the taxi. If the driver takes in more than that, it is his income. If less, he takes home nothing and may even have to come out from his pocket. If increases in fees and charges cause taxi companies to pass them on to the taxi driver by way of a higher daily rental for the taxi, the taxi driver will stand the risk of a bigger loss if business is unusually bad. I think it is not healthy to subject individual taxi drivers to greater financial risk and liability, and hope that any increase would be charged to the taxi companies directly instead of being passed on to the taxi drivers or the commuters. Although we have the highest number of taxis per capita, yet during peak hours and rainy days, there is not enough to meet demand. There are perennial public complaints about the non-availability of taxis during such times. However, during non-peak hours, there are taxis aplenty cruising our streets or waiting for commuters at taxi stands. Therefore, any increase in the already high population of taxis will affect the income of taxi drivers adversely. The solution to this problem, as advocated by the LTA, seems to be variable pricing to meet demand, and by that, it appears that the LTA is subtly referring to (although not openly pushing for) the phone booking fee. So, if you are prepared to pay more by calling for a taxi, according to the stipulated quality of service, you will most probably get your call answered within 30 seconds, confirmation for the booking within 5 minutes and a taxi at your doorstep within 10 minutes. That is for those prepared to pay the extra, that is, the pricing difference. For others, it means a long wait along the roadside, or in a queue at a taxi stand. If this is the preferred solution, then I think we should publicise it and tell commuters not to waste time waiting by the roadside or taxi stand. If we adopt this solution, I believe the situation for those wanting to hail a taxi from the roadside, or taxi stand, will only worsen in time. The QoS or quality of service does not help to alleviate the situation. The five qualities of services require that phone booking service levels be met, otherwise a penalty of up to $100,000 per contravention will be imposed on the taxi operator. Now, we know that demand for taxis is high during peak hours. For fear of not meeting this QoS, taxi companies, especially the smaller ones, will naturally want to take their taxis off the streets and keep them on standby to make sure that they can attend to phone bookings. If not, if their taxis are all committed picking up passengers from the roadside, and they are not able to attend to the calls, they will be fined. CityCab is offering the lowest booking fee now to attract more calls. But if their phone booking becomes more popular and they are swamped with calls, how long can they manage with a small fleet and not run foul of the QoS? So, I think the writing is clearly on the wall - better pay the higher price if you want to get a taxi, otherwise take the bus or MRT. Those unwilling or ignorant, especially the tourists, will continue to complain and have a bad impression of our taxi service. Sir, may I move to my cut regarding competition in the taxi industry.

You have got to go faster, Mr Ong.

I wonder how competition can be introduced at this late stage where there is already a dominant market leader which has the clout to set pricing and market trends. The situation is aggravated by the merger of Comfort and TIBS taxis. The smaller existing companies and any new entrant would not be able to compete and would find that there is not much point taking on the big boy head-on. They would simply follow what the market leader does. Like former Finance Minister, Dr Richard Hu, explained before in relation to pump prices, domestic petrol pump prices are set by Shell which has the largest network of petrol stations and the others simply follow.

Sir, since we are in good time, may I seek your indulgence to do one cut, just two minutes?

No. You have missed the bus. You have to wait for the next bus. Mr Seng Han Thong.

Sir, I will drive very fast. First, let me declare my interest. I am the Advisor to the three Taxi Drivers' Associations - Comfort, CityCab and TIBS. Thus, in Singapore, whenever I board a taxi, I do not need to pay, but I have to pay when I get down, as usual. Sir, under the new regulatory framework for the taxi operators, taxi companies are to pay a levy of $25 per taxi per month to the Government to finance the cost of enforcing taxi service standards. This means that the taxi industry needs to pay the Government $5.7 million per year to enforce service standards. Sir, when the Government is trying ways and means to lower the business costs, I see this move as going in the opposite direction and driving up the cost of taxi driving. The taxi drivers are concerned that, eventually, they need to bear part or all of the $5.7 million. The commuters now foresee that the additional cost will be passed to them and I believe the taxi companies must be thinking of how to pass this additional cost to either the taxi drivers or the commuters. So the question I would like the Minister to clarify is: must we impose a direct increase of $5.7 million operating cost on the taxi operators? If the issue is taxi service standard, is the $25 levy per taxi per month the only viable solution? I would strongly urge the Minister to review this creative way of enforcing service standard by imposing a fee rather than an incentive. Are our taxi services that bad that require $5.7 million annually to make it better? Sir, while the Government is seeking vigorously to enforce a taxi service standard, may I ask whether the Government will consider providing a clear arbitration and appeal framework for the taxi drivers without the need to go to the civil court? Currently, we have the Traffic Police driving licence demerit points system, the taxi companies' demerit points system as well as the enforcement unit of LTA managing the disciplinary procedures of taxi drivers. So the only way out for taxi drivers to appeal against any unfair judgement on them is to go to the civil court. The cost is high, let alone rental cost as well as loss of time and time wasted.

Sir, with the taxi industry now being liberalised, it is with hopeful anticipation that standards of services will rise with competition. Taxi operators, instead of just renting vehicles out, can now be expected to do more for their taxi drivers who, in turn, will be encouraged to give a better personalised service. Apart from granting rebates and incentives to drivers, I would like to ask the Minister for Transport if he can consider a scheme where taxi operators can improve the industry by working with the Ministry of Transport to create a dispute and resolution (D&R) panel from which players within the taxi industry can have their problems heard and resolved before being penalised by the authorities and taxi operators. The members of the dispute and resolution panel can be independent from the taxi operators and report to the Ministry of Transport. Fellow members may consist of members from the taxi operators and taxi drivers as well as other professionals nominated by the Ministry of Transport. In a liberalised industry where manpower moves freely from one company to another, we must try to separate the actions involved in disciplining taxi drivers from those hearing the complaints. The panel can take up complaints and disputes between individual taxi drivers and the taxi operators, customers and other road users. For example, one of the common woes that taxi drivers have is being asked to stop at places where it is in violation of traffic regulations. If an unreasonable passenger insists, the taxi driver has little choice but to comply, worried that he might receive a complaint against himself. His action puts him in a difficult position as he might risk chalking up demerit points with his compliance as he would have violated traffic regulations. However, should he eventually receive a complaint by not listening to the customer, or attract a fine for stopping illegally, the driver can now be assured of a fair hearing to his problem. A taxi driver once told me that, apart from having to pay a traffic fine and receiving demerit points on his driving licence, he has to, on top of all this, also pay a penalty amount to the taxi operator. The D&R panel will provide a listening ear for taxi drivers instead of leaving them at the mercy of the taxi operators or traffic authority and risk having their licence withdrawn. The panel will discourage one from being too litigious. It is a less expensive, less punitive and non-adversarial method of dispute resolution. Setting up the panel allows taxi operators to concentrate on providing good taxi services rather than to spend their resources in resolving conflicts, in the process eroding its image as a good provider of public transport.

Ms Irene Ng is not here. Mr Ang Mong Seng.

(In Mandarin): Sir, taxi service is one of the three main forms of public transport in Singapore. Apart from taxis, we have air-conditioned buses and the MRT to provide very comfortable public transportation for our people. Of course, taxi service is much faster, more comfortable and, of course, it costs more. Some commuters are complaining that there are not enough taxis on the road, and are asking for more. However, I feel whether or not we should have more taxis will depend on the demand and supply in the market. If the demand is not so high or the high demand is only restricted to peak hours, then during the off-peak hours there would be an over-supply of taxis, and the operating cost will go up. Eventually, the higher operational cost will be passed on to the commuters. The commuters will have to bear the brunt. So, we have to think of the consequences. 11.15 am Let me give you an example. Recently, I was in Tsim Sha Tsui, Kowloon. I observed that there were a lot of taxis but only about 30% of them were occupied, the remaining 70% were not. As we know, taxi fares in Hong Kong and Tokyo are much higher than Singapore. Do we want to end up like them? Can the Minister tell us whether there is any plan to increase the number of taxis in Singapore? Secondly, recently, much has been said about encouraging the commuters to make use of the radio taxi service. It is a very good system. But to use the phone service, you have to pay a $3 surcharge. If we want to advocate wider use of radio taxi service, should we not consider lowering the surcharge, perhaps halve it to $1.50? This will encourage more people to use the radio taxi service. Thirdly, as Mr Seng Han Thong has mentioned, we are imposing a $25 licence fee on each taxi. By right, the taxi operators shall bear the cost of this $25 licence fee, but can we say for sure that they will not pass this on to the taxi drivers? I would like to know whether this is an ad hoc measure or will this be levied perpetually. If the taxi service has already reached a certain standard, and there is no further need for improvement, should not this $25 levy be lifted?

Sir, it is commendable that we are putting in place a system to monitor service standards for the taxis, ie, the QoS. Taxi operators would no doubt be assessing their operations and procedures to ensure that they are compliant, especially in the face of increased competition from new entrants. The question I am asking is whether there are adequate measures being put in place to ensure that the livelihoods of older taxi drivers - the majority of whom are wholly dependent on taxi driving - would not be unintentionally compromised. There would be occurrences of drivers that would need time to cope with the changes. For example, even as technology is rolled out to our taxi fleets, I have known a taxi driver who had been driving for 17 years, he was dropped because he could not cope with the new text messaging system. Would others suffer the fate of summary dismissal, after failing a language test? In the light of poorer alternative employment prospects for older workers, we must ensure that the transition to high-tech systems required to achieve the higher benchmarks of service delivery must be done with some compassion and, in the event that doubts arise as a result of disagreement between the drivers and the operators, the Minister should look into adequate cost-effective recourse to be available to the drivers, many of whom have not got the adequate financial means to contest effectively. The Senior Parliamentary Secretary to the Minister for Information, Communications and the Arts (Encik Yatiman Yusof): Sir, during my MPS, I came across a number of cases involving taxi drivers who were alleged to have committed offences ranging from discourteous behaviour to arguing with passengers and overcharging, among others. On receiving the complaints, the taxi companies or LTA would investigate. The taxi drivers were asked to give explanations, mostly in writing, and when the drivers, in the opinion of the investigators, had committed an offence, they would decide and impose the penalty. In many cases, it means that the taxi driver would either face suspension or, worse still, lose their licence if they exceed the demerit points. Once the decision is conveyed to the taxi driver, there is no satisfactory avenue for him to appeal, so they approach the MPs. In my experience, out of more than three dozen or so appeals that I had handled, there was only one success. While I understand the reason is, among others, to uphold the credible standard of taxi service in Singapore, I can still emphathise with the drivers because, in most cases, the taxi drivers feel that this is not fair. As the number of retrenched workers who seek employment as full or part-time taxi drivers increases, the current taxi drivers are made more vulnerable to losing their source of income. To overcome this problem, I would like to suggest that we create some kind of transparent appeal process through an arbitration. My colleague, Mr Andy Gan, had more or less suggested the composition of the arbitration panel. I agree with his suggestion. I would like to know the Minister's view on this matter.

Sir, first, let me thank all the Members who have spoken on a very broad range of transport issues. Let me address some of the broader land transport issues before replying to the specific points raised by Members. One perennial concern of Members, and of the public too, is that we have an affordable, quality public transport system. I, too, share this concern. The key to achieving this objective is to ensure that we have adequate competition within each of the land transport sectors. And if it is not possible to have direct competition, to ensure that there are adequate regulatory safeguards to ensure that the service providers are incentivised to be efficient and cost-effective, while meeting the stipulated quality of service requirements. Sir, we have over the years evolved the competitive framework for taxi, bus and MRT services, while ensuring that commuters' interests are safeguarded. This model has largely served us well. But it does not mean that there is no room for further improvement. For this year, one of the priorities of my Ministry is to completely open up the taxi industry. We will allow market forces to determine the taxi supply and the fare levels. In fact, we started in 1998 by allowing the taxi companies to set their own fares. However, we still have regular complaints about the mis-match between the supply and demand, especially during the peak periods, particularly in the CBD area. There are also complaints about poor service standards. Two months ago, I informed the House that we would be deregulating the taxi industry completely under our new licensing framework. Come June this year, new players can enter the market and compete with the incumbents for a slice of the pie. They can then help provide for a better match between supply and demand. But even as we deregulate, we must still ensure that taxi companies deliver good service to the commuters. We will do this by licensing them and requiring them to meet the Quality of Service (QoS) standards. This is a new approach, and I would urge Members to allow some time for the QoS to work. We will complement this licensing framework with a taxi driver Vocational Licence Points System. I will go into that further, because quite a few Members have touched on this. Sir, let me now move on to answer the specific points raised by Members. Mr Chay suggested an alternative approach to imposing a premium on the North East Line (NEL) fare. I would like to inform Members that the fare structure for NEL has not been decided yet. This is because SBS Transit, the operator, has not submitted its proposal. I expect SBS Transit to submit its fare proposal to the Public Transport Council (PTC) within the next few weeks. Only then will the PTC know what the company is proposing as the fare structure for NEL. Sir, as I had explained to Members a few months ago, NEL, being fully underground, will cost more to run, compared to the existing MRT lines now. The NEL operator is therefore more likely to have to charge a higher fare in order to cover the higher operating costs. In fact, this possibility of a higher fare on NEL was highlighted by Mr Mah Bow Tan, the then Minister for Communications in 1996, when he announced the decision to proceed with the NEL project. Mr Chay has asked that, instead of a differential fare for NEL, we explore the option of maintaining a uniform fare structure for the entire MRT system, including NEL. This is, of course, possible. As pointed out by Mr Chay, we will need to allocate some of the revenues from the MRT lines to NEL. This means that the fares on the existing MRT system will need to increase to cover the higher operating costs of NEL. PTC would have to consider this proposal very carefully. The other MRT commuters, especially those who do not use the NEL system, may object to having to pay more in order to cover the higher costs of NEL. Nevertheless, I will ask the PTC to keep Mr Chay's suggestion in mind when SBS Transit submits its proposal. Mr Chay next asked about the safety features of NEL. Sir, LTA has ensured that NEL has all the safety systems of the current MRT system, plus additional safeguards and safety features. The key feature of NEL is that it is fully automated. Train experts believe that this adds to the safety of the system. This is because experience around the world has shown that most the accidents are caused by human factors. For these reasons, fully automated systems are becoming increasingly popular worldwide. Other safety systems on NEL include an Automated Train Protection System that ensures that there will always be a safe distance maintained between the trains. In addition, the trains have built-in fire detection systems, and there are two CCTVs on board in each car. This will enable the operators in the control room to monitor what is happening, as well as allow passengers to communicate with the control centre. Sir, the system will be constantly monitored by multiple sensor systems as well as by highly trained specialist controllers in the Operations Control Centre. I would like to assure Members that LTA and the operator have been extensively testing the operational and safety systems over the past few months. They have to ensure that the system fully satisfies LTA's stringent requirements for operational safety before it is allowed to commence revenue service. The operating licence also requires the operator to implement a comprehensive safety management system to the satisfaction of LTA. As such, LTA designed and ensured that NEL has all the needed safety systems required for its safe and smooth operation. Sir, let me now move on to Mr Yatiman's cut. I am glad that Mr Yatiman likes what LTA has done in the stations of the North East Line. As mentioned by Mr Yatiman, LTA has integrated works of art by local artists in the architecture. They reflect the cultural, ethnic and historical settings of the neighbourhood of the stations. By doing this, LTA has created a unique identity for each station. This makes the stations more interesting, and enhances the commuting experience. Mr Yatiman has asked whether this can also be done for the new Circle Line stations. I understand that the budget for the Circle Line is extremely tight, and it is already a big challenge building the Circle Line within the budget set for the project. Nonetheless, I will ask LTA to review and see if there is any way that we can take up Mr Yatiman's suggestion. Mr Yeo Guat Kwang suggested that LTA extend the MRT system into Tuas and build new stations on the existing MRT lines to serve the industrial estates that adjoin the MRT lines. I can assure Mr Yeo that LTA is constantly working on improving the public transport system serving the various parts of Singapore, especially areas with high population or high employment concentrations. However, we must remember that the MRT line is very costly, both to build and to operate. For this reason, new and extension MRT lines are constructed only if the economic value they bring to the nation exceeds the cost of developing and operating the station. Otherwise, we will be wasting precious national resources. I will ask LTA to study whether an extension to Tuas makes economic sense and whether the operation of such a line can be viable. I will also ask PTC to study the need to increase the number and frequency of bus services to Tuas from Boon Lay Interchange to meet what Mr Yeo had pointed out. Mr Yeo Guat Kwang also spoke about the possibility of introducing new stations along the existing lines. In the case of Dover station, which he quoted, it had already been provided for when we built the existing East-West MRT line. It was therefore possible to build this station without too much complication. For locations where provisions have not been made earlier, LTA would have to explore carefully whether the site conditions allow this. But more importantly, even if site conditions allow, a cost-benefit analysis will still have to be conducted on its viability. 11.30 am Mr Ong Kian Min spoke on buses. He made two points in his cut. First he asked LTA and PTC to be more open to proposals for special bus services to serve the niche markets. Sir, Mr Ong may wish to note that PTC supports the provision of such services and that this is already being done. These niche services include premier services like express buses and the Bus-Plus services. There are also special services targeted at serving the public during specified times and for specific locations. For example, we have special shuttle services from condominiums or industrial parks to link them to the MRT stations or even to hawker centres, as Mr Ong has pointed out. As at February this year, PTC had approved a total of 114 such non-basic services. Anyone who is interested in providing such a special service can obtain the application form from the PTC, or, if they wish, they can even go to the website for a copy of the application form. Secondly, Mr Ong asked about the progress of the PTC's review on bus service standards. I am happy to inform Mr Ong that the review is actively underway. PTC is taking into account public feedback and is trying to identify some best international practices in measuring bus service performance. To ensure that the proposed standards are robust, the PTC will also conduct a trial audit on these new standards once they are finalised. The results from the trial audit will then be used to fine-tune the standards. Sir, I think it is important that in reviewing the standards, PTC balances very carefully between meeting rising expectations of the public and the need to avoid over-imposing additional costs on the operators. PTC expects to complete its review and to announce the new standards later this year. Sir, let me move on now to the cuts on the taxi industry. Mr Chay spoke about the need for greater fare differentiation and felt that it would not come about if we merely left it to the taxi operators. Sir, he suggested that LTA consider intervening to bring about this outcome. I think the words that he used were that we should put in place "some micro mechanisms". Sir, I agree with Mr Chay that taxi drivers need to be incentivised to be at where and when they are needed most. He used the word "fare differentiation". It is a big word. In simple terms, it means that not all taxi trips, even if they are of equal distance, should attract equal fares. Where and when the demand is greatest, for example, in the CBD and during the peak periods, or even when there are thunderstorms, passengers should be prepared to pay more. In fact, today, Sir, there is already some degree of fare differentiation. This is achieved through the application of a peak-hour surcharge, a CBD surcharge, airport surcharge and other taxi surcharges. Sir, having just liberalised the taxi industry, I would be reluctant to now turn around and micro-manage it. The setting of fares and the design of the fare structure are really matters for the taxi companies to consider and decide. I do not think their management is lacking in imagination. In fact, I think it will be a sad day for Singapore if the Government has to teach the businessmen on how to operate their businesses. Sir, having said that, I can ask LTA to look into the possibility of linking some of the Quality of Service (QoS) requirements to our taxi service levels, especially during the peak periods - the key is to measure the outcome rather than prescribe the micro measures for the industry to follow. In the meantime, LTA and PTC will join the Member's call to urge the industry to better match supply with demand especially in the CBD during the peak periods. Mr Ong Kian Min spoke on the quality of taxi service. He asked why taxi companies are required to provide a taxi-booking service, and why not allow budget taxi operations to be set up that are not required to offer telephone booking services. Sir, this begs an even more fundamental question, ie, where does the taxi service stand in the public transport framework? I must explain to the Member that taxis are not considered a means of mass transport. We have very limited land and this means that buses and the MRT must form our modes of mass transport. Taxis are, in fact, a form of personalised transport. Taxi commuters enjoy a door-to-door service, one that is more akin to travelling in a chauffeur-driven private car. Ideally, taxis should not be cruising around looking for passengers, as they contribute to road congestion and air pollution. But this is a traditional practice, and I do not intend to stop it. But we can, over time, encourage better usage of taxis and our limited roads by encouraging commuters to make a phone booking. It gives all commuters who need a taxi urgently the assurance that they can get one quickly, even during peak periods. That is why we have made it compulsory for new entrants into the taxi market to also provide a phone booking service and it is not meant to protect the incumbents. Sir, in requiring taxi companies to provide phone-booking services, LTA is mindful of the cost. That is why LTA will only prescribe minimal requirements and not the specific technology to be used for the booking and despatch system. Mr Ong may be worried about the cost. LTA has told me that the start-up cost of a simple radio-phone booking system for a fleet of about 400 taxis is between $250,000 and $420,000. Sir, this works out to about $600 per taxi, which is less than 1% of the cost of a taxi. The cost per taxi will, of course, reduce as the taxi company increases the fleet size. Therefore, the setting up of a phone booking service will not be a barrier to entry of new taxi companies. Sir, Mr Ong next went on to talk about taxi fares. He is concerned that taxi fares look set to rise. He has been reading the "tea leaves" in between the last time he spoke in Parliament about the taxi fares and the appearance of an article in the Straits Times that said the taxi fare in Singapore is too low. Sir, he thinks that actually it is the Government that is unhappy because this represents a loss of potential revenue to the Government. I want to assure Mr Ong that he is totally wrong that we are unhappy with the fare level. Neither LTA nor my Ministry has any share in the taxi fare revenue. So we are quite neutral. It makes no difference to us whether the fares are increased or not. Our primary interest is only to ensure that those who badly need a taxi are able to get one and that there is a better balance between supply and demand during the peak periods. He asked again that we publicise our preference for commuters to phone for a taxi and tell them not to street hail. Sir, as I stated a few minutes ago, yes, over time, we would like more commuters to use the phone booking service, especially those who want a taxi badly. But for those who are prepared to wait by the roadside, they can still continue to do so. There is no need for us to stop this practice. But commuters who do so must understand that we cannot assure them of the waiting time. Mr Ong is also worried that the QoS would force taxi operators to take their taxis off the road by putting them on stand-by. He cited CityCab's decision to reduce the charge for a phone booking and he is worried that if they get swamped with calls, they will not be able to manage with their current fleet size. Sir, I think the existing taxi operators are more enterprising than what Mr Ong is prepared to give them credit for. I am sure that if the demand is strong for both the phone booking and street hail, they will find a way to balance the two and not to totally ignore street hail commuters. This is because if they do ignore them, they will only encourage new entrepreneurs to enter and to meet this unfilled demand. If CityCab is swamped with phone bookings, I think this would be a happy problem for them. They have the freedom to expand their fleet size now. Previously, we restricted them to a certain number. Now they are free to expand as and when they like. Mr Ong then went on to talk about competition in the taxi industry. Sir, he expressed concern that the Comfort-Delgro merger would create an even more dominant player and that having this very dominant player, where they can determine their price and the taxi trends, it would deter competitors from coming in or from having a different price structure. Sir, Mr Ong is indeed correct to be concerned with the merger. In fact, I was too, which was why when I heard about it, I straightaway asked my staff to find out from Delgro and Comfort what were their intentions with regard to CityCab and Comfort taxis. Comfort and Delgro have since explained publicly that after their proposed merger, their respective taxi operations will continue to operate separately. Each will have its own board of directors and management. But they will be able to obtain synergies in their back-end operations. For example, they can do bulk purchases of fuel, tyres, vehicles, etc. This would give them greater economies of scale and result in cost savings which I think would eventually be passed on to commuters. But we will have to continue to watch the merger very closely and carefully. LTA now has powers to ensure that dominant players do not engage in anti-competitive behaviours, which is what Mr Ong is concerned about. I can assure Mr Ong that LTA will not hesitate to take appropriate actions should the dominant players be found to be doing so. Sir, with regard to pricing, I think despite the fact that we have a dominant player, this would not deter companies from varying their prices. In fact, TIBS today has a slightly different price structure compared to Delgro or Comfort and CityCab. I am sure, with greater competition, they will continue to innovate. Sir, Mr Seng Han Thong, Mr Andy Gan, Mr Yatiman Yusof and Mr Wee Siew Kim expressed concerns about having adequate protection for taxi drivers, especially when there are disputes or when there are complaints against them. They asked for a more transparent appeal process for the taxi-drivers and they suggested that we have an arbitration panel or a dispute resolution panel. Sir, first, let me state that it is in the taxi companies' interest to ensure that they treat their taxi drivers carefully and build up good rapport with them. This is because while taxi drivers need the companies in order to get their taxis, the taxi companies need the drivers equally much because, without the drivers, they will be in trouble. The satisfied and happy drivers will also be able to provide a better service to commuters and the benefits will again eventually flow back to the companies. Treating the drivers well also helps the taxi companies retain their good drivers. I am glad that the taxi companies do indeed recognise this symbiotic relationship as seen by the fact that they have gone ahead to introduce many measures to help their drivers financially. For example, they have passed on to the drivers the diesel tax savings, they have offered rental rebates and they have passed down the bulk discounts on the purchase of diesel. Sir, while most taxi drivers do a good job, from time to time, there will be some who fail to deliver good customer service or, more importantly, infringe upon some rules and regulations. But I agree with Members that in such cases, the disciplinary framework on the part of the taxi companies and LTA should be transparent, fair and not arbitrary. Sir, I am happy to inform Members that LTA is, in fact, revising the disciplinary framework. Under this revised framework, there will be a clear delineation of responsibilities between LTA and the taxi companies. LTA will deal with complaints relating to infringement of rules and regulations by the taxi drivers, eg, over-charging by the drivers. LTA will accordingly award the demerit points under the Vocational Licence Points System (VLPS). On the other hand, taxi companies will only handle the complaints relating to customer service and they will not be empowered to issue demerit points under the VLPS. Sir, to make it transparent, LTA would publish a schedule of fines and demerit points and the guidelines for suspending or revoking the vocational licence. This will enhance the transparency of the framework. The taxi drivers will have a clearer understanding about their responsibilities and what is expected of them. 11.45 am In terms of the fairness of the system, under the present system, when a passenger or commuter lodges a complaint, LTA or the taxi company will examine the complaint and they need not necessarily call up the taxi driver or the passenger for an interview. Under this revised system, LTA will require both the complainant, as well as the taxi driver, to turn up for interviews so that the full facts can be ascertained. And only when LTA has been clearly satisfied that there has been an infringement of the rules and regulations will LTA proceed to penalise the taxi driver. The taxi driver will still have an appeals process. He can appeal to LTA or, if there is a suspension of the licence, he can appeal to the Minister for Transport as well. Sir, on the part of the taxi drivers, they will also be required to carry out the interviews accordingly. Sir, notwithstanding this new system of requiring interviews to be carried out, we recognise that the disputes between taxi drivers and companies will still arise from time to time, but there are already avenues in place for taxi drivers to resolve their disputes with their company. The aggrieved taxi drivers can approach their respective taxi drivers associations for help. And, in fact, that is one of the key roles performed by the taxi drivers associations. This approach has worked fairly well, and I think there is no need for the Ministry to step in to set up a separate dispute and resolution panel. Sir, Mr Seng Han Thong and Mr Ang Mong Seng spoke about the $25 a month fee. They are concerned about the quantum and they are also concerned that the taxi companies may just pass this on to the taxi drivers and to commuters. Sir, let me first explain the need for the taxi licence fee and put the fee quantum in perspective. The licence fee is linked to LTA's objective and its efforts to improve the level of taxi service. The licensing regime will require LTA, as the regulator, to closely monitor the performance of taxi operators and their compliance with the QoS. LTA will also investigate and enforce against errant taxi drivers under the new Vocational Licence Points System. As these are new activities, additional manpower resources and, hence funding, will be required. The licence fee is to enable LTA to fund these new activities. The licence fee of $25 per taxi per month works out to less than 1% of the gross turnover of the taxi companies. It amounts to less than three cents per taxi trip, against an average fare of around $7.00 per trip. The impact on the taxi operating cost is, therefore, extremely small. Sir, in addition, the taxi companies themselves have been making very good profits. In fact, Comfort last year experienced a significant increase in the profit level. I would also therefore hope, just as the Members have spoken, that the taxi companies do not pass on this taxi licence fee to the drivers as well. Sir, as LTA will need to set up an audit enforcement framework immediately, the work would be more intensive in the first two years of this system. The $25 licence fee is based on the budget of this initial, more intensive, phase of the regulatory work. I am happy to therefore inform Mr Ang that LTA will review the quantum of the licence fee and look into reducing it after two years. Sir, I think I have answered all the questions put up so far. I will ask my Senior Minister of State to answer the other questions.

Yes, Mr Chay.

Sir, the Minister raised an important point and I want to just clarify. I did not ask for the fare structure of SMRT to be raised. I said there should be feeder rebates between the systems so that when the North East Line passes passengers over to the SMRT line there will be certain gains for SMRT. Therefore, for such gains, there should be a rebates scheme whereby the cost is defrayed on the NE Line. This kind of mechanism has to be looked at before we straightaway go for fare increases, just because there is some additional cost. We must look for economies of scale and I am sure SMRT will benefit a lot by the feeder of passengers from the NE Line.

Sir, it works both ways. NE Line will be passing passengers on to the SMRT system and vice-versa. So, if there are rebates, the same rebates will flow both ways, but these will be factors which PTC will definitely be looking into.

Of course there will be rebates that flow both ways, but I am sure there will be a lot of gains for the SMRT lines.

A clarification. On the complaint procedure, I understand that the new complaint procedure ---

Prof. Chin, is that a clarification or question?

Clarification on the complaint procedure. I understand that the complaint procedure involves getting the complainant to come and be interviewed by LTA officials and so on. Is that correct? Because there would be tourists who would just complain and leave the country.

Sir, LTA will require the complainant to come forward, as far as possible. If he is a tourist then we will just have to judge based on the complaint lodged by the tourist and we will still talk to the taxi driver to get his side of the story. In the past, this was never done.

