Hansard, 2005-03-07

Under the provisions of clause 2(d) of Article 46 of the Constitution of the Republic of Singapore, the following Members have been granted permission to be or to remain absent from sittings of Parliament (or any Committee of Parliament to which they have been appointed) for the periods stated: Name From (2005) To (2005) Mr David T E Lim 07 Mar 08 Mar 10 Mar 19 Mar Dr Michael Lim Chun Leng 07 Mar 07 Mar Mr Cedric Foo Chee Keng 08 Mar 12 Mar Mr Charles Chong 08 Mar 18 Mar Mr Lim Hng Kiang 09 Mar 10 Mar Mr George Yong-Boon Yeo 11 Mar 11 Mar Mr Lim Boon Heng 11 Mar 15 Mar Ms Irene Ng Phek Hoong 12 Mar 19 Mar Mr Goh Chok Tong 14 Mar 24 Mar Mdm Cynthia Phua 08 Apr 10 Apr 19 May 20 May 04 Jun 05 Jun

ABDULLAH TARMUGI Speaker Parliament of Singapore

Order read for consideration in Committee of Supply [4th Allotted Day].

Head J - Ministry of Defence (cont.)

Resumption of Debate on Question [4th March, 2005],

That the total sum to be allocated for Head J of the Estimates be reduced by $100. - [Mr R Ravindran].

Question again proposed.

Sir, on behalf of the Defence Minister, let me, first, address the comments raised by Mr Ravindran, Dr Warren Lee and Dr Teo Ho Pin on defence technology.

Defence technology is a crucial force multiplier to overcome the constraints of a small country. Over the years, we have built up defence technology capabilities in the Defence, Science and Technology Agency (DSTA), DSO National Laboratories, the Temasek Laboratories and Singapore Technology Engineering. Although DSTA, DSO and the Temasek Laboratories conduct the bulk of the defence R&D, we have also established partnerships with our local universities and research institutes to tap on all available talent pool to carry out the more upstream research. We also collaborated with foreign R&D partners from countries such as the US, France, Israel, Sweden and the UK to complement what we can do on our own.

To ensure that our defence R&D funds are prudently invested, there is a dedicated agency, DSTA, to manage the investments and ensure that we invest in areas with potentially high pay offs for defence. The R&D agency best able to deliver each of the pay offs is contracted by DSTA to conduct the R&D, whether it be the DSO, our local defence companies, the laboratories in our educational institutions or foreign agencies.

In the coming years, the key priority for MINDEF and the SAF is to transform our fighting force into the third generation (3G) SAF. Advances in areas such as sensors, communications, networks, precision weapons, unmanned systems, modelling and simulation, open up many new possibilities. It is not so much individual platforms but the synergy from networking different platforms, sensors and weapons that will give the SAF much greater potency on the battle field. Hence, we have started to align the development of our defence industry capabilities to support the new demands of the 3G SAF.

Each year, the more significant achievements are publicly recognised through the Defence Technology Prize award. For example, one of the winners last year was the team from ST Engineering that developed an indigenous Air Bursting Munitions System (ABMS). The ABMS enhances the SAF's effectiveness in urban operations, an area of concern raised by Dr Teo Ho Pin. It would enable our soldiers to engage more effectively in built-up areas where the adversaries may have the advantage of fighting from behind windows, on roof tops and at corner of buildings.

Last November, MINDEF and the SAF organised a defence technology exhibition called 3G SAF TechX, specially to showcase many of our R&D achievements. This included our capabilities in comprehensive awareness,

precision strike, unmanned operations and network-centric warfare.

MINDEF's strategy to leverage on collaborative partnerships with the local defence industry has also borne fruit. The partnership with ST Engineering has allowed MINDEF and the SAF to progress from being a pure buyer to one who has the ability to integrate and adapt systems from a wide variety of sources. This partnership has brought about the local development of systems to meet our specific needs, such as the Primus self-propelled artillery and our naval frigates. It has allowed us to develop a strategic capability to respond robustly and quickly to deal with unforeseen situations.

One of the best examples was when we developed the Infrared Fever Sensing System, more commonly known as the thermal scanner, which was deployed at all our checkpoints during the SARS outbreak in 2003. This was done all within a week. Also developed for our hospitals during the SARS period was the "Contact, Track and Trace" system. This was based on Commercial Off-The-Shelf Radio Frequency Identification Technology. So, as proposed by Dr Warren Lee, Commercial Off-The-Shelf or COTS technology is used whenever practicable.

Recently, in the tsunami relief operations, a new product of ST Electronics, a mini VSAT satellite communications terminal, was also rapidly fielded. The mini VSAT satellite allows video streaming between the remote parts of Aceh and Singapore.

Sir, Dr Warren Lee has also asked about the Defence, Medical and Environmental Research Institute (DMERI). This is a division of DSO. Amongst others, it conducts R&D in chemical and biological defences to enhance the safety, survivability and performance of our soldiers. Examples include studies to

mitigate heat load, management of heat stroke, studies to identify the genes that cause myopia, soldier injury prevention and combat care.

In the chemical defence area, DMERI is the national authority representing Singapore in the Organisation for the Prohibition of Chemical Weapons (OPCW). It is one of 16 internationally designated laboratories of the OPCW. It conducts tests on samples of chemical poisons and toxins, as part of Singapore's contribution to the international efforts against proliferation of chemical weapons.

DMERI also supports the Police and SCDF to test and verify both chemical and biological environmental samples. DMERI has also been assisting the Police in testing letters believed to have contained anthrax - post 9-11.

During the SARS crisis, DMERI assisted the Ministry of Health to identify and characterise the SARS virus in its bio-safety-level-3 (BSL3) laboratory. Its high throughput diagnostic services were used to test clinical samples. This high throughput capability will be extremely useful in other outbreaks such as the bird flu, if it should come.

In the recent tsunami, DMERI was the first field public health laboratory to deploy at Banda Aceh, as part of the SAF's humanitarian relief efforts. One of the threats facing the survivors of the tsunami was an outbreak of infectious diseases, following the destruction of public health infrastructure there. The World Health Organisation warned of diseases such as cholera, malaria and dengue fever. DMERI established a field microbiology laboratory in Banda Aceh alongside the SAF medical team. The laboratory supported the medical doctors by providing laboratory tests for infectious diseases and for water samples to ensure potability. It also shared the laboratory data and experience with the teams from

WHO which were coordinating the public health relief efforts.

Dr Warren Lee also asked about R&D relating to the smaller Asian body frame. In order to ensure proper man-machine interface with our smaller body frame, DMERI conducts human factor studies for SAF equipment development and acquisitions. An example of the benefits of such studies is the SAR 21 assault rifle, which was developed indigenously in Singapore.

Mr Ravindran and Dr Warren Lee want to know the scope for the commercialisation of our defence R&D. Let me state that the primary mission of MINDEF's R&D outfits is for the defence of Singapore. However, where defence technology can be transferred to private entities to benefit public health in general, our outfits will do so. An off-shoot of DMERI's infections research is the establishment of a bio-tech start-up company based on its invention of a microfluidic bio-chip. This rapid diagnostic system has been used to diagnose and type dengue virus infections, and will be used for typing the bird flu virus as well. The company will sell affordable rapid molecular diagnostic systems to all users.

Finally, on defence technology, let me assure Dr Teo Ho Pin that MINDEF has been focusing on defence technology development since 1972, some 33 years ago, when 'ETC', the predecessor of DSO was set up by Dr Goh Keng Swee. Today, DSO and DSTA have over 2,000 highly capable and committed scientists and engineers. They also offer many scholarships each year to ensure a 'pipeline' of talents so that we will not only remain at the cutting edge but continue to produce our own secret-edge measures and counter measures.

Sir, Dr Wang Kai Yuen has asked some very thoughtful questions about offsets in defence procurement. Unfortunately, MINDEF's experience with offsets in the 1980s was not encouraging. Our experience showed that the benefits accruing from offsets are much less than they appear to be on the surface. The price of the product would inadvertently be raised and, often-times raised disproportionately to the benefits received by us by way of offsets. Our experience showed that the contractor could mark up the price by as high as 7-8% in return for their offset obligations. This amount goes towards the administration and funding of such offsets. Essentially, we would have to pay for what we get. So Dr Wang's initial reservations about offset programmes are indeed well founded.

The large offset credit values quoted by the contractor look appealing. However, the actual benefits that the purchasing country gets would only be a fraction of it. For example, a contractor might multiply his cost by a factor as high as 10. The value of the offset work the contractor gives out would also often not be priced based on true market value, but what the contractor deems it to be worth.

Our experience in the 80s showed that the higher cost of procurement will negate the benefits received. For example, as part of an offset for defence purchase, one of our local companies was offered the opportunity to manufacture an aft door for a commercial aircraft in return for our defence procurement. The offset credit value would include items such as huge chunks of the non-recurring R&D costs that the contractor has invested over the many years. In addition, as it turned out, our local company would be making a loss for each door that they produced. So, although there is new work for our local company, it was experiencing negative benefits. The company therefore even explored outsourcing the work to China! The

lesson that we learnt is that our companies must be fundamentally competitive in their own right.

Sir, we have since discarded the practice of offsets and have no plans to reintroduce it. Straightforward, clean and clear contracts ensure that we get good value for money. In this way, our contractors could be held accountable for the primary product that they are to deliver, and would not be distracted by trying to fulfil peripheral offset requirements. Additionally, waste and leakages from complicated and obscure offset arrangements are also avoided.

12.15 pm

Mr Leong Horn Kee has asked about the progress of the two-year NS full-time programme and prospects for NSFs to disrupt their NS for further studies. The two-year

full-time National Service (NS) duration was implemented smoothly with an immediate reduction of two to four months for in-service personnel since last July. From December 2004, all full-time National Servicemen (NSFs) are enlisted for a period of two years. The training systems for units and commanders have been adjusted to take into consideration the shorter effective deployment period.

With a shortened full-time NS duration and a more compact and optimised NS training regime, we will naturally have less flexibility to grant disruption. However, a shortened NS period will also mean that there is less need for disruption because many more NSFs will be able to complete their NS before proceeding for higher education than was the case before. There should not be any case of NSFs who would proceed for higher education later than they do before the reduction in NSF duration.

The principle we will continue to adhere to for disruption is that of equity by school cohort. This means that we

will allow NSFs of the same school cohort to commence further studies in the same academic year. This will ensure that NSFs who are enlisted later are not disadvantaged in their pursuit of higher education vis-a-vis their peers of the same school cohort who are enlisted earlier. The disruption guidelines are now being finalised and will be disseminated to the unit commanders and NSFs once they are ready.

Sir, MINDEF currently allows those who have commenced overseas university studies before they reach 17 1/2 years old to complete their first degree. This is because we only enlist NS-liable males at the earliest opportunity upon their turning 18 years of age, and we would not want this group to have to wait unduly for enlistment if they had already commenced university studies before 17 1/2 years old. We could do this, from an operational viewpoint, because this group of students is very small as most students would enter university after they reach 18 years old.

Dr Tan Cheng Bock has suggested that the provision for deferment for overseas university students be further relaxed so that more overseas university students can defer enlistment. Let me explain why this is not desirable.

Sir, NS-liable males are enlisted at the earliest opportunity upon reaching the age of 18 years old. We require them to perform NS while they are young and fit, as this allows them to better withstand the rigours of military training. Sir, if we liberalise the deferment policy further until they complete their degrees, regardless of their age on enrolment to both overseas and local universities, then some 5,400 or 20% of our NS-liable males will be enlisted at a much later age - 22 years old or so. They will generally find it harder to keep pace with the rigours of military training. Our operational readiness will be affected.

NS is a significant phase in the life of young Singaporean males. It marks the transition from adolescence to adulthood. Enlisting a cohort of NS-liable males after they have attained the basic educational qualification, and in their formative years, allows them to undergo a shared collective experience in NS and establish stronger bonds within their cohort, before they embark on their further studies and careers. These strong bonds are an integral part of NS. They form the basis for the camaraderie and comradeship which makes for a cohesive fighting force. If we allow NS-liable males who are pursuing overseas university courses to serve NS at an older age, they would find it much harder to fit in with the younger cohort who are enlisted together with them.

In addition, equity is one of the key principles of our NS policies. It would not be fair to defer those studying overseas to complete their university studies before enlistment, when this is not allowed for those who pursue local university studies. If we do so, it will undermine support for NS amongst our people and unravel the very foundation upon which the security and stability of Singapore is built on.

Sir, the Member has argued that NS default rate will fall if we allow NS-liable males to defer their enlistment and remain overseas for an extended period of time until they complete their Bachelor's degree, Master's degree and so forth. I am not sure about that.

MINDEF's policy is to enlist them at the earliest opportunity when they reach 18 years of age. During these two formative years in NS, our men share a common rigorous training programme, bond as a team and exercise as a cohesive fighting force. They begin to understand the limitations and needs of

the nation, make common sacrifices and contribute to nation-building and the defence of the country. They literally grow up together and this bonds them to their comrades and to our country. I believe that requiring them to return to serve NS with their peers early in their lives and avoiding extended stay overseas would actually reduce NS default rate, and not increase it. The facts will bear this out. The total number of NS-liable males asked to return after their overseas high school but defaulted in the last five years averages about four a year.

Sir, Mr Chay Wai Chuen asked about the fitness level of our NSmen. Physical fitness of individual serviceman is critical to the operational readiness of the SAF. Our regular servicemen, full-time National Servicemen (NSFs) and NSmen (operationally ready national servicemen) are required to maintain a defined level of physical fitness. We use the Individual Physical Proficiency Test (IPPT) to assess their fitness. First implemented in 1980, the IPPT system has undergone regular review and has been benchmarked against other military forces to ensure that it remains current and relevant to our needs.

I am pleased to report that the physical fitness of our regular servicemen, NSFs and NSmen has been good. Over the last five years, an average of 80% of these NSFs and NSmen, who participated in IPPT, obtained at least a pass in the test, with 47% attaining Gold or Silver awards. NSmen who fail their IPPT would also be made to undergo progressive remedial training.

While the IPPT assesses fitness at the individual level, the SAF has benchmarks to evaluate the fitness and operational standards of both our active and NS units at the organisational level. Such evaluation is done on a competitive basis among SAF units. Examples of such competitions are the Annual Best Unit Competition and Best NS Unit

Competition. NSmen, NSFs and regulars in the participating units are subjected to the same rigorous assessments and are required to fulfil various test factors, such as the Combat Proficiency Evaluations which measure combat fitness.

The SAF also continually benchmarks against other professional military forces through participation in multilateral and bilateral exercises. Feedback on our soldiers from such exercises serves as a good gauge of their physical fitness and combat endurance. The positive comments received thus far are indeed a testimony to our progressive training methodologies that develop our soldiers to meet the exacting standards of physical and combat fitness and soldiering skills.

Mr Chairman, Sir, I thank Mr Alex Chan for his concerns on the commitment of our youths to National Service. MINDEF conducts regular surveys to see where our youths stand in the defence of Singapore. Our surveys show that commitment levels to defend Singapore remain high, at more than 90% of those surveyed. The vast majority has strong support for National Service (NS) and Total Defence.

This is comforting for all of us. Notwithstanding these encouraging results, MINDEF has spared no effort in continuing to strengthen youths' commitment to national defence. For example, MINDEF holds regular security seminars and organised visits to SAF units, including SAF open houses, for students in our junior colleges, centralised institutes, ITEs and polytechnics. These events are very popular and well attended by the students. Similar programmes are also organised for all trainee teachers graduating from the National Institute of Education as they help imbue the values of serving NS to our school children.

MINDEF recognises that the commitment of our NSmen is related to their NS experience. Therefore, we are

committed to enhance their experience in NS. We regularly review our NS policies to ensure that they remain relevant to the changing environment. We do not keep our full-time National Servicemen any longer than it is necessary to meet the SAF's operational needs. For this reason, amongst others, we have reduced full-time NS duration from 2 1/2 years to two years from December last year. They undergo proper and realistic training and are deployed in appointments and vocations that make good use of their skills and abilities, wherever possible. Towards the end of their two-year service, we try our best to transit them to civilian life in various ways. One of the ways is our e-Prep scheme. NSFs can participate in a wide variety of online courses to better prepare them for transition from NS to the workplace or further studies.

MINDEF also recognises that as citizen soldiers, our operationally-ready national servicemen (NSmen) have to balance the demands of work responsibilities, family commitments and NS duties. A vast majority of our citizens are committed to the defence and security of Singapore - citizens who will not flinch from the responsibility of national defence when called upon to do so. Mr Alex Chan is one such example. He holds the rank of a Colonel and is a Brigade Commander in the SAF. He has also volunteered to serve even after completing his NS cycle of 13 years. Colonel Chan's dedication as an NSman is commendable and his commitment is indeed a fine example for others to emulate.

Sir, we understand the challenges that our NSmen face and appreciate their contribution to the defence of Singapore. MINDEF is committed to recognising the contributions of NSmen. I will address this when I speak on RECORD IV.

To enhance the NS experience, continuing efforts are also made to

improve service quality standards and to streamline NS administration to better serve our NSmen. MINDEF has recently introduced a number of e-initiatives to improve the efficiency of NS administration and will continue to do more. A significant number of NSmen also volunteer for peacekeeping and humanitarian missions, such as the recent Operation Flying Eagle, and the missions in Iraq and Timor-Leste. This is an indication of the strong commitment level of our NSmen.

Sir, I will now speak on RECORD IV. Our operationally ready NSmen play a key role in Total Defence. Their commitment and sacrifice have ensured our continued peace and stability, and we should recognise their efforts and dedication accordingly. To this end, MINDEF will be convening the 4th Committee to Recognise the Contribution of Operationally Ready National Servicemen to Total Defence, or the acronym RECORD IV, later in the year.

The past three RECORD Committees have made significant contributions in the recognition of our NSmen. For example, RECORD III, which was convened in 2000, brought about the relaxation of exit control of NSmen. It also brought about the recognition of NS for admission to Institutes of Higher Learning. The 4th RECORD Committee will build on the work done by the first three Committees, and will recommend further ways to recognise and enhance the contributions of our NSmen. It will start its work once the members have been selected, and should finalise its report and present its recommendations by early next year. Minister Teo Chee Hean has tasked me to chair RECORD IV. I look forward to working with members of the Committee to identify ways to further recognise and strengthen the commitment of our NSmen to Total Defence. I would encourage

feedback, inputs and suggestions from Members of this House, employers, NSmen at large, and the public. Such suggestions can also be channelled to our website at www.miw.com.sg.

Sir, I would like to thank all the Members for their very thoughtful and valuable suggestions and feedback. MINDEF will bear their views in mind as we review our policies, as we do every now and then, and as we evolve the 3G SAF.

Sir, I would like to ask the Minister of State two questions. First, is on disruption of National Service. I am pleased to hear that his Ministry is now working on the disruption guidelines based on equity by school cohort for entry into the local universities. But how about disruption for entry into overseas universities? Because students go to different countries for studies, eg, Australia, the UK and US, there would be different timing for disruptions. So, could the Minister of State also consider the possibility of late disruption for such NS-liable students who are going overseas, especially for those who are holding non-key appointments?

My second question is this. I think the Minister of State did not answer my question that I asked about the coordination between Ministry of Defence and Ministry of Education

on the NSF being shortened to two years and the entry into local universities, because now there is a gap between November when 'A' level ends, and July when the local universities start. If we shorten the gap to, maybe, the university term starting in April or March, you would save about three or four months of time for the students.

12.30 pm

Sir, neither MINDEF nor MOE has any control on the

admission dates of foreign universities. The Member should remember that NS is instituted for the purpose of the defence of Singapore. Therefore, the primary mission of operational readiness of the SAF must come first. Having said that, where it does not affect the operational readiness of the SAF and where it would be equitable because MINDEF enlists them later than their peers in the same school cohort, we would consider them for disruption. As I said, we are looking into the disruption policies which will be guided by the principles that I have just enunciated, and we would announce them in due course.

