Hansard, 2006-03-03

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 (2006) To (2006) Dr Ong Chit Chung 10 Mar 10 Mar Mr George Yong-Boon Yeo 21 Mar 23 Mar

ABDULLAH TARMUGI Speaker Parliament of Singapore

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

Head Q - Ministry of Information, Communications and the Arts. Mr Seng Han Thong.

Intelligent Nation 2015 Masterplan

Sir, I beg to move,

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

Sir, the digital and interactive media is amongst the fastest growing sector in the world. I am happy to note that the Government is investing heavily in the sector. This is an important step forward in our transition to a knowledge economy and this new sector will open up many more job opportunities for Singaporeans. PM Lee, in his Budget Statement, highlighted the use of optic fibre and the latest wireless technology to ensure Singapore's economic competitiveness over the next several years.

Infocomm is definitely going to play an increasingly important role in our economy. May I ask the Minister to update us on the progress of the infocomm industry, including that of the Intelligent Nation 2015 Masterplan. Indeed, Singaporeans are already responding to this new initiative. Several polytechnics are running digital, media and animation courses. Parents are proud that their children are students of such courses. They realise that their children will have a brighter future by getting a good job in this industry.

Sir, our initiatives should aim to develop Singapore as an alternative hub for animation and design to New York, London and Vancouver. In fact, Singapore can provide an attractive Asian environment for Asian animators and designers who want to be based in a non-western environment. But how do these new initiatives face the keen competition from Japan, Korea, Taiwan and China?

Sir, I agree with the strategy to stay steps ahead of our competition through the enhancement of our broadband capability of ultra high speeds to our homes. Being proactive rather than reactive will give any business the cutting edge. In the IT industry, what

However, I urge the Ministry to carefully review what we have learnt from the Singapore One initiative launched in 1996, before jumping into the waters. I understand that there were some areas of concern over our existing Singapore One, such as there was no clearly identified demand for the service, there was a lack of local content and applications to take advantage of the broadband infrastructure implemented under the Singapore One. There was never any "killer app" for Singapore One. Content and applications usually came from overseas. Deploying high-speed infrastructure within Singapore is of relatively little assistance when the content to be accessed is outside of Singapore. Because of the limited local market, few content providers seek to produce local content and applications for Singapore One.

On the other hand, I think we could also learn from Korea. Koreans use the Internet for lots of activities, like audio and video streaming, gaming, e-commerce and also for government transactions. The main difference between Korea and Singapore is that Korea has content together with infrastructure. Content creation is driven by these service providers in almost everything, like from weblogs to producing videos, music, etc, what they refer to as Culture creators. And because they have a unique language and culture of their own, they are able to develop a self-contained web-culture to link Koreans together in the cyberspace.

It is also well-known that in Korea, Internet users first got a taste of high-speed access at Internet cafes, so called "PC bangs" and subsequently wanted the same rapidity at home. There is also a "copy-cat" syndrome; once one person gets something, everyone else wants it also.

Sir, can we have the same effect on the growth of the IT industry similar to that in Korea? We would need to have the sub-culture of wanting better and greater speed access from our broadband service providers. There are, however, several issues as I see them.

Firstly, we need to make it readily available to all, which means that the cost must be low. At the moment, the infrastructures are owned by two service providers. Therefore, any additional service provider would have to rent from the current two. The cost would have to be passed on to the consumers. For a new national broadband network, I ask if MICA could look into this aspect of freeing up the cost of the infrastructure so that more service providers may be available, leading to a real mushrooming of the IT industry.

Secondly, how would MICA ensure that there will be developments in the content providers to bring in the economic benefits as we invest millions, if not, billions of dollars on this national network?

is available today would be considered obsolete tomorrow.

Mr Chairman, Sir, in 2005, Singapore was rated as the world's most successful economy in exploiting infocomm development by the World Economic Forum in its Global Information Technology Report. This means that we were leading the rest of the world in terms of the ability of individuals and Government to tap into the potential of infocomm technology as well as the Government usage of infocomm technology.