Sir, let me first reply to the two cuts by Mr Wee Siew Kim yesterday. Mr Wee spoke on licencing conditions that we impose on public transport operators. He said that we should avoid over-stringent licensing conditions as they will inevitably lead to higher operating costs and transport fares. I agree with Mr Wee that every regulation has a cost and that we should avoid over-stringent licensing conditions. Hence, in formulating rules and standards, we go for the minimum that will ensure an acceptable level of service, safety and operational efficiency. The operating principle is to keep the cost of public transport low, without sacrificing standards of safety and comfort. But as the needs and expectations of commuters do change with time, regulations will also have to evolve with time. For example, air-conditioned buses were considered a frill when we were young, but this is now a basic item. So, we have to raise the standards to allow for air-conditioned buses. Mr Wee added that regulators should work closely with transport operators on such regular reviews as they have useful ground experience and would be in a better position to advise on which licencing condition should be further relaxed. I totally agree with this partnership approach. In fact, it was through such industry feedback that we decided, not too long ago, to extend the life-span of public buses from 12 years to 15 years. The extension saves the bus operators a lot of money, with downstream benefits for commuters. We will continue to consult the transport operators on such matters. Mr Wee's second cut was on transfer rebate. He said that transfer rebate should be regularly reviewed to ensure equitable treatment for all. I agree with him that transfer rebate should be based on the principle of equity. Specifically, Mr Wee wanted to be assured that commuters using feeder services, without any transfer to a trunk service, should not be unduly penalised. Let me explain how the transfer rebate came about. Years ago, feeder fares used to be lower than the minimum trunk fares. Actually, they were under-priced. In other words, the fare was lower than the operating costs of the feeder bus operator. This was clearly not sustainable as a viable bus operation requires fares to at least cover the cost. Effectively, feeder services were being cross-subsidised by trunk services. This has to be rectified. A simple solution was to raise the feeder bus fare to the right level, and be aligned with the minimum trunk fares which were correctly priced. But if we simply raise the feeder bus fares to the minimum trunk fares, commuters who transfer between feeder and trunk services will be overcharged. To overcome this, transfer rebates were introduced. So this has allowed the Public Transport Council to gradually align the feeder fares with the minimum trunk fares, without raising the cost of transfers. As we adjust feeder fares, the transfer rebates were correspondingly raised. The end result is that the net feeder fare payable by the commuter remains unchanged. It is easier if I can give you an example. When the feeder fare for air-conditioned buses was increased by 10 cents to 60 cents in the year 2001, the transfer rebate was also raised by 10 cents, from 15 cents to 25 cents. So the end result, the net feeder fare payable remains at 35 cents. Incidentally, Members may wish to note that this is the same fare, as what the bus operators charged in 1994 when feeder services were first introduced. In short, the current transfer fare structure does allow for a fair matching of cost to fare, and nobody is unduly penalised. But I agree with him that we should regularly review the structure as circumstances change so as to preserve equity. Finally, let me reply to Mr Ong Kian Min's question on an aborted LTA project costing some $40 million. He was referring to the bus travel information system. This was a project initiated by LTA in 1999. The purpose was to let commuters know with better accuracy the arrival times of buses. Let me give Members the background that led to this project. At that time, several bus companies were, on their own, developing what they called "Fleet Management Systems" computer software to manage their fleet. The purpose was to locate the whereabouts of their buses, and there were thousands of them, at any particular point in time. LTA saw an opportunity to ride on this Fleet Management Systems by (a) making it nation-wide through integrating them, because there were several systems and operators; and (b) adding a new feature to predict bus arrival times for the benefit of commuters. The intention was good but, unfortunately, LTA and the bus operators had severely under-estimated the complexity of the project, in particular, the computer software to interface the different bus company systems turned out to be a lot more complicated, a lot more difficult. As a result, the project experienced major delays and would have resulted in significant cost overruns if the project were to run to completion. So, at a recent meeting, not too long ago, the Board of Directors of LTA reviewed the project. After evaluating its prospects, weighing the revised costs and benefits, the LTA Board decided to abort the project. So far, about $10 million, and not $40 million as reported by the media, has been spent on this project. What were the main cost items? They were (a) a nation-wide radio communications system; (b) the equipment for a central computer system, and (c) the computer software. Although the project has been aborted, fortunately, the efforts, in this instance, put in have not all been wasted. The equipment which has been acquired will have useful use elsewhere. Specifically, LTA will be modifying the radio communications system to support its existing Expressway Monitoring and Advisory System (EMAS). In fact, this modification will then save LTA about $2.2 million every year in data transmission cost, as it will then no longer need to rely on a third party wireless service provider. 12.00 noon Mr Ong also asked if there were feasibility studies done before LTA embarked on this project. Yes, there were. As LTA would be breaking new ground, it did several smaller scale trials in 1995, 1997 and 1999, before the project went full scale. The trials were on smaller scales involving only a few buses. In the 1999 trial, the team was able to achieve accuracy levels ranging from 87% to 99%, which were quite acceptable. Unfortunately, major integration problems arose when the project was scaled up.

Sir, I would like to focus my comments on vehicle and fuel taxes, and their impact on transportation costs as well as business costs. As we all know, financial measures, whether they come in the form of incentives, disincentives and penalties, have always been used to achieve social and other objectives. For example, we have the foreign worker levy to control the population of foreign workers, and we also have incentives given to couples to have larger families. But I think nowhere do we find these measures being widely used than in the case of motor vehicles to control road traffic congestion. Over the years, we have seen penalties after penalties being introduced and levelled against car owners as well as users. This broad and complex range includes excise tax, road tax, ARF, COE, fuel and vehicle taxes, and also parking fees. All these have added on to the transportation cost. These have made it very expensive and, hence, have also affected business costs, because transportation cost forms a quite significant portion of business costs, and will therefore erode our business competitiveness. Quite apart from having a very complex system, it has also produced a few quirks. For example, I would like to cite the example of second hand vehicles. It is much more profitable to scrap than to sell them as second hand vehicles. This is sheer wastage, because cars can be used beyond five years. They can be used for 10-15 years, or more than that. Quite apart from wastage, we also have a significant capital outflow because we import cars. The second quirk is that businesses which use diesel for their equipment have also to bear the burden of diesel tax when they do not contribute to road congestion. My comment here is that we are now very experienced in knowing what sort of measures we should have to achieve a smoother traffic flow, because we really do have a very good road system. We do not have road congestion and all these promote Singapore as a business centre. But I think we need to consolidate. We need to simplify our system, concentrate on those measures which work towards achieving a smoother traffic flow and really unravel the very complex web of fees, charges and taxes, indirect as well as direct. At the end of the day, a simpler system would be much superior.

Sir, I speak with concern regarding the proliferation of ERP technologies currently adopted by several private car park managements. At these car parks, a person does not need to do anything. A camera somewhere above records his entry and deducts from his cash card automatically when he exits. He does not even get a receipt. Sir, what is there to prevent abuse and fraud when such technologies become easily available? Can anyone easily duplicate or get hold of such a deducting system or machine and then go around car parks or somewhere and illegally collect money from unsuspecting car owners? I hope the Minister can address this public concern.

Sir, Sengkang LRT is operating well for the past eight weeks now. It has brought convenience to the residents. Quality service along the frequency and reliability dimensions has been enhanced. Truly, we must commend the LTA for bringing to life the White Paper on Public Transportation of 1996. While the light rail system now has provided enhanced reliability and to the dot predictability, one must not forget that the LRT system, by and large, is expensive to build and maintain. Cost must always remain paramount at the forefront of our thinking. I would like to ask the Minister whether there have been continuing studies and considerations for other forms of transportation, so that future generations of Singaporeans can continue to look forward to increasingly more efficient and cost effective modes of transportation.

Sir, I would like to commend the Ministry on the work that has been done in both ensuring the disabled and elder friendliness of the North East Line, and also on the ongoing work in retrofitting existing stations so that they will be accessible to the semi-ambulant and wheelchair bound. However, in the public transport system, it is actually of little use if only segments of the system are elder friendly, as the user is then still unable to complete his or her journey from one point to the other. Taking the MRT stations as an illustration, having the stations internally totally accessible to the frail and wheelchair bound is useless if the connecting buses are inaccessible, or if the frail or semi-ambulant elder is unable to get to the station, because of overhead pedestrian bridges, underpasses, raised pavements or kerbs surrounding the station. I am not quite sure whether overhead pedestrian bridges, underpasses, pavements and kerbs are under the purview of the Transport Ministry or MND. But I do hope that whichever it is, the planning and implementation of access across systems and precincts are being well coordinated. Moving on to buses, I understand that the Ministry has assessed that it will not be practical to introduce such wheelchair accessible features as kneeling buses, as it is anticipated that this would slow down the whole system too much. However, there are many other simpler features that our buses can have that will make them much more user friendly to ambulant senior citizens, and these include zero step boarding, stepless aisle buses or steps of lower height, properly placed rubberised handgrips and such features. I know, again, that the Ministry has prescribed steps height of 360 mm or less for all new buses. I want to ask whether, in fact, all the buses in our system have already been converted by now. It was sometime ago that this was prescribed. If not, when is it anticipated that this will be achieved? Bigger bus service numbers will also be helpful for senior citizens to quickly and easily identify approaching buses. And also software features such as bus workers' skills and attitudes in providing some assistance or simply being mindful not to accelerate and decelerate too quickly coming into and leaving bus bays, and allowing enough time for the older passengers to get seated. The exclusion of cost of wheelchair lifts and installation of such lifts from the OMV of a vehicle when computing the ARF in the budget this year is most welcome. And this is targeted at the vans used by VWOs to provide transport service for the elderly and disabled clients. But, in many developed countries, it has been recognised that it is actually far more cost effective to transport the disabled and elderly by mainstream taxis with special transportation service, often carried out by the mainstream taxi operators. They can provide door-to-door service round the clock and give travel assistance such as helping the passenger in and out of the vehicle. Essentially, all that it takes is some basic training although, of course, added features in the cabs like grab handles to aid entry and exit, swivel seats and wider door openings are also very helpful. Taxi fares in Singapore compare very favourably with many other developed countries. But for the poorer elderly, various countries have a variety of subsidised systems. London has a taxi card system.

Dr Lee, your time is almost up.

Many Ministries and agencies have to come together to realise a truly elderly friendly transport system. I would like to ask the Transport Ministry whether there is a directed effort. Is there somebody in charge to push and coordinate all the activities of all the agencies, so that we can move towards a comprehensive elder friendly transport system expeditiously in a planned rather than ad hoc manner?

Sir, I would like to carry on from where hon. Member, Dr Jennifer Lee, left off. I would like to take up the plight and plea of older persons, otherwise known as the elderly, in heeding the call of the Government to practise active ageing, including remaining or rejoining the workforce where possible. Sir, there are many senior citizens who would like to be in employment, but who find difficulty in doing so. They cite a number of factors. One of these is commuting by mass public transport. While eligible senior citizens are appreciative of the concessionary public transport fares for off-peak travel, they find the applicable time period for travel restrictive. They mentioned that for them, because of reduced employment income, they have to rely on the mass public transport to commute to and from work, and many have working hours that require them to ride the buses, MRT or LRT during peak hours, thus incurring higher transport costs, especially in view of the recent fare hikes. Then there are those who are still fit and healthy and who can take public transport at all times of the day that the mass public transport system is in operation. They do not think it a danger to be part of the rush hour human traffic. Besides, senior citizens are sensible persons. They would not wish to jeopardise their own safety nor that of others. They would know that for themselves whether it is safe or not for them to travel during peak times. So there is no need to confine them to off-peak periods. Under such circumstances, would the Minister kindly initiate a review of existing public transport regulations that impede opportunities for senior citizens to be gainfully employed and to enjoy active ageing? This is also in line with the thrust of the Economic Review Committee's recommendations regarding employment of older workers. I know that this has been brought up before in this House and the older persons would just like the Minister to please review and assist them as far as possible, and thus make their day.

Sir, I would like to move on to a free do-it-yourself mode of transport, ie, cycling. Often times, we have heard that the unkind Singapore weather is not conducive to cycling and that seems to be the reason for not promoting cycling as a more popular means of transport. But I believe that the habitants of any place on earth have to learn to cope with their environment. In discussing for more to be done for cyclists, we seem to have a mental picture of quiet country roads, where the sun is shining but the temperature is a cool comfortable 15 degrees Celsius and the humidity is low. We seem to believe that cycling can only be done in such an ideal environment. But the reality is that even in a cycling country like Holland, the sun does not always shine every day. Cyclists have to learn to face the rain, the cold and even the snow, but many people there still cycle as a means of transport. They face different, but equally unpleasant, problems with the elements. I think we just have to adapt and learn to cope with the weather. We should take a deeper look at how we can make it easier for those who may want to cycle, if our drivers are less harsh on cyclists and our roads safer. 12.15 pm Apart from cycling to and from work, we should also consider the needs of the recreational cyclists. Nowadays, I see more and more serious cyclists, donning their brightly coloured racing suits and riding their expensive bicycles on weekends in areas such as Holland Road and Bukit Timah. At present, I see many of them are expatriates. Nevertheless, this is a happy sight and we should encourage more people to participate in this healthy affordable sport. I would like to ask the Minister to consider setting aside for the use of cyclists during weekends the left lane of three-lane roads in certain suitable areas and making some efforts to educate motorists to look out for and have due regard for these cyclists. I believe this will be a good start and, over time, the attitude and behaviour of vehicle drivers towards cyclists will change for the better to make our roads safer.

Sir, there has been a spate of complaints by pedestrians on what they call the "bicycle menace" on pedestrian footpaths. I can emphathise with them. Just last night, I was almost hit by a cyclist racing by from behind. But I can emphathise with cyclists too, as most roads are too dangerous for them, especially the main roads. Cars and buses often zoom by very closely to the cyclists, endangering their lives, and taxis are particularly treacherous as they swerve suddenly to the kerb with little notice, to pick up passengers. Sir, pedestrians angry with cyclists on pavements are really barking up the wrong wheel. They should be directing their unhappiness at the wheels of bureaucracy of LTA. The LTA does not factor in the need for bicycle lanes in its road planning. With more taking to cycling, they should widen the roads and build an extra lane for cyclists in certain areas, separate from the pavements for pedestrians. Indeed, in Tampines, it is not uncommon to see cyclists, especially women, transporting their children to school on bicycles. The Government has replied that there are already park connectors, but these tracks so far mainly only link our major parks and nature sites. And the purpose for the park connectors is for leisure cycling and not as a means of transport. Sir, we need to connect them to roads to allow residents to ride to places that they frequent, for example, schools, markets, shops and to their homes. The Government has also said before that town councils should be the ones to look into providing cycling tracks within their HDB estates. I agree that town councils, especially with the support of their MPs, should be the right channel to advise the LTA on the areas that need bicycle lanes. Indeed, in Tampines, we are looking at how to build cycling lanes and cycling tracks to connect to the park connectors. But, in the end, we still have to seek the approval of the LTA. And there is a lot of red tape involved. The park connectors are under the National Parks Board; the roads are under LTA; the common areas in town councils are under the town councils. I would think that the right agency - the lead agency - in building bicycle lanes should be LTA. LTA should be the one planning for and providing bicycle lanes as part of the public transport for Singaporeans. At the same time, as more Singaporeans take up cycling, I feel that there should be a concerted effort to educate them on road safety. I think, very frankly, many cyclists do not know the traffic rules very well. But you cannot really blame them, because they do not take driving theory tests, like the way that drivers have to. But I am not saying that they should take tests. I am saying that there should be education mounted to teach cyclists what are the rules. Frankly, at one time I was cycling to work everyday, from Upper East Coast Road to Kim Seng Road, never mind the weather - very hot, but I cycled to work because I enjoyed cycling and I was training. One night when I was cycling home, I was knocked down by a taxi in a roundabout. Frankly, I was not sure whether I or the taxi driver was in the wrong. But later when I took up driving and I had to go through the theory tests, I realised that the taxi driver was in the wrong; so, I felt better.

Ms Ng, you have to cycle faster because your time is nearly up!

Today, there is a big controversy about whether cyclists could use zebra crossings. So I think there should be some effort mounted to educate cyclists on road safety. And I worry now, because of the outcry about cyclists on pavements, cyclists will now feel compelled to go onto the roads without being prepared to take on the dangers of competing with the big vehicles for space on the roads.

Sir, there is a hotchpotch of cuts. Let me take them chronologically. Let me begin with the cut by Mrs Fang Ai Lian. In principle, I agree with her that taxes and levies should be as simple as possible for easier administration and compliance. She asked whether we could continue to work and simplify further our vehicle taxes. Actually, our vehicle taxes are not that complicated. When vehicles are registered, they are subject to a nominal registration fee of $140. In addition, there is an Additional Registration Fee (ARF) and an Excise Duty (ED). Both serve the purpose of curbing car population. After that, you just pay the annual road tax. Collectively, these taxes allow us to achieve a balance between cost of ownership and cost of usage. Of course, it cannot be a static picture, and my Ministry will always work with Ministry of Finance to fine-tune this balance. Over the years, we have done so. But I take the point of Mrs Fang that the situation does change, and if it does, I think we should always be on the lookout. Especially, she mentioned about quirks here and there, which have distorted the consumer behaviour. Then we should try to fix them. I am open to suggestions. And some of those quirks that she mentioned, I do not have personal knowledge of them, but we will look into them. But she did make a point that we sometimes inadvertently contribute to business cost, and she gave the example of diesel tax. For diesel tax, we do not add to business cost. Goods vehicles and buses run on diesel, are not charged diesel tax at all, and precisely for the reason that she gave, which is we wanted to keep business cost low. Mr Steve Chia spoke about the increasing use of ERP technology in car parks and so on, and he was greatly concerned about security and whether some people will come along with some gadget and zap away all the money in our cashcards. This is certainly a valid concern. Let me give a little bit of background to provide a bigger picture. Cashcards were introduced in 1996, when we took a big step into the cashless society. We were not alone in this movement but we were among the early adopters. There are many reasons for promoting cashcards. Basically, handling cash is a very inefficient and costly business. To businesses, going cashless spells lower cost and higher productivity. To consumers, going cashless means greater convenience. A cashless society is, therefore, an ideal worth pursuing. But to gain consumer acceptance, security concerns of the type that Mr Steve Chia talked about have to be robustly addressed. People will be willing to use a cashcard only if they can be assured that they will not get unduly short-changed or have their money zapped away. That is why the usage and security of cashcards, or a more correct technical term, stored value cards, are governed by the Banking Act. Only banks are allowed to issue multi-purpose stored value cards. And MAS imposes very strict rules and regulations on them. Because we have taken these concerns seriously, cashcards have become widely accepted by Singaporeans. It is now very much part of our life and we literally cannot leave home without it. There are now 10 million cashcard transactions per month in Singapore - quite an achievement! For my Ministry, a key usage is for electronic road pricing (ERP) payments. How do we ensure security, in our case, for ERP transactions? The ERP system is audited regularly, both by the internal audit department of the LTA as well as its external auditor. The processes and transactions are all subject to audit. For example, the charge tables are meticulously checked both before and after they are downloaded into the system. In addition, the live transaction data are also checked as they come into the system to confirm that the ERP charges deducted are correct. Mr Steve Chia observed that increasingly car parks are adopting the ERP technology, much to the convenience of motorists. For example, I have been attending performances in the Esplanade, it is such a breeze - just drive through. But Mr Chia can be rest assured that the system is secure. He just has to remember to insert a valid cashcard into his in-vehicle unit. In fact, you can check it yourself quite easily, if you are worried about the system being faulty, or whatever. Just take out your cashcard, check what is your cash balance, and when you go through the toll gate, do it again. Sometimes, I do that, just to be sure, and it works all the time. But he made a new point and asked: are there gadgets that you can carry and go to the car park and start zapping away the money? You can try. But I do not think it will work. Next, let me reply to the cut by Mr Wee Siew Kim on alternative public transport. I agree with him that we should always be on the lookout for cheaper, less costly, alternative modes of public transport. We are not fixated on MRT or buses. But the fact remains that, based on current technology, a judicious mix of MRT and buses still serves our interests best. But we are not alone in this game. Every other city has to grapple with this problem. So, we have other cities' experience to study and to learn from. But we will continue to monitor what is happening elsewhere, and see if there are better solutions. Let me now come to the cuts by Dr Jennifer Lee and Prof. Ngiam. Dr Jennifer Lee asked if our public transport system is friendly to the elderly. Let me make it quite clear. The top priority of our public transport system is to cater to the needs of the masses. It cannot be helped, because large numbers have to be moved speedily from point A to point B, and that is fundamental. If we cannot meet that objective, we would have failed. Nevertheless, our public transport system does try to accommodate the needs of the elderly, the feeble and the disabled, for as long as it does not severely compromise the needs of the masses. Dr Lee talked about buses - when will we get all our buses elderly-friendly? I think we are doing it systematically and progressively. When buses are being replaced, they are required to become elderly-friendly. I think this is a practical way going forward, because the other alternative, which is, big bang, overnight, ask the few thousand buses to be replaced, that will be high cost. Somebody has got to bear that cost. I remember vividly our three-cent debate not too many months ago, and this will cost more than three cents. She asked what is the progress to-date. I checked. I think, right now, about one-third of SBS Transit and TIBS fleet of buses are elderly-friendly with low floors. Yes, she talked about bus drivers, that they have to be more careful when they have the elderly and the disabled on board and should not do sudden brakes or accelerations. I checked. Yes, this is part of the training for bus drivers. Actually this is common sense, but sometimes, common sense needs to be reiterated. As for MRT, the same thing. We are progressively upgrading our stations. To-date, we have completed five stations, one of which is Novena, which is in my constituency, coincidentally. But the other 40 will be progressively completed by 2005. 12.30 pm Taxi is a very important mode of transport for the wheel-chair bound. I totally agree with her. Some of our taxi operators have begun to be doing that. In fact, yesterday, while driving here from MITA, at the traffic light junction, I saw one of the Comfort taxis with that Handicare Cab Service logo, a very kind looking taxi driver and very proud of this logo. They are providing very good service for those who require handicapped friendly taxis. But we will continue our efforts to work with the various operators to see how we can make the transport system to be even more friendly to the elderly and the disabled. I agree with her that this is a project not MOT alone can deliver. And I thought I made that point too some months ago when a similar question was raised here, ie, to ensure that it is seamless travel all the way requires contribution from everybody - MND, MOT - but we will do our part. Prof. Ngiam joined in the debate and talked about fare concessions. And I thought we discussed that too a few months ago. Fare concessions scheme for senior citizens is operated by the operators; we are not involved. As rightly pointed out, once we get involved, we have to do it nation-wide and cross-subsidise. Somebody has got to fund the subsidy. For us to intervene to say that the operators must have fare concessions and do it 24 hours, seven days a week, I think the load would then have to be shouldered by all the commuters. Whether that is fair, I think that there will be people who feel otherwise. But what we can do is that we will encourage the operators, as I think the Members do, and all the other civic organisations as well. And I think the level that they have reached today is a reasonable one. Off-peak traffic is less any way and, as we all know, seats are perishables. So the cost of subsidy is very much less during off-peaks. But to turn it into a peak period concession, that is a completely different kettle of fish. Prof. Ngiam's concern is: are we, because of not providing concessions during peak hours for the elderly, making it difficult for the elderly to get a job? I do not think so. I think the barriers to the elderly getting a job are many. I do not think concessionary fare is the make or break barrier to their employment opportunities. Let me now talk about bicycle lanes, raised so passionately by Mr Ong and Ms Irene Ng. Like both of them, I enjoy cycling too. But we are practical people, I am engineer-trained. When we manage mass transport policies to move large number of commuters in the most efficient way, we have to give priority, not to bicycles, but to MRT and buses. LTA is involved in road reserves. We do not take charge of the whole Singapore island. We only take charge of about 12% of Singapore island, which is called road reserves, and those are our assets. So we have to manage this 12% very carefully. If 12% can become 40%, then, yes, we have many more road space to give to some other users. But when we are constrained by this 12%, we have to be careful. Yes, in cities, like Beijing, Hanoi, you will see on TV thousands of cyclists and, because of that, they set aside special bicycle lanes. That is because they are at a stage of economic development where, for the masses, bicycles, in most cases, are still the most affordable. I do not think Singapore is in that situation. We have already gone past that stage. If you look at Beijing, which I visit quite frequently, as the middle class expands and the standard of living goes up, they are now rapidly putting in MRTs, upgrading their buses and expanding their roads. It is a matter of time when they will also be taking away the bicycle lanes. So this progressive switch from bicycles to buses and MRTs for the masses, you can see it all over the world and is closely correlated with GDP growth. We do not discourage people from commuting by cycling. In fact, just this morning, when I came from the Ministry of Transport in Alexandra Road to here, not a long distance - because I remember this cut - I was on the look-out for cyclists, and there were half a dozen of them, some young, some old, and they were cycling on the roads, not on the pavements, in a very common sensical manner. So my message to cyclists is to continue to cycle. Our roads are safe relatively, but please exercise some common sense. Because if you are careful, look out for traffic, do not cycle in Orchard Road, but most other roads, I think it is all right. If you do not exercise common sense, sometimes you get into trouble. My daughter was cycling in the park the other day and she also had an accident. So I asked, "What happened?" She said, "A friend called her on her mobile." She had to answer. Of course, please have some common sense. My message to motorcyclists is the same too: Live and let live. This is a lane that we all have to share. And whenever you see a cyclist or motorcyclist in front of you, just slow down. Better be slow than sorry. I think I have covered all the cuts.

Sir, can I seek your permission for two clarifications?

Yes.

The Minister has not answered my questions. Who actually monitors the use and proliferation of the ERP technology, not the issuance of the cashcard? And the second clarification is: can the Minister assure citizens that it will not happen, and not to say that it is not likely to happen?

The ERP technology is licensed by LTA. Therefore, we own the licence. When the technology is expanded to include parking charges, they have become our licensees. So through that system, you have some sort of control. But cashcard, as I explained in my answer, is regulated by the Banking Act. The Member talked about a new technology and whether somebody can come around and swipe away cash from our cashcards. I am not aware of such technology. So I cannot talk about whether somebody will come out with such an idea; I do not think so.

Clarification, Sir. I did not say it is a make or break factor. But it is one of a number of factors that will help in the overall decision of the older persons seeking employment.

As I said just now, I am an engineer. So when faced with a problem, I straightaway zero in on what are the factors, rank them in priority and attack them. We will try to tackle the most important barrier first. Yes, there are countless barriers to employment. Right now, there is economic recession, jobs are down anyway, and so on and so forth. So there are many, many problems, especially for the elderly getting a job. I do not think fare concession is such a big barrier that we have to put in our efforts to solve it and, with that, you can solve the unemployment for the elderly.

Sir, we have been told that PSA has done it again. It increased its twenty-foot equivalent units (TEUs) by, I think, about 7% or 9% last year, amidst all the hullabaloo about losing its top two customers. We also read that PSA has been giving severe discounts to its customers and extra service during this period under review. What does all this show? It shows that sensitivity to customers is very important in attracting customers and sales revenue. If we had been more responsive earlier, perhaps we would not have lost the top two customers which account for at least 20% of the business and so much of the downstream businesses in the economy. How does the Minister ensure that the port is responsive to industry-wide and global changes? We are not talking about IT, or network, or good management, etc. Big time shipping companies and private port operators or terminal operators with sales revenue bigger than PSA earned possibly in a more difficult environment also have good IT systems, good network and good management. We are talking about listening to the voice of the customers and repositioning ourselves to anchor and serve our customers to collaborate with partners in new ventures under changing industry environment. The shipping industry and the global manufacturers are moving towards network connections, just-in-time logistics to maximise efficiency. Supply chain efficiency and just-in-time logistics can power the port customers, shipping lines, the terminal operators to be partners. And private port operators can also manage a network of ports and this can drive shipping lines to adjust routes and schedules for mutual gains. Not even IBM or Microsoft can control the forces which drive industry-wide changes. It is industry-wide changes which drive dinosaurs out of business when they react too slow. IBM lost the key business because it thought the contractor Microsoft was offering something that would not be a challenge to it. Port management is also changing. For the past four years, I have been arguing in this Committee for the privatisation of some of our port terminals. The answer has always been that PSA is different, or we are doing a good job, we are the transhipment port, and so on. Last year, the answer was we would consider it. Are we collaborating with industry players and building alliances to avoid being muscled in, as the episodes in the last two years showed? Are we a world-class industry player or just a world-class transhipment centre?

Sir, a more competitive and challenging economic environment is spurring not only regional countries to attack Singapore's maritime turf, but also attracting international players to compete in our regional markets. While it is heartening to note that our container throughput grew by almost 9% to about 17 million TEUs last year, in spite of having lost Maersk and Evergreen, we can no longer take this year-after-year number one position for granted. It is apparent that our surrounding neighbours are truly giving us a run for the money. They have improved their port operations efficiency and are building new ports with the state of the art facilities and have openly stated that they want not just a slice but a big chunk of our business. As Mr Chay has said earlier, our port must rise to the occasion and review the business model which contributed to our success in prior years and overhaul this to suit the current challenging business landscape. We must craft the response and differentiate ourselves from the rest, not only to defend our leading position, but more importantly, to set ourselves several steps ahead of the competition in the current fierce environment. We cannot allow ourselves to be locked in past thinking. I suggest, Sir, that we critically re-examine our strategies and work towards positioning ourselves as a flexible multi-tasking and multi-modal excellence hub which integrate sea, land and air transport. We should continue to enhance our competitive advantages, such as fully operationalising the cargo tracking technology that we have invested in which enables cargo arriving at our ports to bypass customs inspection and be transported by road to and flown expeditiously out of our airport. Our commitment to implement the container security initiatives as the first in Asia, which include the deployment of state of the art X-ray machines at our port terminals, should also be fully taken advantage of. I would also like to suggest that we review and loosen up customs treatment wherever feasible so that we can fully take advantage of the various free trade agreements which we have already signed with various countries and with many more on its way. 12.45 pm

(In Mandarin): Sir, last year, PSA lost two of its major customers to Malaysia. But according to reports, in February this year, our total container throughput has increased by 29%. However, out of this 29%, only 4% was derived locally while 25% was from its operations at other ports, eg, those in China. If this is the trend, then the throughput of containers in Singapore will be moved overseas. Would we then lose our ranking as the second busiest port in the world? Would this also result in a second round of retrenchment in PSA? Secondly, recently, the Malaysian government announced that it was going to remove the causeway and replace it with a funny-looking bridge so that ships can pass through the Johor Straits. I would like to ask the Minister, under such circumstances, would it further affect the development of our port and its performance.

Sir, the loss of two major shipping customers had jolted the port. Measures and initiatives taken in response had resulted in a respite. However, the threats from regional ports have not disappeared. Their aspirations to supplant us would inevitably lead to renewed and re-intensified bouts of competition once they have time to build and expand capacities, and had adjusted and digested their new-found business volumes. I would like to ask the Minister for the initiatives that we have underway to ensure that we maintain our pre-eminent position, and to prevent the onset of complacency. Additionally, in the face of competition from port operators, they are in a position to offer package rates that are applicable to a string of ports located astride the global shipping routes. What would we do differently, now that competition is on a more global basis? Our "little red dot" may have to consider linking up with other dots along the world trade routes, and offer a comprehensive package, if that is what shipping customers now view as competitive advantage.

Sir, with the knowledge and expertise that we have built up over several decades, and having proven ourselves as a premier port globally, I would like to suggest to the Minister for Transport that we consider marketing our port expertise to countries which are desirous of embarking on excellence and also internationalising the port operations. Opportunities are clearly opening up in the emerging wider hinterland of China, Indo-China and India. In order not to over-stretch our resources, MPA could also consider collaborating with private organisations to license its intellectual property and capitalise on the vast business opportunities in the overseas markets. In today's context, we need to stay engaged with the world market as a means to remain relevant and keep ourselves constantly updated with new competencies, so as to stay competitive in a world-class league. The global arena is also the test bed for our port institutions to evaluate its competencies in an international setting. Given the experience and capability acquired over the years and Singapore's strong standing in various aspects of port management and our port-related institutions, such as the MPA and PSA, I am sure our expertise is highly valued and recognised by foreigners the world over. We should ride on this global wave and export our expertise as a further means of contributing to our GDP.

Sir, Singaporeans are justifiably proud of the pre-eminent positions occupied by our airport and our seaports. The reliability and efficiency of these hubs have contributed enormously to the successful and huge strides our trade and industry sectors have made to plug into the world. These are the multiplier effects the air and sea hubs have on our economy. Needless to say, many enterprises in Singapore continue to depend on the continued growth of these hubs for continued existence. Hence, the success of the hubs cannot be singularly judged within the boundary fence of the port, or the confines of the airport. A narrow measure of performance would fail to recognise that the performance of these hubs must be viewed in a much broader context. I would like to ask the Minister if the regulatory oversight of these key hubs and drivers of our economy could be further augmented with performance indicators that measure the impact on the enterprises along the value chain downstream of the ports and the airport.

Sir, I notice that nowadays fewer cruise ships call at the Singapore Cruise Centre at the World Trade Centre. I was also told that Star Cruise, which used to call twice weekly at the Singapore Cruise Centre, has now reduced the number of calls and is now using Changi Ferry Terminal, which is operated by a Malaysian company, to bring passengers to board its cruise ships anchored at Tanjung Langsat in Malaysian waters. It seems that by doing this, it is much cheaper for the cruise operator than berthing its ships at the Singapore Cruise Centre. Have we priced ourselves out of this market? Is this a case where a Government-controlled entity mistakenly thought it had a captive market and could impose whatever fees and charges, and customers who want to use the Singapore port had no other choice? This loss of the cruise business has severe implications for other tourism-related industries. I would like to ask the Minister whether there are any plans to regain this market.