On the second question of admission into local universities, as I understand it, the Ministry of Education is currently studying it to see if any adjustments can be made in the matriculation periods for local universities.

I would like to ask the Minister two questions. First, about the kind of cultural sensitivities that our SAF troops undergo. As we have seen in our relief mission in Indonesia, the cultural sensitivity and the facility in the language help greatly in the mission. I would like to ask the Minister if such sensitivity is also inculcated into its training and courses with other countries in ASEAN, such as Malaysia. My second question is to do with the training space. It has expanded greatly since independence. I would like to ask the Minister whether the current list of countries giving us training spaces is adequate, especially given our emphasis now on training our troops to transform into a 3G SAF, as well as for non-conventional warfare, such as terrorism.

Sir, the Member is correct. She pointed out that the cultural sensitivity displayed by SAF officers, men and women in Operation Flying Eagle during the tsunami disaster was important. Indeed, it is appreciated

by our host and it helped us to be effective on the ground. SAF officers participate in exchange programmes with various countries, Indonesia included, and these exchange programmes allow us an opportunity to immerse in their culture as well as to understand their military practices and the personalities involved. Fortunately, for us in the tsunami disaster case, many of our commanders there knew the Indonesian commanders on a friend-to-friend basis because they have participated in similar courses together.

Additionally, SAF officers also take language classes and I think this is particularly helpful in trying to understand the culture and sensitivities of our various military partners in our region and around the world.

Sir, on the point of training space, Singapore, being small, would always be constrained by training space. But we try to overcome that by participating in exercises abroad and SAF does so in many, many countries around the world - South Africa, France, United States, Thailand, Brunei, and so forth. So we will continue to strike such partnerships where there are mutual benefits. And as the Minister for Defence has announced, we will be looking to expand our partnership with India. That should help us alleviate the constraints of small space and help us diversify our training areas.

Retirement Age

(In Mandarin): Sir, currently, the retirement age for our army regulars is 45. Our soldiers have gone through intensive physical training. At 45, they are still strong and fit and could continue to serve the SAF. It is such a great pity to let them retire at this age. In the United States, Germany, Japan and Thailand, the retirement age of their army personnel is 60, and in UK and Canada, it is 55.

Therefore, I suggest that the Defence Minister consider extending the retirement age of our army regulars to 55 or even 60.

Upon retirement at the age of 45, many ex-regulars find it difficult to find suitable jobs under the current competitive employment condition and some use their pensions to set up businesses, such as interior decoration services, sale of CDs, luohan fish or even bubble tea. Although some operated successfully, many of them lost all their pension money.

Moreover, due to our declining birth rate, the number of male citizens eligible for National Service is falling. Hence, I hope that the Defence Minister would consider allowing army regulars to serve until the age of 55 or even 60 before retiring. The Ministry can retrain those above 45 and then employ them in other positions in the Ministry.

Total Defence

Sir, although the concept of Total Defence was first introduced in 1984, not many Singaporeans, especially the heartlanders, fully understand their roles and responsibilities in Total Defence. A recent article in the Sunday Times on 27th February 2005 has highlighted that many Singaporeans are not well equipped for emergency or disaster, such as the preparation of emergency bag.

Sir, various reasons were highlighted for the lack of emergency preparation among Singaporeans. These include: Singapore is safe, it is fated, no time to think, too old to worry and nowhere to run. This is indeed very worrying and disturbing. If this state of mind is reflective of all Singaporeans, we will

need to urgently step up our national education efforts on Total Defence.

Sir, Total Defence is about the different things that we can do every day in every sector of our society to strengthen our resilience as a nation. Total Defence comprises five key aspects, namely, military defence, civil defence, economic defence, social defence and psychological defence. These five pillars of Total Defence require the full participation of our citizens, households and business community in order to achieve an effective and all-rounded defence for Singapore.

But there are certain constraints and challenges which we must overcome in order to develop our Total Defence capabilities. First, the five key aspects of Total Defence presently come under the purview of many Ministries. As such, there is no single champion to drive the efforts and monitor the progress of our Total Defence capabilities.

Sir, to-date, many Singaporeans do not know what to do under the five defences. Many also do not know whether they are well prepared for Total Defence against various threats. Some do not even know that they are vulnerable to certain threats. Sir, although Total Defence day is on 15th February of every year, not many Singaporeans commemorate this day by displaying their readiness in Total Defence. I understand that 15th February was chosen so as to commemorate the fall of Singapore to the Japanese Occupation in 1942.

Sir, there are certain setbacks to this date. First, Total Defence day, which is on 15th February, is not a public holiday. As such, many Singaporeans, especially those who are working, may not be able to have time to organise Total Defence activities except for schools. Second, 15th February is one day after Valentine's Day. Many young and old couples still have hangover after their Valentine

celebrations. It is also near the Chinese New Year festive season. Third, 15th February is not an easy date to remember. Sir, I would like to suggest that we change the date of Total Defence day and make it a public holiday where all Singaporeans can come together to organise Total Defence activities as a nation. I would suggest a day which is not during school holidays, not near or within examination periods, and not near another public holiday. Maybe, 1st July can be a good day to rally our nation to showcase our Total Defence capabilities before we celebrate National Day on 9th August.

Sir, for Total Defence to work effectively, we need to appoint a champion agency and develop a more effective community outreach strategy. We need to regularly conduct SWOT, which is Strengths, Weaknesses, Opportunities and Threats, analysis on our Total Defence strategy. This will better prepare Singaporeans to respond more effectively to potential threats or disasters. The results of the SWOT analysis must be conveyed to our people regularly so as to ensure that they update and upgrade themselves to better cope with these emergencies or crises.

Sir, Total Defence provides a good platform to build community ownership among Singaporeans. I would like to urge the Government to devolve more Total Defence functions to the community. Sir, I would also like to urge the Ministry to focus more on reaching out to the community to further strengthen our Total Defence capabilities. I would like to ask the Ministry the following questions: (1) What is the status of achievements and operational readiness of Singaporeans in Total Defence? (2) In what ways has Total Defence multiplied our defence capabilities? (3) What are the plans to reach out to the community to build our Total Defence capabilities?

Sir, I would like to thank all Members of Parliament who have spoken on the retirement age and Total Defence. Sir, first, I would like to answer Mr Ang Mong Seng. The SAF needs timely renewal of the SAF leadership and constant infusion of new ideas at all levels of the SAF is critical if the SAF is to remain dynamic, energetic and forward looking. At the same time, we need to strike a balance between experience and dynamism. So in order to be fair to the individual officers, our career scheme must be such that the officers on completion of military career are young enough to acquire skills and knowledge to make a career switch. They must also have enough working years left for a meaningful second career. Therefore, our scheme is structured such that our regular officers transit to the second career around the age of 45 years.

An SAF career is a meaningful and rewarding one, and few jobs can match a job in the SAF. Sir, many go on to establish successful careers for themselves outside the SAF by leveraging on the skills they have learned in the SAF. The knowledge and experience they learned in the service are sought after by many employers. Sir, ex-SAF officers have transited to various industries, such as manufacturing, logistics, financial services, human resources, real estate, education and training, consultancy and safety, property management and security management, and others. MINDEF and the SAF also re-engage some of them as civilians in jobs that make best use of their experience and expertise.

Sir, transition to second career is not unique to the SAF. Through better medical care, the life expectancy of Singaporeans have risen over the years. Coupled with globalisation and rapid technology changes, careers have become shorter all over the world. So transiting

to a second or third career will increasingly become a way of life for all of us. Notwithstanding, Sir, MINDEF recognises that transition has its challenges and has put in place programmes to assist officers in their transition. Under the SAVER Scheme, officers receive a lump sum payment on completion of their service. We also run programmes to facilitate the officers in their career transition.

For example, we help officers with private sector employment and offer officers time and opportunity to work in new jobs with allowance during the transition, to make up for the interim loss of income. MINDEF and the SAF also offer courses and programmes to help bridge the gap between their existing skill sets and the new skill sets required by their prospective employers.

12.45 pm

Sir, another group of regular servicemen is our WOSE corps. Mr Ang Mong Seng might know them as the NCOs in his days when he was doing National Service. WOSEs are Warrant Officers, Specialists and Enlistees. They typically retire from service at the age of 55, not 45. They, too, have concerns about transition to a second career. We also put in place a scheme for them. The equivalent of the SAVER for WOSE is the Premium Scheme. Under the Premium Scheme, they receive a lump-sum payment upon completion of service. We also offer similar career transition programmes for the WOSEs. At the end of it all, transition is a personal matter that our officers and WOSEs have to do on their own. It comes down to attitude, expectations and adjustments. Some have been more successful than others. MINDEF does its best to help transit to a second career.

Sir, I have asked for the latest issue of Pioneer magazine to be distributed. This is a special issue, because it profiles our men and women in Operation Flying Eagle. But it is also important because of the special Total Defence issue. Hence, I have asked for it to be circulated. My interest here is really centrefold, which is the ABCs of Total Defence. You might like to read them in your own spare time, but before I answer the specific questions raised by Dr Teo, I would like to give an overview of Total Defence so that I can answer his question in totality.

Sir, Total Defence is a concept which Singapore adopted way back in 1984. In essence, what Total Defence means is that, if Singapore is to be a secure and safe country, we have to deal with all unexpected contingencies and setbacks. In order to achieve that, we must be strong in five departments. We must be strong in Military Defence, Civil Defence, Economic Defence, Social Defence and Psychological Defence, and all these were enumerated quite clearly by Dr Teo himself. Together, Sir, they represent the five pillars of Total Defence. The official logo is shaped in the form of a hand, and each finger represents an aspect of Total Defence. Outstretched, it represents our home. But when the five fingers work in concert, they become a formidable fist.

Sir, the key to the effectiveness of our Total Defence is the active participation and involvement of all Singaporeans, and, I repeat, all Singaporeans. Dr Teo does not know the championing agency. In fact, MINDEF is the championing agency of Total Defence. However, MINDEF works in concert with all the other Ministries and agencies in Singapore. Indeed, MINDEF works with every Singaporean to play our part in Total Defence.

Sir, if I may refer MPs to the A-Z of the centrefold and ask them to just look at X and Y, it reads: "Total Defence is

not about doing anything extra. It is really the little things you can do every day. For example, take NS seriously, take part in civil defence, take part in civil emergency exercises, pick up new economic skills, forge close ties with Singaporeans of other races and religions, or just feel proud to be Singaporeans. This is how you can contribute to Total Defence."

Sir, let me give hon. MPs some examples. Dr Teo suggested that many Singaporeans do not know what to do in Total Defence. Indeed, based on their actions, many Singaporeans do know what they do without knowing that they are doing a part in Total Defence. For example, the discovery of the Jemaah Islamiyah network was a shock to Singaporeans. The outbreak of SARS was totally unexpected. These threats posed far-ranging consequences. However, these threats were swiftly contained and neutralised by the professional agencies and by all Singaporeans. What happened was really Total Defence. Singaporeans reacted calmly, positively and actively, and that they did very well.

Sir, because we have Total Defence, we had a coherent and integrated approach to the problems posed by JI and SARS. We overcame these threats from different angles, using our different strengths. From the agencies, there were the direct responses. We took security measures against the JI terrorists. From the health angle, we took health measures against SARS. But the most critical element that determined our successes in the fight against these two threats were the unity and resilience of Singaporeans. That was Total Defence at work without Singaporeans knowing that they were playing their part. Without knowing it, all five pillars of our Total Defence were at work. Singaporeans of all races and religions rallied together against the JI terrorists, which cloaked itself as a

religious movement. We also stood together as a nation to fight an invisible enemy, which was SARS. At the end of it all, we emerged more united and resilient.

Sir, let me now elaborate on the five key components of Total Defence. Military Defence is the purview of MINDEF and SAF, and this includes the many National Servicemen who make up the backbone of the SAF. The Total Defence spirit also comes from the support that families, friends and employers and the community give to our NSmen as they perform their duties to defend Singapore against adversaries both internal and external.

Military Defence, Sir, is complemented by Civil Defence. The lead agencies here are the Ministry of Home Affairs, the Singapore Police Force and the Singapore Civil Defence Force. Together, they ensure the security of our homeland. Post-September 11, security threats have taken on new dimensions. MINDEF and the SAF now work hand in glove with the Home Team, the SCDF and many non-security agencies, such as the Ministry of Health and the Ministry of the Environment and Water Resources, Customs, Infocomm Development Authority and others, to fight internal and external threats.

But, Sir, it is not just Government agencies which have to be alert and vigilant. Our people must be equally alert and vigilant. This is where Civil Defence comes to the fore. The Ministry of Home Affairs has a security outreach programme in which they work with businesses and the community to raise the level of public vigilance. For example, people who work in our shopping centres, MRT stations, including some taxi drivers, have been co-opted to work as our eyes and ears of the Home Team. In addition, the SCDF runs programmes and exercises to prepare our people to deal with any

emergency. They include the Community Emergency Preparedness Programme which has practical training and survival skills and almost weekly emergency community spirit and emergency preparedness exercises. Many Singaporeans take part in these programmes seriously because they know that when a crisis develops, they have to be ready. And there is no second chance for them and their families.

In addition to Military Defence and Civil Defence, we have the third pillar, ie, Economic Defence. When we had SARS, the Government worked with businesses and industry to help them withstand the economic shock. This included aggressive temperature-taking at all public premises. Singapore Tourist Promotion Board and the tourism industry mounted intensive campaigns to lure tourists back to Singapore. The Ministry of Home Affairs and the National Security Coordinating Secretariat have been working with businesses to ensure that in the face of a security threat, their power supply will not be threatened. All these are just examples of Economic Defence at work. Beyond these, Economic Defence also means that Singaporeans must be economically employable. It is the responsibility of individuals to ensure that our skills are market relevant. Hence, all of us have to learn, unlearn and relearn our skills on a lifelong basis. At the same time, it is the job of the Government to restructure the economy so that we are prepared to face the new globalised world.

The fourth pillar of Total Defence, Sir, is Social Defence. Social Defence is a critical component of our multi-racial and multi-religious country. The racial and religious harmony in Singapore is very precious. It has taken us years to reach this stage of racial harmony and cohesion. Every Singaporean has a role to play in

Social Defence. We were put to the test when the JI network was uncovered. Not only did we pass the test, we emerged from the episode stronger and achieved a deeper understanding of each other's religion and faith.

The final pillar of Total Defence is Psychological Defence. Sir, Psychological Defence is really the social glue that binds all the other four pillars together. It is the bedrock of our Total Defence. All the other four pillars do not count for much if we do not have the resilience and commitment to see them through in words and deeds. For example, when we talk of Military Defence, if our NSmen do not take NS seriously, it is mere words. Similarly, if their parents, employers, families or the community do not support them while they are performing their NS duties, then these are just words. So, Psychological Defence provides the glue that binds all the four pillars together.

Sir, our tagline for Total Defence is "There is a part for every one", and Singaporeans appear to have hoisted that in. Our surveys consistently show there is a very high public awareness and commitment to Total Defence, eg, we do National Service and our attitude towards National Service. Today, even after 30 years of National Service, support for NS has not wavered. Every family is proud to send their sons for National Service. At the grassroots level, there are a number of programmes to help residents acquire the skills and knowledge of Total Defence. We have long had a Civil Defence Executive Committee in every constituency. There is now another key programme, and this is the Community Safety and Security Programme (CSSP). In this programme, members of the local community, such as GRO leaders, volunteers, residents and students, work together with the People's Association and the Home Team to solve issues affecting the neighbourhood. The CSSP also serves to foster community cohesion

and bonding, as it brings people from diverse backgrounds together and solve problems from a community perspective.

The People's Association also develops numerous community activities to strengthen cohesion. For example, there is now the IRCC. There are also special programmes to reach out to the young and the very young. An example is the Racial Harmony Youth Ambassadors' Programme, which aims to develop dynamic youth leaders who contribute actively in the development of its cohesive and harmonious community. Under these programmes, students participate in team-building activities and visit places of worship. Thereafter, they organise projects for the school and CDC. Total Defence touches each and every aspect of our lives. Hon. Members might wish to log on to the website Totaldefence.com.sg for a more comprehensive list of the things we have done and can do.

Sir, I would like now to answer Dr Teo's specific question on why we chose 15th February as Total Defence Day. As he mentioned it in his speech, 15th February 1942 was the date which marked the fall of Singapore and, for three years and seven months, Singapore was plunged into darkness - a period of humiliation and indignity. That ended when the Japanese formally surrendered to Lord Mountbatten on 12th September 1945. The Total Defence Day is not a day in a way to celebrate. It is a day for us to remember and be sombre about, that a day like this should never be repeated in Singapore. So, we cannot change the date.

But Total Defence does not mean that we just do things related to Total Defence on 15th February. We do it on a daily basis, as I have elaborated in my speech. Singaporeans today are aware of Total Defence and they are participating in an active way. We need to do more. We

hope to enlist the help of Mayors like Dr Teo Ho Pin to reach out to the people who have not been touched by Total Defence just yet. In fact, Total Defence reaches out to not just adults but to the very young. For example, on this website called NeoPets - those with young children will know that the NeoPets website is one of the most popular - we reach out to the very young. We also reach out to the young. For the young, the most popular thing is the ring tone. So, we now have Olinda Cho, one of the finalists of the Singapore Idol programme, to record the latest upbeat version of the Total Defence jingo. For adults, of course, we have more serious stuff.

So, if all the agencies work together, and together with the CDCs, I think we will bring the Total Defence awareness to a new level.

Sir, just to seek a clarification. I can understand that it is quite difficult to measure Total Defence in totality. But I think we still need to come up with some indicators to measure our efforts as a nation, so that we know how we are progressing. So, it would be good if the Senior Parliamentary Secretary can provide us with the statistics or figures as to how far we have achieved in terms of Total Defence, ie, for the five pillars. You can measure the individual pillars, but to measure our progress in Total Defence, the five pillars in totality, it is going to be quite difficult.

Maybe, the Senior Parliamentary Secretary can highlight MINDEF's KPIs for Total Defence for this year?

1.00 pm

Sir, I thank the Member for his suggestions. For KPIs, we validate whether the outreach programme for Total Defence has reached Singaporeans. We also test the attitude to National Service and their readiness to

defend Singapore. Based on previous surveys, we have found these results to be very encouraging. Can we do more? Yes, we certainly can do more.

Dr Teo mentioned in his speech that Singaporeans are not prepared because they do not have an emergency pack, for example. I know that the emergency pack was promoted by Mr Wong Kan Seng a few weeks ago. In fact, every family member has a radio and a torch. It is just that they did not put them together. So this is a reminder for families to put aside a torch with a fresh battery and a radio with a fresh battery. These are little reminders that we can do. What else can we do? On the ground, we need Members of Parliament to work together with us on this. We have the ideas, and we need to reach out to them. The Members of Parliament and the Mayors have their own ideas. We can work together. Within MINDEF, there is an organisation called NEXUS. It coordinates with all the other Ministries. It is not a very high-profile organisation. Perhaps, that is the reason why Dr Teo does not know that MINDEF is the championing agency. We need to do more. I welcome Dr Teo's help in bringing Total Defence down to the grassroots level even deeper.

Sir, I have a question for the Senior Parliamentary Secretary. Instead of marking Total Defence day as the day that Singapore fell to the Japanese on 15th February, why not we consider marking it as the day the Japanese surrendered and Singapore regained its sovereignty on 12th September as the day that we began Total Defence? I think it is more meaningful in that sense because we mark that day of independence as the day of sovereignty.

Sir, Singapore did not gain sovereignty on

12th September 1945 because the Japanese surrendered to Lord Mountbatten. Singapore gained sovereignty on National Day, 9th August 1965. We already have National Day to celebrate that day. It is like Independence Day, 4th July. 1st October is China's National Day. That is the day when the Chinese gained sovereignty. The Americans became a whole, so to speak, on 4th July. In Singapore, we have a National Day to celebrate our independence day. So 15th February is actually a solemn day for us to remember the fall of Singapore.