Undoubtedly, the establishment of Singapore One has helped us achieve this acknowledgement. Apart from this recognition, how do we rate the success of the old optical network, Singapore One? Although this may be difficult to quantify, have we measured the benefits and the values derived from this

I remember in the past that when we had the optical network being set up, there was a lot of work being done. So I would like to know whether the construction of the new network involves quite an amount of digging and rigging causing inconveniences for residents? Will the iN2015 also constitute a lot of construction work and cost to residents?

The evolution of society and technology has introduced new challenges for us. However, research has shown that Singapore's business investment in R&D and training continues to be minimal. I would like to know how do we then come up with new technologies, instead of just buying from suppliers? I would like to ask whether IDA can be a catalyst and impetus to new research in infocomm technology so that we could be the pioneers and inventors of new technologies instead of just users.

investment? What makes the iN2015 different and will it be able to extract more value from the implementation of this Masterplan? Will the new network bring down prices for end users? Will it assist vendors to make broadband services more attractive to the consumers?

Mr Chairman, Sir, Singapore is fast becoming a cosmopolitan city and a global hub for people from various nationalities and talent to relocate here for work, to live and to play. MICA's vision to create a network and Net-savvy society is fast becoming a realisation. Still, the country needs to be adequately wired for appropriate optical network cables and for citizens to be infocomm-savvy in order for them to be a connected Singapore.

Sir, I would like to know, in the setting up of the new national broadband network, what is the Minister's aim to raise the national household broadband penetration rates to. If I am not mistaken,

only about 50% of the citizens in a household with access to broadband usage are Net-savvy. How does this compare to the national household broadband penetration rates of countries such as Korea and Taiwan? Can penetration rates be raised as a result of content and cost? I think this is very important.

Infocomm 21

Sir, on Infocomm 21 plan, this has been implemented for some years now. I would like to ask the Minister to give us an update on the expenditure and the benefits that have been derived from those investments.

Recently, the CEO of IDA announced the Government's plan to widen the scope of the network and introduce better technologies. In fact, if I recall, we have slackened in some ways and the choice of technology becomes very important to Singapore and we cannot make mistakes about it. I just want to be reassured by the Minister that whatever we do, the choice of technology and the network that we put in place, there are mitigations that they will not go wrong.

Most importantly, Sir, it is the perspective of the users because ultimately, it is the users that matter, whether it is in business, in schools or even the ordinary citizens. I think more could be done to encourage Singaporeans to use it. Infocomm is important for a small country like Singapore because with infocomm, the world is our oyster.

IT Governance

Sir, since the early 1980s, the Government has been exploiting IT for continuous improvement of its business processes and innovations

Sir, we have only heard success stories about how IT has been well deployed, used and managed by our Government agencies. There are no horror stories except for the few cases of IT security lapses reported by the Auditor-General in the past year.

The governments elsewhere have been spending a lot on IT also. It is generally perceived by the public that more money has been wasted on computerisation than has been created by it. For example, there was a report in Australia that quoted that 50%-90% of IT projects go over time, over budget, or fail to meet expectations of productivity or efficiency benefits.

Given this background, Sir, I would also ask the Minister to periodically share with us when they come across areas of implementation problems, and show direction in helping enterprise to invest in IT.

A recent research carried out by the IT Governance Institute (ITGI), a global leader in the IT governance, has highlighted the need to clearly align IT goals with business goals, to optimise value creation from IT investments, to properly manage information risks, to effectively manage IT resources, including outsourced IT capabilities, and to adequately measure IT performance.

In this regard, an appropriate IT governance framework such as COBIT (Control Objectives for Information and related Technologies) needs to be established to govern and manage IT

Mr Chairman, Sir, as effective IT governance is the single most important predictor of the value an organisation generates from IT, I would like to ask the Minister as to what are the current status and implementation problems, if any, of the IT governance landscape in the Government agencies, especially with regard to the five domains of IT governance I have mentioned earlier, and how the Government plans to achieve a desired level of maturity in IT governance practices in Singapore, both in the private as well as the public sector. For example, what structures, mechanisms and processes will be in place to ensure that organisations get the most value from IT spending without incurring wastage or extravagance, while minimising risk to an acceptable level?