Sir, let me take the cuts one by one. I will start off with the points made by Mr Chay. In some ways, Mr Wee Siew Kim also made similar points. Mr Chay asked how do we ensure that PSA remains responsive to its customers, and he asked how do we make sure that we have a global network of ports that fits in with the trend of shipping lines going more into supply chain management, and how do we make sure that we remain a world-class player. Sir, how we make sure that the port is responsive to customers is something which PSA alone has to be responsible for, because PSA is a corporatised body, it has its own Board of Directors and its own management. It has to set its own strategies and address the business challenges as it sees fit. Arising from the loss of the two shipping lines in the last two years, I think PSA has changed its mindset. There has been a change in management and a significant change in mindset. As such, PSA has been reaching out very actively, especially over the last six months or so, to its key clientele, to see how best it can meet their needs. I understand that the discussions include the possibility of dedicated terminals operated jointly with its key clientele. So, PSA has been making a lot of efforts and we are seeing the results. For example, PSA was actively engaged in negotiations with Hanjin Shipping Line of Korea. This was reported in the press. And despite a lot of competition from other ports, PSA has managed to enter into a long-term agreement with Hanjin. Again, this shows that PSA has managed to be flexible and to remain highly competitive. In terms of the network of ports, this is also what PSA has been doing over the last six or seven years. As a result, PSA today has an overseas network of 14 ports in eight countries, and I understand that PSA is actively striving to further enlarge this network of ports. What is crucial is that it intends to build a global network of ports that are strategically located along the key international shipping routes. In this way, it can offer basically a world-wide service to their partners, who are sailing worldwide. It will also allow PSA to link all the ports electronically onto one platform. If it can do that, this will save its key shipping clients the cumbersome administrative paperwork and allow those companies to focus more on their key business requirements, ie, managing their ships and supply chain management services. So, I think PSA is indeed rapidly restructuring and transforming itself, and I am quite hopeful that it will be able to retain its position as a global player. Mr Ahmad Magad said that the port must be able to rise to the occasion and must be able to craft its responses to meet the competition effectively. He asked that we position ourselves to take advantage of our position as a hub, in terms of both air and sea hubs. Sir, this is exactly what we are doing. We are now exploiting the synergies that can be developed from the multi-modal transport arrangements. For example, today, cargo can be shipped from the region to either PSA or to Seletar and, from there, because we have a very good road network, they can be trucked very quickly to the airport. Again, because of the tremendous connectivity at Changi Airport, these cargoes can leave very quickly for international destinations. So, today, we see flowers and, in fact, even tropical fish coming from the region being exported through Singapore. We are now working closely with EDB and CAAS on how we can further develop these multi-modal shipping arrangements. The other area that we are looking at also is our cruise hub. As Mr Ahmad Magad knows, we have a cruise centre which is quite active. In recent years, the Singapore Cruise Centre has also benefited from the fact that we are an aviation hub. So, now we see more of the cruise lines running fly-cruise packages. They fly in passengers to Changi who stay maybe one or two days here, and then they leave through the port for regional cruises. So this is another exciting idea which we are looking at, which is really a multi-modal transportation package. Sir, Mr Ahmad Magad also mentioned that he would like us to review our customs procedures so that we can better benefit from the FTAs that we are signing. Indeed we are doing so. We are working closely with Customs and the relevant agencies to ensure that our customs procedures and our IT systems allow for the smooth and convenient movement of goods between Singapore and our respective FTA partners. Sir, Mr Ang Mong Seng expressed concerns that PSA's growth appears to be more focused on their overseas ports and, if that is the case, whether we will run the risk of losing our position as the No. 2 container port in the world, and whether this would in turn lead to a fresh round of retrenchments. Sir, I think Mr Ang probably did not interpret the figures very clearly. Yes, PSA has grown, both in Singapore and globally. Yes, the global growth has been higher in terms of percentage. But that is because the global throughput of containers is starting from a very low base. So, from a very low base, it is very easy to grow by a high percentage. For example, Guangzhou port grew by 40% last year, and that is because it started as a very small port. But in terms of actual container growth, it is really not very big, compared to the container growth in PSA Port. PSA Port last year grew by 8.8% to 17 million TEUs, ie, there was a growth of over a million TEUs in Singapore alone. As I explained to Mr Chay, PSA has been more innovative and flexible in their approach to customer service. I am quite confident that PSA in Singapore will be able to hold its own and, not only that, continue to grow. And if they can do that, I do not think we need to fear that there will be another round of retrenchments. 1.00 pm Mr Ang asked about the bridge that has been announced to replace the Causeway. He asked about the impact. Sir, the bridge will allow only small barges to connect Pasir Gudang to Tanjung Pelapas. This is because of the clearance required and the bridge will only be 25 metres high. So only small barges can sail under the bridge. Even then, it would take the barges slightly longer to sail from Pasir Gudang to Tanjung Pelapas as compared to sailing from Pasir Gudang to PSA. I think the impact of the new bridge on PSA is therefore not expected to be serious at all. Mr Ahmad Magad talked about leveraging on our port expertise. He asked that we consider marketing our port expertise abroad, especially to China and India, and he asked for MPA to collaborate with other countries because MPA also has significant expertise. Sir, I want to assure Mr Magad that that is exactly what PSA and MPA have been doing. PSA has been actively expanding, as I have mentioned just now, they are now in eight countries with 14 port projects. In fact, China is one of the key focal points of PSA's efforts. In China now, PSA has four ports in Dalian, Fuzhou and Guangzhou. And I understand that PSA is actively looking for more port locations in China. In India too, PSA has two ports and, again, it is actively looking to collaborate on more port projects in India. MPA too has been active internationally. It provides training assistance to other port authorities in port management, oil spill response and the implementation of IMO conventions. This last part is quite extensive because there are a lot of IMO conventions and they are amended from time to time. So there is a lot of updating and training required. We play a big part in providing this training, not just to Singaporeans but also to trainees from the region, including from Africa as well. Mr Wee Siew Kim asked about the multiplier impact of our air and sea hubs. He asked us whether we measure the success of our air and sea hubs in terms of the downstream multiplier impact, ie, do not focus too much on the profits of just PSA and the airport but look in terms of how we grow the air and sea sectors, so that the multiplier impact on the economy can be achieved. I think he is probably referring to the many SMEs that are involved in these two sectors. Sir, I agree with Mr Wee that indeed the multiplier impact is very important, and that is why we do focus a fair bit on our air and sea hubs. The air and sea sectors alone contribute to 5.6% of our whole economy. So the benefit is not just to PSA and CAAS but, really, there is a huge impact on the rest of the economy. If you look in terms of the entire transport sector, which includes the land, storage facilities, etc, it contributes to 9% of our total economy. This is one of the key pillars of our economy. Being a key local activity, SMEs do benefit a fair bit from these two sectors. Sir, we are definitely committed to growing the two hubs and not just looking at making sure that PSA and CAAS are able to generate reserves and surpluses. That means we are looking at how we increase the volumes of business at both the PSA and the airport. On the port, I have already spoken quite a fair bit in reply to Mr Chay and Mr Ang on what PSA is doing. On the airport, I think it is important for me to point out one factor and, that is, Singapore is actually not a natural air hub. We are not geographically located in the right place and our domestic market is really too small for us to be an air hub. But we have become an air hub. This is because of the tremendous efforts that we have put in in the past, in terms of growing the infrastructure and making Singapore into a business hub which then contributes to the development of the air hub. But new technology and equipment will pose significant challenges to us in the growing of the air hub. For example, the new long range planes will allow flights between Europe and Australia to take place without the need for an intermediate stop. At the moment, we are a very convenient intermediate stop. With the long range planes, they can actually over-fly Singapore. So how do we respond to this challenge? I think the answer is we have to be really nimble, alert and make sure that we continue to offer value-added services that make it worth their while for the airlines to stop in Singapore and for visitors who still want to come to Singapore, especially businessmen visitors. One of the things we are doing to develop the air hub is the development of the Airport Logistics Park at Changi, or ALPS. This is located strategically in Changi's free trade zone and ALPS will then be able to leverage on the excellent connectivity and the superior handling efficiency of Changi Airport. The logistics companies can enjoy very rapid turnaround with minimal customs formalities. The opening of ALPS will definitely help strengthen our position as a leading air logistics hub, and we will definitely look into working with the other agencies to see how we can further develop our air and sea hubs. Mr Ong Kian Min spoke about the cruise centre. He stated that Star Cruise has reduced its callings at Singapore and is instead ferrying passengers from Changi Ferry Terminal to Tanjung Langsat. He asked whether this is another example of how we have priced ourselves out of the cruise market and asked how do we plan to regain this market. Sir, the real picture is quite different from what Mr Ong had painted. First, let me assure the House that Star Cruises is still operating from the Singapore Cruise Centre. It currently has three cruise ships that call regularly at our port - the Superstar Virgo, the Megastar Aries and the Megastar Taurus. It would be useful for me to explain to Mr Ong some of the developments in our cruise industry. In 2002, we had 740 calls by cruise ships. This was a significant 40% drop compared to the year before. So, in a way, he is right that there has been a decline in the cruise industry. Was this due to competition from Malaysia and high PSA charges? I think the answer is an emphatic no. The drop was due to two factors. First, we must understand that the cruise industry is a leisure industry and the leisure industry is very, very much dependent on how strong economic growth is. And the fact that we have very weak local and regional economies means that the clientele for the cruise industry has declined, both local as well as foreign clientele. Secondly, we also had the heightened security concerns amongst holiday-makers after 911. So these two factors together resulted in the number of cruise ship calls dropping by 40%. In fact, the reduction in the calls by Star Cruises was only 30%. So the other cruise lines suffered a bigger drop, compared to Star Cruises. Indeed, the entire cruise industry worldwide is also experiencing a slowdown. According to the UK independent research company, Ocean Shipping Consultant, the global cruise industry is expected to see continued weak market conditions over the short to medium term. It is expected only to start recovering in the second half of this decade. So, basically, we are all in the same boat. Mr Ong suggested that perhaps the high berthing charges could be a possible factor. Again, let me assure him that this is not so. Our berthing rates for cruise ships have remained unchanged. Since 1991, we have not changed the rates at all. This is because we know that the cruise business is very sensitive to cost, and, as such, MPA regularly reviews the berthing charges to ensure that we remain competitive. The ship that Mr Ong referred to is actually the Superstar Aries. Let me explain that this ship is normally home-based in Taiwan but because this is the off-season in Taiwan, the owners have brought it back to this region. They have brought it back for only three months from January to March. They have parked it at Tanjung Langsat. But while parking there, the ship still makes destination calls from Singapore. So it comes to Singapore and from here, it goes on cruises to Malaysia, Phuket and other destinations. It did 12 cruises from Singapore in the past two months and for March, they will have four cruises. So it is not that they are not using Singapore. It is just that this is a surplus ship, so they have parked it in Tanjung Langsat presumably because it is a lot cheaper to just park it there. Sir, I believe I have answered all the questions.

Mr Chay, are you withdrawing the amendment?

I thank the Minister and his Senior Minister of State for their answers, and beg leave to withdraw the amendment. Amendment, by leave, withdrawn.

Amendment No. (2). Dr Chong Weng Chiew.

Sir, I beg to move, That the sum to be allocated for Head W of the Main Estimates be reduced by $10 in respect of Code WA 1500. With the impending move of the Traffic Police to LTA, I would like to raise this cut under this Ministry. For taxi drivers who have accumulated 24 demerit points within two years, especially for those with points owing to the fault of their passengers, I appeal that they should be given extra six points. Perhaps, these six points may be for a period of just six months. In this way, taxi drivers will not be penalised unduly, just because of the non-cooperation of some unreasonable passengers. Also, the time spent by a taxi driver on the road is many times more as compared to the others, perhaps we should consider allowing them these six points, especially in these difficult times, as many taxi drivers are also sole breadwinners of their families. The Minister actually has already replied to my cut on the taxi disciplinary board and thus I would like to beg leave to withdraw this amendment.

(In Mandarin): Sir, although we understand that the purchase and sale of cars, whether passenger cars or commercial cars, is a transaction between the buyers and sellers, I feel that there should be proper regulation for this trade to ensure there is transparency in the transaction so as to protect the consumers, because every purchase involves tens of thousands of dollars, and these are hard-earned money of our citizens. We should ask all sellers to clearly spell out all the relevant information regarding the vehicle on sale, so that there will not be future conflicts and complaints. In the past few years, among the complaints received by CASE, some one-third of them relates to car purchases. I hope that the situation can be improved. For example, some purchasers have complained that there were inherent problems with the car the moment it came out of the showroom. There were also quite a lot of complaints concerning the car financing plans. Many dealers told their customers that they would have no problem obtaining financing from the finance company, and coaxed the customer to pay a deposit for the purchase. Subsequently, they found that the finance company turned down their loan application for some reason, and the deposit was then forfeited. I suspect some dealers have been using this trick to cheat the customers of their deposit which could amount to a few thousand dollars. There should be more transparency in all these transactions to protect the interest of the consumers. 1.15 pm

Dr Chong suggested that taxi drivers be subject to a higher demerit points cap than other motorists. As he correctly pointed out, demerit points are managed by the Traffic Police under the Driver Improvement Points System (DIPS). The purpose of DIPS, as we know, is to promote safe driving and to get dangerous drivers off our road. Demerit points are levied on all motorists who commit offences, eg, beating the red light at junctions. Increasing the cap, I am afraid, would send the wrong signal. Yes, I agree that taxi drivers are heavy road users, but they shoulder heavier responsibility too, as they have the passengers' safety in their hands. We should, therefore, expect a high, not lower, standard of safety from taxi drivers. More importantly, the law must be applied equally on all motorists. To differentiate them for penalty would be invidious and unconscionable. But I take Dr Chong's point that there could be occasions, eg, he quoted the example of non-cooperation by the passengers, which may lead to a penalty being imposed on the taxi driver. In those circumstances, they need to look into it - in this case, by the Traffic Police, I presume - before they decide whether demerit points are to be imposed. As for Mr Yeo Guat Kwang's cut, he would like us to consider regulating the motor dealers to cut out, as he put it, "unfair trading practices", so as to protect car buyers. Although he talked about motor dealers, his comment could have applied to any other trading activities. But regulating trading is really a very big step to take. If we make more rules to regulate trading, we will increase business costs, which would eventually be passed on to consumers and that is why the Government has always resisted taking such a big step. But, in response to feedback from CASE and several Members of this House, MTI has been working with CASE on a consumer protection Fair Trading Act. I understand that under the proposed Act, consumers will have some recourse if sellers, and that would include car dealers, engage in unfair trade practices. However, as the intention of the Act is to protect small consumers who lack the resources or expertise to protect themselves, there is likely to be a cap on the amount that the consumer can claim. But I agree with Mr Yeo that the industry should promote greater transparency and self-regulate to cut out unfair practices. They should try to avoid the situation whereby the Government is forced to step in to regulate tightly. The best way to prevent this is for them to maintain a high standard of practice. LTA has been working with the Motor Traders Association and the Automobile Association of Singapore to promote transparency in the buying and selling of motor vehicles. LTA is also working with CASE to encourage more motor traders to join the CASE Trust Accreditation Scheme. Dealers who have signed onto the scheme would be required to observe a code of good practices. Nevertheless, I will ask LTA to discuss this subject further with CASE and the industry associations to see if more needs to be done.

Dr Chong, are you withdrawing your amendment?

I thank the Minister for his reply and beg leave to withdraw the amendment. Amendment, by leave, withdrawn.

Amendment No. (3), Mr Low Thia Khiang.

Sir, I beg to move, That the sum of to be allocated for Head W of the Main Estimates be reduced by $10 in respect of Code WE 3100. Sir, the 1996 White Paper on A World Class Land Transport System (page 42) stated that LTA will consciously reduce the burden and anxiety of waiting for buses. LTA has embarked on a pilot project to display bus arrival times at two selective bus-stops. Over the next two years, LTA will work with the relevant organisations to expand this project. Today, six years later, commuters are still suffering from a bus waiting complex. Then, recently, the newspapers reported that just months before the project was to have been completed, LTA is dropping the $40.3 million plan to provide commuters with bus arrival times at bus-stops, interchanges and the Internet. This, according to the report, is due to software and integration problem. Sir, I have the following questions: (1) How much has LTA spent in developing the system so far? (2) What is the software and integration problem? (3) Why is LTA unable to resolve the integration problem and did LTA foresee the problem before calling for the tender? (4) What is specified in the tender in regard to software development and integration? (5) What is the alternative now to provide real-time bus travel information to alleviate the anxiety of commuters waiting for buses?

Sir, I could not quite recall now, when I answered a similar cut about an hour ago, whether Mr Low Thia Khiang was in the House. If he was not, I do not know, Sir, what you want me to do. Should I repeat what I have just said one hour ago or let him read the Hansard?

Mr Low, you want to hear the reply again?

Sir, I will withdraw my amendment and read the Hansard. Amendment, by leave, withdrawn. The sum of $297,240,300 for Head W ordered to stand part of the Main Estimates.

The sum of $1,151,565,500 for Head W ordered to stand part of the Development Estimates. Head V -

Head V, Ministry of Trade and Industry. Mr Leong Horn Kee.

Sir, I beg to move, That the total sum to be allocated for Head V of the Main Estimates be reduced by $100.

We are living in an uncertain world. Events and circumstances are shifting and changing fast. Sir, the issue I would like to raise with the Minister for Trade and Industry is what should be Singapore's fundamental economic policies in the light of a changing world. It was barely 10 years ago that Japan was considered the world's No. 1. That book of the same name by Harvard professor, Israel F Vogel, published in 1980, was a top seller then. Japanese companies were buying up everything in sight, including top US golf courses and the Rockerfeller Centre. Today, Japan has been languishing for over 10 years, laden with a mountain of domestic debts and a sickly economy. Nearer home, and a more comparable example, is Hong Kong. They are now in deep trouble, it seems. Hong Kong recently announced that they would incur deficits of HK$70 billion. The official reserves will drop from HK$303 billion to HK$185 billion, or about only S$41 billion, by year 2005/2006. Analysts have even predicted that Hong Kong would die. Hong Kong has touted itself as the gateway to China. This strategy backfired. Hong Kong becomes increasingly marginalised as MNCs seek direct entry into China with huge FDIs. Hong Kong faces hollowing out of its manufacturing industries to the cheaper Chinese cities nearby, such as Shenzhen, Zhuhai and Guangzhou. Their services sector faces the threat of Shanghai, which is fast eroding Hong Kong's position as a major financial centre. Shenzhen has a population of 7 million people and Shanghai has a population of over 14 million people, and still growing. Sir, how about Singapore? We are a small city with only 4 million people. Our domestic market is small. Singapore is becoming an increasingly high-cost manufacturing centre. We are lacking in sufficient pool of people with gung-ho and enterprising spirit. Government is too dominant in the business sector. Faced-off against the growing mega-cities like Shanghai, how can we handle such threats? China and India are two potential growth areas. Are we doing enough to plug into these two countries? How much have we done to establish closer trading ties with these countries? The Government has identified the need to focus on nurturing the twin engines of growth, namely, manufacturing and services sectors. I wish to remind the Minister not to neglect other sectors as well. Every amount of contribution helps, eg, the smaller sectors like tourism, retail and logistics are also good sectors to earn foreign income. Sir, I am very fearful that a super-Asian nation like Japan and a dynamic and vibrant Asian economy like Hong Kong have seen their fortunes turned for the worse, literally overnight. Even in the US, President Bush has announced the roll-out of US$3 trillion, that means US$3,000 billion budget, with long term tax cuts to spur growth. Therefore, we must be perpetually watchful over Singapore's long term survival. Can the Minister gaze into his crystal ball and tell us if we are doing right? What can go wrong, and what we can do about them?

Madam Ho Geok Choo is not here. Mr Leong Horn Kee, please.

Sir, on investment promotion, I would like to ask the Minister what is the outlook of investment promotion for Singapore in the next few years? We have heard, over and over again, that China is said to be a huge suction for foreign direct investments (FDIs). It is estimated that 20% of all FDIs in emerging markets around the world currently goes into China. In 2002, China attracted US$50 billion of FDIs. What is the impact of the attraction of China in terms of FDIs on Singapore? How much FDIs and what type of industries have we in Singapore to be able to attract so far? What are the new desirable industries that we wish to attract? Is the EDB facing increasing difficulty to attract MNCs to Singapore? I would also like to ask the Minister what is the estimated new employment creation from the investment commitments we have received so far. These new jobs would help to alleviate the employment situation. I would like to ask the Minister about the idea that ASEAN itself is a huge market of 500 million people and therefore could be a good region to attract MNCs. How can we cooperate on this concept amongst ASEAN countries so as to counter the attraction of China for FDIs? Another concept is to promote Singapore as an alternative location to China. Many MNCs often do not want to put all their eggs in one basket, ie, to invest only in China. Hence, many MNCs may want to have an alternative production or operating headquarters centre outside of China. Singapore can, indeed, be such a centre. 1.30 pm

Sir, I raised the issue of cost competitiveness many times before, and also during the Budget debate a few days ago. I feel that the response so far does not give a comfort feeling that we have identified the solutions of all the factors of costs. During the Budget debate, of course, I got a straight "No" answer from the Minister for Finance with respect to my suggestion on differential pricing for industrial land. The Minister felt that we already have sufficient initiatives in place to address the issue of high cost of land. The Minister also said that the Government will ensure sufficient and affordable land for industrial use, and will always be available to keep Singapore competitive in the long term. During the debate, I also highlighted the issue of the image that we have created outside Singapore, and I brought up the example of a project which would have been competitive in Singapore, but the customers that I spoke to preferred to do it in China or in countries like Philippines, simply because they felt that Singapore could not do it. And I felt that it is competitive because it was mainly capital cost that was involved, and the labour content was really very small. But the issue of land could then become a significant factor. Sir, the issue of image and perception that we have given to others regarding our cost being high could be a big issue for us. And one lesson that I have learnt throughout my working life is that the perception can be as bad, if not worse, than reality. With this as the backdrop, I would like to ask the Minister a few questions: First, on industrial land, I believe that the Minister for Finance really meant that the Government will continue to provide affordable industrial land to JTC. Can I ask the Minister what are the JTC initiatives and plans to assure the affordability of factory space over the long term? Also, whether JTC and its 100% owned subsidiary, Ascendas, have indeed passed on all of the savings from property tax rebates to their tenants. I have often heard feedback that Ascendas did not quite do so. Second, what initiatives does the Minister have to address the high cost image and to eliminate the unhealthy perception problem that we are facing? Finally, I also brought up the issue of many hidden taxes, Government charges and fees, and if they are all added up will make our overall effective tax rate looks worse than many countries - taxes like property tax, petrol tax, COE, road tax and so on, which have been brought up by many Members. Is the Minister still convinced that we are indeed cost competitive if we add up all these factors of cost?

Mr Wee Siew Kim, you can take your two cuts together.

Sir, Singapore industries can look forward to harnessing the cheaper factors of production of labour and land on the islands of Bintan and Batam. On top of the proximity to Singapore, the two islands are not unfamiliar to most Singaporeans, having become choice holiday getaways. Now that our Government has taken the initiative to include the two islands in our FTAs, this augmentation to our industrial base would continue to anchor manufacturing as the key driver for our economy. However, some SMEs that had studied this latest development cite logistical and cross-boundary administrative issues or transfer of goods and materials as continuing impediments to achieving the full integrative potential of Bintan and Batam as our manufacturing hinterland. I would like to ask the Minister for the expeditious streamlining of procedures with the Indonesian authorities to facilitate the movement of goods and services. In a cut on the Ministry of Transport, the Minister for Transport had assured that we are tackling the customs procedures for importers and exporters, but this is the Singapore side. Let us extend these to our Indonesian friends as well. Additionally, the transfer of the security measures and precautions and knowledge that we have already attained to the islands would give additional comfort to our export markets that our extended manufacturing hinterland comes with the same assurance that they have come to expect of Singapore. Sir, even as we expand our manufacturing hinterland, it is our goal to spur entrepreneurial development in Singapore. Through innovations, we hope to generate the fuel that propels our manufacturing base. It is recognised that in prototyping new products, testing new products and proofs of concepts, enhancements to bring forth new versions of products, require a base of supporting industries. These are the people who, with engineering ingenuity and skilful hands, craft and bring to life the ideas. These too are the same supporting industries that have cut their spurs being key suppliers to the MNCs that have located their manufacturing and design centres here. Hence, SMEs that are engaged in these downstream activities may need to be identified and given special attention and incentives. I ask that the Minister consider that when we approach the twinning of topics of promoting entrepreneurship and manufacturing, we give special attention to alleviating the challenges facing the SMEs in our supporting industries.

Sir, over the years, we have had to reinvent ourselves in terms of our offerings to tourists to Singapore. Where we were once a shopping haven for luxury products, we now often hear the refrain that we are expensive, or that our products are tired. Even when visitors ask their Singaporean friends for ideas on what to see or where to go, the suggestions do not come readily, except when it comes to food or the usual suspects - the zoo, Sentosa. This is well manifested in the challenge for us to push the average length of stay beyond the 3.19 days and raise the tourist expenditure above $758. Sir, the Singapore Tourism Board itself declares that there is no such thing as a typical visitor, and that there is a huge variation in needs. At the same time, we have had to adapt to sudden shocks, such as the September 11 disaster which affected long-haul markets and reshaped travel patterns. Yet, when we plan, not surprisingly, we consider the longer term effects. In this regard, I note that the new initiatives proposed by the STB represent an intention to shift the emphasis beyond volumes, such as tourist arrivals or top line numbers, as I would refer to them. However, I note that there is still a tendency to focus on make-overs and single products on a discrete attraction basis. The same appears to be true, ie, the lack of a holistic approach to accommodation capacity, such as the seemingly ad hoc proposal to offer HDB-type experiences. What is yet more worrying is our tendency to look after only the hardware aspects, rather than the software issues. I do not know, for example, whether Chinatown is a case in point - huge fanfare at the opening, encouraging start but, understandably now, a pitiful stage. Sir, many visitors like to go where the locals go. Many would love exploring the HDB commercial areas or dining at the coffee shops, whilst enjoying the MRT trip along the way. Stand-alone tourist attractions have their place in the overall scheme of things, but where there is little association with the Singaporean identity or lifestyle, they lose their shine rather quickly. We have enough failures like Haw Par Villa to learn from. I therefore like to ask the Minister the following questions: Firstly, have we explored sufficiently the natural charm and heritage of Singapore when developing ideas for both tourists and Singaporeans? Secondly, how do we translate the new initiatives into economic reality, so that it will not be a superficial make-over exercise, and how will progress be tracked and assessed? Finally, what structural changes are needed within the hospitality sector, eg, in the projections for the different class of hotel capacity?

Sir, I would like to raise an issue with regard to Malaysian Airlines having China girls as stewardesses to boost tourist visits to Malaysia. According to the Oana-Xinhua report, MAS plans to employ some 100 China cabin crew this year. The tell-tale sign is not about the cabin crew, but rather the increasing attraction of Malaysia as a favourite tourism destination for Chinese travellers. It has been forecasted that MAS' sales volume for 2003 is expected to double that of next year. It has been reported that during the Chinese New Year holidays in early February, sales increased by 60% compared to that of the previous year. Sir, surely we can add value to Malaysia's new found strategy of attracting China tourists. How can Singapore attract this group from China? How can we ensure that this group will not bypass Singapore? Is there any arrangement with the Malaysian Tourism Board to package a bi-neighbour attraction package perhaps, which destinations could include both Malaysia and Singapore. Will Singapore take the initiative to offer a joint programme which can work both ways in this particular area, since tourist arrivals from China are growing? Whilst offering Singapore's hotspots, we can also offer to market Malaysia's hotspots through direct tourists to Singapore. This way, we will work towards a mutually beneficial arrangement. How many other such arrangements are there today with Malaysia? Is there any special tourist attraction that we can offer? For sure, we are no shopping haven, neither do we have the wonders of the world. Sure, we have Sentosa, the Esplanade and the lights. What more can we have that will offer a difference? It is time that we started to look also at our competitiveness at the tourist dollars and our standard of customer service. Chinese tourist arrivals to Malaysia from January to November 2002 numbered about 517,000. Projecting from this figure, the year 2002 figure will be about 560,000. The Singapore figure for Chinese tourists for January to November 2002 numbered 611,000 visitors. This will be projected to about 660,000 for the whole year. In 2001, Malaysia recorded a tourist revenue figure of RM24.2 billion, about S$11.1 billion, an average of RM$1,890 per visitor. If Malaysia is earning S$11.1 billion from this sector, it can illustrate to the Malaysians that, mutually, we can grow the pie, so much more if only we combine our efforts. Perhaps Singapore can be the coordinating hub to link Malaysia with the other regional islands in Indonesia for the tourists to visit. Not only will increased tourism boost the economy, but it will also help to create jobs for the retrenched. Can the Minister enlighten the House as to whether there are existing programmes with the Malaysian counterpart? If not, is there any intention to pursue one? Also, are we embarking on a massive customer service training for our service providers, in view of the increasing service excellence programmes that both China and Malaysia are embarking on?

Miss Penny Low, you can take your two cuts together.

Sir, each year, the Singapore Tourism Board spends much effort and money looking into ways to attract the big spending tourists to Singapore. Whilst it makes economic sense to attract high tourist dollars, the diversity of Singapore can be appreciated by tourists of all classes. If efforts are made to attract all, I believe the numbers would all add up to sustain Singapore as a top tourist destination in the region. Yesterday, I was delighted to read the Straits Times article entitled "Welcome to Hotel HDB". It is meant to be a sort of budget hotel, aimed at the China market. I applaud the move by the Ministry. Yet, there is another group of globetrotters, who has been somewhat neglected and certainly deserves our attention. They are the backpackers. Perhaps in this part of the world, backpackers are perceived to be "poor travellers", and not much value add. This is not necessarily true. In fact, in Europe, Australia, New Zealand and other countries, backpacking and caravaning is a prized travel choice, and a way of life for some. Backpackers in good numbers can contribute substantial tourist dollars and provide employment for many. In all major cities in the world - London, New York, Paris, you name it - there are niche markets which cater to these backpackers. Backpackers have more to offer than just tourist dollars. Backpackers add to the vibrancy and dynamism of cities of the world, adding colour and flavour to the cities. In many cities, backpackers contribute significantly to the creativity and culture of the place, as they bring along with them different world views and a keenness to exchange ideas at a heartlander's level. Tourists are always attracted to places with all kinds of tourists, and certainly this is not a group to be neglected. While many backpackers may be fresh graduates out to conquer the geographical world, many of them graduate to conquer the corporate world subsequently. Therefore, giving them a good impression of Singapore may one day become a deciding factor in the relocation of themselves, or their companies. In recent years, there have been reports of lodges that provide accommodation to these backpackers being closed down due to their inability to renew their licences. The famous Peony Mansion, Lee's boarding house and many other popular backpackers lodge are now history. Many of those around are also in a deplorable state and look more like crammed bunkers with dirty toilets and very little sanitary attention. I have spoken to some of the operators along Bencoolen Street, and they have told me that the premises sit on gazetted land that may be recalled at short notice. As such, it was not worth investing in the place, even though there were profits to be made from running it. Some of the operators' licences were subsequently not renewed, as it was said that they could not meet the standards. Hence, I would like the Minister to comment on whether there is a policy to discourage or encourage backpackers; whether these owners or licensees had, in fact, not met the standards set and hence unable to renew their licences. If the latter is the case, then what measure is MTI taking to help the licensees upgrade and keep their licence? Will there be efforts to grow this market and, if so, what should we be expecting in the near future? Last but not least, could the Hotel HDB concept be expanded to become a backpackers Lodge HDB? 1.45 pm Sir, my next cut is on medical services hub. When I first heard of the call for Singapore to be a regional medical services hub, I had a feeling of deja vu. This call was first heard in the early 90s, which saw millions of dollars going into dressing up public hospitals, and words like "restructured", "semi-privatised" and "privatised" hospitals became fashionable. This year, the budget of the Ministry for Health is up by 33.9%, much of which will go into financing of new hospital buildings. While I am hopeful that our efforts this time will be successful, I would like to seek assurance from the Minister that our efforts and resources will not be spent in vain this time. The fear is that while we are building ourselves into a regional medical hub to attract top-end clients from the region, so are our neighbours like Malaysia, Thailand and, very likely, Shanghai. In fact, in 2001, Thailand's Bumrungrad Hospital saw 225,000 foreign patients, which is more than that of all Singapore hospitals combined. Cost was a critical factor as these countries are able to provide good medical services at cheap rates. Talent may be the other, but talents are mobile. Hence, could the Minister comment on: (1) Our competitive edge vis-a-vis our neighbours, and the difference then and now? (2) What are the steps planned to build Singapore into a medical hub for the region? How do we plan to counter this competition and stay ahead? (3) What steps have we taken so far to woo more foreign patients to seek consultation in Singapore? In addition, will this emphasis on high-end service, which means more expensive machines and facilities, also translate into locals having to pay higher dollar for medical services rendered? With the experience during this downturn, should we not focus on basic medical so that locals can enjoy adequate medical services at reasonable rates, rather than to up the ante for all concerned? Would it also be better for Singapore to concentrate on building its capability, capacity and experience in coping with the ageing population? Sir, besides attracting overseas patients, another important area where we can look at is the provision of an educational centre or a learning centre for foreign doctors, medical workers and researchers. We have over the years built a world-class infrastructure, systems and best practices. Our physicians and doctors are highly proficient. In fact, we have some of the best practitioners here. A good starting point would be to establish a world-class learning centre that attracts doctors from the region to come here to gain insights on our top-end practices, and have them develop and enhance their expertise here. This will boost our image as a first-class medical hub of the region where not only patients come for our service, but also having a world leading learning centre for the medical profession of the region. Perhaps, with the recent emphasis on education, bio-medical research and life sciences, plus a few medical breakthroughs in recent years, it will not be too farfetched to include in our vision, to fashion Singapore into a hot house for medical breakthroughs.