Mr Ravindran, are you withdrawing your amendment?

Sir, I would like to thank the Minister for Defence, the Minister of State for Defence and the Senior Parliamentary Secretary for their overview of MINDEF's policies and their succinct answers to Members' questions. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The sum of $8,896,000,000 for Head J ordered to stand part of the Main Estimates.

The sum of $363,000,000 for Head J ordered to stand part of the Development Estimates.

MPs' Allowances

Sir, I beg to move,

That the total sum to be allocated for Head F of the Estimates be reduced by $100.

Mr Chairman, Sir, one of the key duties of a Member of Parliament is to represent his constituents and speak up in

Parliament. They must be prepared and able to have the time and opportunity to ask questions and speak on topics and issues concerning their residents and affecting Singapore.

Yet, this ability to speak and ask questions is continuously being restricted by the Parliamentary Standing Orders. First, the right to ask oral and written questions is being curbed to a total of three plus two (maximum). Then, the right and the time given to raise matters at the Committee of Supply is also restricted to 18 minutes for us.

The use of the simple average of 18 minutes for this Committee of Supply debate and five questions in total for oral and written questions is limiting the ability of MPs who are harder at Parliamentary work and more willing to take their work more seriously to speak up and ask more questions than some others.

It is terrible to read that the number of cuts filed by MPs has dropped by 65% because of this time limit imposed and that the largest number of cuts on a Ministry dropped drastically from 104 last year to only 29 this year. There are MPs who would have submitted more cuts and asked more questions than others who would not even have been actively seen in Parliament. Using this important average ratio of the active and inactive MPs forces the active and outspoken MPs to become mediocre and less active in their duties. This is not good for their track records.

If the speaking and questioning rights of MPs are being reduced through restrictions in the Standing Orders, and their effectiveness to perform that duty is being reduced accordingly, I would suggest that Parliamentarians' and Ministerial allowance, by the same argument, should be reduced accordingly. Instead of taking the average of the top-earners in the top six professions, they should adopt this simple formula used

here. Just take the simple average of the earnings of Singaporeans and pay a simple average to the Ministers and civil servants. Whereas this is not the case, I hope that the Parliamentary Standing Orders Committee would use a more equitable formula in allocating more speaking time for active MPs than taking the simple average of the total time used divided by the total number of MPs.

Mr Chairman, Sir, Mr Steve Chia's premise is that, first of all, the speaking and questioning rights of MPs have been reduced through the changes in the Standing Orders and, therefore, correspondingly, the MPs' allowance should be reduced. He has made two points which are both wrong.

First, is his contention that the speaking and questioning rights of MPs have been reduced. It has not been reduced and I will explain why. If he recalls, last year, in Parliament, we had an exercise to update the rules of Parliament and this was to bring it in line with other parliaments and jurisdictions. One of the things we reviewed was the number of questions, both oral and written, that a Member could ask at one sitting. As part of this exercise, we looked at the practice of other Parliaments - Lok Sabha in India, the Canadian Parliament, the Malaysian Dewan. We saw that these parliaments all have different limits on the number of questions, ranging from three to five questions per Member per sitting. This idea of a limit on the number of questions is not something exceptional. It is not something that we cooked up. In our case, we looked at the number of questions that were asked over the last couple of years and the Committee decided to recommend to Parliament that there be a limit of five questions, oral and written, per Member per sitting. This was a reasonable figure, and Parliament approved it.

Sir, this move does not in any way reduce the speaking rights of MPs. In fact, apart from asking questions for oral answer or submitting questions for written answer, there are many other things that Members of Parliament can do. They can move substantive motions, raise adjournment motions, ie, they can raise a matter upon the adjournment of Parliament, debate on Bills, and introduce cuts during Committee of Supply debates.

Indeed, the implementation of this new procedure of allocating speaking time to Ministers and MPs during the debate in this Committee of Supply which we have seen, has ensured that we all have sufficient time to make our points without being guillotined. It has also provided time for Members to question Frontbenchers, and to seek clarifications on certain issues that have not been addressed and needed to be addressed. This has made the debate in this sitting a much better debate, both in substance and in style. I do not see any Member of Parliament having insufficient time to raise his point, even though he may have had a limited time to make his cut. There has been sufficient time set aside after the Minister, the Minister of State or Senior Parliamentary Secretary has spoken, for clarifications to be made. In fact, not all the time that has been allocated has been used up. That is the reason why we are running so far ahead of schedule. There is no excuse whatsoever for the NCMP not to raise his point or to make his clarification.

Now, with the new system, we have more opportunities for Members to speak. We have more opportunities for them to question and comment on Government policies and issues of concern of their constituents.

Therefore, I totally disagree with Mr Steve Chia that the amendment to the Standing Orders that we introduced last

year has curtailed, in any way, the Members' effectiveness in the discharge of their parliamentary duties.

On the question of MPs' allowances, Mr Steve Chia must know that the elected MPs' responsibilities are more than just in Parliament. They have to look after the interests of their constituents in Parliament by speaking up on their behalf, but also in their constituencies, through the various activities that they organise - mobilising their constituents, explaining Government policies and, in general, making sure that their constituents have a good standard of living and a better quality of life.

The MPs' allowance and the honorarium are meant for MPs to meet part of their expenses in the course of these duties. Non-constituency MPs like Mr Steve Chia, of course, do not have any such responsibilities to look after their constituents. So if there is any reduction in MPs' allowance, I guess it could conceivably apply to NCMPs.

Generally, Mr Chairman, Sir, I cannot see any correlation between the amending of the Standing Orders last year and the allowance that is paid to MPs.

Sir, I note that the Opposition MPs have two extra minutes than the PAP MPs except for GPC Chairmen. Can I ask why is Parliament being more generous to the Opposition MPs in terms of giving them two minutes more than the rest of us?

Secondly, if the law of averages is to be applied in terms of the number of cuts given, it could be argued that a logical conclusion would be to cut the allowance of Opposition MPs because the PAP MPs have filed more cuts on average a year than the Opposition MPs.

Mr Chairman, Sir, I guess the real answer is that we have

always tended to bend over backwards to give the Opposition MPs a chance to be heard in Parliament. After all, there are only two elected Opposition Members and one NCMP.

I guess other Members would not mind if we give them two minutes extra to say what they have to say.

1.15 pm

Sir, I have a few points of clarification. First of all, how could Parliament break the rules just to favour us? Rules are rules and they have to be followed. How could the rules be broken just in favour of us as the Opposition? That is the first point.

Secondly, a point of clarification, the extra two minutes that have been given to me is, I suppose, because I moved the cut as the only person speaking on this head. That is to answer Ms Irene Ng.

Sir, I would like to ask the Minister what weightage of work is accorded between parliamentary duties and constituency work. As it is, the NCMP and NMPs are only paid 15% of what elected MPs are paid. Effectively, you are saying that constituency work is 85% more important than parliamentary work. Is that how Parliament accords the responsibility?

Next clarification: why choose countries that are in favour of limiting the time? There are so many other countries that do not have ---

Mr Chia, we are supposed to end at 1.20 pm. I suggest you leave some time for the reply.

Sir, I just want to ask the question: why are the countries selected in favour of limiting time when there are many others who do not have such restrictions? While there is

sufficient time given for MPs to talk about their cuts, there are not enough cuts, in the first place, to go around. That is why we have too much time and we are trying to fill up so much time now.

I do not think we have time any more. Let Mr Mah reply first. You have got five minutes.

Mr Chairman, Sir, I notice that you have been very generous with the NCMP, giving him sufficient time to speak.

I am.

In fact, I have to rush my answer now, looking at the clock.

Sir, the NCMP made a few points. I think one of the questions he asked was what is the proportional value of the time that MPs spend in Parliament versus the time spent in the constituency. I think it is a very difficult question to answer. But let me say this. If the MP does not do his work in the constituency and if he does not convince his constituents that he is worthy of their support and be their representative in Parliament, there would be no time spent in Parliament, to speak of, because he would not be elected. So, he should tell me what is the relative value of work done in the constituency versus work done in Parliament. I think he will know the answer for that, and that is the reason why he is the NCMP and not the elected MP.

Sir, why do we choose Parliaments that have limits? The answer is a very simple one. We have looked at all the practices of various other jurisdictions. Some of them have limits and some of them do not. We feel that, in our case, it is relevant for us to have a limit and that is the reason why we have chosen those particular parliaments. The issue is not

whether there is a limit or not. The issue is really what is a reasonable number. Having looked at the practice of other parliaments and at our own record, how much time our MPs take and how many questions they file, we have arrived at a standard for us. This is something that we feel is reasonable and I think Members of Parliament have not been constrained in any way. I do believe they will continue to exercise their responsibilities seriously, effectively and adequately in Parliament with the new Standing Orders in the same way that the new format for debate in the Committee of Supply has, as I said earlier, made for a much better informed and more robust debate in Parliament. I think all of us have been the better for it.

It is guillotine time. Mr Steve Chia, are you withdrawing your amendment?

Sir, I thought the guillotine time is at 2.00 o'clock.

If you read the guidelines for the new system, the guillotine time has been moved forward.

Sir, I beg leave to withdraw the amendment, as you have requested.

No, it is not at my request. It is stated in the guidelines. Please get it right.

Amendment, by leave, withdrawn.

The sum of $25,456,110 for Head F ordered to stand part of the Main Estimates.

The sum of $1,767,600 for Head F ordered to stand part of the Development Estimates.

Head T - Ministry of National Development. Amendment No.

. Dr Amy Khor.

Public Housing Policy and Role of HDB

Sir, I beg to move,

That the total sum to be allocated for Head T of the Estimates be reduced by $100.

Sir, the ERC had recommended in 2003 that the Government review HDB's role in public housing and also undertake a fundamental review of the home ownership policy, which remains the key plank of this Government's social policy.

In July 2003, HDB divested its building consultancy function to HDB Corp. HDB Corp was granted a 3-year moratorium of public housing projects. Thereafter, the public housing sector is to be liberalised in phases, starting from July 2006. This move is laudable as it shows HDB's intention not to remain as the monopoly provider of new public housing. I would like to ask the Minister if the possible modes for private sector participation had been exhaustively evaluated and, if so, what is the likelihood of a particular option being chosen over the others. I would like to urge the Minister to go beyond the traditional outsourcing of the building management and consultancy services as these are already done for design-and-build schemes. The private sector should be allowed to assume a more significant role so that their skills and expertise in housing design and projects could be better tapped as well as preserved. Injecting private sector participation of up to 50% would lead to a more dynamic and innovative public housing sector. Moreover, the private sector should be given more leeway to be developers of public housing estates, since HDB Corp will, from July 2006, be able to compete

in the private sector market. Given that its parent is the formidable Temasek, its activity will most certainly cause some concerns among the private developers in Singapore.

The reverse tender mechanism which allows the developer to bid for the land, taking into account the maximum end-unit selling prices fixed by HDB, could be a possible mode of allowing wider private sector participation whilst ensuring the affordability of the flats. Possible concerns that flat quality could be compromised by developers who cut corners to maximise profit could be allayed as eventually only half of the market is to be opened to private sector participation, even in July 2008. The remaining half will still be under HDB's ambit and will help to provide the quality and price benchmarks.

Another alternative approach would be to provide fixed housing subsidies in the form of cash vouchers or grants to first-time eligible home buyers, much akin to the CPF housing grant for first-time buyers of resale flats. The developers could then bid for the land and price their flats at market rates. The prices of the remaining HDB developed flats would help to provide a price benchmark and ensure that the developers do not overprice. Resale HDB flat prices would also act to keep prices of these new flats in check.

This leads me to my next point regarding the mix of public to private housing. In the previous 1991 Concept Plan, it was envisaged that a long term public to private housing ratio would be about 75:25. We are nowhere near this ratio given the percentage of public housing sector has consistently over the past 10 years or so hovered at about 84-85%. This may be attributed to the fact that HDB continues to offer flats of all sizes and shapes literally. A case in point is the Pinnacle at Duxton which arguably competes directly for home buyers in the

private sector looking for flats within that area.

The recent economic downturn has increased the popularity of smaller size 3-room and 4-room HDB flats compared to 5-room flats. Demand for 5-room and larger flats has dwindled to a trickle. Even as the Government continues to preach against over-consumption in housing, it is better for HDB to focus its attention on the lower end of the mass housing market where the needs are more acute due to lower affordability as was indeed its original mission. In fact, it would be ideal if HDB completely stops building 5-room and larger flats and instead sell more Executive Condominium sites as a step towards increasing the proportion of housing types as well as giving the private housing sector more space. If a housing subsidy in the form of cash grant is to be allocated, this grant could be given to all first-time home owners with a household salary cap commensurate to that stipulated by HDB. And they should be allowed to buy any property they choose, be it private or public. With 84% already housed in HDB flats, some 95% owning the flats and an ageing population, there should be sufficient 5-room flats in the resale market for those who wish to upgrade.

Indeed, one of the worries is that with an ageing population, there could come a time when there are more downgraders than upgraders and then there could be a glut of larger HDB flats. This would depress prices, leading to further asset deflation and fulfilling the fear of a new underclass of asset-poor and cash-poor Singaporeans.

Housing Policy

Mr Chairman, Sir, in terms of public housing, the Government has done remarkably well in providing affordable public housing. But HDB has many rules. For example, if

one were to buy a flat from the resale market, one could not sell the flat until a stipulated time. But, at the same time, one may not qualify for a HDB preferential loan and would have to obtain a commercial loan from the banks. Currently, those who buy resale flats and use commercial loans have to wait for one year before they could sell. Why not allow them to sell freely in the market as they have to use commercial loans? We should make it easier to buy and sell in line with market forces and conditions. It should be quid pro quo for the use of commercial loans. Some of the residents also need to sell the flats earlier because of financial distress.

I have the following points to raise. Why should we insist on 20% down-payment by cash or CPF for the purchase of HDB flats? Many young couples, and those of lower income groups, will find it painful to cough up 20%. Why make it more difficult for us to promote home ownership, particularly for first-time buyers? High down-payments would inevitably delay marriage plans for young couples and further delay in them having babies and would act against our national procreation policies. Why not cap it at 10%?

Sir, in an economic downturn, some of the poor and the elderly are finding it hard to provide for their old age. In such a situation, would the Government seriously consider launching reverse mortgages? Reverse mortgages have been brought up many times before but there was no real follow-up. The Government grants $30,000 in CPF for first-time buyers of certain flats. This is a very good scheme and the idea could be extended to first-time buyers of HDB new flats or resale flats or Executive Condominiums. The Government could make such grants portable and give a much wider choice for first-time buyers who qualify.

Affordable Public Housing

Mr Chairman, I would like to support Dr Amy Khor's call to review our public housing policy. We have to make sure that our houses remain affordable and that they do not deplete the retirement savings of our people. In this regard, I would like to make three specific suggestions.

Firstly, HDB should focus on building smaller units such as 2-room and 3-room flats, leaving the larger ones to the private sector, which is more than capable of building them. Smaller units would also be more affordable and would take up less of their savings.

Secondly, HDB should also consider providing more rental flats, given the long waiting list for rental units. HDB has always taken the position that because rental flats are heavily subsidised, their eligibility criteria have to be very stringent. Perhaps, HDB could introduce a two-tier rental rate system. The first tier is the present subsidised rate meant for those who qualify under the existing criteria. The second tier could have lower subsidy, but meant to be more flexible.

Thirdly, I would like to urge the Ministry to reconsider the reverse mortgage scheme. I am not suggesting that we open this scheme to all Singaporeans at this stage but, at least, we should allow those who are retired and need financial help to re-mortgage their flats, because the alternative would be for them to sell their flats in order to resolve their financial problems. They would then end up losing their shelter over their heads. Reverse mortgage would, at least, help to defer, if not avoid this unpleasant outcome. Sir, we have done well in providing public housing. Now we should refine HDB's role to focus on providing housing for the lower income

and the needy families. After all, this is what an inclusive society is all about.

Mr Chairman, Sir, I would like to come back to the results of the Feedback Unit's survey on the challenges facing Singapore, which I have spoken on earlier during the debate on the Budget Statement. In this survey, there are five issues where there exist a significant gap in public perception between seriousness of the issue versus the confidence that we, as a people, would be able to overcome this problem. And keeping public housing affordable is one of these five top-most concerns.

71.2% of the respondents consider that this is a serious matter with major impact. On the other hand, only 48.5% of the same respondents are confident that we would be able to cap the increase in public housing cost and keep public housing affordable. Thus, there is a significant gap of close to 23%. In other words, Sir, up to a quarter of the people surveyed do not think we could keep public housing prices down. I find this survey result particularly vexing because 86% of Singaporeans are already housed in HDB and of those living in HDB flats, over 90% are owner-occupants. As such, this perception does not tie in with reality.

However, this survey was designed and conducted scientifically and should truly reflect the concerns of Singaporeans surveyed. Clearly, past policies of the HDB have contributed to this, perhaps to switch to bank origination is one of these and perhaps the various co-payment schemes under MUP is another. I would like to find out from the Minister what steps would he be taking to dispel this perception gap.

1.30 pm

Sir, I want to address the concern of providing

appropriate affordable housing for those who cannot afford to buy a flat but looking for a rental flat. The current rate for 1-room and 2-room rental flats is about $33 to $75 for household income below $800. For those with household income below $1,500, the 2-room rental is about $165. I find that after this, there is a wide gap. People have to rent a unit in the open market today. A 3-room or 4-room flat is from $700 to $1,300, depending on the proximity to a MRT station. What is HDB's role in meeting the needs of rental housing to the people? We have reached a stage where Singaporeans own about 90-odd per cent of HDB flats. What is the current demand for rental flats and the anticipated future demand, as our jobs are getting less stable and housing loans are big commitments. I would like the Ministry to bridge the gap by, firstly, allowing more flats to be let out by HDB owners, ie, relaxing the rule on minimum occupancy period, and also to make available more 3-room flats for rental through the buy-back from the public.

Next, I would also like to appeal to the Ministry to review its debarment policy. We are talking about families who have sold their flats twice previously and are neither allowed to rent or purchase a flat from HDB. Most are forced to downgrade because of financial difficulties, and most of these cases would incur losses and left to the mercy of the open market. The debarment policy was instituted, I believe, to protect people from abusing the system of subsidised public housing for profit. Although the Minister has asked us to appeal for these cases, many appeals have been made but most cases have been rejected. I would like the Minister to look at it again.

Rental of HDB flats

Sir, on the rental of HDB flats, I would urge the Minister to enlarge the pool of rental

housing, to allow Singaporeans more options. This should not be construed as a deviation from our long cherished and highly successful home ownership policy since it is but an interim housing solution. There are clearly many couples who have household income above the $1,500 per month cut-off for renting flats but may earn below the estimated 50th monthly income percentile of $3,000. They may wish to have time to build their nest-egg before they purchase a flat and therefore wish to rent, but find rentals of HDB flats in the secondary market unattractive or unaffordable. These couples are caught between a rock and a hard place.

Three other groups of Singaporeans have also come to our meet-the-people sessions to appeal for rental housing as temporary relief for their woes. Such requests have continued despite the economy having shown sterling performance last year. These are the elderly singles, the financially strapped, downgraders and the elderly whose children are unable or unwilling to live with them.

Sir, the experience of the past few years of economic downturn, the tightening of CPF rules, the requirement of larger downpayments, etc, are likely to make the phenomenon of downgrading a permanent feature of economic down cycles and increase the demand for rental flats. The financially strapped HDB flat owners who wish to sell their flats in order to repay their debts also find themselves at their wits' end since they are debarred from renting a flat for 2 1/2 years. Occasionally, through successive and passionate appeals, this requirement may be waived, but this is the exception rather than the rule.