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for Singapore's competitive advantage in a global marketplace. Thanks to the tremendous effort of the Infocomm Development Authority (IDA), Singapore today is reputed to have the best e-Government model in the Asia-Pacific region, and the world's third best in the global ranking of e-Governments by Accenture's 2005 e-Government Leadership Study. activities in the five domains of IT governance, namely, strategic alliance, value delivery, risk management, resource management and performance measurement.

Sir, in answering Prof. Ivan Png last month on data protection, the Minister announced that an Inter-Ministerial Committee comprising 16 Government agencies started to look into the regime of data protection and that they are expected to finish the work in the middle of this year. This is indeed good news. When I raised the matter in this House, in the Committee of Supply in 2002, the then Minister had pointed out that a sectoral legislation would be the way to go and that the data protection code in the private sector would be spearheaded by the National Trust Council.

A great deal of water has flowed under the bridge since then and no code has emerged. Indeed, I am not even sure what has happened to the National Trust Council.

Be that as it may, the question I would like to ask the Minister is: what are the terms of reference for this Inter-Ministerial Committee? Is it going to take a more holistic and comprehensive approach in reviewing the area of data protection and privacy?

I ask this because, without a properly thought-out data protection regime, we are not just going to be on our way to be the intelligent nation, we could also become the most monitored and exposed nation. Because of technology like RFID, we can literally be tagged as to where we are and what we do. Personal data is collected on a grand scale, even now, and databases are being sold and mined. By matching data collected in several databases, our life stories are being recovered and revealed without our knowledge, let alone our permission. This is a high price to pay for the convenience that technology offers. We are lulled and seduced into accepting such technologies that rob us of our privacy. I believe it is the duty of the Government to act responsibly and provide protection to the individual for this most important right.

This is no academic or theoretical problem. Coincidentally, when I was looking into this problem, I glanced at Today paper on 27th February. It had a section called "Voices", and in it three readers wrote in to complain of misuse of personal information.

The first writer complained about the dangers of misplaced credit card slips containing one's credit card information, which can be retrieved and used by fraudsters to buy goods on the Internet, for example. The second writer, called "Noodie Mak", I do not know whether that is a man or woman, said that he or she obtained personal details of a friend from a local institution, including her IC number, just by doing an Internet search. He said that, armed with that, and a little bit more, he could get a SingPass and

Sir, all these are worrying accounts and show that any data protection regime must be comprehensive and not sectoral. The right to be given to data subject to object to the use of their personal data must be clearly and succinctly stated. Sir, I would, therefore, like to ask the Minister to update us on the work of the Committee and to extend the terms of reference, if necessary.

Aside from the more obvious sectors such as Government, financial and medical sectors that require stringent rules, we must also take into account workplace privacy. It is increasingly the trend that employers instal monitoring software to see how or what their employees say in their emails. The regulation of data protection is not a luxury in an info-tech world. It is a necessity. It is a fundamental right.

then sign up for a lot more things. Finally, a low-tech example. The third writer mentioned that he was required by LTA to display his name, address and IC number on his goods vehicle. He felt that persons unknown have misused this and this led to his bank informing him that two of his credit cards have been compromised.

Mr Chin, you do not have the luxury of time either. Dr Tan Boon Wan, two minutes.

Internet

Sir, that Singapore will establish a second high-speed network is, indeed, exciting news. In the inter-connected world today, not having access to the Internet and its service is a severe handicap. Like my colleague before me, I am interested to know how we have used the existing network before we embark on giving a new one.

To access the Internet we need a PC and a connection to a network. Hence, it would be helpful to know the penetration rates of the PC and the Internet among Singapore households. What is the utilisation rate of our existing networks? What more can we do to enable households without a PC to get one? What can we do to get those households not connected to the Internet to do so? Is access cost an issue? How does our cost to access the Internet in Singapore compare to countries like Hong Kong, Japan and South Korea? Is it too high? Will the penetration rate of the Internet increase if the cost is reduced? If so, can we get it lowered, the sooner the better? We should increase the use of Internet among our households via the existing networks before the second network arrives.

Mr Chairman, I would like to, first of all, thank hon. Members for the comments, support and also their queries on MICA's plans for the infocomm sector. In response to Mr Seng Han Thong who raised the question about our plans for developing the infocomm sector and also asked for a review of what we have achieved so far, I would like to, first of all, outline MICA's strategies to transform Singapore into an intelligent nation and to sharpen Singapore's competitive edge. I will then respond to the specific queries from the other hon. Members later on.