Sir, every time I speak on compiling macro statistics, I remember my request to the Minister for the publication of gross national product (GNP) statistics, in addition to gross domestic product (GDP) figures on a regular basis. He has yet to do so, I believe. But my point goes beyond asking for GNP numbers to be published. I believe that the Government can play a key role in broadening the perspectives of all Singaporeans beyond Singapore. Sir, the right Government signals have significant implications. Why else are Singaporeans disinterested in what is going on outside of Singapore? We speak of GDP growth whenever we want to dwell on our economic well-being, but our domestic market should not be our sole focus; otherwise, our working norms revolve around Singapore. In many Singaporeans' minds, working abroad is not seen as an opportunity to widen the horizon but an option for those who cannot find jobs here in Singapore. We regard postings outside of Singapore as the least preferred alternative and expect to be adequately compensated. It is thus not surprising that many Singapore companies expanding overseas frequently experience difficulties recruiting Singaporeans for these posts. Just in today's Business Times, we read about this same difficulty in getting Singaporeans out of their comfort zone. Apart from not realising our potential as good managers, we also forgo the opportunities of learning more about the global market that Singapore operates in. Sir, in a major economy that we all know of, many of the citizens have not travelled or worked outside of the country, and have no particular motivation to do so. They can probably afford to do so as their GDP is many times ours. There is ample industry and job diversification within their domestic market itself. But, Sir, we do not have this luxury. We, therefore, need to go beyond visiting other countries to understanding the different economic and cultural norms. In this regard, apart from repeating my request to the Minister for regular publication of GNP-type statistics, I would also like to request for indicators and messages that are more consistent with our efforts at globalisation. For example, it will be useful to know how far our companies have ventured, what businesses we have engaged in, and what business associations and networks are particularly important. This should not be one-off PR exercises but a constant feature. Ideally, over time, our geographical borders should blur when Singaporeans contemplate the economic participation.

Sir, may I take this opportunity to applaud MTI's vision and hard work in securing the many FTAs, industry and trade agreements. However, the real work begins when the deals are sealed. By this, I mean that the full benefits of FTAs and other agreements can only be reaped when our businessmen join MTI's bandwagon, to explore all possible business opportunities and take full advantage of it. I understand that this will be MTI's top agenda, but the process must be expedited so as to reap the first mover's advantage, since other countries are also busy concluding similar agreements. Even more so is that a widespread awareness, understanding and eagerness to actively explore business opportunities will help give hope to our people, lift the spirit and mood of Singaporeans. May I suggest some ideas to connect policymakers with entrepreneurs of most, if not all, types and sizes: (1) We could hold various seminars via the associations, and even at grassroots level, so as to increase reach as well as depth. This can encourage entrepreneurship from the very basic level. (2) Organise more target-oriented publicity via the mass media. For example, country-specific opportunities, industry-specific opportunities, and highlight those which enable Singapore to have a comparative or competitive advantage due to lower or no trade duty, charges, etc. (3) Organise more trade missions and exchange programmes to include a wider group of entrepreneurs and participants. (4) Establish liaison office in Singapore and the relevant countries (eg, via IE Singapore), with dedicated staff to help answer queries, provide background research and facilitate high level introductions. Could MTI comment on when they will be rolling out the various programmes and what more can be done? On a separate note, can MTI also comment on how the FTAs can increase the efficiency in our production networks, especially in the context of our high value-add manufacturing and services, and expand on the demands of our new twin engines of growth? On the EU-Singapore FTA, since the Minister commented that it is a very important one to Singapore and it is a very difficult one to conclude at the moment, what is the Ministry doing to overcome the EU's reluctance or focus? Does Singapore present itself as a strong business case for EU? Last, but not least, how can various sectors of the society, ie, parliamentarians, business leaders and others, help to cast Singapore in a favourable light, so that we can be in a better position to conclude the various trade and business agreements with other nations?

Mr Inderjit Singh, take both your cuts together.

Sir, my topic is on China and India. We all have heard many times in the House and also elsewhere the Minister sharing with all of us a defined strategy for China. Some examples are - investing aggressively in China, moving low cost manufacturing or the low value-added activities from Singapore to China, providing our services and expertise to China, because that is what is probably lacking there, training of our scholars in China to ensure that we develop a good network for the future, and also working on an ASEAN-China FTA. The question I have is: how confident is the Minister that we will be successful in our China strategy? The second question is on how China will respond to us. Are we a preferred partner or just another business contact for China? If we go with a mindset that we think that China is going to respond to us favourably, compared to everyone else, and if China does not feel the same way, then we may have difficulty in pushing the strategies that we want to push. The second issue is on India. Do we have a defined strategy, just like what we have for China, to tap the opportunities that are available there? And, if so, what is that strategy? One question that many have asked me is whether the Government is serious or half-hearted about going into India. Another question I have is: are we too late entering into India? Finally, how are the Indians rating Singapore as a partner? And are they willing for us to be a preferred partner to tap the opportunities? I know these questions are wide and varied, but, I think, if we understand how China and India feel about us, it is going to be easier for us to execute our strategies. Sir, moving on to the issue of world class companies or globalising Singapore companies, I agree wholeheartedly with Mrs Lim Hwee Hua that it is important that we globalise our Singapore companies. We also have heard from many local companies that when we started talking about the second wing for our economy, many of them did regionalise. But when the Asian crisis came, they got hurt, and therefore they have backed off and pulled back on their efforts. So we really need to think of new initiatives that can help us to more aggressively globalise our companies. We all talk about the clustering of companies, big and small, going to the region. Can I ask the Minister whether there is any progress in this area?

Sir, many businessmen nowadays bemoan the difficulties of doing business in Singapore. These sentiments are the result of not just the current economic downturn, but also the impact of global competition. The fact of the matter is that our domestic market is just too small - only 4 million people. On top of this, the MNCs, the international companies and businesses will come into our backyard and take away our domestic customers. Singapore companies must therefore globalise or face the threat of survival. How can the Government, as the leading member of Singapore Inc., help? I feel that IE Singapore should step up its effort to increase Singapore's share in the global conscientiousness for her products and services. The ERC recommendations in this respect should be fully supported. Our presence should be enhanced through more active participation in events like trade shows and exhibitions. At such shows, for example, CeBit or Comdex, it is not unusual to find entire halls fully occupied by Taiwan, represented by both large and small companies. The Korean presence is also very strong. Many more of our SMEs must be encouraged to take part in such events. Perhaps our Government agencies could help to lower costs by buying space, hotel rooms, air tickets, etc, in bulk and through grants and subsidies. Secondly, IE Singapore should also actively consider setting up offices in more cities to look for new business opportunities whenever there is sufficient interest. These offices can act like representative and agent offices to handle enquiries and channel them back to the appropriate companies in Singapore. References like trade, product or company handbooks should be made freely available in these cities. More remote cities, for example, those in China, India and even South America and Africa, could be explored. They can be our business scouts and pioneers to open up new territories for our enterprise. 2.00 pm If resources are a problem, our Majulah network could be fully exploited to obtain support for information gathering, contacts, and assistance with the initial work that needs to be done when a business first starts up in a new city. A scheme with volunteer businessmen can be instituted. I know of companies who are quite established in certain cities in China where IE Singapore is not represented. These companies may be quite willing to assist IE Singapore in its efforts to help other Singapore companies. Finally, I agree with the ERC when they pointed out that what Singapore needs are a few more global brands. Strong brands allow companies to enjoy high gross profits and continued customer support. We are already very successful with SIA and Creative Technology. Could we get more? How can the Government help? Global branding requires global awareness, global presence, and global recognition, and this is not easy to achieve. Support and assistance from the Government can go a long way. Even SIA needs Government's help, in terms of securing air services agreements from other countries. The Government should therefore seriously consider identifying a few Singapore products and help them to grow both locally and internationally. Take, for example, Tiger Beer, our earlier policy on import of beer has enabled it to grow strongly in Singapore. How can we now help it to grow overseas? Although widely acknowledged as one of the best beer by expert beer drinkers, its brand presence in Europe and America is still weak, if not non-existent. Other recent examples with international aspirations are Tee Yih Jia Food and even Super Coffee. They are making increasing presence abroad. Government and GLCs, such as SIA, can help in promoting their products. Perhaps, we can start by serving Tiger Beer, Tee Yih Jia's roti prata and Super Coffee exclusively at our Embassy functions abroad. Would the Minister look into these suggestions?

Sir, I would like to add on to the points made by Dr John Chen regarding the role of IE Singapore and their officers. There are some overseas centres and advisors in some 36 locations around the world. Its role is to help Singapore based businesses enter foreign markets and thereby contributing to the growth and internationalisation of local companies into world-class enterprises. Paramount for successful entry to a foreign market is the intimate understanding of the country. As Sun Tze's Art of War states: 'Know thyself, know thy enemy. Hundred battles fought, hundred battles won.' This knowledge includes its culture, its social and political structures, its business and market structures, and so on. In order to give our entrepreneurs an insight and a headstart, qualitative briefing by the relevant officers of IE Singapore must extend beyond newspaper cuttings and widely available published articles. In fact, IE Singapore, by setting up offices at the various locations, has the economies of scale and is perhaps the best agency to conduct such research and collate first-hand market intelligence that is crucial to the survival of our entrepreneurs. Feedback from business community has been that such pertinent and relevant qualitative briefing had not been very forthcoming. Instead, the experiences were that they have been merely given publicly available reading materials, directory listings of businesses or Government contacts and not so useful information about the country. Sir, we cannot do the business for our entrepreneurs, but we can facilitate our external wing with qualitative market intelligence to enhance their presence in a foreign land. Can the Ministry please comment on what can an entrepreneur expect when they approach IE Singapore? And, two, how are IE Singapore officers chosen, meaning those who are stationed overseas? And what is their role? Sir, to enhance our chances of success, our IE officers must have skill sets that will extract maximum information from the respective countries they are operating in. IE officers must do more than just acting as a facilitator or writer of research articles. They must be more proactive and business oriented, as my colleague, Dr John Chen, has uttered. In fact, our IE Singapore officers must also adopt, not just a high-tech, but also a high-touch approach. I would like to propose that such officers be recruited from a variety of disciplines and have good grounding in sociology, or even anthropology. Frequently, knowing the business can only get one so far. It is knowing the clients that makes all the difference. Hence, the officers must be well versed with the nuances of the country, the key individual players, the economy, government red tape, common mistakes made and how to avoid them. In short, the officers must play the role of our intelligence officers for our local businesses venturing overseas.

Sir, it is clear from the comments of many MPs that the economic uncertainty caused by the prospect of war in Iraq weighs heavily on everyone. Even after the Iraqi crisis has been resolved, I do not think that the global uncertainty will completely clear. The reason is this. The Iraqi issue has been very divisive internationally. And it has caused probably irreparable damage to the western alliance and there are bound to be far-reaching political and economic implications, long after the war has ended. Perhaps, this was waiting to happen. The western alliance was formed to counter a common threat, that of the Soviet Union. That threat has now disappeared, and we are beginning now to see the crack in the alliance. And Iraq is only the precipitating force to break up something which, perhaps, eventually must come. What this means is we are in for a more prolonged period of uncertainty. And the question before us is how do we adjust ourselves to a new situation. In the meantime, as many MPs have pointed out, we see the emergence of China and India as global powers. And there is also the new threat of Jihadi Global Terrorism. And underlying all this are powerful technological forces at work, undermining old structures, miniaturising the means of destruction and changing the nature of life itself. We cannot be sure what the world would look like 10 years from now. But one thing we know, and that is, the past is no more. Mr Leong Horn Kee asked if we have a good strategy to take into account this fast changing external environment, and this has been a concern of many other MPs as well. What is within Singapore, we have some control over, including our overall business environment. And we must watch our cost, upgrade our skills, increase our productivity and develop local companies. We have limited influence over developments in the region, and beyond the region, we are just price takers. The ERC Report, which has been debated in detail in this House, addresses in detail the internal factors which are within our control. On the issue of cost competitiveness, raised by Mr Inderjit Singh, my SMS Tharman will go into the questions he raised, in detail, afterwards. On MTI today, several MPs, including Mr Leong Horn Kee, Mr Inderjit Singh, Mr Wee, Mrs Lim and Dr Chen raised questions about our external linkages. On the ERC Report, I would like to make one point, which bears upon the questions raised by many of our MPs, which is how do we stay competitive in the new world. Many investors and analysts study closely the ERC Report and they know that, far from ducking difficult issues, we tackle them head-on. PERC noted carefully the seriousness of our purpose. And many MNC CEOs told Chairman, EDB, that it is a remarkable report, and a few went so far as to say that they wish their own governments could do the same. We may argue sharply over issues, and we should, but in the end, as a people, we are united and our collective will is strong. And this gives us a solid reputation. For this reason, we continue to attract major investments. To answer Mr Leong Horn Kee's questions, EDB is confident that it can attract $8 billion of manufacturing fixed asset investment this year and $1.9 billion of total business spending. In fact, we have been attracting the lion's share of investments coming to Southeast Asia in the last few years. Our reputation is our greatest asset. Mr Leong Horn Kee, Mr Inderjit Singh and Miss Penny Low asked questions about FTAs. The aim of our FTAs is to strengthen our links to our key economic partners, especially the US, Japan and Europe, which are our main sources of investment and technology, and also our major markets. They help our manufacturing sector to stay competitive with respect to China and other countries. For example, our FTA with Japan makes it more attractive for petrochemical companies to invest in Jurong Island because it can export many products tariff-free to Japan, and that FTA, as Mr Lim Chin Beng noted yesterday, has already increased the volume of trade between the two countries, and made Singapore an even more attractive platform for the export of electronic products. The US-Singapore FTA, which will be signed in Washington in May, will save us hundreds of millions of dollars a year in tariff savings. And we are still working on FTA with the EU, as I elaborated in Parliament last month. And to answer Miss Penny Low, the EU takes a position that there should be no new FTAs till after the Doha round. But I am still working on my good friend, Commissioner Pascal Lamy. As Mr Leong Horn Kee pointed out, we must ensure that our businesses benefit from the FTAs. I agree with Miss Penny Low that Government officials must always consult the private sector and make sure that business concerns are adequately addressed during the process of negotiation. MTI has been working with business groups, like the Singapore Business Federation, to gather feedback on what our demands should be, and we explain to our business community how their members can take full advantage of the FTAs that we have concluded. In the coming months, the SBF will be organising, with MTI's support, a comprehensive outreach programme in different languages, consisting of talks, briefings and sector specific workshops. Looking to the future, to answer Mr Leong Horn Kee and Mr Inderjit Singh, China and India will become as important to us as the US, Japan and the EU are now. Dr John Chen also asked whether we are doing enough in the case of China. We are strengthening our links to both countries and steadily building up our economic portfolios and networks and, one day, our children and grandchildren will benefit from these networks and investments, the way the Dutch, the Swiss and the British continue to benefit from the investments which their forefathers made a long time ago in the US. So this is a mission with long-term implications for our survival chances for decades to come, and which is why we give it the highest importance. China is a big story and is already the most important destination of our outward investment in cumulative terms, overtaking Malaysia six years ago. Last year, our non-oil domestic exports to China grew by a whopping 40%. IE Singapore, EDB and STB are all increasing their presence in China, and to facilitate the sharing of information among Singaporean businessmen, a point raised by many Members here, a Singapore Chamber was established in Beijing last year and, in Singapore, Network China was formed. And the flow will be increasingly two way. 2.15 pm When China's Vice-President, Hu Xintao, visited Singapore in April last year, he proposed that Chinese companies partner Singapore companies in their externalisation policy, what they call their zou chu qu policy. So, when I visited Hangzhou in August last year, I proposed to the provincial government that they might want to consider establishing a Zhejiang Centre in Singapore, because Zhejiang is one of the most entrepreneurial provinces in China, particularly businessmen from Shaoxing, Ningbo and Wenzhou. They followed up in double quick time, and they have been putting the heat on us. Just a few days ago, the Vice-Governor was in town with a large business delegation to announce the launch of this Centre. We hope that other Chinese provinces will follow suit, because this is good for us. And, as China invests in Southeast Asia, in order to secure resources and markets, I believe many of them will see Singapore as a natural base of operations, including the listing of their companies. It is true - what Mr Leong Horn Kee and other Members have said - that China's competitiveness presents a big challenge, particularly in some industry sectors. But China's prosperity would eventually bring prosperity to all of Southeast Asia, as was the case historically during all the previous dynasties - the Tang, Song, Yuan, Ming and Ching. China has become a huge importer of products from Southeast Asia, and Chinese tourists in Southeast Asia are increasing rapidly, as Members have noted. In Singapore, we expect one million arrivals by 2005. Our children - provided there is peace - will inherit an Asia full of opportunities, from Northeast Asia, to Southeast Asia and to India, linked by expressways, by road, rail, air and sea links, and by the Internet. Mr Leong and Mr Inderjit Singh asked about our strategy for India. India is on the move, perhaps not as fast as China, but making steady progress year by year. In the last 10 years, India grew at an annual compound growth rate of 6%, which is very good, considering the fact that, once upon a time, they talked in terms of a Hindu growth rate of 2, 3 or 4%. Now, they blithely target 7-8% to make a 'dent on poverty', to use a phrase which has now become in vogue in the Indian establishment. We have been alive to these developments and, in fact, from the time former Prime Minister Narasimha Rao began his new policy of reform and opening up in 1981, we have positioned ourselves strategically as a long-term partner of India. Our links are developing nicely. IE Singapore and STB have been increasing their presence in India, and many other things are being done. Next month, Prime Minister Goh will be visiting India, and we are likely to launch negotiations for a Comprehensive Economic Cooperation Agreement, which includes a FTA. Even two years ago, the idea of an FTA with India would have been unthinkable. But, today, we are going to negotiate one. India is increasingly looking eastwards, and increasingly watching what China is doing. As they look eastwards, they see Singapore as a natural facility and partner. I hope that the Comprehensive Economic Cooperation Agreement with India will make us an extension of India into East and Southeast Asia. It is good for them and it is good for us. EDB has been attracting Indian companies to Singapore. Already, 17 out of the 20 Indian IT companies with export revenue operate in Singapore. With occasional tension between India and Pakistan, Indian IT companies need disaster recovery centres outside, and they see Singapore as being ideally positioned for that purpose. Following Polaris, iFlax Solutions and others, Satyam, one of the leading Indian software companies, announced recently its decision to establish such a centre in Singapore. In an emergency, hundreds of their professionals will fly to Singapore. Their computer systems will already be operating, and they will come in on pre-approved passes so that we do not waste time processing the applications. And EDB believes that more Indian software companies will come. The reason is simple. Their customers - who are the MNCs in America, Europe and Japan - want assurances that even if there is conflict between India and Pakistan, there is an alternative. So, when these software companies go overseas, they say, "Look, this is what we can do for you, and our insurance is Singapore." It burnishes their product. It adds value to their product, and it adds value to Singapore. And this is only one way in which we can help India in its development. Another area which Indian Deputy Prime Minister Advani pushed very hard when he was in Singapore was to get Singapore to help develop tourism in India. The whole of India, with all its mountains, plains and historical sites, attracts fewer than three million tourists a year! So, there is huge potential. There is a lot of infrastructure which is required, but this is a long-term undertaking, which we intend to partner India in. As China and India recover their historical positions as major economies in the world, we have to integrate our economies in ASEAN so that we are not left behind. Both today and yesterday, during the debate on MFA, many Members are worried for ASEAN, whether we are moving fast enough and in a determined enough way. But, in fact, despite the Asian financial crisis and the global economic downturn, ASEAN has not done too badly. This year, ASEAN is likely to make major moves to strengthen the organisation and to ensure better implementation of decisions taken. Our bilateral FTAs have helped to catalyse trade liberalisation in ASEAN, and between ASEAN and other regions. ASEAN is now being courted by all the major powers, such as China, Japan, the US, EU, Australia and New Zealand. We are in a good position. We have no submarines, no ICBMs. We threaten nobody. We can be friends with everybody. I mean no nuclear submarines. We have conventional submarines. And this is the best position for ASEAN to be in, in a multi-polar world. Last November, in China, the leaders of ASEAN signed a framework agreement to establish an FTA, with provisions for an early harvest. This is an agreement of historical importance which all of us should fully grasp because, when we talk about our portfolio in China and what we hope to do in China in the future, this FTA will change the entire landscape. By the time it is fully implemented by 2010, it will create by far the largest Free Trade Area in the world, of two billion people. Our businessmen, scholars, tourists and students will be travelling up and down from Northeast Asia down to Southeast Asia. It will transform East Asia not only economically but also politically and culturally. China is prepared, partly out of goodwill, to engage the countries of ASEAN flexibly, to take into account the fact that the 10 countries of ASEAN are at very different stages of economic development, and it has indicated a willingness to have bilateral Free Trade Agreements with member countries within an overall ASEAN framework. We will certainly consider this for Singapore. Our economic links to Indonesia are growing again after the Asian financial crisis. Last year, we were the No. 1 investor in Indonesia. Others watch our moves, because they know that we watch Indonesia very closely, and they take note of our guarded confidence in the long-term economic prospects of Indonesia. Mr Wee Siew Kim emphasised the importance of seamless links between Batam, Bintan and Singapore. In fact, I have been working very closely with Indonesian Minister Ibu Rini Suwandi on the various administrative aspects on customs, trade facilitation and so on, and we have made good progress. Yes, there are still problems, but they are being solved one by one, and more Singapore companies are investing in the Riaus. Some of our SMEs have shifted operations there to take advantage of much lower land and labour cost, which is a persistent problem that we face here. For example, Nam Lee, a factory which Ibu Rini and I visited just a couple of months ago, manufactures wrought iron doors and gates for apartments in Singapore. Since then, it has increased its capacity 50%, because it has found Bintan to be very attractive and makes it very competitive. The Integrated Sourcing Initiative under the US-Singapore Free Trade Agreement, which means that some components manufactured there will count as being of Singapore origin, will be of particular helpfulness to the Riaus. I encourage our SMEs to look at possibilities in those islands, because it can help them to reduce their land and labour cost dramatically. The nine provinces of Sumatra are also keen to have closer direct economic links with Singapore. Subject to Jakarta's approval, the Governors have invited me to bring a delegation of officials and business leaders to meet them informally in Padang in a few months' time to discuss how we can work more closely together. There is a natural synergy between the two sides which should benefit us. To help our businessmen to operate in Indonesia, IE Singapore will be establishing, in the near future, Network Indonesia. Mdm Ho Geok Choo spoke about our relations with Malaysia, particularly in tourism cooperation. We have been having hiccups in our relations with Malaysia. But despite these hiccups, our economic relations remain strong, and I work closely with Minister Rafidah on ASEAN matters and, when there are practical problems between the two sides, we solve them. Of course, it would be much better, and certainly much more reassuring for our businessmen, if the political relationship were also better. We do promote joint tourism, and the tourism boards do work closely together. But, unfortunately, the efforts are sometimes negated by Malaysian media reports which, from time to time, make it seem as if we are about to go to war. With Thailand - and I should mention Thailand also because it is a core country in ASEAN - our economic links have been raised to a new level by Prime Minister Thaksin and Prime Minister Goh, and we are now exploring new areas of cooperation with the establishment of an air hub at Chiangmai, the import of Thai foodstuffs, the integration of our auto-industry sectors, and the mutual recognition of standards. An integrated ASEAN can be a major manufacturing base in the world for a whole range of goods, and be an alternative manufacturing base to China for Japanese, American and European companies, and this is how we should position ourselves, because no one wants to put all his eggs in the same basket. Many CEOs have told us that Singapore, in alliance with our ASEAN neighbours, can match China in many areas of manufacturing. The CEO of Agilent Technologies, Ned Barnholdt, said recently that he expects Asia, especially Singapore and Penang - he has over 3,000 workers in Singapore and over 6,000 in Penang - to increase its share of Agilent's global production from about 30% to 40% in two years. So, he is placing his bets on Southeast Asia. Just a few days ago, Pasquale Pistorio, CEO of ST Microelectronics, announced plans to invest an additional US$250 million in Singapore to expand its wafer fab capacity, fully confident that from here he can compete with China. Of course, we can only maintain the share of manufacturing in our economy if we keep on upgrading and improving our system and efficiency. Ten years ago, MTI expected that the disc drive industry in Singapore would be hollowed out, and we are still expecting that 10 years from now. But what is the situation today? The situation today is that we still produce about one-third - sometimes higher and sometimes lower - of total global production of hard disc drives, albeit with a smaller workforce. How? By going for high-end products and by being highly automated for the cheaper lines. So, when Seagate shut down its Penang factory two to three years ago, some bits went to China, the high-end bits were re-consolidated in Singapore. We must keep pushing this, and we have every intention to maintain manufacturing as a pillar in our economy. EDB, IE Singapore and SPRING will continue to promote the cluster approach, and this is one important way to address Mr Wee Siew Kim's point about helping smaller companies in the supporting industries. We are helping local companies to form clusters. I know sometimes they wish that the Government can give them a leg-up by favouring them in tenders. We cannot do this because it is against the WTO Government Procurement Agreement. In any case, it is not a good principle because, if you are protected, you will never be globally competitive. But we do help them form clusters, giving them advice, sometimes providing grants, and helping them to compete in international tenders. This is the best way to help our SMEs in supporting industries. 2.30 pm New sectors, like the biomedical sector, would also help us. Last year, the sector was a star performer, with manufacturing output rising nearly 50%, to almost $10 billion. The sector now accounts for about 18% of the total manufacturing sector, in terms of value-added, which is not bad at all. The jobs created are high value, well-paying jobs and the total number of jobs increased by about 11% last year. The biomedical sector will also boost the standard of healthcare in Singapore and establish Singapore as a premier medical hub within a seven-hour flying radius. Miss Penny Low asked how our healthcare industry compares to Thailand and Malaysia. Our costs are higher but we are at the high end of the market because our standards are higher. But we must watch our costs and we must make sure that we stay competitive, if necessary, by bringing in more foreign doctors, nurses and technicians to supplement our own limited supplies. The ERC has identified this area as a promising area of growth. Will it cause local healthcare cost to go up? Well, we have got to watch for side effects. The Health Ministry is concerned about this. We have got to make sure that in promoting healthcare services, we do not inadvertently cause unnecessary hardship to Singaporeans. But the fact that we are an international medical hub will benefit Singaporeans. It is like Mayo Clinic in Rochester, which is a small town up, far away, in the middle of the prairies. The people of Rochester enjoy a standard of healthcare unimaginable in any prairie town. Why? Because Mayo Clinic is there. And why is Mayo Clinic there? Not because of the patients that they can find in Rochester but because they are a worldwide medical centre. In the same way, there is no necessary contradiction between Singapore as an international healthcare centre and Singapore providing cost-effective healthcare for Singaporeans. We should also not neglect traditional sectors like tourism, logistics and retail, as Mr Leong Horn Kee reminded us. Mrs Lim Hwee Hua spoke about tourism in the hospitality sector. With the rapid growth in the middle classes in Asia, especially in China and India, this is an industry with a lot of potential. Look at Bali. Ever since the December 12th bombings, it is now targeting Asian tourists. Yes, they spend less, but one day, they will be spending more. Throughout the Asian financial crisis and the global economic downturn, tourist arrivals from India and China grew double digits. Recently, in the last few months, we noticed a sudden surge in the arrivals from Japan. When we analysed the numbers, we found out that more Japanese retirees and more Japanese students have been travelling to Singapore. Why? Because we are seen to be a safer destination. So, even though we lack natural wonders - anyway we are a small city-state - there are many things we have which commend ourselves to people from all over the world. Of course, we should think of new products, we should burnish existing products. In the case of Sentosa, there is a quiet revolution going on to completely transform the island. Many things are not yet visible, but within 2-3 years, you will find a very different Sentosa. There was a time when we had gate hours at Sentosa because it was inconvenient for visitors there to stay on after 10 pm. Now, we are marketing Sentosa as a 7/24 destination for both Singaporeans and foreigners. Recently, a Hong Kong company, run by Victor Cha, put in millions of dollars to upgrade a really top-class restaurant in the Beaufort and to open a new spa, the first spa in a tropical setting in Singapore. In order to seize these new opportunities, we have recently reorganised STB to transform it from being only a tourism promotion agency into an economic development agency. Our indicators will be economic indicators and not just tourism arrival numbers. Tourism still accounts for about 10% of our economy and total employment. STB has a joint venture with a number of hotel groups to establish an international hotel management school. And as part of the effort to enhance our tourism products and infrastructure, STB will set up a $100 million tourism investment fund for strategic projects. Mrs Lim Hwee Hua is right that we should cater to different segments to make sure that there are enough rooms allocated for the different segments. It is impossible to predict these numbers accurately, so what we have done is to allow the market to operate by letting off more and more white sites. So we let the market adjust to what the real demands are. Miss Penny Low wanted to know our attitude towards backpackers. Well, many of us were backpackers in our youth and we should encourage our ITE, polytechnic and university graduates to backpack when they graduate, the way New Zealander youths and Israeli youths backpack after they graduate, sometimes for months, in order to see the world and understand the world before they come back to work and set up a family. It is good for us because it broadens our mentality. We know that when we traipse in various continents, we form our views and these attitudes last for a long time. So, in the same way, we should welcome backpackers into our midst, treat them well. I will ask STB to look into the details of whether the licensees have been properly regulated. If we want to provide good standards, we should not have sub-standard accommodation. If we need to have youth hostels and if we need to convert HDB blocks, we will do so. Even though the numbers are not big, it adds something to the local economy. Many MPs asked how Singapore can maintain its global competitiveness when our costs are sometimes higher. Let me mention two important factors. One is our intellectual property (IP) infrastructure. We offer strong protection of IP, especially patents, copyrights and trademarks. And Singapore will become a centre for the trading and management of IP in the region. Recently, a major pharmaceutical company told EDB that it is expanding its operations in Singapore and scaling down its operations in other locations because of our protection of intellectual property. When I visited Olivia Lum at her factory a few months ago, she explained to me the elaborate precautions she takes to ensure that her most important intellectual properties (IP) are in Singapore, and not elsewhere, because elsewhere, they may be stolen. This is a key advantage that we have, and is an advantage that we inherited from the institutions bequeathed to us by the British - legal standards, accounting standards, a judicial system that enforces contracts. If we look into the future, a lot of the value of assets in the world will not be in the physical reality, but will be in the coding and in the ideas. Today, between ASEAN and the US, 1%, by weight of the total trade is carried by aeroplanes. But that 1% makes up 60% of the value of the trade. In other words, by sea, it is 40%. More and more in the future, the global economy will weigh less and less. For America now, hundreds of billions of dollars are carried electronically and in human brains, and this is our future too. For both manufacturing and services to become more innovation- and knowledge-driven, we must make sure that ideas and IPs are protected and that there are opportunities for these ideas and properties to be commercialised in Singapore. Our comprehensive approach to IP protection is thus a major strength. If we do all that we have set out to do under the ERC, we will be an entrepot for ideas and intellectual properties. This will generate good jobs for Singaporeans and add substantial value to our economy. We must make sure that we educate our young in the schools about the importance of intellectual property, to safeguard intellectual property, not to resort to piracy, and the attitudes that we have towards physical property, we must transfer towards intellectual property. Yes, it may cost them a bit more money to buy the original software and DVDs, but it makes a big difference to the future of our economy. Our cosmopolitan culture is also another crucial competitive advantage and which will set us apart from other cities in Asia. Without so many foreigners helping us, many of them helping us because they like us, we will not have the economy that we have today. What we want to do, and this has a bearing on the concerns raised by many MPs about the mindsets of Singaporeans, is we want Singapore to be a home away from home for the Japanese, Americans, Europeans, Chinese, Indians and Australians. So when they come here, they find a people who are welcoming, welcoming of them as co-workers, as backpackers and tourists and, maybe sometimes, even as sons-in-law and daughters-in-law. And because they feel welcomed here, they want to use Singapore as their hub of operation. Recently, Dr Tony Tan chaired EDB's International Advisory Panel and some members told him that the most important thing that we have done was to build the Esplanade because it represents an icon of what we stand for. We did not build the Esplanade just for ourselves. We built it as a regional facility and is a statement about what we consider to be important. If we want to be a brain centre, a centre for talent, then the Esplanade expresses in a very attractive way what our attitudes are. In the last few years, MTI reorganised every one of its statutory boards, including changing some of their names in order to achieve this fundamental re-orientation. Where it is cost-effective, we will set up overseas offices to help our businessmen all over the world. I assure Miss Penny Low that we recruit officers, not only for their IQ, but also for their EQ and for their culture and language skills. I also assure Dr John Chen that our statutory boards know that a crucial part of their mission is to help Singapore companies globalise. Of course, some of our officers are still young and lacking in experience, but they are an enthusiastic bunch and they are learning fast. Mrs Lim Hwee Hua reminded me that I owed her an answer on reporting of GNP. We do report GNP numbers annually. We have considered reporting them more regularly, say, at quarterly intervals, but this cannot be done in a practical way because these GNP numbers are not as easy to collect as GDP numbers. And because of the time lag, they are not very accurate quarter by quarter. In order not to convey a wrong impression, we have decided to confine the reporting of GNP numbers on an annual basis. Just for the information of Members, the statisticians now refer to it as GNI, and not GNP, because the income concept captures the idea more accurately than the product concept. Mr Leong Horn Kee asked how Singapore would compare with Shanghai and Hong Kong in the coming years. As all of us who visit Shanghai regularly would note, it is on its way to becoming the greatest city in Asia, which was its position before the Pacific War. It will recover that position, and I have no doubts in my mind that it will become the New York of China, because of the eventual size of the Chinese economy. In the case of Hong Kong, if you read the speech by Chief Executive C H Tung recently, he sees Hong Kong's future in the Pearl River Delta, which already accounts for some 40% of China's total exports, and they talked about a bridge linking Hong Kong to Zhuhai and Macau. So I believe that will be Hong Kong's position. Yes, as Mr Leong Horn Kee told us, they face difficulties now, but the Hong Kongers are a tough people and, one way or another, they are going to bounce up again and benefit from the developments in China. 2.45 pm What of Singapore? I believe Singapore would become the London of Asia. In other words, our hinterland will be a multi-national hinterland. We serve a diversity of cultures and markets. We will be a centre for talent, for ideas, for IT management. We will be the healthcare centre and education centre, centre for R&D, a centre for the creative services. Low taxes, a facilitating regulatory environment, use of the English language, a multi-lingual facility, and, most importantly, citizens who operate multi-channels in their brains and in their hearts, so that anybody who comes here finds himself not far away from home. I believe if we put our minds and efforts to it, this will be a position which is ours for the taking in the coming years and decades - Singapore as the London of an Asia, which for the next 20-30 years will be the most dynamic region in the entire world. Many of the entrepreneurs in that Singapore will be Singaporeans, and many more will be foreigners who have come to the conclusion that we are the best place to be in in Asia. Let me clarify a story in yesterday's Straits Times reporting that Government contributed little or nothing to the initial success of local entrepreneurs like Ron Sim and Kenny Yap. We have to be realistic. EDB, IE Singapore and SPRING cannot be handing out taxpayers' money freely to anyone who asks. There are 100,000 SMEs in Singapore. So, even though we try very hard to reduce the number of forms, we will still need forms, and there must still be criteria. Of course, we will try to make our criteria as objective as possible and, where it is possible, we will try to use a market test. But, in the end we have to concentrate our efforts. We have facilities for companies in different stages of growth and I will be the first to admit that, in deciding which companies to help, we do not always get it right. Sometimes we get it wrong. But it is right that we should help Osim and Qian Hu when they show signs of taking off. For companies like Tee Yih Jia and Tiger Beer, they have no difficulties getting help from our economic agencies because they are well-known brands. Of course, we want as many Singaporean brands as possible, and where we can help companies achieve international branding, we do so. But, you all know it is not easy. There was a comment that EDB favours MNCs. Let me clarify this. Although EDB does encourage technology start-ups as part of T21, EDB has to concentrate on the big accounts, because the big accounts matter a lot to us. Without the big investments, the pharmaceutical companies, the wafer fabs, the petrochemical complexes, we will have a much poorer economy, and there will be much less feeding for SMEs. If EDB had not worked its guts out to bring in Texas Instruments, Matsushita, HP, many years ago, we would not have today's economy, and we will not be here today to talk about our hopes for the future. And it was right that they had someone posted to Apple to make sure Apple was happy in Singapore. Sir, the public sector can do many things. But, in the end, what we do is what a gardener does. We water, we fertilise, we weed. The key is having the right seeds. If we have the right seeds, local seeds and imported varieties, beautiful things will grow in Singapore and there will be a bountiful harvest for all of us. But without good seeds, no amount of watering or fertilising will help. And, in that sense, we are reinventing what Raffles did in 1819. He turned a fishing village into a bustling entrepot by good administration, protecting property, enforcing contracts and opening the doors to traders from all over the world. And they came, and it grew and it grew. We will do the same for the digital economy, and this will give every Singaporean his place in the sun and hundreds of thousands outside will want to come in. We are getting there, despite the current downturn. EDB is succeeding in making Singapore a Global Entropolis. Many countries have already established centres here, including Germany, Japan, China, India, Australia, New Zealand, Israel, Chile, Norway and Korea, and many more are considering Singapore. Their SMEs and start-ups are here to exploit opportunities and to make use of the presence of the 6,000 multi-nationals which are already here. We hope many of them will link up with our own local SMEs and that creative sparks will fly and make the whole sector much more diverse and interesting. We have, as a matter of policy, decided that for our overseas delegations, we will bring foreign companies based in Singapore along, so that when they are together with Singapore businessmen in the coaches, in the hotels, they talk to each other, exchange ideas and maybe things will happen. Our objective in doing all these is not to depress value in Singapore, which is Mr Leong Horn Kee's worry. Our objective is to increase value so that our assets are worth more, so that just being a Singaporean commands each of us a premium in the global market place, and all this is because of what we are and what we stand for.