In fact, most recently, I have come across a financially-strapped family who has no choice but to sell their flat as they

are deep in debt. The husband was unsuccessful in his application for renting a flat from HDB. He was informed by HDB that he is debarred permanently from renting a flat as he had purchased two flats directly from HDB and had resold them in the open market. No concessions were made despite his dire financial consequence. Where then does HDB expect him and his family to stay other than out in the streets?

Sir, I would like to argue that there is a case for the Ministry to relook at our own versus rental mix in public housing, since our home ownership rate has already attained 95%, believed to be the highest in the world, whilst the percentage of rental flats is less than 10% of the total stock. The existing HDB rental policy appears too restrictive and contradicts the Government's current pro-ownership and pro-family stance.

Sir, the rules for requiring elderly singles to pair up and the permanent debarment of families who have already bought two flats direct from the HDB should also be re-examined.

Sir, since the Asian financial crisis, SARS and the economic downturn, I have noticed a dramatic change happening at our meet-the-people sessions. No longer do residents queue up to see us for priority of housing or upgrading to bigger flats. But on the contrary, they are asking for the reverse - downgrading to smaller flats, requesting for rental flats, and also restructuring the mortgage loans.

I notice that there is a confidence loss in their ability to sustain their lifestyle and home, because of job insecurity due to global and domestic change, in work norms, expectations and performance. Increasingly, more and more are asking for assistance to pay their utility bills, SC&C charges, medical bills and, earlier on as I pointed out, the mortgage payment for the HDB flats.

Sir, we have to look and find answers, or it will become a big social problem. The answer lies in the HDB flats, their prized asset. We have to give them a life line by allowing them to monetise their asset, to release funds for their use and to ease their hardships. At present, flat owners can downgrade if they stay in 4- or 5-room flats. But downgrading means having to sell and wait for a 3-month period before they can rent or buy smaller HDB flats. This point has been brought up by my parliamentary colleagues. Of course, this causes a lot of inconvenience, frustration and hardship for these people searching for a place to stay while waiting for this 30-month period to lapse before they can buy or rent again. This ruling, as Members know, was introduced many, many years ago when HDB home owners were upgrading and the property market was very buoyant, and many of them cashed in on the situation and they made money. But situations have changed and we have to look at the rule again. I think many Members in this House had brought up this rule. This rule must really be looked into by the Minister, because it has to be applied appropriately to the situation.

Because some flat owners cannot wait, they are forced to buy smaller HDB flats in the open market. But this eats into whatever little funds they have salvaged from the sale. HDB used to buy back 3-room HDB flats from the open market and rent them to the poorer Singaporeans. This is to encourage home ownership. Now I am asking the HDB to apply this rule but with a widened scope - to buy back the flat at market rate, especially the 3-roomers for those in severe hardship and then rent back the same flat to them at a subsidised rate.

Some people have told me that the numbers involved may be very small, because many probably will have negative equity as a result of the sale of their flats. When they sell their flat, they have to pay

back the CPF component, and they also have to pay back the outstanding HDB loan. I feel that in spite of that small number, we should not reject the idea. What I am asking for is an option, a way out for people in severe hardship. It is a choice to help those to raise some funds to ease their hardship.

I am not asking for welfare. I am asking for compassion. Those who agree to the scheme must also agree to another scheme, to allow their money to be used wisely; in other words, the money has to be used to offset their rentals for at least a minimum of two years or maybe even more.

Can we extend this to the 4-roomers and 5-roomers? I think we have to look into this because even if they downgrade to a 3-room HDB flat, they still cannot get sufficient funds to help them out, especially those who have failed in their businesses. I think we should look into this, not forgetting that there are also many people who have suffered very serious medical problems and they need funding. Sir, while I advocate that they should be primarily for the 3-roomers, let us not rule out the possibility that we could also extend this to the 4- and 5-roomers.

Sir, I do hope that the Minister will consider my proposal.

Sir, I would like to call for a review of the HDB policy of not allowing single mothers to rent HDB flats. If the policy objective is to discourage single mothers from having babies, it is not working because the problem is recurring. And, in any event, I seriously doubt that the unavailability of rental housing is a consideration at the point of conception. They do not sort of sit back and think, "Oh, I shouldn't do this because I can't rent a flat."

If we say that the number of units is limited and we have to make a moral judgment as to who should get it, then we should extend this policy to fathers who father illegitimate children as well. This policy operates harshly and creates unnecessary hardship on single mothers. HDB's primary role is to provide housing for Singaporeans who are in need of it. And if a mother is seeking to rent a HDB flat, it usually means that she cannot afford to rent in the open market or to buy one and that she does not have family support for whatever reason. I would therefore call for a review of this policy.

Sir, when I was a student social worker back in the late 80s, I was confronted with a rude shock of flat evictions. Yes, I saw Singaporeans being evicted from their flats because they were not able to pay their rentals. Of course, HDB tried to minimise the impact by informing social workers of the impending eviction. The families were devastated. Some tried to protect their children from the crisis.

Sir, I fear that history may repeat itself. I am referring to the situation of flat owners now having to secure mortgage loans from commercial banks. Yes, we acknowledge the rationale behind the policy, ie, HDB is not in the business of lending money.

Sir, with the new policy implemented, the HDB flats are no longer as secure as they used to be. We know that the commercial banks have the first charge in cases where flat owners cannot make good their mortgage payments or when they are declared bankrupt. In other words, they will lose their flats should the

commercial banks take action against them.

Sir, my fear is beginning to come true. A couple of weeks ago, a resident came to see me asking me for a rental flat. The reason is that she had been given notice by the bank to vacate her flat by March, as she has not been able to make good her loan payments.

There are many others who are facing legal action at various stages. I am afraid to see more evictions of these cases, as these cases are really on the verge of losing their flats. This is something that I fear most when the new policy was implemented.

In this regard, I would like to ask the Minister whether HDB tracks the cases of those who take up loans from commercial banks and who are at risk, through default payments, of losing their flats. How many are currently in this category operationalised by banks taking legal action against them already? Also, how many flat owners have had their flats repossessed by the banks since the policy was implemented?

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On a related

note, Sir, I would like to ask the Minister whether HDB or MND has plans to help Singaporeans better understand the implications of them getting loans from commercial banks and the risk that they have to take. This is especially so for cases who choose to downgrade due to inability to pay for their current mortgage loans. Sir, in some cases that I have seen, families are threatened with repossession within a year of their purchase of their flats. While I understand that we should leave the commercial banks to operate freely within the open market, we should be mindful of the implications to Singaporeans. Many are unaware of what they are getting into.

I think we should pay close attention to the issue before we revert to the early days of having to deal with families losing their homes. As we pride ourselves as having a high percentage of home owners, I hope we will not get into a situation of having to deal with a larger number of home losers or move into rental flats once more.

Sir, over the last three years, I have seen an increasing number of cases where HDB flat owners who want to downgrade to smaller flats or sell their flats and move to rental flats facing great difficulties in financing their needs. The financial crisis, SARS and economic downturn had changed their capability to pay for their housing needs.

Sir, the first group consists of divorcing couples, the second group involves people who are retrenched during the economic downturn. They found themselves unable to continue the mortgage payments and did the right thing by downgrading to smaller flats. However, there are three major difficulties facing them. First, the minimum occupancy period set by the HDB; second, the 30-month debarment period during which they are unable to apply for purchase or rental of flats; third, in getting financing from the banks.

Sir, in the past, when the market was buoyant, they had no problem as the selling price was good. After deducting all the necessary payments, they still have enough money to buy flats from the open market. Now, divorcing couples and downgraders may face the prospect of not finding shelters over their heads. As some were divorced only after two years of marriage, they have difficulties of selling their flats as ordered by the courts because they have not met the minimum occupancy period. For those retrenched

and wanting to downgrade, the above HDB conditions are also not helpful to them. Those who bought their flats during the peak years of 1997 or 1998 and took the maximum loan of repayment for 30 years are the worst affected. Many are unable to meet their mortgage repayment. At the same time, they could not sell their flats to downgrade because of lower selling price of their existing flats. If they do so, they would have to chalk up the difference with cash. I appreciate the assistance that the HDB gives to them by allowing them to defer their payments, but this does not solve their problem. I also know that in some instances, HDB did consider the request on a case-by-case basis.

Sir, may I ask the Minister what else can be done to assist these people on their housing loans? Sir, the rules were made many years ago and the circumstances merit such rules to be made and enforced, and enforced vigorously if necessary. But, now, I strongly believe that the situation is different. Can we not review the policies?

Housing for an Ageing Population

Sir, there is a need for better planning of the housing needs of Singaporeans in view of the fact that 12% of households today are headed by persons over 65. Should there not be more 3-room and 2-room HDB flats being built in view of more downgraders than upgraders in the recent times? Will MND consider building new HDB flats with "lifetime-designed HDB concept" so that such flats can be adapted as the needs arise to allow people to "age in place"?

More studio apartments and retirement homes will be needed to better accommodate the silver generation. Will MND set aside designated lands for this purpose? It may be more feasible to allow 30 or 40-year leases to the private sector to make retirement villages viable.

Sir, may I urge MND to be less stringent on the HDB "Joint Singles Scheme"? I am not suggesting that we convert all HDB rental flats to only "Singles Scheme" as many lessees may prefer to rent with spouses or other family members for companionship. Will MND be more flexible to those with no family members or friends to share with as it is very difficult for many singles to live with complete strangers?

Like my parliamentary colleague who spoke earlier, may I urge MND to give HDB cash-poor retirees the option of reverse mortgages? This facility will allow the elderly to pay for their daily living and remain in their own homes and there will be less cases of bad management of funds from selling of HDB homes and lesser demand on rental flats.

On faster upgrading of HDB lifts, may I suggest that priority be given to those HDB flats with a higher percentage of elderly residents to get earlier upgrading?

(In Mandarin): Sir, at the moment, the imminent problems faced by our senior citizens are cash flow and housing, and these two problems are inter-related. During their younger days, in order to realise the dream of owning their own flats, they used up a lot of cash and CPF money to buy their flats. After retirement, when their children grow up, they move out. The old folks have a property but no cash. If they were to sell their flats, under the present policy, they are barred from applying for a HDB flat. But if they do not sell the flat, they would not have enough money for their daily expenses. So I suggest that HDB consider allowing them to rent a flat without having to wait for 30 months after selling their flats.

Although the HDB has studio apartments for the elderly, they are all for

sale, on a 30-year lease. During this period, if anything happens to them, who is to inherit the apartment? And that would be a problem. On the other hand, should they outlive their lease, then it would be yet another problem. Therefore, I would suggest that the best thing is for them to rent the flats. Then they do not have to buy their flats and, at the same time, they can sell the present flats so that they have the capital to provide returns for their investment. If they were to sell a 4-room flat, they would have more than $200,000 in hand, and they could get the fund managers to invest for them, and get back some $2,000-$3,000 a year, enough to pay the rent. Their housing problem is solved and they can have cash for their daily expenses. It is a win-win situation.

At the moment, there are quite a lot of vacant flats in Jurong West. I would suggest that HDB start a new plan to convert one or two blocks of these vacant flats into rental apartments for the elderly; for those 3- or 4-room flats, maybe they can be converted to 1- or 2-room flats for the old people to rent. At the same time, in order to look after the welfare of the residents in the studio apartments for the elderly, VWOs and grassroots organisations can set up some special care groups to organise some welfare and recreational activities for the old folks. The concept of "Senior Citizens looking after Senior Citizens" launched by the Redhill Residents' Committee is a good one. Perhaps we should extend it to other areas as well.

Neighbour Problems

Sir, problems between neighbours appear to be increasing. I wonder if the Minister can share the statistics on the matter for the HDB estates. Many of these cases are intractable, even with strenuous efforts by grassroots leaders to resolve

them. This is despite the involvement of the police, town council and other Governmental agencies. In many instances, even the efforts of the Mediation Centres have failed. Perhaps, it is now time to consider the use of legislation to force the quarrelling parties to sit down and resolve the differences in the interest of peace in the community and to provide relief to the aggrieved party. I wonder if HDB would consider reviewing its lease agreements or moving legislation for this purpose for the HDB residents.

Sir, a cause of friction between neighbours in HDB flats is ceiling leaks. The generosity of the HDB to absorb half of the repair costs under the Goodwill Repair Scheme has gone a long way to abate the problem. The remaining half of the costs is shared equally between the two flats. Residents agree that this is reasonable if the leakage is due to normal wear and tear as a result of ageing and usage, not the fault of any party. But residents do not think this is a fair arrangement when the ceiling leaks are caused by renovation works of the upper flat, which weakened the water insulation of the floor. They do not think that they should be asked to share the repair costs. The owner who did the renovation should take full responsibility. To be fair to the owner, a reasonable time between the subsequent ceiling leakage and the renovation works should be worked out for the owner to be held responsible. I hope that HDB will seriously consider this suggestion to impose this condition on owners who apply to renovate their flats.

Sir, Members have spoken on a very broad range of issues relating to public housing. But let me first respond to probably the most fundamental question on public housing, which is the role of the HDB, raised Dr Amy Khor.

As Members would know by now, the HDB was set up in 1960 at a time when

Singapore was facing very severe housing shortage and most of the people were living in slums and squatters in the cities and outside. And HDB had to build thousands, literally thousands of flats, in a very short space of time. It was a challenge for HDB. It was a challenge to HDB's resolve to overcome. And I must say that it did an admirable job.

Today, almost nine in 10 Singaporeans live in HDB flats. Almost all own their flats. No other country, whether you are talking about a developed or a developing country, has been able to achieve this.

Now that it has largely met its objective of providing affordable housing for the majority of Singaporeans, the question that all of us are beginning to ask is: what next can it do? What more can it do? What is the role of HDB moving forward?

To answer this, I would like to look at the broader context of our public housing programme. Right from the start, the Government's public housing policy has not just been about providing a roof and shelter. Public housing is also very much about promoting rootedness, about giving Singaporeans a stake in this country, a physical stake in giving them an asset. The Government has therefore encouraged home ownership right from the beginning. To own a home is to own a part of Singapore. It is what makes Singapore worth defending and worth contributing to.

Rootedness also means being a part of the community and contributing to the well-being of this community. And that is why in the design and planning of HDB estates, we consciously set out to create a strong community spirit and foster social integration. So we carefully guide the ethnic balance in our housing estates, we mix different flat types within the same block. We provide recreational

facilities to draw HDB residents out of their flats and create plentiful opportunities for them to mix and mingle in the common spaces. The walkways and the corridors that you see in the HDB estates are not just about connecting blocks to blocks or connecting blocks to bus stops. They are also about connecting people and connecting lives.

The HDB void decks, in particular, are something which are quite unique to Singapore. If you walk around HDB void decks today, you will see young and old playing guitar; sometimes playing football to the annoyance of some residents; you see older people playing chess, playing qigong; housewives catching up on the neighbourhood gossip on the way to market; or young parents sitting at the void decks waiting for their children to finish kindergarten and during that time, exchanging ideas or gossip. Most Members would also have at one time or another attended a happy occasion, a wedding, or a sad occasion, a funeral of, say, a friend or a resident at the void deck.

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Our HDB estates, with their flats, hawker centres and shops, have become a common point of emotional reference for many Singaporeans - just like what we were talking about earlier. National Service for males - in the same way that our schools have brought Singaporeans of different races and socio-economic groups closer together. So, what I call the "HDB experience" has become an integral part of the Singapore experience for many Singaporeans.

Two National Days ago, the parade organisers produced a little red book which they called "Things that make us Singaporean". I still keep my copy, because I find thumbing through it some

very nice little snippets. One of my favourites is by a Mr Ong Wee Loong, who is a full-time National Serviceman. He says, "A foreign friend once asked me: How come you know so many languages? I told him I live in a cultural language centre called an HDB flat, learning Malay from the left, Tamil from the right, dialects from the people above and below me." So, each HDB estate is like a "mini-Singapore", culturally, racially, religiously diverse, and yet everybody living harmoniously together.

Our public housing programme has played a critical role in bonding Singaporeans together. Like many of my colleagues in this House, I grew up in an HDB flat and I have many fond memories of my childhood. My children grew up in a private property. But, fortunately, for a while, we lived in an HDB flat in Eunos, and that experience had a very big impact on my children. They had the chance to meet regularly and to mingle with Chinese, Malay and Indian children living in the same block or playing in the playground or waiting in the carparks for the school bus to take them to the school nearby. And this "HDB experience" has been a valuable one for them and for me. They still recall with fondness, the friends that they made there, Salleh, Jamal and so on. And this is an experience which as many Singaporeans as possible should have.

Today, the first home for nine in 10 Singaporean first-time home owners is an HDB flat. More than eight in 10 first-timers who bought their HDB flats 10 years ago are still residing in an HDB flat, either in the same one or in another HDB flat. For the minority who upgrade to private housing, I believe their HDB years have formed an important and cherished part of their memory and life experiences.

Sir, I submit that we must endeavour to make the "HDB experience" a pleasant, memorable and a rewarding one for all

HDB residents, whether they are young or old, for newcomers, long-staying ones, people of different socio-economic backgrounds, different races. That is the challenge for HDB. That is the role that HDB must continue to play, going forward. We must continue to plan and execute our home ownership policies in such a way that the "HDB experience" that I talked about is a memorable and rewarding one.

We must make sure that public housing policies are fairly disbursed because, after all, we only have a limited amount of money to spend on public housing;

We must make sure that the flats that we build are of good quality and continue to remain affordable, a point which many Members of this House have brought up;

We must make sure that the leases are properly administered, eg, rentals, resale, etc;

Towns with supporting amenities are comprehensively planned and developed to meet demand; and

Older estates are systematically and properly reviewed, renewed and revitalised, so that vibrant communities continue to thrive there.

Of course, HDB cannot do all these alone, and this is where I believe that we must now start to leverage on the experience and expertise of others, eg, the private sector, the people who are not currently involved. Let us get them also involved in contributing to this "HDB experience".

Let me now touch on private sector participation in public housing. This is the first point that was raised by Dr Amy Khor when she asked how we intend to involve

the private sector in the provision of public housing.

Currently, public housing accounts for about 80% of the total housing stock. All of these flats are designed and developed by HDB. This is quite unusual. In fact, most other countries do not practise this. They do not have such a dominant player in the form of an HDB. Hong Kong and Malaysia, for example, do involve the private sector in various forms of public housing.

In 2003, when I announced the formation of HDB Corp, when we corporatised the building and development arm of HDB, I explained to the House that, together with this, we will also be opening up the private sector gradually to the private sector, starting with 10% in July 2006, reaching 50% in July 2008. Private sector participation will enable our public housing programme to be more responsive to the needs of our residents. And market competition, I believe, will also result in greater innovation in building and design, greater choice and, ultimately, better value for money for flat buyers.

My Ministry has been studying various options for implementing and involving the private sector in public housing development, and we have narrowed it down to two modes. Under the first mode, the private sector will provide the consultancy services, for example, architectural design and project management and, of course, the building works, as one package. This is known as Design-and-Build (D&B). This is a familiar method. It is tried and tested. It has been done for various estates in the past few years. But under the second mode, which I will call the Design, Build and Sell Scheme (DBSS), the private sector will undertake the entire development process for HDB flats, from tendering for the land to designing of the flat, the development of the flat, the building of it and, ultimately, selling the flat. So, design, build and sell.

Upon building completion, the developer will pass the common areas back to HDB. The flats will remain as HDB flats. They will be subject to the prevailing HDB rules and conditions. They will be sold to Singaporeans who are eligible to purchase subsidised public housing. The Ethnic Integration policy will also continue to apply.

Dr Amy Khor asked whether we considered other schemes, such as the reverse tender mechanism. Yes, we did. Under this scheme, we would cap the price of the flats and then we will let the developers tender for the land and build. The problem with this is that, having capped the selling price, the only way that the developer is able to make money is to stinge or save on the construction cost and, therefore, may create problems, as far as quality is concerned. And this is the experience, for example, that the Hong Kong authorities had, which they strongly advised us not to follow.