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

Order. I suspend the Sitting and will take the Chair again at 3.15 pm. Sitting accordingly suspended at 2.52 pm until 3.15 pm Sitting resumed at 3.15 pm

Debate in Committee of Supply resumed.

Head V - (cont.)

Mr Inderjit Singh.

Sir, I have already raised the points earlier. So, I am going to skip this cut.

Sir, many Members in this House have been lamenting the high cost of doing business in Singapore during the Budget debate. The ERC Report also seems to suggest that our cost of doing business is high. However, we have also heard contrary opinion that business cost is manageable. Besides the anecdotal evidence, have the various Government agencies gathered more facts and information regarding this matter? Have we conducted an objective benchmarking exercise to compare the cost of land, utilities, Government fees, etc, against competing countries? We should conduct such exercises at regular intervals, say, every three years, to check our business cost structure. The study should also normalise such costs to take into account our higher productivity. For example, we can check what and how much are the various cost components to produce, say, one disk-drive or one mobile phone. If the land cost component is too high, then we can take steps to reduce it. Likewise, if the utility costs are too high, we can also reduce them. On land and factory cost, the Government policy has always been to charge local market price. My question is: as the largest land and factory supplier, how does the Government determine what the market price is? Not long ago, a company told me that it had rejected a factory offer by JTC because of its price and bought another factory from the market several months later at a substantially lower price. In an economic downturn such as the present one, there are JTC and HDB factories that are empty. How does the Government then determine market rent for these and other factories that are unoccupied? Is downward adjustment of market rent for existing lessees fast enough? Another point to note is that JTC land is often leased with strings attached. These conditions placed upon the lease, such as subjecting transfer of lease to JTC's approval, make it less attractive as a loan collateral due to the inflexibility imposed. This adds to the lessee's financing cost. Sir, let me also address one more point on Government fees. I understand that most fees are decided based on a cost recovery basis. DPM has said that otherwise, the taxpayer will have to pay more tax. My question is: are the costs calculated based on the most efficient operations model? How often does the Government review the work involved in processing an application and ensure that it is the most efficient? Let me also add: do the calculations take into account the additional taxes collected when these approved businesses become successful in later years? I would like to suggest that the Government take a business chance. Show by example the meaning of entrepreneurship. Lower these fees to encourage more business applications. Set them at a level to discourage frivolous applications, not more than that. My argument is that in a few years' time, the Government will be more than compensated for its own entrepreneurial spirit of lowering fees by collecting a larger tax revenue from the additional businesses that would be set up. Sir, would the Minister respond to my views?

Sir, since the 1997 financial crisis, the immediate action of the Government was to cut the cost of business. The first to be cut was workers' CPF and wages. The question mark hanging in my mind is: who is the culprit for the high cost of business? Is it Government charges or high wages of workers, or both? I look to the ERC Report for guidance. Chapter 2 of the Report on lower costs and staying competitive, which runs to seven pages out of a total of 199 pages of the Report, did not provide any clue to my question. Chapter 7 on Wages and the CPF, under the sub-title "Wage Competitiveness", it is stated that "our wages are already much higher than many countries. Nevertheless, we are still competitive because our productivity is higher too, so adjusted for productivity our labour costs are not excessive." Sir, I also read The IFER Report: Restructuring of Singapore Economy published by the Institute of Policy Studies (IPS). After making some comparisons, it concluded that "labour costs in Singapore are not too high in relative terms." So, I am puzzled. Since labour cost does not seem to be a problem, then why is workers' CPF not restored? I hope the Minister can enlighten me. Sir, the IFER Report also pointed out the following: (1) The Government artificially jacks up land prices resulting in high cost of business. Examples are the tender system and reserve price; JTC's lease agreement for industrial land rental is subject to upward revision every year; Government grants to foreign investors and concessionary rates given to large local companies help to support the demand for factories and land at high prices and high rentals. (2) The foreign worker levy does not serve the objective of providing more jobs for Singaporeans who do not want to take up the jobs anyway, but resulted in higher cost for employers. (3) The policy goal of asset enhancement led to higher labour cost and other distortions. (4) Excessive charges of Government departments. It gives examples like the Maritime and Port Authority charges $2,500 for a boat ride by a company's staff to inspect a minor oil spill incident. URA charges $1,200 per application submission. And the Singapore Land Authority sells plans by sets instead of allowing single plans to be purchased. Other examples are: PSA making more money per container than shipowners; and a prime mover costing $35,000 in Malaysia can cost as much as $120,000 in Singapore because of COE and ARF. Sir, I do not think I have time to list out all that is in the report, but I hope that the Minister will respond to the above and the analysis of the report which, among other issues and suggestions, also concluded that the Government should try to contain Singapore's costs, especially in relation to land, labour, regulation and transportation, where business costs are inflated unnecessarily by policies which are outdated or which have unintended consequences.

Mr Heng Chee How, you can take both cuts together.

Sir, a proper understanding of factor productivity is crucial to sustaining competitiveness and real wage growth. Nominal wages in a country like China can be very low by international comparison, and this has contributed to the view that China is able to take away investments and jobs from other locations around the world, because of their low cost including low nominal wages. A closer examination will, however, reveal that it is not the low nominal wages alone that matter, but the unit labour cost, ie, labour productivity. If China's labour productivity, taking into account its wage levels, places it increasingly ahead of other countries, then that will be the source of its competitiveness. So too for all other countries. Put another way, countries with higher wage levels than those of, say, China must fight on the basis of higher productivity and lower unit labour cost, rather than try to compete with the likes of China on lower nominal wages. And unless they do so, they will risk being overtaken. So, prosperity, ultimately, is underpinned by productivity. And unless Singapore's productivity matches that of developed nations and maintains a gap with those of developing countries, then we cannot sustain the high standard of living. The importance of continuously pushing productivity growth therefore cannot be over emphasised. I therefore urge MTI to continue to give emphasis to this area of productivity - to promote productivity and implementation of productivity enhancement amongst companies in Singapore. Sir, as to my other cut on industrial land policy, I have already spoken about it in the main debate. So, I do not want to speak on it.

All right. Mr Ang Mong Seng.

(In Mandarin): Sir, when we were promoting industrialisation in the 1970s, the JTC succeeded in developing a very large and typically Asian industrial estate. It attracted not only foreign investors but also local SMEs to set up factories there. At that time, the lease granted by JTC was for a tenure of 30 years which would be expiring soon. According to JTC's policy, if the lease is to be extended, it would run for another period of 30 years, which means the existing lessees would have to put in a lot of capital investment to extend it. In these bad times and the prospects of the next few years being uncertain, the local SMEs operating in the JTC industrial estate are in a dilemma. To extend the lease means that they will have to pour in lots of money in terms of capital investment. Not to extend means they would have to fold up. I hope that the JTC would exercise some flexibility in dealing with the matter. Must the lease be necessarily extended by another 30 years? Can the Minister not consider giving them a shorter lease of, say, five years, without any commitment of further investments, so that they will be able to tide over the present difficult time? If JTC persists in its original policy of requiring fresh investment as a condition for the mandatory 30 years' extension, then many of the SMEs will not be able to carry on with their business. Consequently, a lot of employees will lose their jobs, and the performance of the entire manufacturing sector will also be affected. Furthermore, according to the terms of the lease, there would be a 5% increase in the rent annually, in good and bad times. It will be increased automatically. At this difficult time, I think we should review whether there should be this annual 5% rent increase.

Sir, I speak in support of raising the service standards of the retail sector in Singapore. The state of the retail industry has been much lamented during this economic downturn. The retailing industry is an important one for Singapore. The retail sector contributed $5.2 billion to GDP in the fourth quarter of 2002, and employs close to 75,000 workers, between 3-4% of our workforce. Most retailers attribute the drop in consumer spending to the economic downturn. This would not be totally untrue seeing how Singaporeans have been cast under the gloom and doom of sustained economic hardship, structural unemployment and the possibility of war. However, I propose that we take a closer look at the problem. Aside from the economic downturn that had contributed to lower consumer spending, I believe that the service standards in the retail industry are equally to blame. As it stands, overall value added per worker in the retail trade sector is about $30,000. This is a third of the manufacturing sector. A survey conducted by SPRING Singapore has revealed that 60% of service companies do not have clear work performance standards and procedures in place. In fact, most companies only have broad guidelines, resulting in different standards of service across the industry. Retail workers are often left to their own devices. The situation is no better for retailers in the HDB heartlands. I commend the Minister's decision to push through the formation of the Retail Academy of Singapore. I believe that we need to retrain our retail workers as fast as possible. We cannot afford to leave service standards as they are. Otherwise, consumers here will shop elsewhere, like Malaysia, Thailand and other popular holiday destinations. 3.30 pm Singapore consumers are becoming increasingly sophisticated. They are becoming more and more demanding and discerning, whether in terms of service, quality, convenience and variety. I myself have been astounded by the poor service quality demonstrated by some retail workers here. There is very little customer-centric mentality among our sales people, a lack of product knowledge and a correspondingly poor service level. I have no doubt that leaving things as they are in the retail industry will mark the beginning of the end for retailers. I hope that the Retail Academy of Singapore will add value on top of the national skills recognition system for the retail industry. I hope that it will increase service standards and provide the blueprint for hands-on training on the job. Combined with the various assistance schemes, ranging from the Retail Essential Assistance Scheme and the Franchise 21 Assistance Scheme, we are moving in the right direction to professionalise and revitalise the retail industry in Singapore. I would like to emphasise, however, that no amount of training would do when it comes to service, if the service provider has a bad service attitude. A waitress who scores five A1s in subjects of table setting, service techniques, order taking, familiarity of the menu and hygiene, but puts on a long face, and comes across grouchy will do no service to the restaurant. It would then be ludicrous and, indeed, laughable to have offered a course titled "When to Smile" or a course titled "How to Seem Friendly" to address this deficiency. Sir, I would like to relate ---

You do not have much time to relate. You only have got a few seconds more.

I will move forward. I look towards Hong Kong and what our very own Singaporeans, who have visited and shopped in Hong Kong over the last few years, have to say is testimony to the improvement of service quality there. Just as our Minister for Trade and Industry has mentioned, there must be a fundamental reorientation in the service attitudes of our retail workforce. I hope the Retail Academy will fulfil this.

Sir, in Singapore, consumers are expected to exercise caveat emptor when purchasing goods or procuring services. As such, there is no one single all-embracing Consumer Protection Act in Singapore to protect consumers from unfair and unscrupulous practices of businesses. However, based on the thousands of consumer complaints received by CASE, Singapore Tourism Board and the media, we can see that we need a Consumer Protection Act to protect some consumers in Singapore. Sir, three groups of consumers are vulnerable to unfair and unscrupulous business practices, namely, the elderly, the illiterate and young children. We have heard of many hard selling door-to-door salesmen, who have conned many elderly and housewives. This is still prevalent in Singapore today. In fact, I have received feedback from my grassroots leaders that some people even posed as "God of Fortune" to do house-to-house visits during Chinese New Year to demand ang pows from our residents. Sir, I wish to seek clarifications from the Ministry concerning the proposed Consumer Protection Act. One, how can the Act protect the elderly, illiterate and young consumers? Two, how can the Act be enforced without a Fair Trading Office? And, three, will the Act cover all industries?

Sir, the introduction of the Fair Trading Act is a major step for consumerism in Singapore. Principally, we want to introduce legislation to protect consumers, but without adding onerous burden to businesses and costs. We are confident that we can find a balance between consumer protection and business concerns. Sir, since the proposed scope of legislation was published, CASE has noticed a new tactic by timeshare companies, for example, trying to beat the proposed law. I hope to see the Act enacted as soon as possible as the longer we wait the more of such cases we may see. In January this year, the MAS started industry consultations on a proposed extension of the scope of the Act to include all financial services regulated. The consumers welcome this move. I would like to know the Ministry's assessment on how soon the industry consultations with the financial sector can be completed, and when we can expect to see the Fair Trading Act becoming a reality in Singapore. I would also like to raise two related points on the Fair Trading Act. First, the $20,000 limit. The proposed Fair Trading Act defines the $20,000 limit on the value of the goods and services. CASE has studied this and feels that if a cap is necessary, the limit should be on the compensatory amount, instead of on the value of the goods and services. Second, the infrastructure support for the Fair Trading Act. We understand that there are those who feel that there is a need to set up a Fair Trading Office to police the Act. While CASE agrees that it is not necessary at this stage to set up a Fair Trading Office, the Ministry should give the assurance that basic infrastructure support will be put in place to help consumers. There should be, in the first instance, the contact point of some sort, for example, a call centre that will filter out complaints. In Australia, the percentage of phone calls that are resolved without being turned into a written complaint comes up to about 95%. After the written complaint stage, some form of conciliation and negotiation should also be put in place. Most of the people would turn up for mediation. In Australia, the rate of resolution at this stage is more than 50%. Sir, it is necessary to have mediation centres and call centre as a contact point. The percentage of cases that eventually end up in the formal legal process is therefore very small. In addition to the basic infrastructure, another key part of the fair trading regime is education, ie, education for consumers and traders. A website is also essential for both information dissemination, as well as gathering of complaints. I hope MTI will give support in such an educational drive initiated by CASE or any other business organisations. Some form of publicity should also be done to inform traders of unacceptable conduct. Our media can play an essential and significant role as such. Sir, allow me to go on to the next cut?

Yes.

Review of the Hire Purchase Act. Currently, car loan providers apply a mathematical formula called the 'Rule of 78' to most car loans. While the name seems harmless, it actually hurts car buyers by penalising those who pay off their loans early. The Hire Purchase Act covers car purchases where the price of a car is under $55,000, excluding the price of COE. Under the Act, car financiers apply the Rule of 78 and stack a disproportionate amount of interest into the early period of the loan. The situation is even more onerous for those cars priced above $55,000, where the car loans are governed by common contractual law. If they pay off their loans early, they get back only a proportion of the interest rebate. Indeed, the United States concluded that the rule was so onerous for the consumers that they have already outlawed using this rule for loans which are longer than 61 months. Britain is also reviewing the practice. I urge the Government to do likewise here. At the same time, the Hire Purchase Act should be updated with the amount of the car value which the Act covers, to widen the requirement for full rebate, or better still, make the Act to cover all car loans. The US practice for car loans can also be studied and implemented here. In the US, car loans are transparent because details of the hire purchase agreements are readily available in all the banks' websites.

Sir, I like to echo the point that my colleague, Mr Yeo Guat Kwang, has brought up on reviewing the Rule of 78 which is commonly applied to car loans. On 22nd January 2003, MAS liberalised its 1995 car loan guidelines to enable 100% financing for the purchase of a car and repayments can be spread over a longer period of time. This created an euphoria in the car market, much to the delight of car dealers and financiers alike. Recent articles in the Straits Times confirmed my suspicion that many car buyers are not aware of the implications of the 'Rule of 78'. And I like to take this opportunity to further expand on the workings of this rule, which Mr Yeo The Rule 78 applies the moment a borrower signs the loan agreement. Be it a floating rate, or a fixed rate, he or she will be legally obliged to pay back all of the principal and all of the interests that will accrue over the term of the loan. If the borrower redeems his or her loan before expiry, the lender would "generously" forgive some of the future accruable interest payments. This is despite the fact that, at the time of redemption, the interest payable for the future has yet to be accrued. In other words, Rule 78 has a pernicious effect on borrowers by way of hidden prepayment penalty. The borrower's disadvantage is heightened by the fact that the banks and finance companies often refer to this practice or the application of Rule 78 as a rebate of the finance charge. To a layman, this can be misleading. In short, without getting too technical, early redemption of a loan at different times for different maturities and different interest rates will produce different penalty sizes. The rule of thumb is that the higher the interest rate, the greater the penalty amount and the earlier the prepayment in relation to the term, the greater the penalty amounts. This is highly unfair to the customer and encourages indebtedness which is contrary towards what we want to advocate in Singapore. Certain states, as Mr Yeo has said, in the US and Europe, have already outlawed the application of Rule 78 if the loan is for more than five years, or for a given period of time. Could the Minister comment on the current practice and whether a review of this rule can be expected, and whether the loan deal could be stated more clearly and fairly to the consumers?

Sir, there are two pieces of legislation that CASE has been advocating. First, the Fair Trading Act to protect consumers. Second, the competition law to level the playing field for all. The Fair Trading Act is making good progress and if we should see the law enacted this year, it is no surprise. Competition law is something that I hope to see enacted also. Competition law will protect small firms from unfair competition by big firms. It also ensures that all players will have an equal and fair chance. Competition law will also benefit consumers as well. If the playing field is level, companies will be free to compete and innovate, and this will be translated into better products and higher quality of services for consumers. I hope that the Minister can share his insights on the competition law, and whether we can expect the law to be enacted in the near future.

Sir, the Government is currently drawing up the legislation for a framework for competition in Singapore. I have no quarrels with the principle, ie, one of ensuring fair play and equal treatment. However, I believe that we should be clear of the desired outcomes about having such a legislation. What is the goal? Is the sustained competitiveness of Singapore the desired outcome? Or is an ideal state of competition per se the goal? Furthermore, in pursuit of an ideal state of competition, what are the costs of introducing competition? Sir, let me cite a few examples. But before that, allow me to declare my interest as an employee of Temasek Holdings which is involved in the businesses mentioned. In mobile telephony, how do we decide that three operators would do just fine? Why not two, or four? Obviously, the size of our domestic market and the sources of competition are crucial considerations. Too much zeal in introducing competition or insisting on a certain level of domestic originated competition, as opposed to ensuring fair play, can be value destroying of Singapore as an aggregate whole. We know for a fact that competition does not originate only from Singapore sources and that the typical definition of monopoly, or oligopoly, may not always hold. At some point, we have to ask ourselves if we are unwittingly disadvantaging our own operators in the name of competition. Let us take another example. Competition in print and broadcast media. Certainly, when one speaks to the consumers, the conclusion is that the variety of choice is welcome. But I think the jury is still out in terms of the cost of the introduction of competition. In this arena, thousands of publications by non-domestic sources distributed through the various channels constitute the real competition. So it is not really a case of MediaCorp Singapore versus Singapore Press Holdings, but with the advent of the Internet and cable TV, the competition is really out there, not just within Singapore. 3.45 pm Sir, lest I leave the impression that I am against having a Competition Law, I must say that it can be meaningful for businesses such as those dwelt on earlier, eg, bus services. Competition must, therefore, be the means to an end, ie, sustained competitiveness for Singapore, and not an end unto itself. In this regard, I would like to ask the Minister to reiterate the guiding principles for drafting the competition law, and how he proposes to guard against any overkill situation, which would be manifested ultimately as cost for doing business in Singapore.

Sir, the severity of the economic crisis is mostly felt and indicated through the disconnection of utility supplies. The situation seems more acute lately, as we have seen more Singaporeans affected by it. Certainly, there are those who are recalcitrant defaulters, but I am referring to the genuine hardship cases who are often victims of their economic circumstances. Sir, my understanding is that Singapore Power will disconnect electricity supply first and, if no payment is received, water supply is disconnected, often about a week later. Depending on the size of the arrears, they will then require a substantial amount before the utilities are reconnected. I can anticipate the response from the Minister, ie, these actions are necessary because, basically, Singapore Power is not a welfare organisation. Sure, I understand that. It is a profit-oriented organisation and should make profits. Indeed, it was reported that, excluding factors like divestments, Singapore Power's net profit for 2001 rose 15%. While it is not a welfare organisation, I am sure it can afford to be a caring one. Sir, the disconnection of these supplies robs the individuals and families of their dignity and self-worth, as they are made to feel that they cannot afford even the basic human needs, such as water. I would like Singapore Power to consider the following suggestions for a win-win situation between them and the people. Firstly, following the assessment and recommendations by the CDCs or family service centres, allow genuine hardship cases to defer payments to their arrears, akin to what HDB is doing with those who are not able to pay their monthly mortgage loans. They can resume paying their arrears by instalments when their economic situation improves. Secondly, allow people to decide and prioritise what they want to use. Most people would choose water over electricity in terms of priority. For cases where electricity supplies have been disconnected, I encourage Singapore Power to accept payments for usage of water only, thus preventing the water supply from being disconnected. It will be more affordable and manageable for them. Their electricity supply can be reconnected when they feel that they can afford it. Sir, some have commented that these households need to be more responsible and discerning in their usage of utilities. This is true, and we should encourage users to be more responsible. In this regard, can we think out of the box and consider different possibilities to ensure that people have greater responsibility to manage their lives? I would like the Minister to consider the possibility of supplying utilities through a stored-value system. Stored-value system is already in use in our transportation system through the ez-link cards and the cashcards in paying ERP charges. The system I am proposing is for the users to store a certain pre-paid value for both water and electricity. The meter will show how much supply they have used and how much is left for them to use. The user will then be responsible in deciding on cutting down on his usage, or topping up on the stored value. In this way, his dignity and self-worth are maintained, as he is given the responsibility to manage his own life. He is in control of the connection or disconnection actions. For the low income and hardship families, it is a way of teaching them skills in managing and budgeting their expenses. Sir, such a system is already in operation in some parts of the UK and the US. I would encourage the Ministry to study these systems and implement them here to overcome future problems of people not being able to pay for their utilities. Let us ensure that we continue to allow our people to manage their lives with dignity and self-worth.

Sir, several Members have rightly spoken about our cost competitiveness. This is an important issue. Our objective, which all Members will agree on, must be to sustain a high income economy. We want a society brimming with affluence and dynamism, leading and not just following. This must mean, as Mr Leong Horn Kee has pointed out, that Singapore ultimately cannot compete as a low cost economy. What we must do, however, is to minimise costs where they are artificially propped up and wring out inefficiencies wherever we find them, in Government, in the markets. We do this by streamlining services, keeping our markets open and introducing more competition, wherever feasible, to moderate price increases. We must also work relentlessly to increase productivity, keep upgrading the skills of the workforce, and build deeper pools of innovative expertise. If we succeed in this, the outcome will be higher incomes, higher wages, not lower. Several Members have referred to the image of Singapore as "high cost" and, therefore, uncompetitive. Is this image, or perception of an image, in sync with the facts? Each Member would, I am sure, have at the back of his mind, some real examples of firms, even industries, that are no longer able to compete in Singapore. There will be real examples. But the facts overall, for the economy as a whole, provide a different picture. We are a competitive economy. Our wages are high but, on the whole, they are made up for by higher productivity. In BERI's workforce study last year, Singapore was ranked first internationally, in Relative Productivity. This refers to productivity-adjusted wages. Across the board, our cost structures have in fact adjusted downwards significantly in recent years. Office rentals have fallen by about 38% since 1996, and are now cheaper than in most competing cities, including cities like Seoul and Beijing, never mind cities like Hong Kong and Tokyo, which are of course much more expensive. Industrial space is not cheaper than in many competing Asian locations, but the gap has been narrowed. Industrial land prices have dropped by about 45% since 1996. JTC rentals are down to the levels of the early 1990s. Competition in the electricity market has brought tariffs down significantly, despite rising oil prices. And the full liberalisation of the telecommunications market has also brought charges down. Mr Inderjit Singh, Dr John Chen, Mr Low Thia Khiang and others have referred to our many Government taxes, fees and charges, and asked whether we are still competitive after adding all these up. Let me first say that the total Government burden on businesses, comprising taxes, both direct and indirect, and Government fees and charges, is low - certainly lower than in most other countries. It is two-thirds of the total tax burden in the US, taken as a percentage of GDP, for example. And the US is regarded as an environment that is supportive of enterprise. We have achieved this because we have kept Government spending low and kept Government smaller and more efficient than most. That is the only sustainable way to keep Government-imposed costs down, not by lowering fees and charges to prevent the costs of services from being recovered. But I agree with the several Members that we have to keep reviewing Government services, keep looking for more efficient ways of doing things so as to reduce costs, and trim charges wherever it is possible to do so while recovering costs. In this spirit, MTI has recently completed a review of TradeNet charges. We will be significantly reducing Government permit fees for applications made through TradeNet, from $4 per application to $0.90, with effect from 1st April 2003. This measure does not seem like a large one, but it will alone save businesses more than $20 million annually. In total, we are competitive. There are pockets of inefficiency in the economy, areas where we find excess overheads or redundant procedures, and there are industries where costs and wages are still higher than what our capabilities can justify against the competition in China and elsewhere. But there are many areas where we retain an edge in productivity and capabilities, and offer an operating environment superior to what other lower cost economies can offer. That is why we continue to attract high quality investments, OHQs, and new financial market teams, even as we lose some existing activities. If we were not competitive, the EDB would not have been able to attract $8-9 billion of new investments each year in manufacturing alone. So, our economy is going through a difficult period, with most of the external engines of demand weak or sputtering, but we have not become uncompetitive and we are not being hollowed out. Mr Low Thia Khiang had asked why then did we cut the CPF in 1998 and why have we deferred the restoration of the CPF for another two years. We have stayed competitive precisely by making quick adjustments in wages during the downturn, and we will stay competitive by taking the recommendations of the ERC to enhance the flexibility of our labour markets, stay flexible in wages and work practices. That is the way in which we stay competitive. During recessions and slow growth, as what we have seen in the last few years, profits fall. Even productivity falls. So, if wages do not fall, there is a simple result: unemployment goes up. By making quick adjustments to the CPF and, therefore, to wages, we have avoided a much sharper increase in unemployment. Sir, restructuring our markets to inject more competition has been an effective strategy for bringing costs down. The telecoms and energy markets are good examples of the dividends gained by consumers from market liberalisation. Energy, especially, is an important component of costs. By restructuring the market to inject competition, and by competitive pressures leading the generation companies to switch to natural gas, which is more efficient, we have brought tariffs down. Electricity tariffs today are 8% lower than in December 2001. Tariffs would in fact have come down much further, if not for the significant increase in oil prices last year. The benefits are even greater for the larger consumers of electricity, who are now part of the contestable retail market, which the suppliers can bid for. These larger users have made additional savings in their electricity bills ranging from 2-7%, over and above the 8% drop in tariffs enjoyed by the rest. The EMA is now working with industry players on the next phase of retail market liberalisation. From 224 customers currently in the contestable retail market, we expect another 5,000 customers to be contestable by around June 2003, and another 5,000 by the end of this year. By the end of the year, therefore, 75% of total electricity sales of annual value worth about $3 billion will be contestable. Dr John Chen suggested that PowerGrid should benchmark its grid charges internationally. We agree with him. EMA has recently completed a benchmarking exercise for grid charges. While PowerGrid must be allowed to earn sufficient returns to be able to finance new investments in the grid network, EMA will use the benchmarks as an indication of how much scope there is to extract efficiencies out of PowerGrid. EMA's findings are that our grid charges for households compare favourably with that in other jurisdictions. But there is scope to reduce charges for both commercial and industrial users. PowerGrid will therefore reduce its grid charges by 8% on average, with effect from 1st April 2003. For industrial users, grid charges will be reduced by up to 14%. Looking forward, however, we must brace ourselves for higher electricity prices. We do not know how high oil prices will go as the situation in Iraq plays out, or how long oil prices will remain high. Consumers must conserve energy, and manage their energy bills prudently. Overall, our utilities costs do not make us uncompetitive. Even the cost of water in Singapore is still comparable to other major cities, and less than half the cost of water in Frankfurt and Tokyo, for instance. Several Members have asked questions on industrial land, including Dr John Chen, Mr Inderjit Singh and Mr Ang Mong Seng. This is an important area of economic policy. We will ensure that our industrial land market is competitive and responsive to changing conditions. First, as Deputy Prime Minister Lee has explained during the Budget debate, the Government will release sufficient industrial land for sale under the Government Land Sales framework to achieve sustainable, internationally competitive land prices. There is sufficient supply of industrial land to do this for a long time. In answer to Mr Inderjit Singh, this is indeed differential pricing at work. By zoning land for industrial use, we allow the market for industrial land to settle at a different level from land for commercial use. Second, JTC pegs its rentals to the prevailing market rates, and now exercises considerable flexibility in the terms and conditions of its leases so as to be business-friendly. Third, we intend to grow a stronger private sector in the industrial land market for greater competition and stability.

4.00 pm Dr John Chen and others have asked if industrial land prices really reflect the market. JTC keeps close track of private industrial rental rates, and does quarterly reviews to peg its own rentals to the prevailing market rates. In January this year, it reduced rentals by a further 2-7%. So, since the Asian financial crisis, JTC has reduced rentals by nearly 40%. This shows that JTC is responsive to the market, and that its rentals are not sticky downwards. In general, JTC's rentals are comparable to the private sector for equivalent facilities and are even lower in several cases. However, JTC cannot simply slash prices to clear each and every piece of vacant space, because this will lead to an unstable market and shake confidence. No responsible developer will do so, even in competitive markets. JTC's scheme for making annual rental adjustments also seeks to reduce risks for the customer. It caps increases and rental rates at 5.5% per year, when market rates are moving up, but allows customers to fully capture the benefit of any downward price movements in the market. Some customers on older schemes have different rental adjustment conditions, but all of them have been offered the option of moving to this new market adjustment scheme. On top of keeping posted rentals in line with the market, JTC has been giving significant rental rebates to customers, as Members know. Mr Inderjit Singh has also asked if JTC and Ascendas have passed the property tax rebate onto their customers. The answer is yes. With the recent announcement to extend rental rebates until December 2003, the total value of the rebate package from 1998 to 2003 will amount to $1.1 billion. More than 7,000 companies are benefiting from these rebates. These rebates are helping businesses to tide over current difficulties, but they cannot be permanent. We have to gradually move back towards market pricing over time. Mr Ang Mong Seng asked whether JTC could be more flexible in its lease terms. This is an important question for companies in this uncertain business environment. JTC has indeed been responsive. It has broadened the range of lease tenures that it offers to investors. In addition to its standard 30-year and 60-year leases, it now offers leases of 20 years or less. Leases of 12 years or more have, in fact, been quite popular, and a lease of as short as 8 years has, in fact, been granted. Last year, JTC also enhanced its Temporary Occupation Licence scheme, which now allows for short-term use of between one and three years, with an option for renewal. JTC has also changed its requirements, or as someone just put it, "the strings attached" to its new leases. It previously imposed a minimum plant and machinery investment as a condition for the lease to be awarded, so as to optimise land use. Since last year, it has scaled down this requirement so that companies only need to declare the amount of investments they intend to make. This is to help JTC to make a decision if there are competing uses for a specific plot. For existing leases, JTC has changed its lease conditions to allow companies to extend their leases for up to 10 years without having to comply with the usual terms, in other words, without having to meet the need for fresh investments. This scheme was introduced on a case-by-case basis last year. From April this year, the scheme will be extended to all customers whose leases are due to expire within the next three years. This short-tenure renewal scheme will help companies to continue operating, without having to make large new expenditures in a difficult business environment. JTC's flexibility in renewing leases has helped many companies. Khong Guan Biscuits, a household name, is one example. Khong Guan was keen to keep its factory in Singapore where it has been for over 20 years. But it found that it was not viable to pump in new investments in the Singapore operations in the current business environment. They have 20 plants operating internationally, but they wanted to stay in Singapore for reasons of history and sentiment. JTC allowed Khong Guan to renew its lease for another 10 years without having to meet the usual renewal conditions. We kept Khong Guan in Singapore, and saved jobs for over 200 employees. JTC has put in place other initiatives to help companies save costs during these trying times. As a further measure, JTC will reduce its rental deposit from two months to one month for customers on GIRO with effect from 1st April 2003. This small step will free up $27 million for JTC's customers. In the longer term, we have to add more depth and breadth in the industrial land market, increase the role of the private sector and inject greater competition. JTC has already reduced its presence in the high-rise factory market, where its share is 31%. It will increasingly let the private sector take over the development of generic industrial facilities, such as ready-built factories and business-park properties. JTC will instead focus on its developmental role, engaging in new and higher risk projects where it is better placed in the private sector. This includes projects with a long payback, such as Jurong Island, or projects which push the envelope, such as Biopolis in One-North. JTC will engage and collaborate with the private sector to develop a more vibrant and competitive industrial land market that responds quickly and creatively to new business needs. One-North is itself a good example. JTC kick-started the project. Once the project began to draw interest from prospective customers, other developers developed the confidence to join in. We expect the private sector to develop up to 80% of One-North over the next 15-20 years. Over time, as the manufacturing sector moves up the value chain, our industrial facilities will increasingly be light and non-pollutive. There will be greater scope to integrate industrial sites within our HDB townships. JTC will work with HDB to redevelop and rejuvenate industrial sites in HDB towns, starting with a couple of pilot sites. This will have two benefits. First, it will bring more employment to the doorstep of residents. This will become more important as the population ages. In the long-term, it will make it more convenient for our older workers to remain in the workforce. Second, the rejuvenation of these industrial estates will help to support start-ups and viable SMEs. Having this broader range of work opportunities, and SMEs humming away, will contribute to the vibrancy and rhythm of life in HDB towns. MTI agrees fully with Mr Heng Chee How and other Members about the importance of productivity growth. It is ultimately the only basis for sustaining high wages and remaining attractive to investors. To achieve our GDP growth potential of 3-5% per annum over the next 10-15 years, we will need productivity growth of 2-3% per annum. This is a challenging goal. It exceeds what has been achieved in other developed countries, which are generally ranged between 1-2%, or even the exceptional 2% rate achieved by the United States during the economic boom of the 1990s. How can we sustain productivity growth of 2-3%? The most important factors will still be our economic fundamentals. This means ensuring macro-economic stability, keeping our economy open to international trade and investments, and removing artificial restraints on competition. It also means investing in our people to build human capital, at all levels of education and continuous learning. And it means stimulating entrepreneurship. These fundamentals are the best way of promoting innovation and efficiency. The Government will also continue to support industries with specific programmes to help firms to move up the value chain. Productivity improvement is about all firms, the new economy or the old economy, humble or established. Let me give you two examples of companies from the HDB heartland, both clients of SPRING. The first is Sincere Photo Shop, a HDB retailer in Tampines. Sincere makes use of Fujifilm's Internet portal to allow its customers to send over digital pictures and images for printing. The customers can collect the processed pictures at outlets of partner shops or have the photographs mailed to them. The portal also enables customers to make payments for Sincere Photo's services via the handphone. One year after adopting these innovations, Sincere Photo Studio had achieved more than 20% improvement in sales. Even something as simple as leveraging on an established franchise can yield significant gains. Hui Yi Collection & Colour Lab in Jurong West is a good example. Joining the Kodak Express franchise in November 2001 enabled Hui Yi to improve on its store design and layout to improve its image. Also, Hui Yi benefited from a transfer of management and retail expertise, enabling it to improve on its customer service, product knowledge and operational efficiency. Since joining the franchise, Hui Yi's sales have improved by 50%. Mr Arthur Fong expressed his support for efforts to develop the retail sector. I agree with him and Mrs Lim Hwee Hua that we need to rejuvenate the retail sector. It is not just a matter of numbers - how many people are employed in the retail sector and how much it contributes to GDP. A competitive and lively landscape of retail players is integral to any vision of Singapore as a leading cosmopolitan city. Manpower training is the key to jacking up productivity in the sector. The Retail Academy of Singapore (TRAS) will be the focus of this effort. TRAS is driven by the private sector, with the support and encouragement of Government. It is aiming high. It plans to train and certify 23,000 workers over three years. It will also attempt to place at least 50% of unemployed trainees in retail jobs upon completion of their training. To help TRAS get off the ground, MTI will provide a dollar-for-dollar matching grant for contributions raised by the industry, subject to a cap of $1 million. TRAS will also be eligible for capital expenditure funding under MOM's Manpower Development Assistance Scheme (MDAS). I agree with Mr Arthur Fong that it is ultimately the culture of service excellence that marks out a competitive retail sector. It is what gives customers good memories. TianPo Jewellery is a good example of a retailer that has taken customer service seriously. All its staff undergo a rigorous training schedule, focusing on customer service and product knowledge. In 1998, it embarked on a Service Excellence Programme (which uses scripting and casting to achieve service excellence). Since 2000, TianPo has won an average of 15 Excellent Service Awards every year. More importantly, its sales have more than doubled in three years, from $4 million to $10 million. Next, consumer protection. Dr Teo Ho Pin and Mr Yeo Guat Kwang have enquired about the proposed Consumer Protection (Fair Trading) Act. CASE and other members of the public have told us that the $20,000 cap on the value of goods and services is too low. Mr Yeo has just reiterated this. MTI has reviewed this issue and has decided to change the way the cap is defined. It will be a $20,000 cap on the value of the claim instead of the value of goods and services purchased. The consumer who purchases goods and services with a value of more than $20,000 will thus be able to bring a claim under the Fair Trading Act if his claim is $20,000 or less. This will take care of most of the complaints received by CASE, nearly all of which have a claim value of less than $20,000. Dr Teo asked if the Fair Trading Office is needed to enforce the Fair Trading Act. The Fair Trading Act adopts a different approach from a number of other jurisdictions. The difference is that it does not criminalise unfair trade practices. There is hence no need for a Fair Trading Office to enforce the Fair Trading Act in Singapore. What the Act will do is to empower consumers to obtain civil remedy themselves, without having to rely on Government's protection. Besides allowing for quick redress, this approach of self-reliance will encourage greater consumer responsibility and proactivity. Dr Teo and Mr Yeo have drawn attention to the need for basic infrastructure to be in place for the Fair Trading Act to work. This is indeed crucial. The Small Claims Tribunal provides an affordable avenue for consumers to seek redress. CASE has had a mediation service in place since June 1999, which consumers can turn to before taking legal action. Some trade associations have also expressed interest in developing alternative dispute resolution mechanisms. MTI welcomes such initiatives. We will work with them to set up such mechanisms, to help resolve complaints without consumers having to end up taking legal action. Another key component is the education of traders and consumers. We are glad that CASE will play an active role to support the Fair Trading Act by educating consumers and helping consumers seek redress in court. As highlighted by Dr Teo, vulnerable consumers, such as the elderly and the illiterate, will be especially in need of help. MTI will give its full support to CASE and the business associations in the educational drive. Dr Teo has asked if the Fair Trading Act will cover all industries. It is intended to be generic in its scope. The original plan was to exclude only two areas from the Act, the purchase of residential property, which is already covered by an extensive body of conveyancing law, and financial investments. However, during public consultations, we received feedback that the Act's coverage should be extended to financial investments. MAS has therefore conducted a follow-up industry consultation on the possible extension of this Fair Trading Act to include financial investments. 4.15 pm MAS' consultations ended early this month. MTI will incorporate possible amendments and table the Bill in Parliament within the next 4-5 months. Mr Yeo Guat Kwang and Miss Penny Low spoke about the Rule of 78 that applies to the early repayment of car loans. MTI is reviewing the Hire Purchase Act. We have recently commenced a review which will cover various elements, including the application of the Rule of 78. In making any revisions to the Act, we will have to maintain a careful balance. We will want to make sure that consumers are not unfairly disadvantaged, but we should regulate with a light touch so as to minimise compliance cost of businesses. Several Members, including Mr Leong Horn Kee, Mr Yeo Guat Kwang, Mr Inderjit Singh and Mrs Lim Hwee Hua, have spoken about the intended competition law. Currently, we have a sectoral approach to competition law, with sector specific competition frameworks in telecommunications, electricity, gas, and media industries. As MTI announced last year, in line with the recommendations of the ERC, the Government will enact a generic competition law. We target to do so by 2005. MTI is studying the legislative frameworks, practices and experiences of other countries. We are mindful that the Singapore economy is small and open and will adopt features of laws that we see elsewhere that best suit our circumstances. Our aim is to develop a legal framework that will enable us to further maintain and promote vigorous competition among firms, without adding unduly to business cost. Finally, on Singapore Power, Dr Maliki had asked how Singapore Power manages utilities accounts in arrears, and if utilities can be billed separately for water and electricity so that households who can only afford to pay for their water bills will not have their water supply disconnected. Singapore Power Services (SP Services) is flexible in working with households on suitable instalment plans to help them tide over their difficulties. Utilities are only disconnected after SP Services has made numerous attempts to get the households to pay their arrears and to commit to an instalment plan. If they do not contact SP Services to work out a payment plan, they will get their electricity disconnected. If they continue to default on payments, PUB will install a thimble in the household's water-pipe to limit, but not halt, the flow of water. This thimbling of water is not done until at least five months after the initial default. If the household is still in default after another six months, in other words, eleven months after the initial default, then the water supply is disconnected. So the water supply will not be disconnected if these households pay, at least, their current utilities bills, which would then only comprise water and refuse charges. In effect, the result is what Dr Maliki wanted. Separating electricity and water billings and collections is not a sustainable solution. At the end of the day, the arrears and utilities charges must still be paid. The crux of the matter is that households in difficulty will have to control their consumption of electricity and water. Those in hardship should also seek assistance from their relatives or from the CCCs and CDCs. As for Dr Maliki's suggestion of using stored value cards and other measures, the Energy Market Authority will look into any creative solutions that will help.

Sir, the Senior Minister of State has not responded to my query on the IPS report which says that business costs are inflated unnecessarily by Government policies.

Sir, I have responded quite thoroughly on the issue, not just on business costs as a whole, but specifically to do with Government taxes, fees and charges. Overall, we are competitive, and Government taxes, hidden or not hidden, direct taxes and indirect taxes, when you total them all up, they are lower as a proportion of GDP, and they are lower as an imposition on business, than in most other countries.

Mr Leong, please move on to the next cut.

Sir, this subject on entrepreneurship had been well debated by many Members in this House during the Budget Speech debate. I would like to make a few points. First, I would like to congratulate the Minister of State, Mr Raymond Lim, for being appointed the Minister of State in charge of promoting entrepreneurship. The process of creating an entrepreneurial nation needs a total approach, more so, a total mindset change, as said by many MPs and I in this House. Our people have become too rigid in thoughts and methods. How then can we encourage our people to take risk and start businesses? These are some of the points made by many Members as well as the Minister of State himself in his speech during the Budget debate. The Budget Statement actually mentioned that the MTI would set aside $500 million to grow Singapore companies and help them to venture abroad. It was mentioned at page 23, paragraph 2.22 of the Budget Statement. However, I have not found any detail on how this $500 million is going to be spent. I would like to hear from the Minister some details on how this sum will be used. Can the Minister of State also give us an insight into some of his initial thoughts on how he intends to fulfil his new role as the Minister of State in charge of Entrepreneurship? Has he any initial programme or course of action that he can enlighten this House? Would he get private sector input on his deliberations? If so, how? Has the Minister of State thought about the various measurable data, parameters and targets to track the progress and success of this entrepreneurship drive over the years to come?

Sir, in the last few days, we have heard from a few Members in this House about the role of Government in promoting entrepreneurship. The common argument we have heard is that true entrepreneurs should not wait for the Government and should know how to find their ways and they should stop expecting the Government to do things for them. Sir, speaking from experience and having done it myself, a few times over, I would like to say that all of these are academic arguments and they do seem logical. But I must also add that unless one has done it or gone through the trials and tribulations of becoming an entrepreneur, he will never understand why the likes of Ms Olivia Lum, Dr Gan and myself, still feel that the Government can indeed do many things to help. I must also add that the few of us in this House, who are advocating this suggestion that Government's involvement is indeed needed, did it without the Government's help in the first place. And, if you look at the background of every one, we did not wait for things to change. We struck out on our own, with or without Government's help. But having experienced the headaches and heartaches, and having had to resolve all of them by ourselves, we now want to help others avoid similar problems so that they can better focus on their businesses and have an easier chance of succeeding. If we indeed want a thousand flowers to bloom, then we will need many more thousands to try and fail, and this is precisely where the Government can help - making it easier for those few thousands to try. Some will never need Government's help, but many could do with a little support here and there. If nothing else, the Government could, at least, clear the obstacles which exist today and which stifle entrepreneurship. The Government could, at least, create a more level playing field as Singapore-based companies face the GLCs and MNCs. The Government could, at least, allocate its resources, such that every company, whether large or small, will have equal access to these resources. As you can see, the private enterprises and the entrepreneurs have never asked for handouts. All they want are equal opportunities and for the obstacles to be cleared. So, in this respect, I congratulate Mr Raymond Lim for being appointed, and I am glad that the Government appointed him because it shows that they do realise that there is a need for a champion, and there is something that the Government can do about it. I would like to give him three suggestions on what he could do as his key priorities. The first one is on a conducive environment for the rules and regulations. I will not go through the details. We have talked a lot about these. I would like to take just one example that stifles entrepreneurship - the patent laws which will jail a person who first files his patent outside Singapore. This is not entrepreneurship friendly. In fact, it is negative when we try to attract entrepreneurs to be based in Singapore. I know that the Government is trying to develop Singapore's IP industry. But why do we think that we can do it by forcing people to do it down here? In fact, it has a negative impact on us. Some of the suggestions I would like to propose are these. We have the pro-enterprise panel - we all know the role - and I think this could be transformed to a pro-active agency that reviews the rules and regulations, in addition to reacting to them through feedback. To do this, they will need a much bigger secretariat because it is a part-time role for many people involved. Second, for every rule and regulation that is presented in Parliament, I suggest that we do a study of its impact on the cost of business. What is the cost of compliance? And if every Bill that is presented comes along with a cost of compliance, we can basically make it a lot more business friendly. On the issue of EDB, I would like to clarify the points that some Members and I have made. And the Minister has raised this just now, on what EDB does for multi-nationals. I do not think that anyone has argued that EDB did wrong. In fact, they did an excellent job. Many, including myself, praised EDB for its success. They have really done well for Singapore. But, in the same breath, I say, let EDB continue to do what it does best, and, that is, to bring in the big accounts, as the Minister said, and to focus on multi-nationals. It is precisely because EDB was successful in what it did that I am advocating a similar approach - a one-stop agency for start-ups and local companies based in Singapore. We already have the making of such an agency. SPRING Singapore is an excellent example. But, in my own experience with them, they need a lot more clout, teeth and resources, the way EDB has resources to help multi-nationals. The third area which the Minister of State can focus on is in the area of financing of SMEs, and this is a topic that I will talk in my next cut.

Sir, the need to groom local entrepreneurs cannot be overstated and it is for this reason that today, we have a Minister of State in charge of Entrepreneurship. Sir, I like the analogy stated by Minister George Yeo a while ago. He said that we are like a garden, and the Government can fertilise, water and nurture it, but the ultimate test is in the quality of the seed. I agree and, in fact, like to go one step further. Perhaps, within this garden there are a number of pots of bonsai that are very valuable and, if we give them special tender loving care, one day they may grow to become a treasure and may become a collector's item. Sir, while it is good to encourage all Singaporeans to become more entrepreneurial, it is also important for us to focus our efforts to groom a number of what I call "super-entrepreneurs", who can become business leaders in their respective fields. These super-entrepreneurs will be able to put Singapore on the world map. They will be able to help us connect to the world and allow us to ride on the waves of the growing economies. As a start, I would suggest that our GLCs and perhaps some of the bigger private companies can play this role and become business champions one day. We must work with them, understand them and find ways to help them to succeed. And, when they do succeed, they must in turn help groom other Singapore companies. As we groom super-entrepreneurs, we must not forget the problems faced by many local businesses, especially the SMEs. One of the main obstacles for the local entrepreneurs is the lack of financing. Many have spoken on this subject and I shall not repeat the arguments. To help them, Sir, I would like the Government to seriously consider setting up a special bank for the SMEs. I believe the DBS Bank was initially set up to provide the much needed financing for developing new industries and, hence, the name "Development Bank of Singapore". Now that DBS has become a full commercial bank, it has changed its name and shifted its focus, by necessity. This is not a bad thing for DBS, but it has created a gap that needs to be filled. Therefore, we should consider setting up a new SME bank to fill this gap. With proper safeguards, I believe the SME bank can be viable. It will certainly signal the Government's determination to help local businesses and it will be a major boost to groom entrepreneurs.

Sir, many Members have spoken about Government's red tape and the need to remove it so as not to stifle entrepreneurship. However, I believe that what is most important and difficult to do is to effect a mindset change in the civil service, from one of rigid implementers of rules to a friendly business advocate. This will contribute positively to creating an environment where entrepreneurship can flourish. However, such a change can only come about if top Government leaders, the media and the general public keep up the publicity, exhortation and, if necessary, pressure. To be truly successful, our Minister in charge of Entrepreneurship certainly needs all the help he can get, to not only remove old rules and red tape, but, more importantly, change all our civil servants' mindset, so that they will become pro-business, customer service oriented and advocates to the businessmen that they deal with. 4.30 pm Sir, creating the right civil service mindset is only one aspect. Entrepreneurship requires many attributes. Besides talent, it requires the willingness to take risks, the grit to keep on going despite failure, and the passion and belief in a dream. How do we nurture such qualities? Do we suffer from too much order? I tend to think so. Maybe we need to loosen up a little, allow greater flexibility and diversity. We should not be too quick to put someone down just because he is a little different or has different strengths and aptitudes. As we all know, there is strength in diversity. A diverse economy is more resilient and more survivable. Another problem we seem to have is that of the copycat entrepreneur. Look at the bubble tea craze. Just because one or two outlets made some money from this idea, we had hundreds of bubble tea businesses sprouting up overnight. The end result? They all lost money. I am sure Members can cite a few more examples. What we really need are entrepreneurs with original ideas that contain a good amount of innovation that can be protected legally. Entrepreneurship will only flourish when our young idealists dare to dream, be willing to sacrifice their time and effort to chase these dreams and be brave enough to risk all for their belief. A few will succeed and reap the benefits. Many will survive and get by, and some will fail, but the Government must create the right environment for these people to bounce back and try again. Sir, I have made general points on what characterise and promote entrepreneurship. For us to succeed, it is necessary for the Government to consciously and constantly build into its policies, be they social or economic, be they in school or the workplace, an environment conducive to the nurturing of entrepreneurs in Singapore.

Sir, I am impressed with the Government's initiative to market test non-core Government activities, and divest non-strategic Government-linked companies. This does open up tremendous opportunities for both mature and budding entrepreneurs. However, these well-intentioned moves must consciously avoid the evil of a private monopoly replacing public monopoly, especially if that monopoly is a privatised "Government-cloned" monopoly. Could the Minister comment on what measures will be put in place to prevent this development? As I have highlighted in my Budget debate speech, we will need to do more to rebalance some of the risk-reward ratios of our four factors of production, so as to incentivise our entrepreneurs. Ultimately, the entrepreneur is the ultimate value creator, who employs the other factors of production. However, he will only do so if the rewards outweigh the relative risks. The costs of land and labour must be kept reasonable, and the upward pressure on these two factors must be kept in check. On the other hand, capital return is at an all-time low now and it is, indeed, opportune for entrepreneurs to access funds and, in return, give a better return on capital, albeit with some degree of risks. On accessing funds, again, it has been talked about many times in this House. But it is a constant refrain of SMEs that there is a lack of adequate supply of risk capital. There appears to be an inherent risk-averse culture of capital providers, particularly banks, for risky start-up efforts. The Global Entrepreneurship Monitor (GEM) Report 2001 noted that failures are not tolerated and capital providers are suspicious of entrepreneurs. This culture has created what the GEM study termed as a 'capital gap', which is a situation where funds needed at start-up stage are not available, but pour in when the entity is already successful. This will not work. There must be easier access to a constant stream of risk capital, or else, it is a non-starter. Perhaps it is time to set up some sort of a SME Bank, that a few of my colleagues have spoken about, where entrepreneurs can have access to seed capital and start-up funds. And a new set of rules should apply to these budding entrepreneurs, away from the typical collateral-based lending. Government grants need not only target high value add type of entrepreneurs, but be made available to a whole variety of businesses. In addition, I would like to propose the establishment of a network of a series of colourful entrepreneur hubs to encourage budding entrepreneurs and even the retrenched to venture. This could be done at two levels. First, the 'experimental' level and then the 'serious or committed' level. Please allow me to explain. (a) The experimental level type of entrepreneur hub can take a leaf out of places like London's Covent Garden and New York City's Greenwich Village. Its emphasis is on low cost and simple set-up, although not necessarily only in artifacts or souvenir trades alone. This encourages budding entrepreneurs and niche entrepreneurs to market test their product and creativity, and adds vibrancy to a city. It could also become the breeding ground and form a part of the critical mass needed for the emergence of serious entrepreneurs. (b) The serious or committed level. This can take the shape of our One-North project, or the Southampton Enterprise Hub in South East of England. The pillars of such a hub are knowledge and institution networks, trained persons and a sophisticated information and communication structure. In other word, links with academic institutions will enable research and market information, so that IP innovations can be brought out of the laboratories.

Miss Low, can you sum up now, please?

And links with the real business world will also give it an unceasing flow of ideas and people who are actively engaged in entrepreneurial activities. The combination of both types of entrepreneur hubs, when well managed and networked, will create an "entrepreneur breed entrepreneur" culture. Perhaps 'enterprise hub directors' could also be introduced to network both locally and globally, so that a constant flow of fresh inputs and outputs can be seen here. I hope the Minister would consider and study this proposal.

Sir, many Members have spoken about the need for financing of SMEs. I think the issue really is that, today, we have two ends of the spectrum in terms of financing. One end of the spectrum is VC financing through equity, which I would say is the aggressive end. And the other end is debt financing through collaterals, which is the conservative end. If we can develop a more vibrant financing environment, we will surely attract more entrepreneurs from Singapore and from outside Singapore to locate down here, as sugar attracts ants. And I think we have many gaps to plug today. It will take us some time for us to develop this vibrant environment, and I have given a number of suggestions to the Minister. I will just highlight a few, in addition to the small business bank which some Members have raised, and the OTC board. We have been very successful with the Local Enterprise Financing Scheme (LEFS), and I would like to suggest that we build on this scheme to enhance it further and to give it a bit more flexibility, so that this can be applied in many other areas, including non-equipment financing, participation by non-banks and venture capitalists, and also to give more flexibility to financing institutions so that they will be more encouraged to use the LEFS to lend. There is also a whole slew of financing modes depending on the life cycle of the company. The financing mode that a company needs may change as the company changes in its structure. As ours is still an immature market, compared to the more entrepreneurial economies like the US, Israel and Taiwan, we will therefore need some help, and this is where the Government can play an important role in trying to help find the match of a financing type for a company. I therefore suggest that we set up a Matching Agency that can facilitate this role, just as a facilitation agency. Once we can get this whole process going and the environment gets more mature and companies know where to find the money, I think the Government can back off as the momentum picks up. I think there is also room for agencies like SPRING Singapore to play a developmental role of providing smaller companies with the right training, mentorship and access to the right advice on what is the right type of financing available for them. I think whilst many companies can do it on their own, there are still some who still need some help. I have also given a suggestion of creating a special fund called a buy-out or restructuring fund. It will be especially useful in an environment like this where we want to encourage mergers, acquisitions and management buy-outs of GLCs. If there are more funds like this established in Singapore, I think we can spur the activities and create a lot more opportunities like this. Finally, the issue of credit rating and credit insurance schemes. If these can become permanent features in Singapore, they will surely help lending institutions to gain more confidence when they lend money particularly to smaller companies. And I think this is something that we have started but it is not well developed, and this could be another area which SPRING Singapore and the Government could develop further. And if these schemes are developed, traders who have been complaining about their access to financing will find the problem being resolved.

Sir, SMEs will provide the future impetus for economic growth. The problem is: how to grow SMEs? How to assist them? How to help them transform from SMEs to become MSCs - Major Singapore Companies? This term is not coined by me. It appears in the ERC Report, and therefore, I am just using the same term. How to transform SMEs into MSCs, versus the MNCs? Sir, I think one of the starting points is that the SMEs need a patron. Perhaps Mr Raymond Lim, besides being designated as the Minister of State in charge of entrepreneurship, could also call himself the Minister for SMEs. He can then be the patron for SMEs. A high level, high profile patronage for the SMEs will help them to focus their efforts towards helping these small companies to grow. And being the patron, Mr Lim will definitely have all the sorrows of the SMEs poured onto his shoulders, and therefore he can better understand in-depth all the problems of the SMEs. Sir, I fully agree with my colleagues, Mr Inderjit Singh and Miss Penny Low, that unlike MNCs, which are well taken care of by the one-stop agency of EDB, there is currently no one-stop agency to help SMEs. I would like to suggest that MTI should designate an agency, like SPRING Singapore, to be the one-stop agency to help SMEs locally, and then IE Singapore can be the one-stop agency to help SMEs to venture overseas. Sir, for that matter, since both SPRING Singapore and IE Singapore claim to help local SMEs, why not revive the idea of merging the two agencies into one, that means, combining SPRING Singapore and IE Singapore. Then it will have a new name called SPRING-IE Singapore. I believe that this is a better approach which will have a single composite body to help the SMEs, both locally and venturing overseas. Sir, the other point I want to raise is with regard to MTI's responses to several of the good recommendations, stated in the ERC Report, to assist SMEs. Some of these worthwhile recommendations are: (a) to develop entrepreneurship programmes at all educational levels; (b) to impose sunset rule on all licences to cut red tape.; (c) to enact a competition law; and (d) to establish a private equity exchange. Sir, as I have said earlier, one of the problems of the SMEs is that there is no single agency to help them to champion their cause, to speak up for them and to solve their problems and to resolve red tape. Therefore, my idea of a single agency for SMEs would be able to help to champion the several recommendations of the Government in the ERC Report so as to help the SMEs. In summary, I would like to propose that Mr Raymond Lim be a patron of SMEs, and a one-stop agency called SPRING-IE Singapore be the single agency for SMEs.