Under the DBSS, developers can price their flats, based on what the market can accept. To ensure affordability, eligible first-timers will receive a $30,000 or $40,000 CPF housing grant from the Government, similar to the grant for first-timers who are buying HDB resale flats. Those eligible can also obtain the HDB concessionary loan to finance their flat purchase.

Developers will be free to decide on the design and flat mix, so long as the character of public housing is preserved.

The DBSS scheme is untested. It is brand new. It is unfamiliar to HDB as well as to the flat buyers. So, we will take a cautious approach. We will test out the concept via a pilot project. HDB has identified a site at Tampines Avenue 6 for the pilot project. It will tender out the site

to interested developers in the second half of this year.

I expect that the majority of HDB projects that will be outsourced to the private sector will be under the tried and tested Design-and-Build (D&B) scheme. HDB will continue to be the developer, and set prices for the bulk of new HDB flats. HDB-developed flats, along with the HDB resale prices, will form the benchmark. It will set prices for the DBSS flats, and this will ensure that public housing continues to remain affordable for Singaporeans.

MND will evaluate the pilot DBSS project carefully before deciding whether to implement the scheme more widely. If we do, it will be done selectively, most probably in the more mature estates which are more popular with residents. We will modify the scheme, if necessary, depending on the outcome of the pilot, to ensure that our overall objectives are met, and to make sure that DBSS flats remain affordable for HDB flat buyers.

Sir, the liberalisation of the public housing market is a key milestone in the development of our public housing programme. I think it will reshape the way HDB provides public housing in future. It will introduce different ideas, it will bring different designs and minds to bear on how we can provide good public housing. But I want to assure Singaporeans that, even as we involve the participation of the private sector in our public housing programme, we will continue to provide housing subsidies for young couples to set up homes, start a family and for those who need to upgrade from their smaller flats. I hope that private sector participation in the development of public housing will help to enrich and enhance the "HDB experience".

Let me now turn to the issue of affordability of HDB flats. Many Members

have spoken on this. Dr Wang Kai Yuen revealed to us the results of a survey that the Feedback Unit did which showed that there was this gap between what the sample survey considered to be serious and the confidence that they had that the Government would address these concerns.

Sir, housing is a basic need, and I can understand why Singaporeans are concerned, and why they have raised the cost of public housing as a major concern, along with public transport and healthcare. Let me assure Members that the Government is committed to ensuring that HDB flats remain affordable to Singaporeans, especially to first-timers. But the question always is: how do we measure affordability? What do we mean by affordability? The universally accepted way is to compare prices with income, ie, what you have to pay versus what you expect to earn. Specifically, this means comparing the monthly mortgage instalments with your monthly household income. This is known as the debt-service ratio, with mortgage as a numerator and household income as the denominator.

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Last year, those who bought HDB flats needed to use, on average, less than 20% of their monthly income to service their housing loans. In other words, there was a debt to service ratio of 20%. This 20% ratio is reasonable and affordable by any standard. It is well within the 40% guideline which most banks use when they give out loans and when they do their credit assessment. It is also in line with international benchmarks when you compare across countries on whether housing is affordable. In our case, we are talking about public housing. Typically, the benchmark is around 25%-30%. Most flat buyers will be able to service their housing loans entirely with their CPF

contributions, in other words, they need not touch their take-home pay.

Dr Ong Chit Chung suggested we review the 20% downpayment required for the purchase of HDB flats. He argued that by requiring 20% downpayment, we are making flats less affordable. I just want to inform him that we need a downpayment because you cannot expect to buy such a big ticket item as a house without any commitment on your part. This is meant for financial prudence and it applies equally to buyers of HDB flats as well as private properties. For HDB flats, the conditions are less onerous than private properties because, in the case of HDB flats, for this 20% downpayment, you can actually use your CPF to fully pay for it. I just want to enlighten him further. To further ease the cashflow of younger first-timer couples and to enable them to set up home earlier, HDB has also introduced what it calls the Staggered Downpayment Scheme. In this Scheme, they only have to pay an initial downpayment of 10% when they book a flat that is under construction and the remaining 10% is payable only when the flat is completed, which is usually a few years later.

To further enhance the affordability of HDB flats, HDB last year resumed the building of three-room flats under the Build-To-Order (BTO) system, ie, to build only when there is demand. The first contract in Sengkang last year achieved a very high take-up rate of about 90%. This resumption of the building of new three-room flats after a hiatus of many years has helped to moderate price increases for resale three-room flats, and it has benefited flat buyers who want to buy three-room flats.

Mdm Cynthia Phua and Dr Amy Khor also asked about HDB's plans to ensure optimal supply of HDB flats. They talked about building smaller flats, even two-room flats and less five-room flats. Let me just say that with the new Build-To-

Order system, the building programme will be entirely demand-based. In other words, if there is demand for smaller flats, HDB will build smaller flats. If there is demand for larger flats, of course, HDB will also consider. But the focus at the moment is to sell its current stock of flats which encompass a wide range of flat types, ranging from the Executive flats all the way to the four-room flats. HDB will monitor the demand and adjust the supply of new flats and new flat types accordingly.

Sir, let me now turn to the issue of HDB rules and regulations. I think many Members - Dr Amy Khor, Dr Ong Chit Chung, Mdm Cynthia Phua and Mr Yatiman Yusof and others - in their speeches, alluded to the many different regulations and rules that HDB has. When I first became Minister for National Development, I asked for a briefing from HDB about their rules and regulations. I was given a folder this thick [indicating]. Of course, I did not look at it. But in the course of the briefing, I discovered that there is actually a reason for every single rule and regulation. There is a reason for every single one of them and it is all very logical.

They are there to support current policies. It does not mean that the rules and regulations cannot change because if policies change, rules will change accordingly. But many HDB rules and regulations are there for a serious purpose. Let me take one example which many Members have commented on. In fact, I get a lot of appeal letters on this, and this is our ethnic integration quota. This policy is there to make sure that we do not have racial enclaves re-forming in our HDB estates. If Members will recall, in the early days of Singapore, we had communities and settlements based on race and sometimes even based on dialect groups. We had Malays in Geylang Serai,

the Chinese in Chinatown and Indians in some parts of Serangoon.

With the HDB's building programme, these racially based settlements were dispersed. They went to live in different parts of Singapore as a result of the new estates being built in Toa Payoh, Ang Mo Kio, Bedok and so on. But over time, they started to re-form again. This is why we have the Ethnic Integration Policy (EIP). And as a result of the EIP, we now not only maintain the multi-racial character of our HDB estates, but we also allow our neighbourhood schools, hawker centres and shops to also be multi-racial. Together, they form and create that comfort level, that familiarity with one another's customs, traditions, idiosyncrasies, languages, whatever, which bind us together as Singaporeans.

Having said that, as I indicated, rules and regulations are made by men. They are not cast in stone and we will change them. We regularly review our policies and when the environment has changed, where the rule is no longer relevant, we will modify or even remove the rule altogether. As Singaporeans become better educated, they want to make more of their own choices. They are prepared to take responsibility for their choices. Together with this increase in responsibility undertaken by the residents, we can relax the rules and regulations. I believe this will improve the HDB's experience.

Over the last few years, HDB has made several major key changes to policies and rules aimed at giving residents greater flexibility in the use of their flats. Let me briefly mention three of them. First, bank origination was implemented in January 2003. Many flat buyers have now been able to take advantage of very attractive home loan packages. Yes, some of them have over-extended and Dr Maliki has mentioned the consequences of some of these. I will

address the issue later. But to-date, 50,000 bank loan applications have been processed, and almost $9 billion worth of bank loans have been disbursed.

The second change we made was in June 2003. We implemented the HDB's Home Office Scheme. This has enabled HDB residents now to work from home. They can list the home address as their office address. Now, some architects, tutors, IT specialists, work from home. It does not just save time and money but it also allows them to spend quality time with their families. Since then, 15,000 HDB dwellers have enlisted under the scheme.

Third, in October 2003, we freed up the subletting rules for HDB flats. Prior to this, there was a lot of difficulty in subletting your whole HDB flat except under very exceptional circumstances. Now, we have freed it up. To-date, more than 2,300 lessees have sublet their flats totally, and half of them are elderly lessees. They sublet their whole flat, use the money for their old age and move in with their children.

These are three major changes which illustrate how we have freed up rules and regulations over time to encourage residents to be more self-reliant, to be more responsible and to be more entrepreneurial. I am happy to announce that HDB will further liberalise its rules in two areas. First, we will reduce the time bar for households who have bought one subsidised flat to apply for a second subsidised flat from the current 10 years to five years. The 10-year time bar was implemented in 1997, together with other measures, such as the resale levy. This was to better manage the demand for new flats among second-timers. We do not believe that it is necessary to maintain the time bar for 10 years because the situation has changed. So we have reduced it to five years. Second-timer households who need to upgrade to

bigger flats can do so sooner. This will take immediate effect.

Second, we will further relax the subletting rules for HDB flats. Those who have no outstanding HDB loan will now be able to sublet their flat after occupying them for five years, compared to the current 10 years. Those who have occupied their flats for at least 10 years will now be able to sublet their whole flat even if they still have an outstanding HDB loan, compared to the current 15 years. These changes will give flat owners greater flexibility to monetise their flat and it would also provide more housing options for those who are not yet ready to buy a flat and who want to rent.

This move will make 537,000 flats, or 65% of all HDB whole flats potentially eligible to be rented out. Of these, about 300,000 can be rented out immediately as the flat owners have met the 10-year occupation period or the five-year occupation period and do not have any outstanding HDB loan.

I hasten to add that while the numbers appear large, we would expect most flat owners to continue to owner-occupy their flats. The actual number of flats sublet is therefore likely to be much smaller, but still significant. HDB will announce more details of the two policy changes shortly.

On the issue of affordability, there is a quick point that I want to make in response to Dr Amy Khor and Dr Ong Chit Chung. I believe they suggested that we should extend the housing subsidies to those who purchase private properties. I am afraid I cannot agree. If they can afford to buy private properties, surely they would have less need for financial assistance from the Government. And in any case, the income ceiling for housing subsidy is already very generous. It allows about 85% of Singaporeans to be eligible. The last point, which is equally important, is that we would still want

people to take the housing grant, to live in an HDB flat and go through the HDB experience.

Let me now talk about building a more inclusive society. This is the Prime Minister's vision, of building a more inclusive society and public housing will continue to play an important role in helping us realise this vision. In particular, let me touch on the housing needs of two groups which Members in this House have brought up.

The first group is the low-income and those in financial difficulty, and the second group, the elderly. HDB has in place various financial assistance schemes to help needy Singaporeans who have difficulty paying their housing loan instalments. Members would be familiar with them - reduced or deferred loan instalments, etc. HDB will work closely with individual flat owners to advise on the appropriate assistance measures. Last year, we approved 40,000 applications for financial assistance from HDB mortgagors, not a small number, but an indication of the last few years' financial difficulties or economic problems. Existing assistance measures are generally adequate in helping flat owners to tide over their temporary financial hardship so that they do not have to sell their flats.

But in cases where they do have to sell their flats, where they have been retrenched or have suffered a substantial pay-cut, etc, and they want to downgrade to a smaller flat, HDB would also view their cases sympathetically. HDB is prepared to waive the minimum occupation period to allow them to resell or to grant them another concessionary loan for the next flat purchase, depending on the circumstances of each case, ie, it is not a blanket change of policy

but it is a more flexible way of interpreting and implementing the policy. So I want to

assure Members that MND and HDB would be as flexible as possible in cases of genuine hardship.

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Dr Maliki asked about the number of flat buyers who have defaulted on their bank loans and have their flats repossessed. So far, we only have one case of a mortgagee sale of an HDB flat by a bank, out of some 50,000 bank loan cases, as I indicated earlier. Before this, let us take a step back and just remind ourselves that the flat buyers who have to take bank loans, who are not eligible for HDB loans, are really those who are either better off or those who have already bought a flat earlier with a HDB loan. So, in other words, they have already benefited from the housing subsidy and the subsidised housing loan. So we do try to advise and educate our residents that when one takes a bank loan, one has to make sure that one does his sums, through the information material that we provide, the info web, newspaper advertorials and many other channels. In fact, even direct face-to-face meeting. I have asked the HDB counter staff to make sure that they explain to the prospective HDB flat buyers that they know what they are in for. So we constantly hammer home this message, that buying a flat is not like buying a TV set or even not like buying a car. It is a long term financial commitment, and flat buyers must do their sums carefully. Those who take bank loans must be aware that they would be subject to the mortgaging financing policies of the bank, not of HDB. So I urge all flat buyers, whether they are taking a HDB or a bank loan to please exercise financial prudence. Buy a flat within their means. We would provide all the counselling that is needed and necessary but, ultimately, the decision lies with them. So please be careful.

Dr Tan Cheng Bock suggested a very innovative scheme of helping those who

are in difficulty. In other words, the HDB buys back the flat and then rents that same flat back to them at subsidised rates. He says that this is not a welfare scheme. I am not sure that I agree with him. If this is not a welfare scheme, then what is? The point really is that there are many, many ways of allowing a resident to encash or monetise their flat. They could rent out just a single room, which many are already doing today, without too much hassle. Or, they could rent out the entire flat and with the relaxation of the rules that I have earlier announced, more people could actually take this route. They could sell their flat and buy a smaller one. For those who could not afford to buy another flat after selling their existing flat, they may also be able to move into a HDB rental flat. And, to help these cases, HDB would consider waiving that 30-month debarment period to allow them to rent subsidised 1- or 2-room flat. So there are many avenues open for this group. I will be talking about another possible avenue later on, which is the reverse mortgage. But, because of all these different options, I do not think that we should start another subsidised rental scheme for flat owners, whether it is 3, 4 or 5-rooms.

Now, let me address issues and concerns on rental housing, which has been raised by Members. Mr Gan Kim Yong, Ms Indranee Rajah, Dr Amy Khor, among others, asked whether Government could provide more rental housing or to free up the regulations to have more people to be eligible for such rental housing. As Members would know, the Government provides 1 and 2-room rental flats to meet the housing needs of lower income Singaporean families, those who are unable to own their flats. The rentals under the public rental scheme are very heavily subsidised. And this is the reason why we have to make sure that there are strict eligibility conditions on citizenship, income, family nucleus, property ownership, etc. Otherwise, the

demand for such heavily subsidised flats would go up very sharply.

Mr Gan Kim Yong asked whether we could relax eligibility criteria for rental flats. In fact, we have done so. Last year, we raised the household income ceiling for rental flats from $800 to $1,500 and this has made subsidised rental housing accessible to more lower income families.

Ms Indranee Rajah suggested that MND review its policies on rental flats for single mothers and also for PRs with citizen child. As far as PRs with citizen child are concerned, we cannot change the rules for rental housing, for the very simple reason that citizenship must have its privileges. We have heavily subsidised rental flats. We have to reserve them for citizen households. As far as single unmarried mothers are concerned, we would treat them the same as other singles for rental of HDB flats, in other words, age cut-off of 35 and they must also have another single to qualify. This, I must hasten to add, is not to penalise single mothers, but to encourage them to look first to their families for care and support. But, again, for those who are victims of circumstances and who first face severe hardship, HDB would exercise flexibility, on a case-by-case basis, depending on the merits of each case. By the way, I wish to inform Ms Indranee that this policy applies to single fathers too. So we do not gender discriminate.

Let me stress that as we provide even more rental flats for low income families, we will continue to assist low income families to buy flats and to become home owners when they are financially ready and we have many schemes under the Special Assistance Housing Programme to do so. Why? Because, it is important that we keep the home ownership dream alive for as many Singaporeans as possible, including those low income

Singaporeans who would over time make good and who also feel that they deserve a stake in this country.

Let me now move on to the topic of housing for the elderly. Dr Lily Neo, Mdm Cynthia Phua and Mr Ang Mong Seng have raised this. And it is an important issue. Our elderly are not a homogenous group. They have different financial, healthcare, housing, social and psychological needs, as well as lifestyle preferences. For MND, the challenge really is to provide a comprehensive range of housing options, such that these diverse needs can all be met. For example, Dr Lily Neo spoke about the need to have lifetime designed homes that would change as the lifestyle changes. Our public housing policies today encourage our elderly to age in place. In other words, they should continue to live in a home that they are familiar with, strong family ties, strong community support. And it is for this reason that our HDB flats can be modified to enable residents to stay in the same flat over the various phases of their life cycle. It is for this reason that we constantly upgrade our HDB flats, especially the older estates to make sure that they are elderly friendly, both inside the flat as well as in the surroundings. Later on, I will be speaking about the lift upgrading programme, which is another way for us to make sure that our HDB estates continue to be elderly friendly.

Besides making sure that estates are elderly-friendly, we also need to look at how we could help retirees who are so-called "asset rich but cash poor" to monetise their asset for their retirement. Mr Ang Mong Seng suggested removing the 30-month time bar that is currently preventing elderly lessees from selling their flats and moving to a rental flat. This is a very common and current request in our MPS sessions. We are now

seeing many such cases, but there is a problem with just depending on this as a solution to our problems. HDB's rental flats are part of the social safety net provided by the Government for low income Singaporeans who could not afford to own their own flats. The monthly rentals are very low. They are substantially below the market rates. For example, for a 1-room flat we are talking about $26-$30, for 2-room flats we are talking about $60. The market rate for a room is only probably $200-$250, maybe more depending on the location.

Why are they so heavily subsidised? It is for the simple reason that they are meant for the very low income families who could only afford to rent the flats. The fundamental issue is not whether we should retain or remove the 30-month moratorium, rather it is whether we should widen our safety net further and create another welfare scheme for elderly HDB flat owners who have already enjoyed one subsidy, who are already owning a HDB flat, sometimes maybe more than one over time. If we do this, we are simply going to increase the demand for HDB rental flats. Last year alone, for example, HDB received something like 2,300 requests for waiver of this 30-month debarment. If we were to build another 2,300 flats just to cater for this demand, we would really have to up our public housing budget considerably. I do not think the Ministry of Finance is going to be very tolerant of this. So how else would it be funded? Money from within the budget? If we took it from the existing public housing budget, we would have to scale back on other expenditures, lift upgrading, particularly subsidy for first-time home owners even. So, at the end of the day, it is a matter of prioritising our resources, making sure that the many competing needs are met, and met as fairly as possible. Giving elderly flat owners who already own a flat another subsidised rental flat is not a sustainable option in

the long term. So what are the options available to them? Because the problem is there, and it is a real one, how do we ensure that the elderly have enough funds for their retirement?

First, HDB has built studio apartments and the studio apartments which are on short lease. They are equipped with all the necessary elderly-friendly features. The elderly can sell their current flat, use the proceeds or part of the proceeds to buy a studio apartment and keep the rest for their old age.

Second, we have liberalised our subletting rules for HDB flats. The elderly can now rent out a room, or the whole flat, and they can move in to stay with their children. Many elderly have done this. They sublet their flats and they have moved in with their children, slightly more than half have done so.

Third, the elderly can sell the flat and rent a flat or room from the open market, and I hope that with the further relaxation of the subletting policy, with more HDB flats available to be let out, this would help to keep rentals competitive.

The Government will look at other options to facilitate monetisation of flats by the elderly. Many Members have mentioned reverse mortgages. We have done many feasibility studies on reverse mortgages. In principle, it is a very attractive concept. But, so far, the schemes that we have studied indicate that monthly repayments are low. What is more worrying is that because the reverse mortgage currently has fixed tenure, if the elderly outlive their reverse mortgage term and are unable to repay the loan, they actually risk losing their homes. But we will continue to pursue this option. We will talk to the banks, the insurers and, if they are able to offer schemes on more favourable terms for HDB flats, we will certainly consider such schemes.