Sir, I remember being involved in 1986 in the Economic Review Committee where a lot of emphasis was made on the role of SMEs, because we were hit with a recession. So, workshops and committees were set up to promote SMEs and a lot of emphasis was made on the role of the SMEs in the Singapore economy. But what I also remember is that after the economy recovered, issues about helping SMEs became less prominent. Basically, amongst the SMEs, we felt that when the economy recovered, the emphasis on the role of SMEs was forgotten, or less important. Today, in the last week of our Budget debate and every day, we are talking about issues regarding SMEs, the ERC Report and many of our parliamentary colleagues have made very good suggestions about how to promote SMEs. 4.45 pm We understand that SMEs now employ over 50% of our workforce. They contribute 35% to our GDP. MNCs contribute 45% to our GDP; and GLCs, 16%. I believe this formula had worked very well for Singapore in the past. But what I would like to ask is: is there a review of these ratios and targets, in terms of the long-term strategic development of SMEs in Singapore? GLCs take a very commendable role in investing in high tech, knowledge industries and taking us a leap into the future. MNCs' role cannot be underrated. We all congratulate EDB on a job well done. And we should continue to attract big MNCs to come to Singapore. But what I would like to ask is: is there a long-term plan to review the role of SMEs in Singapore, in terms of, for example, its GDP component? Are we going to allow or encourage our local enterprises to grow larger, whereby these SMEs or local enterprises will have the capabilities, financial resources and size, in order to compete effectively in the regional and global markets? SMEs are mainly Singaporeans. Until the day we see Germans and Japanese coming here to set up SMEs, we see most of the SMEs are Singaporeans. I just came this morning from the inauguration of the 52nd Council of the Singapore Chinese Chamber of Commerce and Industry and there are 4,000 members. We have 120 association members with about 20,000 members of their own. So we are talking about 25,000 membership within the Singapore Chinese Chamber of Commerce and Industry. And these are Singaporean companies. When the going gets tough, these Singaporean entrepreneurs would not stay. As the saying goes, when the going gets tough, the tough gets going. And we still intend to make Singapore the headquarters of our business operations. So what I would like to propose in this House is that we need to review and promote the image and the role of SMEs. We do not need a revolution. Suddenly overnight, we say, "It is really cool to be an entrepreneur." We do not need to do it overnight. But what we need to do is to make the image of an entrepreneur to be much more acceptable and higher in the Singapore scheme of things. We come from a society ---

Dr Gan, can you sum up now?

Yes. In Singapore, I think from the views of SMEs, the mandarins and the scholars are at the highest peak of the social structure, whereas the merchants and the businessmen are at the bottom rank. And one of the issues that I would like to bring up in this House is whether we would, over time, promote the social ranking and role of SMEs.

Sir, for the past three years, I have also been involved in efforts to promote the IC design activities and support companies and research institutes in their efforts to design electronic silicon or integrated circuit. This industry has huge potential and has been growing at a phenomenal rate over the years. The semiconductor industry is about US$300 billion. For those who are not aware, semiconductor chips are pervasive, and they are found in computers, cellular phones, watches, cars, pacemakers, coffee pots, satellites and greeting cards. In short, they are everywhere. In our effort to promote entrepreneurship, there is a clear need for Singapore to nurture technology start-ups. Why? Just as I speak here in this House, other countries like China, Taiwan, Australia, South Korea and Malaysia are very seriously moving into this area. This is because they know that as they embark on to the IC fabrication industry, there is a need for them to grow and develop their activities so as to increase the number of local design, products and innovation. In Shanghai, for example, mainland China's second foundry, Grace Semiconductor Manufacturing Company (GSMC), is now being built. GSMC is among the companies looking out to make money, by being in the first wave of advanced semiconductor concerns to establish manufacturing bases in mainland China. With many of their orders coming from foreign design houses and much of what they make going overseas, they are also doing their utmost to ensure the growth of their local design industry and local design houses because they know that, eventually, a rising type of local design houses would eat up fab capacity and drive expansion. This is what our local fab pride, CSM enjoys, and could not benefit from. In countries, like China, Taiwan, Australia, South Korea and Malaysia, and even Thailand, incubation centres with the support of Government are sprouting out like mushrooms. More often than not, in these countries, new technology start-ups are given the support and facilities, infrastructure, software and hardware for them to start their work and focus on what they are best at, that is, design and create. Sir, for Singapore to move forward, private enterprises must be encouraged, engineered even for the sake of growth, if this is indeed the direction that we have charted for Singapore. Are we willing to seriously assist our start-ups, in every sense of the word, by sincerely providing infrastructure and financial assistance? Supporting them inevitably is part of the conducive environment that we need to create. This is why I support the call by Members for the formation of relevant financial institutions to assist start-ups. Perhaps, the changing of mindset is the greatest challenge at hand. It is time for us to listen to the industry players and stakeholders. In my interaction with the industry professionals and also budding start-ups, I often hear them complaining of so many schemes that are supposed to assist them. But, in the end, the criteria, requirements and controls are so cumbersome and tedious that most give up and prefer not to ask for help at all. It may not be fair to say this, but the impression that I get is that civil servants and Government officers seem to be oblivious of happenings in the industry. Do we need so many complex schemes, so many different names and acronyms? Would the Ministry consider simplifying and streamlining these assistance schemes? Can we make the application process more transparent? Sir, very often, for technology start-ups, the entry barrier is high and often difficult to start ---

Mr Nordin, can you start summing up now?

Can we not do something to lower these barriers and encourage more young, able and talented professionals in this field to explore their ideas and take the leap of faith to be the next big companies from Singapore?

To allow the Minister ample time to reply, may I request the remaining speakers for this amendment to keep their speeches as short as possible. Mr Arthur Fong.

Sir, in this economic climate, we hear of many businessmen saying that our Government is not sympathetic to helping them tide over the slowdown. I too initially believe this to be so. But I have seen many viable small and medium enterprises being forced out of business because of the chain of debts. Although these SMEs are viable, their obligations to their employees and suppliers are often compromised, because of their own debtors who too are holding them up. But a quick look at the SPRING Singapore's shows - they have a whole coterie of financial assistance schemes to help SMEs to tide over the short-term difficult cashflow situation. Sir, an example is the micro loan scheme that helps SMEs to overcome their short-term cashflow problems. It allows the local companies concerned to borrow up to $50,000 at a favourable interest rate of 5% repayable over four years. Let us be clear about our intention here. Any business organisation that is not able to balance its cash in the long term has no business to be in business. But I understand SPRING Singapore is not the only agency that assists our business. There are others and, given the shortness of time, I will address my concern. Sir, I understand that a company has its application for a micro loan rejected by an attendant bank on the grounds that the company had previously issued cheques that bounced. I am afraid this is not the first or the only case. It is common knowledge that even many of the successful entrepreneurs faced all kinds of cashflow problems in their struggling days. Coming to Mr Gan Kim Yong's point on the SME bank, perhaps, it does merit some look at his suggestion. Because I think the attendant banks, who are assessing these loan applications, are assessing them based on a lot of programme lending and credit scoring. There should be people who have experience looking at business from the business perspective - from the different valuation model, business order books, management audit and the experience of the people running the business. So, in this respect, maybe, instead of just going to the SME bank, we should have people with these experiences in the attendant banks. Sir, I am afraid that the best intentions of our Government may be thwarted by what is actually happening on the ground. Sir, I call on the Minister of State in charge of Enterpreneurship to assure the House that the original spirit of whatever assistance schemes that we have in place is carried out to their intent on the ground.

Sir, I follow up with what Mr Arthur Fong has said. Pro-business schemes are many, from SPRING Singapore, IE Singapore and EDB. Now we also have the EDB very actively helping SMEs. But, often times, as what we have heard in the House today, most of these schemes are crafted by civil servants with a lot of inputs from the different sectors, including the private sector. However, the schemes to assist SMEs are much more difficult to craft than schemes to attract MNCs to Singapore. Because SMEs come in all shapes, sizes, colours and are in different stages in the organisation's life cycle and from different industry sectors, it is very difficult to just have one solution for all. What we would like to propose is a lot more customisation of these schemes to help SMEs. One of the issues that I would like to raise, which I thought was a bit arbitrary, is the $15 million cut-off point. Where SMEs whose fixed assets are beyond that amount, they are not allowed to be on the different loan assistance schemes. And where did the $15 million come from? It has been there for a long time. I think it is also time this cut-off point is reviewed. In order to be able to customise schemes for SMEs, what I would like to propose is that the relevant agencies undertake a much more in-depth research and data gathering about SMEs, ie, the structures of SMEs in Singapore and the industries they are in. We need a database in order to do much more analysis and diagnosis, so that we would be able to customise the schemes to the needs of SMEs, as well as to review some of the old schemes which really do not apply any more.

Sir, I think the most important support that we can give to our entrepreneurs is one of financing them. For the new start-ups, they need financing. It is difficult for them to do so if they do not have sufficient capital of their own. If they try to borrow from commercial banks, as we have heard, and if they lack the track records and most of the time they do not have sufficient collateral, it is difficult for them. Traditionally, local banks have been the ones who have been supporting the small accounts, such as these. But with the merger of six banks into three, it is generally felt that the three banks are now more risk-averse. We are not blaming the banks as they have their own bottomline and their shareholders to look after. 5.00 pm The same also holds true for small entrepreneurs venturing overseas. For example, if they go to China, it is very difficult for them to borrow locally. If they want to borrow from Singapore banks, Singapore banks will insist on collaterals in Singapore. And if there are no Singapore collaterals, there are no loans and no ventures overseas. It is also difficult for them now to attract funding from private investors, angel funds and venture capitalists. With the economic downturn and uncertainties, funds have become scarce and, at the same time, private investors and venture capitalists are getting more conservative and wary. Alas, angels are also getting to be fewer. Sir, I am not talking about handouts. I agree that the Government cannot become an ATM where anyone with a calling card "entrepreneur" can come and freely draw from the support. Entrepreneurs must also compete for limited funds available. The rule of survival of the fittest should also apply. But the problem of financing genuine entrepreneurs with potential is real. Many of these entrepreneurs with good and workable ideas would probably be stopped in their tracks before they even get started, because of a lack of funds, and that would be a real loss to the economy. Sir, I know that there is really no easy solution to this problem, but we really need to find a way forward to bridge this gap and to help our entrepreneurs to flourish. The idea of a SME Bank or a special fund could be a workable solution. There is a Chinese saying, wan shi ju bei, zhi qian dong feng, ie, everything is ready, what we need is the East wind. I think there are hundreds, if not thousands, of entrepreneurs who are prepared to set sail, and I hope that the Ministry and, now, Mr Raymond Lim, can find the East wind for them.

Sir, I thank Members for their useful comments on promoting entrepreneurship and developing the SMEs. I agree with Mr Inderjit Singh that the Government has an important role to play in promoting entrepreneurship, but I think he and many Members of the House would agree with me that, ultimately, whether they succeed or not really depends on themselves. Let us take the example of Dr Diana Young, CEO of Mil-Com Aerospace Group. She had to mortgage her home and persisted even when the going was tough, until she clinched her first deal in India. Starting with six employees in 1994, the Mil-Com group of companies now serves as a one-stop centre for the aerospace industry, offering value-added services ranging from engineering and airport security technologies, to training for engineers and technicians. As a female in a male-dominated industry, her achievements are all the more remarkable. This is the kind of feisty and resilient spirit that marks a true entrepreneur. The Government should not be hand-holding our entrepreneurs, but neither should it stand in the way. Nor should it simply be folding up its arms and do nothing. It should and will help by creating the conditions that will make it possible for those with the drive, determination and gumption to succeed. Mr Inderjit Singh has said in his Budget speech that we must ensure that the business environment is friendly, not just to big firms or foreign SMEs, but also the small local firms. Dr Gan just now highlighted the importance of the SMEs for the economy. I fully agree with both of them. We will help our SMEs upgrade their capabilities, so that they can better compete in the marketplace. Ms Penny Low's vision of a vibrant enterprise hub is one that we share and have been actively nurturing. It is one where large and small companies, local or foreign, co-exist, compete, interact and leverage on one another's strengths to scale greater heights. There will be feedback between industry and academia, and a wide spectrum of capital ready to commercialise ideas. However, we must be agnostic on nationality and size of firms, because they all contribute to economic growth and create jobs for Singaporeans. So, in answer to Dr Gan, as to whether we have a quota in which we fix in our minds a certain percentage should be for SMEs, a certain percentage for GLCs or MNCs, we do not have. We will promote the growth of all enterprises. We would like all of them to succeed, because they add to economic activity and growth, and jobs for Singaporeans. One example of the synergistic benefit of such an environment is Encore Technologies, which brought its Simputer, or Simple Computer, to Singapore to further develop and launch it in global markets as a "made-in-Singapore" hand-held computer. Today, from its Singapore base, Encore works with more than 60 big and small companies in Singapore and the world to develop applications for its Simputer. Besides grooming local companies, we are also attracting foreign SMEs to Singapore to build a vibrant enterprise sector. We want them to use Singapore as their base to innovate, develop products and explore opportunities in the region and beyond. We have already made some headway in this area, and Singapore is fast becoming a cosmopolitan enterprise hub. The number of foreign incubators increased from 38 in 2001 to 51 in 2002, including incubators from India, Japan, Korea and New Zealand. In particular, the Korean IT promotion agency set up its first Southeast Asian centre in Singapore, while Japan's Mie prefecture set up its first overseas Mie Business and Innovation Centre here. The 13 new incubators that came to Singapore in 2002 are expected to create about 500 jobs and generate $55 million in value-added per year. These foreign start-ups that come to Singapore include companies such as SL Interactive, a Korean multi-player online game company. This company is planning to launch a 3-D online game this year. It is also developing games for mobile phones. Besides the high-tech incubators and start-ups, we are also attracting SME centres from around the world. In addition to the South Sumatra Information House opened earlier this month, we also expect to welcome new SME centres from India, China, Chile and Korea. In particular, the Zhejiang Centre will be the first-ever centre of its kind by China in Southeast Asia to help Chinese companies venture overseas. In September this year, Singapore will host the International Small Business Congress, which is internationally known as the SME event of the year. CEOs, entrepreneurs, bankers, venture capitalists and policymakers from all over the world will come here for the Congress. Japan alone will be sending 100 SME CEOs to attend. Such events help to underscore our status as an international enterprise hub. This, then, is the business environment that we are creating. All companies, big or small, must be assumed to have the potential to grow and globalise, and we will ensure that there is a level playing field for all to succeed. Members have brought up three important conditions that we have to get right to create such an entrepreneurial economy: (a) culture; (b) regulatory environment; and (c) finance. I will address them in turn. As Mr Inderjit Singh, Dr John Chen and Mr Leong Horn Kee have emphasised, the critical factor is a culture where Singaporeans are quick to seize opportunities, take risks and make a difference. Education is vital here. Mr Leong asked for an update. NUS and NTU have both introduced entrepreneurship courses and exchange programmes to their curricula in collaboration with Stanford University and the University of Washington, respectively. About half of the 49 graduates from the inaugural batch of NTU's programme are now embarking on new start-ups. Entrepreneurship programmes are also taking off in the schools. Since March last year, some 4,000 students from over 70 schools have been trained under the BizWorld programme by more than 500 volunteers, including business people, public servants and teachers. We hope to increase the number of students trained under BizWorld to 10,000 by the end of this year. I recently heard about Mr Lin Xiang Qian, a former VJC student, who is now serving National Service. As Vice President of Esco Micro Pte Ltd, a company owned by his parents, Xiang Qian spearheaded the product development and exports of its bio-safety cabinets division. Last June, he became the world's youngest person to be granted full accreditation under the NSF International Biohazard Cabinets Field Certifier Accreditation Programme. I know it is a mouthful, but it is an important thing. He also brought in sales of $3.5 million for the company last year - all this in the same year that he sat for his A-Level examinations. I do not want to embarrass him by divulging his results, but he did very well in his A-Levels. It is stories like these that give us reasons to be optimistic. But this culture has to spread beyond our students to our adult population. The Phoenix Award was launched in 2000 to recognise entrepreneurs who had persevered and succeeded in spite of past failures, and to inspire others to emulate their fine example. It is encouraging that many past Phoenix Award nominees and winners, as well as other entrepreneurs, are now volunteering as mentors under the Phoenix Mentorship Programme. Along with activities run by other organisations, such as the Young Entrepreneurs Organisation, the Association for Small and Medium Enterprises, and the Entrepreneur's Resource Centre, such programmes provide a support network for entrepreneurs. To change a nation's culture will take time, as these are societal behaviours that are embedded in the psyche of the people. But a certain momentum has set in. There is clearly today a heightened awareness in the country on the need for entrepreneurship. The debate in this House bears testimony to this. What is important is that we actually walk the talk. By "we", I mean not just the Government and civil servants but every one, including parents, teachers, community leaders, business, workers and the media. On regulatory environment, I share the concerns of Members about excessive red tape. They have added to my store of horror stories that was already quite full after a year chairing the EISC. What is encouraging is that the Minister for Finance has made clear that the Government is very much seized with this issue. Besides the Pro-enterprise Panel, there is the Rules Review Panel. The latter is doing what Mr Inderjit Singh suggested, that is, reviewing rules and regulations. This is a comprehensive internal exercise where all public agencies are required to review their rules by the end of FY 2004. They have been asked to consult private stakeholders as part of their review process. Mr Inderjit Singh and Mr Leong have suggested that there be sunset clauses in rules and regulations. The Government has accepted in spirit this recommendation, with a mandatory review of all rules and regulations by all Ministries every five years. However, we will look into how stronger discipline can be instilled in the process in a way that does not lead to excessive administrative burden. Mr Inderjit Singh has also proposed that every rule and regulation change be accompanied by a study of the cost impact on businesses. This is a worthwhile suggestion, as it will raise the awareness of civil servants on regulatory costs. We will see how best it can be implemented. As for what Dr John Chen said, I believe that he has hit the nail on its head. It is not just about excessive rules, but how they are administered by public servants. After all, there will always be rules. Even in a society of angels, there will be, say, a rule to decide on which side of the road to drive on. The issue is whether the angel will be hauled up if he makes a U-turn on a new road where the traffic signs are not yet up. I have suggested that to shift the mindset, the Government should set the default key at "Yes" rather than "No" in dealing with business. We will see how best this can be done in practice. We also need to move away from our top-down attitude towards the public to one that emphasises teamwork and participation. We are moving in that direction, with the ERC as the clearest example of partnership in setting the economic agenda. As always, more can be done, as bureaucracies tend to be hierarchical and more focused on process rather than the customer. The good news is, as Deputy Prime Minister Lee said, our civil service is moving in this direction, and more would be done. On finance, several Members, such as Mr Ng Ser Miang, Mr Inderjit Singh and Ms Penny Low, have highlighted that financing gaps in the market may hinder entrepreneurship. I agree. The Government has thus sought to improve access to funding for enterprises through facilitating or capitalising new financing avenues, and by sharing in the financing risks. Last September, for instance, the Government introduced the Loan Insurance Scheme, where it defrays part of the cost of the insurance premium. This is to help companies that would otherwise have difficulty in securing funding from VCs and commercial banks. Since its launch, more than $9 million worth of loans have been approved. But more will be done. MTI has accepted, in principle, the recommendations of the panel headed by Mr Inderjit Singh to improve the access to finance for entrepreneurs. We thank him for his work. Mr Inderjit Singh has highlighted some of the recommendations from that panel. Our underlying philosophy must be to work with private players to plug these gaps. What are some of these key recommendations? As I said, he has highlighted some, but let me take you through them. (1) SME Bank. Banks in Singapore are paying more attention to SME financing. This has been helped by MAS granting Hong Leong Finance an exemption from section 23 of the Finance Companies Act, enabling it to provide unsecured loans of up to 0.5% of its capital to customers. This exemption is important as it facilitates their lending to start-ups that are unable to provide collateral. More recently, OCBC has also adopted the lending methodology of Hong Kong's SME Loan that specialises in cash-flow financing. (2) Private equity exchange. The Second Minister for Finance, Mr Lim Hng Kiang, said during the MOF's Committee of Supply that parties who find it viable will be allowed to operate one, if they meet MAS' regulatory requirements. I understand that some interested Singapore parties are looking into this. EDB and MAS will facilitate, where necessary. (3) Credit rating bureau. The Association of Banks in Singapore is currently looking into how best to do this. (4) Angel matching network. SPRING is actively exploring this with a few private entities to see how best to match the SMEs with angel investors. 5.15 pm (5) Modification to existing schemes. Mr Inderjit Singh has mentioned some of these, eg, Local Enterprise Financing Scheme (LEFS) and the Start-up Enterprise Development Scheme (SEEDS). SPRING is working with several venture capital companies to see how LEFS can be used for hybrid financing like convertible loans. SEEDS, which was started to help innovative start-ups with equity funding, will now be extended to non-technopreneurial companies. I turn now to the other issues raised by Members. Mr Leong Horn Kee has asked for details on the $500 million that the Government is putting into growing Singapore companies and helping them to venture abroad. The bulk or $399 million will go towards LEFS, the Micro-loan scheme and the Loan Insurance Scheme. 2,400 SMEs are expected to benefit from these schemes in FY 2003. $42 million will be allocated to the Local Enterprise Technical Assistance Scheme (LETAS) which will help some 3,000 SMEs upgrade their business capabilities and restructure their operations. The rest is for SEEDS and IE Singapore's activities to help Singapore-based companies internationalise. I wish to assure Mr Arthur Fong and Dr Gan See Khem that our SME assistance schemes are periodically reviewed to ensure that they stay relevant. For example, the performance of LEFS and the loan terms and conditions are regularly reviewed by the LEFS Credit Committee, which comprises public and private sector members. Adjustments are made to the scheme, in the light of changing conditions, to meet the needs of SMEs. For example, the conditions were relaxed and the interest rates lowered during the Asian financial crisis at the last recession. The Micro-loan scheme was also started as a result of a review to better serve small enterprises. This explains why LEFS has been very popular with the number of successful applications doubling from 1,586 in 2001 to 3,632 last year. We have also developed new schemes to groom our growing enterprises. For example, the Growing Enterprises with Technology Upgrading Initiative (GET-Up) was launched last month. This scheme pools together resources and expertise from A*STAR, EDB, IE and SPRING to provide comprehensive assistance to enterpreneurs - covering innovations, technology development, capability upgrading and venturing overseas. GET-Up takes a proactive approach. Senior officers from the agencies visit the growing enterprises to understand their needs and offer customised assistance. They have visited about 100 companies in the first two months of the scheme. Another new programme that will be implemented in April is a $10 million Locally-based Enterprise Advancement Programme (LEAP). We have, in the past, provided assistance to MNCs and GLCs who have helped upgrade SMEs. LEAP will be used to encourage multipliers, such as industry associations and incubators to undertake worthwhile projects with clusters of companies. Our intent is to reach out to a larger group of companies by working with such multipliers. What is important is that through these various financial and upgrading programmes, many companies have been able to develop new business models to enhance their competitiveness. One such example is 77th Street, a trend-setter for hip streetwear in Singapore and Malaysia which was featured in yesterday's Straits Times. It has built a loyal following among the young and trendy, particularly aged between 14-28. Founded by Ms Elim Chew, who pounced upon a fashionwear niche which she saw emerging - 77th Street grew from a small retail outlet in Far East Plaza to 16 outlets and another 5 joint venture outlets in Malaysia. Mr Gan Kim Yong has suggested that we identify a few winners and groom them to be super-entrepreneurs, like Mr Sim Wong Hoo. The problem is that the Government has no superior knowledge to identify winners. Sim Wong Hoo was not identified by the Government. The market did. So the market is the best judge of potential winners. However, he is right that, given our limited resources, we should maximise them for the greatest impact on economic growth. Our starting point should be that companies at different stages of growth have different needs. Start-ups are different from companies that are ready and able to internationalise. Help will be available to companies at different stages of their growth, but the extent of help will be different. This approach is to be preferred. It makes no assumption of who the winners will be and, hence, excludes no one. It lets the market decide, while extending in a calibrated fashion to help the companies throughout their growth cycle. Several Members have suggested the creation of a one-stop SME agency, including reviving the old idea of merging IE Singapore and SPRING Singapore. The Finance Minister has pointed out that SPRING Singapore is the designated SME agency. However, based on their feedback, MTI will see how best to enhance what SPRING is doing so as to increase the convenience and comprehensiveness of its service to SMEs and better coordinate with the other agencies like IE Singapore. But let us have realistic expectations here. There are crucial differences between EDB that targets the MNCs that it wants to bring in, and an SME agency that caters to about 100,000 firms with very diverse needs. Mr Leong has asked what are our next steps. There are three. First, we will look into implementing the ERC recommendations on entrepreneurship as quickly as possible. Second, we will take stock of the different schemes and the work done by the various agencies to see how best to position them to promote entrepreneurship. Third, to Mr Leong's question as to whether there will be private sector inputs, the answer is "Yes". Promoting entrepreneurship must be done in partnership with entrepreneurs as it is an iterative process where ideas must be validated, some discarded as they may not work out as intended, and new ones adopted. Some MPs have suggested setting up a statutory board to promote entrepreneurship. I feel that the last thing we want to promote entrepreneurship is to bureaucratise the process and that is why I think it is apt that the Minister in charge of Entrepreneurship is one without a Ministry. It gives a lot more flexibility to do things and not be weighed down by entrenched wisdom. There would, of course, be a core resource group which will come from MTI, but it would include other agencies and private sector participation. Mr Leong Horn Kee asked if there are any outcome indicators to track the success of our entrepreneurship methods. We are watching a number of indicators, some of which include the number of start-ups, the number of companies that grow and eventually internationalise, and their contributions to the Singapore economy. However, the longer term impact of achieving the cultural shifts that I mentioned earlier will have to be measured in a more qualitative way. Ultimately, I hope to see entrepreneurship become a part of our society's DNA. Mr Leong has asked whether or not I should also be the SME Minister. Since taking up my appointment as the Minister in charge of Entrepreneurship, there have been numerous suggestions that I be patron of many things. If you read the Forum page, you will see that. But I have tremendous confidence in my Ministerial colleagues and the Ministry of Trade and Industry who are already looking after our SMEs. I have also been asked when the position of Minister in charge of Entrepreneurship will no longer be needed. As I said in the Budget debate, we will know that we have succeeded when Singaporeans look to the market, rather than the Government, to make their decisions. That is the final acid test.

Sir, I wish to thank the Minister for his very vibrant, animated and enriching discourse on the future strategies for Singapore. Notably, I hope that his idea that Singapore can become the London of Asia will arouse high public interest. Perhaps, the media will want to launch a great public debate on this idea. Can Singapore be the London of Asia? Sir, I also wish to thank the Senior Minister of State and the Minister of State for their very thorough and clear replies. On this note, I beg leave to withdraw my amendment. Amendment, by leave, withdrawn.

Amendment No. (2). Mr Chew Heng Ching cannot speak again. Mr Arthur Fong.

Sir, I beg to move, That the sum to be allocated for Head V of the Main Estimates be reduced by $10 in respect of Code VA 1500. Sir, I shall share your views with the House as well. The formation of the Singapore Business Federation has led to some disquiet in the business community. Many felt that the aim for the business community to speak with one voice has not been achieved. Some in the business community felt that there was little that the Singapore Business Federation could do for them and were confused by what seems to be overlapping roles of the Singapore Business Federation and other chambers of commerce. Others felt that they could not afford to feast in this economic downturn but, in the main, many are questioning, especially in this poor economic environment, what has the Singapore Business Federation done to spur business. Sir, we had a meeting with the GPC Resource Panel for MTI and they have also expressed similar views. For instance, many businessmen are wondering, in the light of the world expo to be held in Shanghai, what has the Singapore Business Federation done to ensure that Singapore businesses are well-represented there. What leg work has the Singapore Business Federation done to give Singapore business a leg-up on the competition from other countries? Sir, the Singapore Business Federation's annual budget for membership fees alone is expected to be about $6 million. We have a moral obligation to take extra measures to ensure that the activities undertaken by the Singapore Business Federation are in the interest of all its members. We should put in place an apparatus to ensure that the Singapore Business Federation has fully met the expectations of its members. I propose the Minister consider setting up an independent body, call it ombudsman if you like, to assess the performance of the Singapore Business Federation in promoting business for Singapore business over a specific timeframe. Perhaps, the Minister of State in charge of Entrepreneurship could take this review under his wing.

Sir, I answer Mr Arthur Fong's question with a certain reluctance. SBF is an autonomous federation. It is under parliamentary oversight only to the extent that we have under law provided for compulsory membership. In order to buffer the Federation from us, when we legislated, we provided for a board of trustees. I am reluctant to be telling SBF what they should do. I do not think it is right that we should set up an ombudsman or some such facility to oversee what the SBF does. It should be an autonomous independent federation, looking after the interest of its members and operating independently from the Government and, if necessary, criticising us. But having said that, I would certainly convey to the SBF the views raised by Mr Arthur Fong, but as a postbox. I think that is the type of relationship for us to establish with the SBF. We took the decision to put it under legislation with great reluctance because, for years, we tried to create an apex body but we could not break through the existing chambers which have been established over time. So, finally, at their request, we moved legislation and since it has only been a year, we should give the SBF some time to find its footing and to establish a pattern of activities. I can tell you this, because I am involved in it: SBF has expressed great interest to explain to its members the FTAs which we have concluded and to collect views from its members on what we should demand of the FTAs that we are negotiating. In the coming months, SBF will be carrying out a whole series of measures to explain and do work on the FTAs. MTI has told the SBF that we will support them fully in these activities.

Sir, I beg leave to withdraw the amendment. Amendment, by leave, withdrawn.

Amendment No. (3), Mr Tan Soo Khoon.

Sir, I beg to move, That the sum to be allocated for Head V of the Main Estimates be reduced by $10 in respect of Code VN 3100. Sir, last year, Singapore attracted some 7.57 million visitors, marginally more than the 7.5 million figure for the previous year. However, there are two disturbing trends. First, tourism receipts have been estimated to be only $9 billion, a decline of 5% over the peak some years ago, and that is a $1 billion loss to our economy. Second, the average length of stay of visitors was 3.2 days per visitor, and this is a steady decline from the peak figure of 3.9 days chalked up in 1991. Although in the past few years we have heard a lot about different ways to boost tourism, eg, Tourism Master Plan, Tourism Blueprint, Tourism Task Force, etc, it appears to me that we have reached a kind of dead-end as to what we can actually do to give a boost to this sector of the economy. To me, the difficulty is similar to what we face in other aspects of the economy - that we are faced with immense competition from other destinations that are not just only cheaper, but are probably more attractive. In the three areas of interest for your average tourists, ie, sightseeing, shopping and dining, other places have caught up with us, and are probably outdoing us. The challenge for us now is to find niches to differentiate ourselves from others. We must focus on a unique identity and offer something not easily available elsewhere, say, a product or a service, or an experience that the tourists can only get here in Singapore, otherwise why would they come. In the past, we have made some dubious efforts, like the redoing of Chinatown, resulting in what I call a "sanitised version" of Chinatown. Many visitors I brought there are simply not impressed with what they have seen because they said there are better Chinatowns elsewhere. But let us take a look at Little India. Luckily, we have not tried to remake Little India too much. It is so naturally attractive, and that is why many visitors, including Singaporeans, flock there. Sometimes you need a little of messiness to make a place attractive. Maybe sometimes it is best to leave things alone. So, I would like to hear from the Minister how the Singapore Tourism Board is tackling this problem. One area I would like to highlight is the increasing number of visitors from China and India. China is now our third largest visitor generating market, with 670,000 visitors last year, up 35% from the previous year. They spent, on the average, $201 per visitor per day, that is the third highest number amongst the spenders. I would like to urge the Board to continue to step up its promotion to the Chinese market with activities similar to the one that was recently done - the Tourism Carnival in Guangzhou. Sir, I was not able to get figures of how many days the Chinese tourists spend in Singapore, but I understand that it could be less than the average of 3.2 days. This is because they find that Singapore is a bit too expensive for them and many tour agents are using Singapore as a quick stopover before whisking them off to nearby destinations. This is a pity. Hong Kong last year attracted over 4 million visitors from China. That is about 34% of their total number of visitors. Many of these are high spending tourists, buying high value items. So it has been forecasted that in the year 2020 some 100 million Chinese would be packing their bags and travelling abroad. This is a vast market that we have to tap. Another problem facing Chinese tourists is their difficulty of navigating around in Singapore because the signs we put up are not in Chinese. I recall that sometime ago STB was looking into the possibility of multi-lingual signboards and preparing more brochures and maps in different languages. Can I know what progress we have made? Sir, India is another promising market. Last year we had 340,000 visitors from India, each spending an average of $278 per day, making them the No. 1 spending nationality. I would like to know what plans we have to increase the number of visitors from this market. Sir, I do not have much to say on the Singapore Zoological Gardens because events have overtaken us, except to say that many Singaporeans are relieved that they have backed down on the proposal to change the name. They wanted to spend something like $100,000 to change their name and $400,000 for the signs. That is exactly the point I was making last year. It is not just the money on changing a name. You spend many more times that amount just to effect the change. Last year, I mentioned about the changes of organisations to names like A*Star, SPRING Singapore, IE Singapore. Today I still have difficulty explaining to people what happened to our Trade Development Board. When I tell them it is called IE, they look at me with some amazement. I notice that all these organisations which have changed their names, and also the zoo, are all under the same Ministry. I hope that we do not change the name for the sake of changing the name, because there is an attraction and value to old names. In the private sector, for example, names like Robinsons, Cold Storage, and as mentioned just now, Khong Guan Biscuits, these are all venerable names with value. So I hope somebody does not wake up one day and take on a flight of fancy and say that since we are remaking Singapore, maybe we should change our name because Singapore sounds so 19th century. I hope the Minister will make sure that this does not happen.

Sir, Mr Tan Soo Khoon raised two important points about the tourism sector. One is that the total tourism receipts have been on a declining trend for a number of years now, and the average number of days that they stay in Singapore has also come down. The situation has been made worse by the Asian financial crisis, the global economic downturn, September 11, then Bali, and so it is a whole series of knocks which the industry has suffered from. But, we are not doing badly, and the number of visitors has continued to trend upwards to over 7 million tourists, which is not bad for a city-state of 4 million people. The fact that they are staying fewer days in Singapore is partly because we have become a very efficient switch. So, if you are doing business here, you are exhibiting here, you carve up your time finely. You land, SIA flies in punctually, in so many minutes you are in town, do your business, whatever, stay one night if necessary, if not, you are off. So, in that sense, that cannot be helped. But, there are new opportunities arising principally from all the developments around us, and the growth of the middle-classes. The Chinese are travelling in huge numbers and this is just the beginning. When I was in Xian two years ago, I asked them, "How many foreign tourists?" They said, "800,000". I asked, "How many Chinese tourists?" They said, "30 million." All over China now, internal tourism is rising spectacularly. What we are seeing is just an over-spill from what is happening within China itself. It is the same thing in India. So we are working very hard to develop the Chinese market. It has been growing double digits. We expect it to reach 1 million by the year 2005. Initially they are mostly here on cheap tours. Some are on zero cost tours, which means they sign up for the tour, they pay nothing, but when they come in here they are brought shopping. They are milked at each shopping centre. They do not see our museums and, before you know it, they are off to Malaysia, Thailand and then back to China. They spend. Many buy gold, not because gold is expensive in China, but because they want to bring back souvenirs. But that market is fast changing and we are finding now more Chinese tourists coming in as individual travellers and they are going for more diverse products. So we have got to keep up with the changes and make sure that we move with the higher value tourists. So, this year, STB will be conducting major publicity campaigns in both India and China. Indian tourists are here mostly as individual travellers. They come with family members and relatives, you can see them all over Singapore and they stay here much longer. And, per head, they spend more than any other category. That is partly because they stay here longer. I am amazed, whenever I go to India, how favourably they look at us. And not only as a shopping emporium - yes, all of them have heard of Mustafa - but it is no longer just Mustafa now. So, we are also stepping up our tourism efforts in India, including involving some of their Bollywood stars, and we are trying to get Singapore more featured in some of the films produced in Bombay. So there are many things that we should do, there are many opportunities, and I hope that in the coming years we will see many more Chinese and Indian tourists coming here and they will give a strong boost to our tourism industry. Mr Tan mentioned that we should consider new and more interesting products because shopping is down. Shopping may be down generally, but we continue to be the New York of Southeast Asia, as far as shopping is concerned. People come here for diversity. When we speak to the golfers, they say they can get different range of golf clubs in Singapore. One Malaysian Minister's wife told me that she shopped for her toys along Orchard Road. I said, "Surely, you can get the same toys in Kuala Lumpur." She said, "No, you have got more range here." So we are finding more such flagship stores relative to the rest of Southeast Asia and this is how we are seeing the development of Orchard Road. Yes, we try to boost Chinatown. I do not think we should do nothing. We have cleaned it up. It is somewhat sanitised now. Recently, we opened a Heritage Museum. It is not bad - old shophouses showing the old `coolie keng', and it has received a good response. The other things that we are doing may take a while longer before we see everything come together. But, we are not letting up on our efforts on Chinatown. Little India can be a little cleaner, but we should not over-sanitise it. There are other products we should consider and we are working on them. For example, we take Jurong Island for granted. But Jurong Island is a remarkable place. If you are a student who studies chemistry or organic chemistry in school, it is a fascinating site to visit. Right now, of course, because of September 11 there is tight security. But we are working on tour buses going to the Exhibition Centre on Jurong Island, and that may bring in tourists from various countries, and really it is one of a few such sites, anywhere in the world. I have been to the site in Pernis, near Rotterdam, and it is not half as attractive as Jurong Island. At night, when we see the lights, it is magical. But, I am not promoting Jurong Island. I would let STB do it. And, even our NEWater plant, I told Lim Swee Say, "Look, I see a tourism opportunity there. Let them try it and maybe sell some souvenir products - NEWater from Singapore. We may make some money along the way." Recently, we found that visitors from Mainland China were interested to experience staying in HDB estates. We will convert a few blocks of HDB flats for them and make some money in the process and gain some reputational benefit for Singapore along the way. So there are many things that we can do. A few months ago, I visited Orchidville up in Mandai. It is an orchid farm. Our orchids are high quality orchids. When they reach the Japanese market, they fetch twice the price of orchids from Indonesia or Bangkok. I asked them why. They said, "Well, because they are all the same length, all have the same number of petals, same number of buds, opened and unopened." And it is a high quality operation. The owner, because he was facing the pinch from the economic downturn, decided to open his orchid farm to Japanese tourists. So they come, they are happy to cut the orchids. They do not cut them well, so he throws in a few of his own sprays, then when they bring them back to Japan, those that are cut by the tourists they do not perform so well. Those that he put into the boxes they look better. So everything looks much better, and in the process he makes more money for himself. He has got a little coffee-house there, a restaurant and, in so doing, he bundles services into his product and ups the value of his products. So, to answer Mr Tan Soo Khoon, there are many things that we can do to make tourism more lively in Singapore and to gain more economic benefit out from it. As for the zoo, MTI was asked to take over responsibility for the funding of the zoo only from this year. I would not like to answer for some of the ideas that have been floated. Maybe, next year I would. 5.45 pm

Maybe I should remind the Minister that there is a saying that says if you pay peanuts, you get monkeys. In this case, if they decide to spend $100,000 or $400,000, it is no small peanuts, and they will find that in the end, if they spend the money, they still end up with the same old monkeys running around. Sir, I beg leave to withdraw the amendment. Amendment, by leave, withdrawn. The sum of $442,032,300 for Head V ordered to stand part of the Main Estimates. The sum of $4,674,405,100 for Head V ordered to stand part of the Development Estimates. Head S -

Head S - Ministry of Manpower. Amendment (1), Mr Yeo Guat Kwang.

Sir, I beg to move, That the total sum to be allocated for Head S of the Main Estimates be reduced by $100. Sir, undoubtedly, structural unemployment is the greatest manpower challenge today. Workers at all levels are hit, both blue-collar workers and executives. The way to address the problem is clearly workers' training. In this regard, I am glad that the DPM announced that the Government will establish a statutory board under the Ministry of Manpower to enhance the development and promotion of continuing education and training for adults. Sir, although our economy is down and unemployment is high, there is never a better time to encourage workers and Singaporeans to go for skills upgrading. In fact, there is a window of opportunity that we must explore. We must use this slack period to enhance our capability and employability of our workers. This way, we will be better prepared when the economy recovers. Since last year, the Ministry has stepped up its employment assistance programmes in various ways. Programmes such as the People-for-Jobs Traineeship Programme, Work Skills Training Programme and the Self-Employment Training Programme were implemented. I would like to ask the Minister what has the feedback been on these programmes. How many workers were helped? And what more the Ministry plans to do to help retrenched and unemployed workers, particularly for this round where both blue-collar workers and executives are affected?

Sir, the Home page of today's Straits Times really sums it all, as far as jobs are concerned. This will be another bad year for the jobless, and firm recovery is expected only next year. Fundamentally, the issue is really one of poor economic growth. The economy is not growing fast enough, and therefore fewer jobs are created. In fact, for every 28 job openings, there are 100 job seekers. In other words, for every one job, there are four workers chasing that one job. Sir, it is easy for us to identify the reasons for the poor job growth. But we have to think of the plight of those who remain unemployed. As the situation worsens, many will get desperate and this will cause instability. The signs that the situation will get worse are there. Out of a total of 89,900 people who are unemployed, 23,900 or 27% of them are long-term unemployment, meaning that they have been out of work for at least six months. Sir, what is cause for concern is that, traditionally, those who lost their jobs in the manufacturing sector could find jobs in the services sector. Over the last few years, for instance, for every four workers who were retrenched, only one came from the services sector. But last year, almost one out of every two persons who were retrenched were from the services sector. Even the services sector is not spared. As the services sector retrenches more people, the profile of those who are retrenched has also changed. More professionals, managers and executives have lost their jobs last year. In fact, it comprises about 42% of the total of those who were retrenched. And what is worrying also is that those who were retrenched take a longer time to find jobs, particularly the older workers. Sir, there are larger numbers who are being retrenched, but the indications are that there are less jobs being created. In fact, the EDB said that 20,900 jobs will be created over the next five years. Out of these, 18,000 jobs will be created by sectors like bio-medical sciences, chemicals, infocomms and the media sectors. But if we look at the bio-medical cluster, for instance, they employ only about 7,000 jobs. So, jobs are created but the numbers are smaller and these are also higher value added jobs. So, the questions that I would like to ask the Minister are these. What is the general employment outlook, where are the jobs being created, and what kind of jobs are these? Will there be enough jobs to absorb all the unemployed workers? What about prospects for the older and semi-skilled workers? Are there jobs for them? What is the manpower planning and projection for the next three years? Sir, as the situation is not getting better - in fact, it sounds pretty grim - I would like to ask the Government to revisit this issue of quotas for foreign workers. I know, sometimes, if we raise this issue, it is almost heretical, and I think there will be a lot of unhappy employers. But I would like to argue a case for us to revisit the quotas for foreign workers. My argument, basically, is this. The quotas were set at a time when we had high economic growth, low unemployment and, therefore, the situation was much more different. Structural unemployment was not a major issue. But now, as the situation worsens, we are expected to have slower growth. The long-term unemployment will increase between 3-5%, and structural unemployment will be a major issue for those who lost their jobs. There will be jobs created in Singapore. Investments will come in but these will be high-value added and high-skilled jobs. So, I think it is necessary that we revisit this issue, even though we may not immediately change the quotas, but I think there is really a need to revisit and see what we need to do. Because it does not really make sense for us to continue to have large numbers of foreign workers when Singaporeans themselves are unemployed. Sir, recently, at my MPS, a 75-year old lady came to see me and she asked for a job as a cleaner. I was rather surprised because I thought she earned the right to retire at the age of 75. But she told me that her son had lost his job, and as he could not get another job, she had no source of income. So, I think the situation is getting pretty desperate for some people, and I do urge that when we look at statistics and figures, we remember there are faces, there are families, there are problems behind those statistics and figures, and that we will really put in a lot more effort to ensure people get work and remain employed. As it is, my firm belief is that the greatest dignity that we can give to a person is a job. On that note, Sir, I do hope for a response from the Minister.

Sir, even as Singapore has to grapple with the challenges of an uncertain economic landscape and rising unemployment, it is also important for us to focus on the ingredients that will be important for us in the future. One of the key ingredients is that of training and skills upgrading. In this context, I welcome the formation of an agency for continuing education and training. I would like to make four suggestions towards the planning of the scope of work of this agency and also to make one request. The suggestions are that in drawing up its scope of work, that priority be placed, first, on ways to further promote the funding of individual initiated training and skills upgrading. Second, to find better ways to understand how adults learn and, therefore, find better ways to help them learn and develop different methodologies for that. Third, to find better ways to stimulate the demand for training, both from companies and individuals. I know that, over the years, the number of companies sending their workers for training, as well as the number of individuals who have taken up training on their own, have both increased. However, there is a need to further promote the demand. It is always easier to put in the money to create the infrastructure, to create the training places, but it is always more challenging to overcome the different hurdles to get the demand up. I think this is an area for closer study and stimulation. Fourthly, in the area of job placement, job counselling as a capability is relatively lacking in Singapore, and this is the result of our many years of more than full employment. And it is different from the kind of social counselling that family service centres can provide. So, this is a capability that we have to grow, and I urge the agency to put this as a priority. My request is in terms of the timeframe for setting up of this agency. I understand that, currently, we are looking at 6-9 months from today. I hope that it could be speeded up.

Sir, as many Members in this House have noted, taking care of careers these days means managing perpetual motion. Promotion of continuing education and training of Singapore workers as the economy restructures is a critical move by the Government to ensure that our workers keep up with the changing needs of their jobs as organisations re-shape, shift and flex themselves to fit our rapidly changing world. Our workers must understand that this is the only way for the organisations they work in to survive in this fiercely competitive environment. They must therefore expect flexible ways of working as duties are constantly being realigned. As Deputy Chairman of the ITE, I make it a point to keep track of the goings-on, and I am convinced that many programmes are in place to nurture CET. At ITE, there are 20,000 training places created for skills upgrading, leading to Nitec and higher Nitec courses. Half of these are taken up by Singaporeans and Singapore permanent residents. There are an additional 10,000 places for general education, leading to secondary, 'N', 'O' and 'A' level qualifications, and 28,000 places set aside for the BEST and WISE programmes. Between continuing training, ie, short skills updating courses and train-the-trainer programmes, there are yet an additional 4,000 training places. What I have just mentioned does not include ITE accredited courses conducted by industry training partners, which contribute a whopping 113,000 additional training places. I know that the ITE works closely with Government agencies, such as the EDB, IDA, SPRING Singapore and, more importantly, with the advisory council on continuing education and training - a tripartite body comprising representatives from MOM, NTUC, SNEF, SCI and also private organisations, to identify areas of manpower shortages in specific industries and also assess the needs and demands for new certifiable skills. Sir, it is therefore evident that ample opportunities exist for mature and young Singaporeans to benefit from CET. In spite of all these tremendous efforts, I still hear frequent rumblings in this House about unemployed Singaporeans grumbling about their inability to find jobs after going for skills upgrading or learning a new skill. There appears to be a disconnect here, Sir. I would like to ask the Minister for Manpower to consider reviewing the current CET framework and, particularly, to ensure that Singaporeans are learning and re-skilling themselves in the areas demanded by employers and by the industries. For unemployed Singaporeans, a centralised CET agency should guide them and match them with skills which better suit their personality and learning abilities. All these could perhaps be undertaken by the new statutory board under MOM which, I believe, is meant to address employment issues and training of workers. Many millions of dollars are being poured into CET, which is the appropriate thing to do to overcome structural unemployment, but I see the effort as being ineffective if unemployed Singaporeans still cannot get jobs. 6.00 pm

Sir, I would like to congratulate MOM for the setup of the CET Board that will ensure continuous training and education for employees to enhance their employability. Sir, I refer to Chapter 13 of the recommendations in the ERC Report. I have six issues which I would like to raise and which I hope MOM will take into consideration when planning the agency. Issue 1, is on the scope of coverage, as defined in the write-up. The whole write-up refers to workers, leaving out the entire segment of our workforce that constitutes PMEs. This segment of the workforce is growing and is anticipated to constitute about 60% of the workforce in the near future. In the light of the critically important role played by this workforce segment in our increasingly sophisticated knowledge-based economy, would it not make better sense to reflect their importance in the write-up? I would like to propose that the write-up take a more global tone to reflect the PMEs. Issue 2 will be on the programmes drawn up for PMEs. What types of programmes will be in place in the new agency that will be suitable and be made available to PMEs? How will the training needs analysis be carried out for in-service employees and economically inactive PMEs? As for the third issue, can MOM clarify the specific differences between the statutory board on CET and CAL? To the public, there appears to be no distinction. Also, how would these two entities relate to SPRING Singapore and PSB Corp? On the fourth issue, the Government has often been told that it must give space to the small timers among the SMEs a chance to grow and flourish and not compete with them unnecessarily. How would the activities and functions which the CET and CAL seek to provide, as outlined in Chapter 13, impact the various economic entities, presently providing similar services and functions? How can the small consultancy and training providers survive with increased competition? If there are benefits arising from the intervention from MOM, we must take care that we manage the small timers well. Otherwise, we would be repeating the experience of the small provision shop and the super stores. Lessons of the past can be applied in this instance. On issue 5, the Government has been told far too often that it must shed its nanny image. Will not the setup of the CET and CAL, even with the best intentions to facilitate the market and industry, signal the paternalistic attitude of the Government which many fear may be misplaced in this particular area at this time? Finally, Sir, with unemployment hovering between 4% and 5%, many Singaporeans have been urged to consider entrepreneurship and self-employment as an option. Will not the setup of these two entities steal away some of their chances?

Sir, continuing education and training is a new name in this new economy. In the old economy, we call this lifelong learning. Thus, continuing education and learning is not a new concept, but the Government's determination is new and it is news. The labour movement has been talking about this concept of continuing education and training for many years, and lately, lifelong learning has become a festival - Lifelong Learning Festival. In fact, in many of the stories we read during our childhood days, our ancestors were talking about how to keep ourselves relevant to the time and to the organisation, and have an advantage over our competitors or rivals through lifelong learning. At this point of time, most Singaporeans, except the bo chap group, know the importance of CET and many retrenched workers, including the PMEs, regret very much that they do not have the relevant skills to take on the new jobs available. Other workers, who fear to be retrenched, hope that they can reskill themselves as soon as possible. Thus, the annoucement of the CET statutory board is hope to many. However, I would caution that we should be pragmatic and realistic and set our priority and target right. The main objectives of the CET should be to re-skill Singaporeans for both the new jobs in the New Economy or traditional jobs which Singaporeans in the past were doing, but not doing now, and more and more foreign workers are doing them. Sir, priority should be given to the industries which are vulnerable to the New Economy so that workers in these industries, as a group, can learn the new skills together. Next in line should be the companies facing relocation possibilities. We should aim at individuals who will be in and out of employment in the New Economy. The CET statutory board shall learn from our Nanyang Polytechnic which caters to the needs of the new investments coming to Singapore by working closely with the industries. In the case of CET, it should work closely with not only the industries which are coming but also industries going out from Singapore so that we can prepare our workers well in advance. Sir, the challenge to CET board is in fact to come out with creative marking strategies to excite workers to enrol themselves for this continuing learning and training. MOM may want to learn from McDonalds again on how it can create the herd mentality that even those who claim that they had no time, no money, or the bo chap group, also queued up for the 'Hello Kitty'. I hope that we have a long queue for 'Hello Teacher'.

(In Mandarin): Sir, I would like to applaud the Government for deciding to establish a Continuing Education and Training agency. This agency will help to further focus and intensify efforts to ensure that our workers are well-skilled and remain employable. I like to share some thoughts on this agency. I think the agency can play a very important role in identifying industries and companies with ready vacancies for those who go for training. It must have a network with the employers to identify which are the job openings in the future so that when they go for training, they will come out and become employable. Secondly, we should put in enough resources into training teachers of adult learners and develop appropriate teaching methodologies. So the CET trainers should also be well-trained in psychological and pedagogical principles for the teaching of adults. They should be equipped with such skills to enthuse workers to learn. Thirdly, the CET agency should also encourage training providers to draw up curriculum that is appropriate for adult learners, rather than use the same curriculum for fresh school leavers. Otherwise, the training would not be meaningful. I think this programme should be more flexible. Fourthly, we should also encourage those existing training providers to provide a greater choice and flexibility for adult learners. For example, we could have e-learning and a similar kind of training to suit the convenience of the would-be learners. Fifthly, I think the CET agency can also play a role in modifying the attitude and behaviour of the workers. Workers must be trained to have a "can do" mindset. They must be determined, innovative and enterprising. Sixthly, the agency will have to look into the motivators and demotivators for continuing education to thrive amongst our people. One method would be the promotion of a pro-learning environment and culture at workplaces. The agency must also work on how to influence the mindset of not only the workers but the employers as well. Today, there are so many continuing education courses, ranging from short courses to certficates, diplomas and degrees. But the quality of these programmes varies - some are good and some are obviously a waste of time and money. At the same time, the diplomas obtained by the students upon completion of their course may not be recognised by the market. So, with this proposed CET agency, we would be able to provide some guidance to the would-be learners so that they can make enlightened decisions when they take up degree or diploma courses offered by the non-Government institutions. They can decide whether this degree or diploma would be of use to them or not. Otherwise, they will be wasting a few tens of thousands of dollars and, in the end, the diploma or degree is not recognised by anybody and they could not find a job with it. I feel that the new agency should also provide courses which can serve as alternatives to the correspondence courses and distance-learning courses which many of our students are pursuing. If this proposed CET agency can be forward-looking and act according to the needs of the market, I am sure it will go a long way in helping to enhance the standard of training of our learners and to lead our workers to achieving a better standard of living.

Sir, the announcement that a new statutory board is being formed for continuing education and training has rasied a lot of expectations. Many people expect the statutory board to fill up all the gaps that are currently found in our training programmes and job assistance plans. I hope the statutory board will live up to this expectation. It is an important development and we should give it a chance to take root. To me, it is an important milestone in our efforts to develop human capital. Sir, a key challenge for this statutory board will be to help people to remain employable. If jobs are no longer guaranteed, then it is important that we help people to acquire the means to remain employed. If we want labour market flexibility and workers' mobility, then we must have a system in place to help workers acquire skills, competence and the frame of mind that will prepare them for change and help them remain continuously employed. With this, Sir, adjustment process will be chaotic, painful and will cause social disruption. The CET must help workers to develop wings so that they can navigate through the rough wind of adjustments that is blowing through our economy. It must also act as a contractor between workers and jobs as displacement will become more common. Sir, I believe that the CET is a move in the right direction and will strengthen our social safety net. As I had argued on the first day of the debate, as we examine how to make our labour market more flexible, we must also continue to ensure that our existing social protection system is adequate and move in tandem with the other changes in the labour market. Sir, this new statutory board will provide greater focus and coordination for worker training and job assistance. Job assistance, for instance, had developed more as an ad hoc programme as a result of the Asian financial crisis. It is obvious now that we need a more permanent structure in view of the changed environment and the problem of structural unemployment. Sir, it is important that the courses the people go through remain relevant and useful. There is also a need to make sure that those who have undergone training have jobs. So there must be a link between training and job placement, otherwise people will get quite disillusioned. For this, employers must also play their part, not participate in programmes, just because they feel obliged to, but actually are not too committed to the programme. I have received some complaints from retrenched workers who are placed on the People for Jobs Traineeship Programme, for instance, that employers are reluctant to employ them after the training period is over. Such examples will discourage people from taking up training courses and act as a disincentive. I hope that the Ministry will continue to monitor the situation closely. Sir, I will not repeat the points which have been raised or mentioned by my colleagues, the other labour MPs. But I have a few points to make with regard to the work of the CET. First, is the point about drivers. I think all training programmes need drivers. So having a statutory board and parking the training programmes under the board itself, I do not think that alone will be effective. So I think it is necessary that the board continues to have drivers to drive individual training programmes similar to the schemes which we already have right now. 6.15 pm Secondly, I would also like to find out what will happen to the various training programmes that are currently run by the various non-Government agencies, such as NTUC and the self-help groups. Will all these now come under the new statutory board? Perhaps, this may be a premature question, because the board has yet to be formed, but these are some of the issues the board ought to look into when it is formed. Thirdly, I want to stress on the need for continued strong partnership of labour, Government and employers, and the community on the various areas to be covered by the CET. Fourthly, I also feel that there is a need for the board to remain focused and to help those who are most vulnerable and at risk, such as older and less-skilled workers. I also feel, Sir, that there is a need for better outreach programmes, as anecdotal evidence, particularly in the Malay community, seems to suggest that those coming for training are generally those who are better educated, and also those who have better skills. Sir, despite all our efforts, there will always be a group that will be untrainable, for whatever reasons. I would like also to find out what will be the CET's approach to this group of people, how it proposes to help them. Sir, another group of people that I hope the CET will address will be self-employed Singaporeans who do not have access to training funds. I urge the CET to look also at how to allow them to gain access to training funds, as I feel that this number will grow as our ---

Mdm Halimah Yacob, can you sum up now?

Yes, Sir. I am ending my speech. --- employment structure changes and as the economy restructures.

Sir, in the course of the proceedings over the last few days, two words kept appearing in the debates. The two words are "change" and "fast". In this modern society, everything is changing much faster - in school, at work, in business and in life. How fast does the Government change in terms of policies and strategies? How fast do businesses change or improve their products and services? How fast do workers change in terms of skills and attitudes to be able to meet the challenges in the face of fierce global competition? How do we respond to such changes in terms of manpower policy? In this fast-paced society, today's jobs may be gone tomorrow. We have to be fast to plan, respond and take action. Sir, I think it is important that our people should be fast enough to be aware of and understand the changes in the job market. I would therefore like to ask the Minister how does the MOM plan, in terms of demand and supply in the labour market? How far ahead do we plan for, and how often do we review our policies? The reason I ask this is that a few years ago, when the Jurong Island was set up, we had a shortage of technicians and engineers for the petrochemical industry. And, now, the bio-sciences industry is the in-thing. Do we have enough qualified workforce to meet the demand? The percentage of our labour force in the manufacturing sector dropped from 27.5% in 1992 to 18.2% in 2002. In the same period, the community and personal services sector percentage rose from 21.5% in 1992 to 25.7% in 2002. For the financial and business services sector, the percentage rose from 10.9% to 17.1%. It will be useful for the public to know what are the manpower needs in each industry, where are the existing jobs, and which are the growing sectors. Such information will help them in making appropriate lifelong learning and career decisions. How does the newly proposed Continuing Education and Training (CET) statutory board plan to train our people for employment? Among our retrenched workers, the most affected groups are production and transport operators, cleaners and labourers, and professionals, managers and executives, which represent 34.4% and 42.5%, respectively. I would also like to suggest that the CET should place more emphasis on training these two groups. The CET statutory board should also adopt a holistic approach in carrying out its training. It is not easy for a retrenched person who has worked in a job for 30 years to change to another job immediately. It takes a lot of courage, mindset change, determination and support from family, friends and society. Therefore, one of the important areas is career counselling. The other area is generic employability skills training. I would like to suggest that the CET statutory board develop comprehensive and flexible training programmes for our workers, especially those who are changing jobs from manufacturing to the service industry. This includes basic IT skills, customer service attitudes and grooming. Another area is in bringing training closer to the people. There are many ways of conducting training. Besides the normal classroom training and training through Internet, the classes can also be conducted at the community centres, libraries, etc, or training facilities can be set up in shopping malls, such as Ngee Ann City, IMM and big shopping centres. For trainees in the service industry, they can observe what is good customer service and what is not. It will be even better if the training providers can link up with the shops to provide hands-on training. This will make training more interesting and fun. As Singapore is encouraging entrepreneurship, there is a Self-Employment Training (SET) Programme to help those who wish to set up business. MOM, Chambers of Commerce, business and professional associations and the Singapore National Employers Federation can set up an "Enterprise Circle" ---

Mrs Yu-Foo, can you sum up, please?

Yes, I am trying to finish, Sir. --- to try to match those who are retrenched with those who have capital, to create joint ventures. Lastly, I would like to urge the Minister to raise the cap for tax relief from $2,500 to $5,000.

Sir, one in three of the unemployed could not find a job for at least six months. The danger is that the longer they are left without a job, the harder it is for them to get back into the workforce. And we know that the problem is particularly acute for workers above 50. I note in the latest labour market report by the Ministry of Manpower that more than half of the retrenched aged 50 and above could not find re-employment within six months. Sending them for more training will not solve the problem. Some have gone for retraining and still cannot find jobs and, as Mdm Halimah Yacob has noted, even those who have signed up for the People for Jobs Traineeship Programme, some of them also find that they could not find jobs. If this sentiment is allowed to spread, a sense of hopelessness will set in, and the jobless will see training as a waste of their time and effort, and they will become increasingly disenchanted with this Government. However, if there can be a promise or a guarantee of a job at the end of a training programme, it would be more useful. The Ministry of Manpower has all the information of where the job vacancies are, it knows what sort of training is needed for these jobs, it has the information on the unemployed looking for jobs, it knows who among the jobless have not found jobs for at least six months. The Ministry of Manpower should give urgent priority to this group. They are more desperate for a job and, hence, should have more realistic expectations. I would urge MOM to tailor a package deal for such jobless workers, ie, training, with a guarantee of a job at the end of it. It is not such a radical idea, because I was surfing the Internet and I found that there are some private companies abroad who offer such a training programme. You sign up for this training programme, if you do not get a job or if I do not help you to get a job within 120 days, your money back. So, I think we could get the jobless to pay a certain amount, go for a training programme, we help him to find a job and, if not, money back. But for this, MOM needs to tie up with employers who have job vacancies. Start with that, and then work downwards, ie, what sort of training is needed and who can be slotted into these programmes. I think MOM can also start looking around at companies with a lot of foreign workers, and persuade these companies to leave these jobs for Singaporeans instead, and that they will train a pool of Singaporeans for these jobs. Right now, the standard approach is that you train first and then we try to place them into jobs later. To be effective, it should be turned the other way around, ie, place first and train later. For employers, it will mean cost savings, because they do not have to put up job advertisements, and they will have a pool of workers all trained for the jobs. For workers, it will mean some certainty that, after the training, they will have jobs to look forward to. For the Government, it will mean reducing the unemployment rate, especially structural unemployment, and keeping faith with our jobless people.

Sir, lifelong learning and adult education is not new to Singapore. In fact, many years ago, we had the Adult Education Board, ie, Lembaga Pelajaran Dewasa, and we are coming full circle mainly because in the good days I remember trying to encourage the older workers to take up retraining and there was this reluctance because the job was secure and they found that they preferred leisure instead of spending time learning. So, the point is that the Government can only do that much if the workers do not exercise personal responsibility. The success of training is really in the attitude and values of the individuals, and this is something that the individuals must really think for themselves, that the Government can provide the facilities, but they must want to learn and to take advantage of all the facilities provided. On coverage of the target groups, I support Mdm Ho Geok Choo's point that in the knowledge economy, it is really beyond the skilled workers, ie, the technicians and even the middle management personnel who need the training. My concern with regard to such learning institutions provided by the Continuing Education and Training statutory board is how do we de-stigmatise these learners wanting to go for training, because we certainly do not want it to be perceived as an institute for drop-outs, but really to encourage these people that there is something valuable that they can benefit from. Unless we make sure that this is an incentive and is of benefit to them, people may actually veer away from taking advantage of it. The next point is obviously the operations of learning. The suggestion is that the Government would want to outsource and get third-party involvement, such as professional bodies, employers and whatever organisations that have an interest in providing this facility. My last point, Sir, is that the Government is in a good position, because it has all the data, information and the network, and I hope that through the services of the CET statutory board, more employment opportunities would be created and there would be a better match of individuals and jobs.

Mr Ahmad Magad, you have two minutes.

Yes, Sir. We all know that much has been done to send the message to our workforce on the importance of lifelong learning. Not only has the Ministry of Manpower reinforced this message from time to time, the NTUC and many employer organisations, such as SNEF and the Singapore Human Resource Institute, and also responsible employers, have done their part to further propagate the message. However, I strongly feel that there is still a segment of our workers who remain oblivious to this message. We need to work harder to reach out to this group, if we are intent on reducing the impact of structural unemployment. Today's world takes no pity on the individual who gets lazy about learning. The choice is to take personal responsibility for continuing one's education or risk ending up without the knowledge and skills needed to protect one's career. Our workers must know that "LLL" is the only way to remain competitive in the job market. They must understand the need to invest in their own growth, development and self-renewal, just like the way a company invests in research and development and comes up with new and better products or services they can offer. Their future employability, their appeal as a job candidate will depend on them having a relentless drive to update their credentials and keep abreast of what is happening in their field. I would like to ask the Minister to consider stepping up the initiatives to further spread the lifelong learning message, and particularly reach out to the segment which seems to ignore or may somehow have not received this message. Just like the crime prevention message is effectively driven home through posters and exhibits displayed at grassroots functions, the Ministry of Manpower could perhaps consider a similar approach to drive home this message, which is important to ensure that our workforce keeps up with changing trends and business needs, and remains relevant in this fast changing world.

Order. It is 6.30 pm. Thereupon, Mr Deputy Speaker left the Chair of the Committee and took the Chair of the House.

Mr Deputy Speaker, Sir, I beg to report that the Committee of Supply has made further progress on the Estimates of Expenditure for the financial year 2003/2004, and ask leave to sit again on Monday, 17th March 2003.

So be it.

Resolved, "That Parliament do now adjourn." - [Dr Lee Boon Yang].

Adjourned accordingly at Half past Six o'clock pm.