Sir, to effectively address the challenges of our ageing population, the Government would need to work very closely with the private and the people sectors. I am glad to hear Dr Lily Neo talking about selling land on shorter leases to private developers to develop private retirement housing. I think this is something worth studying and we would certainly explore it further.

Mr Ang Mong Seng also had another suggestion of converting vacant blocks in Jurong West for senior citizens' rental housing. Again, this is something that I would ask HDB to consider further.

Sir, finally, the issue of neighbourly disputes raised by Dr Tan Boon Wan. I just want to let him know that, in fact, under the existing lease agreement, HDB flat owners have agreed not to create nuisance for other residents. That, of course, does not mean that they do not.

They obviously do. Otherwise, he would not have raised it here. But we do have the legislative powers to actually persuade and encourage HDB residents to be more tolerant and be more mindful of their neighbours' needs. In the worst case or nightmare scenarios, HDB can actually acquire the flat under the Housing and Development Act. If they have neighbours from hell, this is something that is very tempting.

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But the point is that we should not have to come to this point. We should not have to do this. If we can force a sense of community, if we can get neighbours to understand that they are actually living in a wider community, whatever they do to their neighbours, their neighbours can also do to them, then I think we should not have to resort to such things. And this is probably the more fundamental point, that if we can

create this more harmonious living environment, we can actually enhance the HDB experience for everybody and therefore create a more active, a more self-reliant citizenry and strengthen the social bonds that bind us together as a nation.

Sir, a point of clarification. The Minister said that he does not agree to consider the extension of the housing grant for the purchase of any property, which includes private property. He said that one of the reasons is because we do not want to deprive them of the HDB experience. I would like to inform the Minister that first-time owners who purchase Executive Condominiums receive a housing grant. The Executive Condominiums are, in all intents and purposes, private property because they will be privatised in five years' time, and first-time owners receive a housing grant. These first-time owners never had HDB experience, in any case. So what really is the difference? What I am saying is that we could allow them to receive the housing grant but subject to the same conditions for purchase of HDB flats, ie, subject to the income ceiling cap as well as possibly not able to sell the property within a certain timeframe.

My next clarification is that I appreciate the Minister espousing on the benefit of living in HDB flats - the benefit of community bonding and so on and so forth. But surely we are not saying that this is the only possible way to have such an experience and that it is not possible if you do not live in HDB estates. Surely this does not mean that only HDB can provide such an experience of community bonding. If this were to be the case, does it mean that HDB will continue to dominate the housing market? Is this really an ideal and healthy situation for Singapore in the long term?

Sir, the Executive Condominium scheme is straddling between full private housing and HDB. It is a hybrid scheme. It was started at a time when housing prices were high. But even when we did so, we were very careful to make sure that the locations of the ECs were close to and contiguous to HDB estates. To that extent, while they are different from HDB flats, at the same time, they also enjoy the advantages of proximity to a HDB estate - the shops, schools, markets, hawker centres and so on. And their residents are also able to mix with those in the HDB estates. For example, when we organise activities in HDB estates through the RCs, if there is an EC located nearby, we invite them and, in many cases, they do respond. I do not believe that Executive Condominiums are entirely private in that respect.

There is a difference in giving a housing grant of $40,000 for a person to buy an Executive Condominium in Simei, Jurong, Woodlands or Tampines and giving a person $40,000 to buy a bungalow in Queen Astrid Park, because his father happens to be a multi-millionaire. There is a difference, and this is where the eligibility criteria that we have for housing grant at the moment are actually so generous at $8,000 that it allows almost 85% of Singaporeans to be eligible. So if we were to take that line of argument, most Singaporeans would actually be eligible for the grant and they would then be buying different types of property - private property and HDB property. And it comes back to the point that I made earlier, that we would not be able to have as many Singaporeans as possible living in HDB flats.

Is the HDB experience special? Yes, I believe it is. It is special because it is an environment that, as I said earlier, is like a mini Singapore - different races, different smells, different flavours, different kinds of practices. It is quite different from a private estate.

Will HDB continue to dominate? I believe it will continue to dominate the housing market. It may go down to 75% or whatever but I think for the foreseeable future, we are going to have HDB flats as part and parcel of the landscape. But will it be dominated by HDB statutory board? Will it be built by the HDB? The answer is not necessarily because we are embarking on an exercise to allow the private sector to do more of this. But will it retain the character of an HDB estate? Yes, it will.

Sir, can I seek clarification on the upgrading of HDB rental flats? The upgrading of HDB rental flats with elderly friendly features in the past has been useful to many residents, especially the elderly residents, and it is a worthwhile project. May I ask the Minister of the progress and whether it can be enhanced further and be stepped up?

On another issue, can the Minister give us an update, either public or private, on the retirement village?

Sir, we embarked on the programme to improve elderly housing several years ago, and we stepped it up quite considerably. And as a result of this, I visited many of these flats which benefit the elderly not just within the flat, not just in the provision of features such as emergency cord, sitting toilets, non-slip flooring, elder friendly taps and so on and so forth, but it also creates a community that allows them to be involved, that allows them to get help when they need to and allows them to do some of the things that they enjoy doing - the singing, the qigong exercises and so on. Why? Because as we upgrade the flats, we also upgrade the block. We also provide facilities for VWOs to be located there and to provide all these community facilities for the elderly.

Yes, it is a worthwhile scheme. It is something that we are very interested to

do, and we will continue to do so. Many of the flats in Dr Neo's constituency have been upgraded. Old estates in Queenstown, Whampoa and others have been upgraded. We have done most of it and we will accelerate the rest in the next few years.

On retirement villages, so far, there has really been no activity, because the private sector has been looking for land and they are asking us whether we can provide such land, and the answer is yes. We will be looking for such land and the URA will be considering whether they are suitable places for this.

Retirement housing in HDB estates would be the studio apartments. Is it possible for the private sector to also build studio apartments? Maybe.

Sir, a point of clarification. Earlier, the Minister mentioned my name together with Dr Amy Khor that I asked for a housing grant for those going for private property. Although it is a privilege to be associated with Dr Amy Khor, I did not say that. My position is quite different. I asked whether we could consider making grants portable; in other words, making it applicable to first-time buyers of HDB new flats, resale flats or Executive Condominiums. It is just a point of clarification.

May I ask the Minister whether reverse mortgages are working well in other countries? If they are working well in other countries, why not in Singapore?

First of all, I would like to apologise to Dr Ong Chit Chung for lumping him together with Dr Amy Khor. Maybe I should not apologise, but I think I may have scribbled my notes wrongly.

As far as reverse mortgages are concerned, yes, there are countries which have practised reverse mortgages, but

these are mainly countries where the conditions are different from us, either the interest rate regime is different or lower, or the value of the houses is different, much higher. Yes, they have worked successfully in other countries. We just want to make sure that the conditions in Singapore are suitable for such schemes. As I said, it is a very attractive option and something that I would like to pursue. But we cannot pursue it unless there are insurers, banks and financial institutions who are prepared to offer favourable terms to our lessees. Otherwise, it is academic. There is no point in having a reverse mortgage scheme where your repayments are so low as to make it not worth the while.

I have to give priority to those who have made cuts. Dr Tan Cheng Bock.

Sir, the Minister calls my scheme a "welfare scheme" I call it a "compassion scheme". So I just want to seek clarification from the Minister. The HDB has, in the past, bought back 3-room HDB flats at market price and then sell them to the poorer Singaporeans at a subsidised rate, so that the poorer Singaporeans can have ownership of HDB flats. My scheme is a modification of his scheme. What I am asking is that HDB buys back the flats from these hardship cases and then rent these flats back to them at a subsidised rate. So I do not think my scheme is a welfare scheme. I think my scheme is more to give a life line to these people and a way out - an option - so that they can have some funds to help them to tide over this bad period. And I also had some caveats in my speech. I hope the Minister can respond.

Dr Tan Cheng Bock's compassion scheme, not welfare scheme, is another subsidised rental

scheme. Because the bottom line is that the resident is actually renting the flat at a subsidised rate. As I indicated earlier, there is another option, ie, if a flat owner is in financial hardship, he can sell his flat and he can come back and rent a subsidised flat from the HDB. The variation that Dr Tan Cheng Bock has proposed is to actually rent that same flat to him. I will ask HDB to look into it but

the issue of having another subsidised rental scheme freely available to residents should be very carefully considered. At the end of the day, we are talking about how to allocate the public housing budget to as many people as possible. We already have tried to accommodate this group through other means. What Dr Tan has suggested is something that we will study.

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Dr Tan Boon Wan. After that, Mr Ang Mong Seng. We have got 12 more minutes for clarifications.

Thank you, Sir. I am glad to hear that the Minister said that HDB has powers to take action against the difficult neighbours. But it seems that HDB is very reluctant to exercise it. Like the Minister, I sincerely hope that people understand each other and we can solve our problems in a very compromising way. But we are dealing with people who are unreasonable. And if we have the police, grassroots, town councils, all possible agencies, even the Mediation Centres and they still cannot resolve it, I think it is time for something more drastic to be taken. Can I ask whether the Minister will tell HDB to be more forceful and to exercise their power more willingly than to be more reluctant in using their power and give relief to the parties who are suffering?

Sir, if Dr Tan has any specific cases in mind and he wants us to evict any of his residents, please let me know.

Sir, first of all, I would like to thank the Minister for agreeing to look into my proposal to convert some of the flats in Jurong West for the senior citizens. Since there are so many requests and the Minister has mentioned there are 3,200 cases at this moment, can the Minister inform the House when this idea can come true?

I would ask HDB to look into it as soon as possible.

One more clarification. Mr Gan.

Sir, I would like to clarify with the Minister on the rental flats. I understand that it is heavily subsidised but I was asking in my speech whether the Minister would consider having a two-tier rental system with the second tier that comes with a lower subsidy but more flexible criteria.

Sir, we already do this. In fact, when we expanded the eligibility ceiling from $800 to $1,500 last year, the second tier is actually at a less subsidised rate. The $1,500 ceiling already corresponds to something like 20%-25% of the people. So we should refrain from expanding it even further. Of course, the other option really is for them to rent from the open market. One of the reasons why we are relaxing the subletting rules is really to free up the market further and, hopefully, to bring down the rental prices for HDB flats in the secondary market. In this way, I hope that those who do not wish to rent or buy a HDB flat, for one reason or another, can look at this as a viable alternative.

I will allow clarifications at the end of this Head, if we have time. Mr Chay Wai Chuen, your cut, please.

Main Upgrading Programme

Sir, the MUP Programme has been in place for some time and it applies to units which are 17 years and above. I would like to ask the Minister why are 40-year old flats still not upgraded. The reason I am concerned about this is that while the priorities are accorded all round to the different constituencies but for the 40-year old flats, the piping, lifts, ceilings and corrosions are all day-to-day issues that the residents have to live and put up with. So I would like to find out what are the reasons for this delay and why is it so difficult for HDB to make up its mind on this. I am referring in particular to some of the flats in Queenstown and Margaret Drive.

Town Council Sinking Funds

Sir, the town councils are required under the Town Councils Act to lock away some 30% to 35% of their funds into a sinking fund to ensure that they have adequate funds in the long term to do major cyclical works, like repainting, re-roofing, replacement of lifts and water supply system, and so on. And the remaining 65% to 70% of the funds are for routine operating expenditure, ie, cleaning, repairs, utility charges, and so on, in the upkeep of the towns.

Over the years, since the formation of town councils in 1990, many town councils have accumulated very healthy balances in their sinking funds, certainly more than enough to meet their long-term needs. Sir, PM, in the recent Presidential Address debate, has said that the Government would step up their LUP programme for all towns and perhaps have it completed within 10 years. This is a very ambitious target. Depending on the level of funding from the Government, town councils and residents, this exercise will have an impact on the town council

sinking funds. On this, Sir, I urge that the amount payable by town councils for this ambitious LUP project be kept at status quo, and not higher.

Sir, besides the impending use of sinking funds for the LUP, I am also asking that the Ministry consider, if necessary, amending the Town Councils Act to allow the town council sinking funds to be used for other strategic purposes. By this, I am referring to various improvement works within the town, which are of a cyclical nature, ie, replacement of lift parts, facilities like playground, fitness station, and so on. Currently, town councils could only use routine operating funds to fund these expenditures.

Sir, I could go on and list other types of expenditures for which sinking funds could be allowed. May I therefore propose that the Ministry, in the light of this massive LUP project announced by the PM, review the adequacy and the use of town council sinking funds. Sir, if sinking funds could be freed up for certain expenses, then this would help ease the pressure on town council operating funds and, over time, lessen the need to increase S&C charges.

Order. I propose to take the break now.

Thereupon Mr Speaker left the Chair of the Committee and took the Chair of the House.

I suspend the Sitting and will take the Chair again at 3.30 pm.

Sitting accordingly suspended

At 3.13 pm until 3.30 pm.

Sitting resumed at 3.30 pm

Debate in Committee of Supply resumed.

Head T (cont.) -

Head T - Ministry of National Development. Mr Tan Soo Khoon is not here. Mr Ang Mong Seng.

Lift Upgrading

(In Mandarin): Sir, first of all, I would like to thank the Prime Minister for shortening the cycle of lift upgrading from 15 years to 10 years. All the residents of HDB estates appreciate this kind gesture. Among all the HDB upgrading programmes, the Lift Upgrading Programme (LUP) is most welcomed by the residents. According to a survey by HDB, some 97% of the residents support this scheme. Recently, in officiating the launch of the Lift Upgrading Programme in Tanjong Pagar GRC, Minister Mentor Lee urged the residents to give full support to the programme. He said the LUP not only improves the environment of the estates but also enhances the value of the flats.

Since 1997, I have been appealing on behalf of the HDB residents, especially those who live in 4-storey blocks, for lifts to be installed. This had been reported in the Straits Times. Finally, in 2001, the first set of lifts for 4-storey blocks was installed in Bukit Gombak. The Chinese press Lianhe Zaobao reported on this news. As a result, whenever the residents who live in 4-storey blocks meet me, they would ask, "Mr Ang, when can you help us to get the authorities to install lifts for us?" I would like to take this opportunity to ask the Minister when the lifts could be installed for the 4-storey blocks.

In Europe, fibre glass is used as the material for the lift walls, and they mount

the lift motor on top of the lift-cars, thereby reducing the installation cost by 30-40%. Could the Minister consider studying their method? This will help to speed up our LUP process. At present, it takes about two years from the time of the announcement of the decision to install the lifts to the commencement of the installation works. I think the time is too long. Can it be shortened to one year?

Sir, I have four requests to make to the Government with regard to the Lift Upgrading Programme.

First, I appeal to the HDB to expedite the LUP. Residents with low mobility, especially the senior citizens and the frail, are crying out for lift access. This is especially so for those older estates like Ang Mo Kio.

Second, I would appeal for the inclusion of low-rise flats for the LUP, especially those with many senior citizens. For those with low mobility, every step is one too many, whether you live in a high-rise or a low-rise flat.

Third, in order to bring the benefits of LUP to the most number of people, I would like to request that LUP voting be brought down to the shaft level, from the block level that is now being used. If 75% or more of the residents directly benefiting from the building of the lift shaft and eligible to vote, support LUP, then that lift shaft should be upgraded or built.

And last, I would like HDB to inform the buyer of a flat of its LUP status during the sale appointments, and require the buyer to sign a statement that he or she had been duly informed. This is to encourage residents offered LUP to think and vote more carefully. Some younger owners told me that they will not vote for LUP as they do not need lift access immediately. They will sell their flats and

buy another with lift access when they are old and lose their mobility. They must be made to consider the impact of their decisions on their neighbours and themselves, if not in all aspects, then at least on the price of their flat and its saleability.

Sir, like my parliamentary colleague, Dr Tan Boon Wan, I would like to inquire of the Minister whether under the recently announced policy change of allowing town council funds to be used for lift upgrading, LUP will now be extended to low-rise blocks. The policy to-date is that there is no LUP for low-rise blocks, on the basis that it is not cost-effective. But this creates a lot of hardship for the elderly in the low-rise blocks, including those who are disabled, whether chair-bound or with arthritis or joint problems. The lack of lifts effectively confines them to their own corridors, and I hope that there will be a policy review to provide LUP for low-rise blocks.

Sir, the Ministry's development budget includes $517 million for lift upgrading. As mentioned here by the hon. Member, Mr Chew Heng Ching, on 15th January in this House, the Prime Minister announced that lift upgrading would be accelerated to 10 years. Would the Ministry estimate the change in total cost if we accelerated the programme to five years? There are two reasons why the total cost may well be lower.

First, the construction industry is presently very depressed, so prices will be lower.

Second, lift manufacturers will compete aggressively for larger contracts, so we can gain scale economics.

Therefore, Sir, an accelerated programme might well give us more for less.

Selective En-bloc Redevelopment Scheme (SERS)

Sir, I would like to ask the Minister to give more choices, in terms of compensation or alternatives and flat type allocation for those people who are affected by the Selective En-bloc Redevelopment Scheme. Children should be, as best as possible, allowed to help pay for their parents in some of these choices that they have to choose.

Many of the SERS type of choices which are offered may have to be friendly to many of the older citizens who are affected by the SERS scheme. So, I suggest that the Ministry should consider going for two-room or even studio units within this kind of compensation flat types. A lot of the people who are affected by these SERS schemes are old people, and I caution the Minister in the fact that many of them fear going into debt to finance any purchases.

Sir, first of all, on lift upgrading in HDB estates, Members would have heard the Prime Minister announce that MND will be targeting to complete the Lift Upgrading Programme in 10 years for all eligible blocks. Members have also asked whether we can speed up the programme. Let me now give some details about how we intend to implement the LUP in 10 years, as well as to address some of the Members' concerns and suggestions.

We introduced LUP in 2001, and that was to meet the needs of our ageing population by providing lifts on every floor, and the programme has been very, very popular with residents. I say that it is going to be even more in demand as our population ages.

What is the status so far? We have selected about 600 blocks for LUP. Some

of the works have been completed, while others are in various stages of completion. Another 650 blocks have had their lifts upgraded under another programme, which is the Main Upgrading Programme (MUP) which incorporates lift upgrading. Blocks that are built after 1990 already have direct lift access. So, if we do our mathematics, it gives us about 3,000 high-rise and 800 low-rise HDB blocks which are still waiting for their lifts to be upgraded.

To provide lifts on every floor, we will have to add new lift cars, landings, lift shafts, depending on the different block configurations. This is a very major and costly exercise. The cost per unit ranges from as low as $1,500 to as high as $80,000 or $90,000 per unit. To provide for lifts for all the remaining blocks, it is going to cost the Government something like $5 billion. To put this figure in perspective, this is more than four times what the whole Ministry's public housing budget is for the financial year of 2005, if Parliament approves the budget for MND. That is $5 billion.

So, when Prof Ivan Png asked what if we were to accelerate the programme and complete it within five years, what is going to be the extra cost, the answer is really that it is not likely to be less than that. In fact, it may even be more. At the moment, we have low construction cost, but I do not think that this is going to be the case for ever and ever. Costs are likely to rise. In fact, they have already risen. Material costs have gone up. Labour cost will go up, and construction cost generally will rise over time. But, more importantly, we have to ask ourselves, if we were to accelerate the programme, whether HDB, the contractors, suppliers, etc, will have the capacity to cope with such an accelerated programme. We also have to take into account the funds that are available for completing this programme quickly.

Obviously, when you do it in five years, you are going to spend much more per year, and the budget within each year would have to be considered very carefully.

So, our assessment is that 10 years is a realistic timeframe. It is achievable. Considering the fact that we have up to now been looking at a 15-year timeframe, I say that the target of completing it within 10 years is quite a challenging task for HDB. If we want to do this within 10 years, we will have to take several steps.

The first is that we will have to pick more precincts for the LUP and IUP Plus programmes, especially the LUP, starting from this year. So, for FY04, we will be selecting 43 precincts in total, compared to 24 in FY03. With more precincts selected for LUP and IUP Plus, given the same budget, we can afford to do less MUP each year. FY02, we did 10 MUP projects. In FY03, we did not select any because some of the MUP precincts had deferred the polling. In FY04, we will be selecting only three precincts for MUP. So, the first thing we will do is to speed up the selection programme.

The second thing we will do is to stretch every LUP dollar as much as possible. The cost of lift upgrading per unit, as I said earlier, ranges from about $1,500 for a standard block with a standard configuration, ie, common corridors where you just have to punch the lifts through, to something like $80,000 to $90,000 for some of the more complicated segmented blocks where you have to have virtually a lift shaft for every stack of flats. So, to ensure that the largest possible number of residents can benefit from lift upgrading, we will only select blocks for lift upgrading if the cost per unit does not exceed $30,000. With this cost cap of $30,000, 95% of the blocks will be eligible for LUP.

HDB has always been very careful about keeping the cost of lift upgrading low, because this benefits not only the Government as it stretches the budget a little bit more, but it also benefits the residents because they do not have to co-pay as much. To keep costs low, HDB avoids over-provision of lifts, extravagant finishes, and it procures lift and building contracts via bulk contracts. To reduce costs further, HDB will now provide more basic finishes in the building works, for example, by minimising the amount of tiling and other finishes for the upper lift lobbies.

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I come now to the issue of low-rise blocks. This is something that many Members have been asking for in this House, not just in this sitting but

also in past sittings. Mr Ang Mong Seng, Dr Tan Boon Wan and Ms Indranee Rajah, amongst many other MPs, have done so. I am happy to announce that we have decided to extend lift upgrading to low-rise four- and five-storey HDB blocks. This is provided the cost does not exceed $30,000 per benefiting unit which is similar to the criteria that we have adopted for high-rise blocks, and also provided that the blocks are not affected by future development. This new policy will take immediate effect, beginning with the current batch of LUP and IUP Plus precincts, the ones for FY2005. HDB will inform advisors and town councils of the selected precincts shortly.

Mr Ang Mong Seng made several other suggestions, eg, HDB should find new and innovative ways to make lift upgrading more cost-effective. I agree with him. For example, if we can upgrade low-rise blocks in a way that makes it more economical to do so, we certainly will, whether it is in the construction of link bridges or in making use of new technologies. I think all these things are worth serious consideration. I will be asking HDB to get in touch with Mr Ang.

Mr Ang also suggested reducing the period between the announcement of the LUP and the commencement of works. He mentioned that it took something like two years. My experience so far is that this ranges, on the average, about 16 months, and this includes the time to work out the design for HDB, to conduct the poll, to call a tender and, ultimately, to award the tender. But even then, it is a little bit too long. We will endeavour to shorten this period as much as possible so that residents will be able to benefit as quickly as possible.

Let me move on to lift upgrading by town councils, what I would call - TC-LUP. PM has announced that town councils be allowed to use part of their sinking funds for this purpose. This serves two objectives. One, it will speed up the upgrading in HDB estates and help us to achieve our 10-year target. Two, and more importantly, it gives town councils more flexibility and more responsibility as well to schedule and to prioritise the blocks within their estates, bearing in mind their residents' needs and their own resource capabilities.

Mr Chew asked if we could relax restrictions on the use of town council sinking funds to allow them to do their lift upgrading works or other improvement works. Although we do allow town councils, even now, to use their sinking funds for lift upgrading, I just want to remind Members that sinking funds are meant for the long-term cyclical maintenance of the estates. They come from the residents' S&CC contributions over the years and they should be deployed to do the necessary works, like re-roofing and repainting, ie, the cyclical maintenance works that are essential to make sure that our HDB estates do not degenerate into slums. This is a very important point because the basic

difference between our housing estates and many other public housing in other countries is that our estates not only look good when they are first built, but they also look good after many years. If you look at council housing in UK or in other countries, you will know what I mean. After the initial period, because they do not have a system of regular maintenance, and they do not require their residents to actually pay for the maintenance, or enforce the maintenance, very soon it deteriorates. When it deteriorates, values drop and there is a vicious cycle, a spiral downwards. This is something that we really should not see. We must not let this happen in Singapore. This is why I believe that the sinking fund is very important to make sure proper cyclical maintenance is done when it is needed.

But over the years, we have re-looked at the sinking fund contributions. We have relaxed the rules governing the use of the sinking funds. And today, town councils, for example, use sinking funds to co-pay for lift upgrading under the HDB's Lift Upgrading Programme up to a cap of $3,000 per flat. Town councils have also been allowed to use sinking funds to pay for specific improvement works subject to the approval of the Minister, such as installation of video monitoring devices in lifts.

Subject to all these changes, we will still need to make sure that there are sufficient funds left in the sinking funds. Do not forget that over time, our estates are getting older. Our population is aging and our estates are also aging. Therefore, they need more care and attention and more works to be done.

Taking all these into consideration, we have set certain caps and limits on the amount of money to be spent for the town councils' Lift Upgrading Programme. We have decided to allow town councils

to use up to 10% of their sinking funds as at 31st March 2004 to have a certain specific number for the purpose of their own lift upgrading programme. If you add this up cumulatively amongst all the town councils, this is quite a significant amount. It works out to something like $125 million for the 16 town councils. That is on the town councils' basis.

To ensure that more residents can benefit from the TC-LUP, ie, to spread the benefits out as widely as possible, we have also decided that town councils should avoid using the bulk of their available sinking funds to upgrade lifts for only a few blocks. Town councils will only be allowed to implement lift upgrading for HDB blocks where the cost per unit does not exceed $5,000. This, we have worked out, is enough for the typical common corridor standard blocks and also for the point blocks. Most of the standard blocks in our estates should be eligible under this cap. HDB estimates that this will enable town councils to implement lift upgrading for some 300 to 400 HDB blocks, based on these two conditions. It is a sizeable number, and it will go a long way to meet our 10-year target for completing the LUP.

There are several other considerations. First, residents in blocks selected for lift upgrading by their town councils will need to vote. Similar to upgrading programmes under HDB, at least 75% of eligible residents for a block must vote in favour of lift upgrading before the works could start. Residents will also co-pay for the works in the same proportion as HDB's LUP. Why co-payment and why polling? Because we want to make sure that residents carefully consider whether they really require the lift upgrading works before the works proceed. In some blocks, it may well be that, as Dr Tan Boon Wan mentioned, some of the residents may not want it for one reason or another. Once the town council has achieved the minimum 75% support level

for the upgrading, it will have the necessary mandate to implement the programme. So this is a very important point. We will have to amend the Town Councils Act to provide for the necessary legislative framework for town councils to carry out lift upgrading using their sinking funds.

Sir, finally, one last point to address Mr Chay Wai Chuen's point about the blocks in his constituency, Queenstown. Yes, there are blocks in Queenstown which are 40 years old. In fact, they were the earliest blocks that were built by HDB. These blocks have not been selected for MUP or SERS. We only launched MUP about 16 years ago and that was precisely for the purpose of rejuvenating some of the older estates like Queenstown, like Mr Chay Wai Chuen's, to bring them to the standard of the newer ones. So far, we have had 130,000 flats undergoing MUP. Of these, 80,000 have been completed.

But in selecting the precincts for MUP, I must say that it is not just age alone. Age is only one of the criteria. There will be other factors, like the overall redevelopment of the area and the budget, which is one of the big constraints. As we do more lift upgrading, there will be less budget for MUP, so fewer precincts will be selected for MUP. It does not follow then that the oldest blocks will be selected for MUP or, for that matter, considered for SERS. For SERS, there are several other considerations, key of which is the fact that it must have redevelopment potential. My advice to Mr Chay is to get his town council to quickly proceed with R&R works or cyclical maintenance works for those blocks that are urgently needed and not to wait and assume that they are going to be selected for MUP or SERS.

As far as SERS is concerned, Mr Chay also asked whether there can be other re-housing options for the lessees, especially

the elderly lessees. I am pleased to inform him that, in fact, the re-housing options for SERS lessees have been relaxed in the last year or so. They can now opt for different types of flats - three-room, four-room, five-room. We have even built studio apartments for them, and of course now, three-room flats. If they do not wish to take up any of these options, they can still choose two-room flats in areas other than where they are going to be re-housed. In other words, we have opened up the whole of Singapore as re-housing option for those who are affected by SERS. They do not have to confine themselves to just the precinct where the replacement blocks are going to be built. In this way, I hope that the residents who are involved in the SERS programme will have more choices and will find the programme much more attractive. In fact, it is already an attractive programme, but in this way, we hope the elderly lessees will find such options more attractive.

The clarification time has already been exhausted. Dr Khor.

HDB Retailers

Sir, it was recognised, as early as 1992, more than a decade ago, when the retail sector development plan was prepared, that the retail sector, particularly HDB shop retailers, would face a very difficult business environment.

Except for HDB rental shops located near MRT stations and within town centres, many of the HDB shops in the neighbourhood precincts are not doing well. In fact, I would say that some are "terminally ill". In my own constituency, there are shops in some precincts which are perpetually vacant whilst the turnover of tenants in other shops is high.

Past ad-hoc measures to restructure the HDB retail sub-sector and alleviate the misery of many shopkeepers have proven to be ineffective. Indeed, while well-intentioned, some might have added to their woes. The HDB's Sale of Shops Scheme, for instance, has unwittingly saddled many shopkeepers with high mortgage loans that they are now struggling to repay.

MND must therefore tackle this persistent problem in a comprehensive manner and not in a piecemeal fashion. I would like to suggest to the Minister that a special taskforce be set up for the entire HDB retail sub-sector with representation from town councils, SPRING, grassroots leaders and a panel of retail experts, if this has not been done already.

This taskforce can map out the broad directions that each HDB estate can take. At the local level, HDB can work with the respective town councils and merchant groups to identify for each HDB shop cluster or precinct what improvements can be made, the appropriate retail needs, etc, and then develop specific plans to revitalise these shops, including physical improvements and alternative uses for spaces which are clearly not viable. The town councils, SPRING and the merchant associations

could help shopkeepers get together to promote the area, provide assistance to upgrade employees, improve marketing skills, etc.

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I do not advocate keeping unsustainable retail shops afloat. But there has got to be a mutually acceptable exit strategy for their owners. This could comprise reasonable compensation for rental shops or a buy-back scheme for shops sold, similar to the JTC buy-back scheme for factories, if the tenants decide to exit from the businesses or the tenants could be offered some resettlement scheme in more viable HDB retail precincts. HDB could, like any

experienced shopping centre landlord, use a small portion of the substantial amount of rental it collects every year from the 6,000 rental shops, to promote the shops via advertising and promotional programmes. After all, HDB does set aside an A&P budget for its neighbourhood shopping centres. So, why not for the shop clusters?

It is well recognised in privately-owned and run shopping centres that there must be some degree of control over the tenant-mix in order to make the entire centre mutually reinforcing rather than competitively damaging from having too many of the same shops all over.

Also needing some review is the tender system for allocating space. The tender system leads to maximum revenue but also possibly to unsustainable businesses from aggressive overbidding. It is time to explore other modes of allocation as Sentosa Cove has recently done with its private treaty method for selling bungalow plots. This could help to ensure the right mix of retail trade and activities. Studies of shopping centres have often found tenant-mix to be the key for the success of a shopping centre or precinct. Both these suggestions, use of non-tender methods of allocation and picking tenants for their trades, are somewhat anathema to a Government that espouses free market principles, and letting the market, rather the Government agency, to decide. But, perhaps, new operating structures should be devised and experimented with, to balance all these areas of concern.

Sir, much of what I have said is not new. The issue now is to move beyond the plans to concrete action. Sir, I sincerely hope that the package to help shopkeepers restructure, relocate or retire, which is to be announced by the Minister shortly, would be comprehensive and aggressive enough to try to resolve this very endemic problem.

Sir, I rise to speak on assistance schemes to help HDB retailers upgrade to remain relevant. A large proportion of the domestic retail sector is made up of HDB retailers. There are about 15,000 retailers in our HDB estates, of which almost 90% are located in neighbourhood centres and precincts. Many of these retailers located in the older estates fight a daily battle to make ends meet. As Prime Minister and Minister for Finance stated in his Budget speech, these retailers need to be given a means to exit their business if they are non-viable or otherwise they should be encouraged to upgrade to remain relevant. I applaud the Government's effort to help these retailers who make a meaningful contribution to our economy.

Mr Chairman, in the past, retailers who wished to upgrade themselves relied on the LETAS grants which funded up to 70% initially, then subsequently reduced to 50% of the allowable cost involved in upgrading. Allowable cost included consultancy and related travel expenses, whereas costs such as equipment and material costs were excluded from support. I understand that LETAS has been totally removed now. In its place is the Domestic Sector Productivity Fund (DSPF), which links its funding closely with key performance indicators. Retailers would be able to draw from this fund provided they submit a detailed proposal that lists projects, cost breakdowns and ROI before they could embark on upgrading. However, while the HDB retailer may be genuinely committed to upgrading his business, he may not be able to record the level of improvement expected. Take, for example, a retailer selling children's clothings. With the declining fertility rates, his business could not be expected to grow by leaps and bounds. Instead, upgrading will allow him to remain competitive and maintain his level of performance. Thus, the criteria set out

under DSPF may not be applicable. Would it thus mean that such a retailer would not be able to benefit from the fund?

Sir, while it is important to tie funding of upgrading projects to the expected impact, I ask for the Minister's assurance that the process of obtaining assistance in itself does not become a hurdle for retailers who genuinely wish to upgrade themselves.

Mr Chairman, Sir, some years ago, the HDB piloted a scheme to allow the exit of some of the retailers from the shops in the neighbouring housing estates. Subsequently, this pilot scheme was stopped. As a result, many of those units that remained after some of these shops had exited, their business has gone from bad to worse because of the lack of traffic, mix, and so on. So I was wondering whether this new retail scheme that the Government is coming up with, for allowing the exit of retailers from the neighbouring shops, would include lessons learned from the pilot scheme that was done some years ago and, whether we should not also consider widening the scope of this restructuring of the retail shops by considering the right proper mix, as mentioned by Dr Amy Khor just now, including the possibility of lower rentals and so on, to allow this sector of people to carry on with their trade.

The question is, after they exit from the retail shops which they manage in the neighbourhood, what are these people going to do? They have exited their business, they do not know what to do, and after a while the money is gone. So I wonder whether the Minister will address this.

Assistance Measures for HDB Shops

Sir, by and large, the HDB is an organisation

Singaporeans have a lot of reasons to be proud of. The announcement in the Budget that there would be measures to assist the retailers in the HDB heartland is an indication that it is sensitive to the pain of the heartlands. There are many retailers who are trapped in high rentals that they are committed and are sloshing in losses. While we wait with bated breath for details of the measures that will handle the situation, I wish to comment that exit from the business may not be the only solution both for the retailer and also for the interest of the immediate community which HDB heartland shops were set up to serve in the first place.

I seek to ask the Minister to explore alternative ways of handling the situation. Would the Minister consider flexibility in handling specific cases that are in difficulty? There is often-mentioned comment that it is not fair to the other tenderers that have not succeeded in their bid if we now give quarters to the incumbent retailer. But let us not assume the worst of Singapore's businessmen. They do not bid to fail. By the time they start to scream, they are already deep in the hole. So would the Minister allow a review of each case, specifically more from the standpoint of changing business circumstances and the environment since the bid? Yes, there would be grey areas and judgements would have to be made and officials pressed to come out with the work-around solutions. But is this not in the nature of the uncertain world we live in? Work-around is a commonly heard word in the corporate corridors to find ways to turn around poor performers. Could I ask the Minister if he will consider stretching out a hand as a partner to work out a situation? It is a hand of partnership and not a handout.

Mr Chairman, Sir, during the Budget Statement debate, I spoke on the plight of

HDB shop owners and tenants who face difficulties in making ends meet. I had called for the Government to extend further assistance to help lower the rental and business costs of HDB shops. I also called for the HDB, as the developer and landlord of HDB shops, to take an active role in the advertising and promotion efforts of the HDB neighbourhood centres. I, therefore, hope that the Ministry will give some good news to our long-suffering HDB shops in today's COS debate.

Sir, to be fair, HDB had, in response, made several policy changes to alleviate some of the challenges. For instance, it is now easier to change the use of HDB rental units. HDB also allows HDB retailers to sublet their units, either in whole or in part to others. This is a step in the right direction. However, I have learnt that even with the policy on subletting, some new problems have emerged. For example, when a HDB shop sublets its unit, the rent is adjusted towards the market rate set by the HDB. And, for whatever reason, this market adjustment seems to always be an upward adjustment. The rationale is that the rental burden is now shared between two tenants, thus the final amount payable would be lower than if the tenant were to take up the unit on his own.

Sir, when a HDB shop has to sublet, it is often due to the fact that the original tenant finds it no longer able to sustain his business. When HDB adjusts the rental upwards, it is counter-productive to the business. Another problem arises when the original tenant loses his subtenant. I understand from the ground that HDB does not adjust the rental back to the original level and, in effect, the rental is left at the higher market rate. This creates problems to the tenant who had sublet the unit to help ease his rental burden in the first place. Now he is faced with an even higher rental.

Sir, I ask the HDB to thoroughly review all its rules and regulations governing change of use ---

Dr Ong, your time is up.

Mr Chairman, Sir, I rise to speak on steps we could take to reduce the burden on ailing HDB retailers. The plight of HDB retailers has been in the headlines for some time now, the recent one being on Insight in the Straits Times. It has been suggested in the ERC Subcommittee on Domestic Enterprises that the condition of over-supply exists in the HDB retail sector, particularly in the older estates. With this, many HDB retailers are suffering from ailing businesses and could barely make ends meet.

While the Government may not want to take a direct hand in shielding retailers from market forces, it may still be too early for market forces to be applied wholesale within the HDB retail sector. Many of these retailers had taken up retail shops based on the development plans earmarked for the area. However, many of those plans did not materialise during the economic downturn these past few years. This, combined with the gradual pulling back of HDB rental rebates, serves a double whammy to HDB retailers. I, therefore, ask the Minister whether it would be possible for HDB to follow the examples set by JTC in the aftermath of the economic downturn, namely, to reduce rentals to help HDB retailers weather the storm until the point that the market has stabilised.

Second, in the private sector, part of the rent collected forms the budget where major shopping malls conducted advertising and promotional events to draw crowds to their malls. I believe Dr Amy Khor had also touched on this suggestion earlier. I ask if HDB, being the landlord, and collecting rentals from the

6,000 tenants of well above $100 million annually, could, and is prepared to, do likewise to help boost up business in the neighbourhood shops.

(In Mandarin): Mr Chairman, the problems faced by our HDB neighbourhood shops is a complex issue. Each faces different problems due to their different localities, different types of businesses and different management systems. If we want to thoroughly resolve the problems they face, I think we would need to have a comprehensive review on our policies and use multi-pronged measures to resolve their problems once and for all. I have five suggestions and I hope that they would help to solve the problems. First, I think HDB should consider reviving the sale of 30-year lease shops to the tenants. I understand that those owners of 30-year lease shops are very happy and satisfied because their monthly instalments payable to the bank are even lower than the rent payable to the HDB. I hope that the HDB could conduct a survey and if more than 75% of the existing tenants are willing to buy the shops, then HDB should consider selling the shops to them. Second, for those shops whose businesses are no good because of unfavourable localities, HDB should buy back the shops for other developments.

Third, reduce the rent. I hope the HDB would reduce the rentals for those shops which are continuing to serve the residents. I hope that HDB would reduce their rent by 20%. As long as they can keep their businesses going, they would have a chance to turn around. We should help them tide over the present problems so that they could make a come-back later on.

Fourth, we should reduce the property tax of the shops. Some owners of 90-year lease shops are going through severe ordeals as their businesses decline. Reducing their property tax would be one way to alleviate their burden. Some of them have to pay very high instalments to the bank every month resulting in increases in their cost of operation. Maybe the banks could consider extending their repayment periods from 10 years to 15 years or even 20 years. Fifth, upgrade the HDB neighbourhood centres. In places like Chong Pang, Jurong West, Bukit Batok Neighbourhood II, Toa Payoh, Tampines and Marine Parade, the shops are getting a new lease of life after the upgrading exercises. I hope that HDB will consider upgrading all neighbourhood centres so as to attract the crowds to help the shops do better. I hope the Minister will consider my suggestions.

Mr Chairman, Sir, various Members have spoken on the problems faced by HDB shop tenants and asked how HDB could help them.

Let me first of all say that the Government empathises with the problems faced by our HDB shopkeepers. Some of them are first generation shopkeepers who were resettled when their old shophouses were cleared so that we could build roads, schools, HDB flats, factories and so on. So we do remember their contributions to Singapore's development and prosperity. And that is why over the years, we have tried to help them in various ways to tide over these difficulties.

But I think we must not forget that a HDB shop is first and foremost a business. It is run by the shopkeepers. HDB does not run the business. And, as with any other business, shopkeepers with good business sense, acumen, skills,

knowledge of the market would do better than those who do not. Ultimately, whether a shop thrives depends not on how much help he receives from the Government, but on how they could attract and retain their own customers. It would be unrealistic for us to harbour this belief that the HDB or, indeed, any Government agency would be able to solve all their problems. It is unrealistic for an ailing business to rely on Government's life support to keep it going. Having said that, I am happy to note that many of our HDB shopkeepers are doing well.

They are doing business in the heartlands serving the customers well and making a good living for themselves. They do not need additional Government assistance. Whatever we give is gratefully accepted.

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Every time I visit the shopkeepers in my constituency, I ask them how is business. Usually, they answer me guo de qu - can manage, can do. Of course, to get the real sentiment, we really need to look at their faces. Are they smiling or not when they say that? Because that seems to be the stock answer.

HDB tells me that the shops located at the town centres and most of the neighbourhood centres are doing well. It is really the shops in the smaller precincts that are not doing well. All of us know that HDB shopkeepers face major challenges, not just general problems facing the economy, but specific problems facing HDB shopkeepers. They serve a segment of the population whose tastes are changing. They are becoming more sophisticated. They want more quality goods. They want a better shopping environment, and there are new shopping malls coming up all the time, not just in Singapore but also in JB. Because of working patterns and lifestyles, most young couples I know do not shop every

day. They shop weekly and they go to the supermarkets for that purpose.

So we must do something. But, as I said, realistically, we can only do so much. As a responsible landlord, HDB will do what it can to help tenants who face difficulties. Mr Chay, for example, suggested that we widen the scope of the shops for other trades. This is something that has been done progressively over the years and this flexibility has given shopkeepers a way out. If they cannot survive doing this, they can rent out their shops and let somebody else do something else. In fact, HDB today is so liberal that it is more likely to say yes rather than no to requests for change of trade, and I do not mean just changing from one retail shop to another, but even to showrooms and offices. There are still some noes because sometimes HDB neighbourhood would really need a provision shop or a coffeeshop and they cannot be changing the trades too liberally.

But even as we liberalise, even as we accede to the request for some shopkeepers to allow them to change the trade, we do face other problems. Take, for example, the relaxation that we made several years ago where we allowed shops to convert into family restaurants, as a result of which family restaurants have proliferated across many estates. But what happens then? This has led to complaints from the nearby coffeeshops and the eating house operators who now resent this mushrooming of family restaurants because of the new competition. So we will have to manage this very carefully between flexibility as well as trying to manage the competition.

Those who wish to exit their trades are allowed to assign their tenancies and to sublet 50% of their premises. And, of course, during the economic downturn, we granted extensive rebates to the shopkeepers.

Dr Ong just now asked why is it that when we allow tenants to sublet their shops, we adjust the rentals upwards from the prevailing market rent. The reason was that, in the past, most HDB shopkeepers, especially those who are resettled, were paying very heavily subsidised rents, and HDB revised their rentals to market rates when they sublet their premises because they would, in turn, charge their sub-tenants market rate. But now that most tenants are paying market rates, I am pleased to inform Dr Ong that HDB has reviewed this policy and it will allow tenants to retain the existing rents for the remaining term of their tenancy when they sublet their shops. This will also, of course, apply to assignment cases, and the rents will be adjusted to market rate only when tenants' leases are renewed.

There is another relaxation pertaining to the subletting rules. Currently, shop tenants can only have one or two sub-tenants, depending on the shop size. I have asked HDB to do away with this restriction and to lift the cap on the number of sub-tenants, so long as the subletting does not involve more than 50% of the total shop area.

Mr Arthur Fong and Mr Ang Mong Seng, among others, also asked about rentals - why not HDB reduce rentals further? Let me explain how rentals are set. HDB does not set the rentals. They ask a group of private professional valuers to value the property and then set the rental based on the attributes of that property. Adjustments are made for location, size and so on. And these rentals are then fixed for a duration of one, two or three years. The tenant can choose whether he wants to go for one-year, two-year or three-year tenancy. But whichever one he chooses, for that particular period, that rental is fixed. I think this is not unusual. This is what

most contracts are all about. This is what the private sector does. It works both ways. If the market goes up during that period, the landlord does not go to the tenant and say, "Look, I want to adjust your rental upwards because rents have gone up", and vice versa. This is a way to have some security of tenure and to protect the tenant from any escalation but, of course, in a down market, there is a request to adjust the rentals downwards. I think this is clearly not tenable. So the choice really is for those who wish to have more responsive rental to choose the shorter tenancy period of one year. But in fact, almost all tenants choose the longest tenancy period which is three years.

Mr Wee asked what assistance HDB can provide shop tenants who overbid for their shops. They went into a bidding exercise for their shops. They tendered for the price. Presumably, this is the price at which they are prepared to do business, ie, the price that they have factored in in the cost of doing their business. Now that they have bid and their business is not doing well, can we adjust the bid? I am afraid that is not something HDB should do.

The tender process works only if all the players - the tenderer, the landlord, the bidders, winners and the losers - agree that these are the rules of the game. They all bid and they abide by the rules. The highest bidder wins. If the rules say that we do not give it to the highest bid but to the second highest bid, then let us set the rules upfront. This does not mean that the bids are going to be lower, but those are the rules of the game. Once we fix the rules, that is it for the duration of the tenancy. Do not change it half way because, as I said, it works both ways - for the winning bidder as well as for the losers. If we say that after winning the bid and then we lower the bid, I think the second highest bidder would have every reason to feel aggrieved.

The consideration on how to allocate shops depends on what kind of shops, whether the shops are limited in supply or whether it is an area where there is no limit on the number of shops. Since last year, HDB has experimented with a different way of allocation, that is the e-bidding system, which essentially is an auction system. So bidders know who they are competing against. They know what sort of prices are in the system. I must say that it has been well received. So HDB will be moving fully to the e-bidding system for its commercial properties with effect from this month. This way, the problems faced by those who have gone into a closed tender will largely be eliminated.

Sir, let me now move to the restructuring programme for shops. I think this is a matter that is of great interest to Members. The Prime Minister has announced that HDB will implement this new programme in order to rationalise and restructure HDB shops. Let me now provide Members with the details of this restructuring programme for shops (RPS).

The RPS would be targeted at shop tenants where there is an over supply of shops and where the business is poor. Some MPs, like Dr Ong, dubbed it the 3R programme - relocate, restructure and retire. I think that is quite apt. The RPS will look at areas where business is not doing well in a cluster that is probably located in one of the older estates. And they will be polled on whether they wish to exit their business - whether they want to retire. Those who opt to quit will receive an ex gratia payment of $60,000. This is higher than the ex gratia of $48,000 that was previously offered under the voluntary retirement scheme (VRS). It is on a purely goodwill basis and should not be seen as payment for their shops. To be consistent, HDB will also increase the ex gratia to $60,000 for its

future clearance and redevelopment programmes.

The RPS will be triggered on a block basis if more than 50% of the tenants in the block opt to quit. So more than 50% would have to say, "Yes, I want to quit." Then the excess shops will be converted into other uses, especially social and communal uses, childcare centres, RC centres, etc.

HDB will assist the tenants in the blocks that are cleared out but who did not want to quit and who wish to stay to relocate, where possible, to another block within the same cluster or nearby. They will be given a removal allowance of $10,000 which is twice the current allowance of $5,000 paid by HDB.

Over the past five years, HDB has cleared something like 1,700 shops, which is roughly 10% of the total stock of shops through the various clearance and redevelopment programmes, and this has helped to reduce the over supply. It has helped to improve the business conditions in these areas. But, obviously, that is not enough. And through this RPS, we hope to accelerate this process.

Members asked what happened to the VRS pilot scheme that we had implemented earlier. Should we not learn the lessons from that scheme? The RPS will be different from the VRS in two main areas. First, under the old VRS scheme, tenants who did not take up the ex gratia were allowed to stay put. As a result, as Mr Chay Wai Chuen pointed out, there were vacant units interspersed within the estate. And as a result of that, we had worse situations. We do not want to see that happening again, and that is the main reason why we discontinued the VRS.

Under the new RPS scheme, should more than 50% of the tenants in the block opt to quit, HDB will proceed to clear the remaining shops as well and pay

them $10,000 removal allowance. If less than 50% opt to quit, of course, it is status quo - all the shops will remain as they are. That is the first difference.

Secondly, and more fundamentally, the VRS scheme focused on clearance of shops. The emphasis of the RPS is on restructuring and upgrading the operations of the remaining shops. How are we going to do this? HDB will be working with the Retail Promotion Centre of SPRING Singapore to help those who wish to remain in business to upgrade their operations and improve their general competitiveness. Again, this has got to be done

in conjunction with the shopkeepers. So they would have to form themselves into groups, hopefully, into shopping associations or management companies. They would need to engage consultants to see how they can map out promotion strategies, advertising strategies, buying strategies, etc. To help them, SPRING will set aside $5 million from its Domestic Sector Productivity Fund (DSPF) to co-fund up to 50% of the revitalisation programme cost over the next three years.

4.30 pm

Members asked whether HDB can take some of the money from the rentals to do promotions and programmes for the shopkeepers. Let me, first of all, say that HDB is not the retail shop manager. Its expertise is in housing. Even then, many Members have questioned whether HDB should be doing so much, why not do less and so on. I would urge Members not to expect that HDB is going to be able to solve the problems of the shopkeepers, just simply by deciding on the tenant mix, doing promotions, and so on. In fact, the people who would be in the best position

to do so are the shopkeepers themselves. Of course, there will be consultancy and there will be other experts who can help them. We will try and co-fund, and help them to do so. For example, we may want to look at an arrangement where there is a master operator, instead of having individual operators. Perhaps, through this RPS, we can assign the shops to a master operator. This master operator, who has the expertise and experience, can then manage the trade mix, create a certain identity in the shops, and so on and so forth.

I have asked my Minister of State, Mr Cedric Foo, who is also the Chairman of SPRING, to oversee the implementation of the RPS. We will target to launch the RPS on a pilot basis in a few clusters of shops by the middle of this year. Critical to the success of the RPS is the support of the Advisors. So if any Member here would like to volunteer for this scheme, please put up your hand or get in touch with my Minister of State or myself. We will work with you to make sure that this scheme takes off. As Dr Amy Khor said, we should work with the merchant association, grassroots leaders, etc. This has got to be a collective effort on the part of everybody.

Sir, now, let me turn to the issue of HDB shop owners. The RPS relates to a programme for shop tenants. What about the shop owners who have bought their shops? Many Members have asked for assistance for shop owners who bought their shops under the Sale of Tenanted Shop (SOTS) Scheme. Contrary to the picture that is painted that most of these shopkeepers are struggling, my information and the information of HDB suggest that the first-generation shopkeepers who bought their shops under SOTS had a very good deal. They received upfront discounts of up to $96,000 when they bought their shops. These shops were all located in very good locations, ie, in town centres or in neighbourhood centres.

Together with the purchase, came a whole slew of unbundling of many of the restrictions that governed HDB shops at that time. So once they bought over, they were free to sublet their shops, totally or partly, and many of them in fact did. Many of the shopkeepers in my constituency, for example, after they bought their shops, they sold them off straightaway and then disappeared and somebody else is now doing business there.

For those who wish to retire from business, having bought their shops, rather than asking HDB to buy back their shops, they can actually sell it in the open market, often at a substantial premium, even today, to what they bought or what they originally paid HDB. I asked for some figures. One shop in Bedok North Town Centre, for example, was sold for $2.8 million last year. The owner bought it from HDB for $630,000 (net of $96,000 tenancy discount) in 1992, made a handsome capital gain of nearly $2.2 million. The market rates for shops in these areas now, compared to the discounted rate and original purchase price, are roughly more or less about the same.

Dr Amy Khor asked whether we can buy back the sold shops that are struggling. The shop in the Bedok Town Centre, that I cited earlier, the current owner, the one who bought over, is selling footwear, health goods and telephone equipment. His business is doing well. I hope he will continue to do well. But should his business decline, I think it is not the Government's responsibility, or HDB's responsibility, to buy back the shop from him. He would have to find other ways to guard against these fluctuations in the property market. So, those who buy the shops from the original owners, at the market rate, would have to calculate whether, at this rate, they are able to do business, or whether it is a good buy or not. The Government

cannot protect them from any fluctuation in the property market.

Mr Ang asked whether we can revive the Sale of Tenanted Shop (SOTS) Scheme. I think we should focus at this point in time on the RPS Scheme. Let us try and see whether we can do something for the tenants in the shops before we reactivate the SOTS Scheme again.

One last point about property tax. Mr Ang asked if property taxes can be lowered. There are currently no plans for us to touch the property tax which is already pretty low.

I think we should move on. Ms Indranee Rajah, next cut, please.

Making Singapore a Distinctive City

Sir, I would like to ask the Minister what plans MND has for Singapore's urban redevelopment and for making Singapore a distinctive city. Distinctive cities are not products of a single feature, but a combination of good urban planning. You need architectural design, gardens, parks and, most importantly, that intangible factors, which some people refer to it as an X-factor which gives the city its own particular identity. With New York, for example, you immediately think of buzz and energy; Paris, you think of a romantic city; London, you think of history. So my question is: what are we doing in Singapore to create and develop our own unique urban imprint?

Revamp of Orchard Road

Sir, the Government initiated the Remaking Orchard Road Plan to make the area a "compelling shopping destination" for Singaporeans and tourists. By that, I hope the Government also means the disabled. Since a

committee was formed 17 months ago to oversee the plan, nothing has been said about whether the revamp would make Orchard Road more disabled-friendly.

We have heard of the URA's $59 million subsidy scheme to help landlords build underground links. We have also heard the URA will review the existing planning and building guidelines to give owners more flexibility to redevelop. But how these initiatives will improve accessibility for the physically disabled, we do not know.

As the hon. Member, Ms Irene Ng, has pointed out last week, wheelchair-bound folks find it "very difficult" to go shopping in Orchard Road. So I took a walk to find out what problems they would face getting from, let us say, the Marriott Hotel to Shaw Centre. They have to go all the way up Scotts Road, past the Hyatt, past Far East Plaza, past Goodwood Park Hotel, up the incline to get to the pedestrian crossing to get to the other side and come back all the way down again. Or they have to go along Orchard Road, past Lucky Plaza, past Paragon, all the way to the traffic junction where they can cross and come back down again. I am not sure how long either route would take but the rest of us would take three minutes to get from the Marriott Hotel to Shaw Centre via the underpass.

Incidentally, the underpass to Borders is fraught with staircases. Each time, I came to a flight of stairs, I saw a mother struggling with her pram. Let me read from a mother's recent letter to the press about her Orchard Road experiences, and I quote:

"Most of the shopping malls there are not family-friendly. For instance, when I need to use the lift, it would often be located all the way at the back of the mall. And when I want

to enter a shopping centre, I would most likely have to carry the pram up the stairs, as there is no sloped walkway near the entrance."

This is what the disabled have told me: They can get from one end of Orchard Road to the other; they just cannot enter the buildings, the older ones, in particular. And to think that Orchard Road is our most visited free access attraction for overseas visitors!

As the URA intends to improve public infrastructure and the pedestrian malls as part of the revamp, I would like to ask the Ministry how the needs of the disabled, the elderly and families are being considered and provided for specifically. What features - for the shopping centres, along the pavements and underground links - will there be? Will there be more surface crossings? And how much, or what percentage, of the total funds for the revamp will be allocated for this purpose? If we want Orchard Road to be "one of the greatest shopping streets of the world", then it should be so for everyone.

Use of Farm Land

Sir, in 1998, an orchard farm land tender price was beyond $20,000 per acre per annum. Lately, the tender price of farm land came down. So it is below $10,000 per acre per annum. This worked out to be roughly about 0.8 cents per square feet per month. Because of this, the farmer, despite being labour intensive, still can earn a comfortable living by planting vegetables. This is a good sign. However, due to the low farm land rental price, rich non-farmers also take advantage and become Suzhou farmers and build their retired homes in the farm land. Take, for example, a 100,000 square feet land, which is 10 times bigger than a normal bungalow, if they build a house there, the monthly rental is only $715, which is about the

rental for a HDB 4-room flat. If anyone had done this, it is an obvious misuse of the Government's resources intended to help the poorer farmers to be gainfully employed and also as a means to provide an alternative means of food supply for Singaporeans.

The misuse has recently turned from bad to worse. AVA has introduced further relaxation of such land use by allowing restaurants and guest houses to be operated on the farm land. The relaxation of the Government policy has negative impact on the agricultural policy of Singapore, though the Government had all the while in the past said that it did not have one. It has changed the nature of the original purpose of farm land occupation.

Land for eating houses, hotels and residential properties commands a higher premium in terms of land price and rental. The result of converting agro-tech farm land for such use will certainly attract more non-farmers to set up their business on the farm land. It will cause an escalation of land prices and the bona fide farmers will find it unaffordable if they do not follow the same trend. As a result, it will kill the genuine farming activity and end up in the agro-tech park becoming a holiday resort, instead of a farm that produces food as an alternative source of food supply for Singapore.

Sir, I hope that AVA could look into this particular matter, and it should call for reconsideration if there is a change of land use application. I seriously believe that AVA should ask for re-tendering of the land again or, at least, to charge them a premium for such an application. By doing so, we can clearly distinguish between a genuine farmer and a Suzhou farmer.

Prof. Low, your time is up. Encik Yatiman Yusof.

Property Market

Sir, the economy is recovering. Many of us are looking forward to a sustained, albeit smaller, annual growth rate. This is expected. Yet, reading the reports from the newspapers, I get the impression that the recovery in the property market would be very slow. Many are fully aware that the golden years of the late 1990s property boom will never return. We are also fully aware of the fact that the property market is cyclical. There is always a gap between economic recovery and improvement in the property market. Therefore, it is not unusual if the potential players and buyers are still taking a "wait and see" attitude.

Sir, the question is: should the Government take a hands-off position and let the market decide its future direction? In the past, the Government had been known to do something to stimulate the market, such as controlling the land supply and releasing the land parcels and adjusting the development to meet the changing circumstances. Could the Government consider helping stimulate the growth of the property market by (1) reviewing the property ownership involving locals and foreigners? After all, we have done it for the Sentosa Cove; (2) reduce the stamp duties for purchases of properties; (3) be flexible on the five-year occupancy period for flat owners who want to sell their flats; and (4) review the 80% cap for the bank loans for the purchase of properties?

Records for Rental and Lease Transactions

Sir, at present, there are official records available to the public on sale and purchase transactions of properties. I would like to know whether official records on rental and lease transactions, similar to those on sale and purchase transactions, could be kept