Sir, in 1981, Singapore launched the first National Computerisation Plan. This year, we celebrate 25 years of infocomm development. In the past 25 years, we have successfully exploited infocomm for economic growth and job creation. Last year, the infocomm sector's estimated growth was between 6%-8%, generating about $37 billion in revenue. Employment in the sector - employment is something which Mr Seng was interested in - had increased from 108,000 in 2004 to

Sir, the infocomm sector has, indeed, done very well in recent years. It has also moved up the value-chain as our companies in Singapore become more innovative. Hence, higher-value areas such as infocomm research and development, digital media, infocomm consultancy and project management and enterprise systems and integration were the biggest value and job creators.

Infocomm is, today, one of our strategic advantages. Our standing in international competitiveness rankings reflected this. The World Economic Forum 2005 Global IT report placed Singapore at the top of 104 countries in infocomm deployment. Today, we have one of the highest Internet penetration rates in the world. Dr Tan Boon Wan asked what is our household PC penetration rate. About three-quarters of our households already have computers and 66% of our households enjoy Internet access, with 52% of them accessing the Internet via broadband. All Government schools enjoy broadband access. Three out of four companies use the Internet for their business activities, in one way or another, and most of them do so via broadband.

Sir, our early adoption of infocomm had given us a headstart and brought us tremendous benefits over the past 25 years. However, many countries, such as Korea, China, Japan, Thailand and

Sir, our strategic response to these new challenges is the Intelligent Nation 2015 or iN2015 Infocomm Masterplan. This is a 10-year master plan to transform Singapore into an intelligent nation and global city, powered by Infocomm. We envisage pervasive deployment of intelligent digital technologies to enhance our economic competitiveness, exploit new opportunities and transform life in every possible way. Let me elaborate on two key aspects of the iN2015 Masterplan, namely, infocomm infrastructure and manpower development.

Sir, after careful study, we have concluded that a Next Generation National Infocomm Infrastructure (NII) is a strategic enabler for Singapore's economic restructuring and competitiveness. A Next Generation NII is critical to transform Singapore into an innovative and creative economy. This infrastructure has two components: an ultra high-speed National Broadband Network; and a pervasive wireless broadband network.

First, on the ultra high-speed National Broadband Network. Today, a high-speed broadband network is an essential infrastructure for economic development, investment and talent attraction, education and a whole host of other activities. Singapore One, the existing broadband infrastructure, has served us well over the last decade. But it is unlikely to be able to meet the expected surge in data and

In order to exploit new possibilities, capture new business opportunities and maintain our regional infocomm hub status, the Government will catalyse the development of a Next Generation National Broadband Network. The network will offer ultra-high speed access, starting from 100 Mbps to more than 1 Gbps - 1 gigabit is 1,000 megabits. This network will connect all homes, schools and businesses, including those in the HDB heartland and in private developments. Workers, entrepreneurs, teachers, students, researchers, housewives, retirees and many others will be able to enjoy ultra high speed connectivity and access. Singaporeans will be able to use the latest in infocomm and media technologies seamlessly, whether they are in the office, in school or at home. For example, some healthcare and education services and information can be delivered remotely. Working parents will also find teleworking becoming more practical. People with loved ones studying or working overseas can enjoy immersive video-calls to bring families and friends closer together. Home entertainment will take on totally new forms such as high definition Internet protocol TV, IPTV or video-on-demand. The new network will change the way we work, live and learn. It will sharpen our business efficiency and spark off many new opportunities for entrepreneurs.

Sir, the new network will be open-access and carrier-neutral, in other words, it will be open to all service providers so that they can reach out to connected consumers. This will lower the entry barrier for service providers and cost to consumers. As the National Broadband Network will be a key infocomm infrastructure, the Government will work with the private sector to build a network

Sir, the second component of our Next-Generation National Infocomm Infrastructure is a pervasive nation-wide wireless network to complement the National Broadband Network for broadband access on the go, for people who are moving about. Singaporeans are already familiar with the many Wi-Fi hotspots scattered throughout Singapore. For example, in the McDonald's outlets, I understand they have Wi-Fi there. IDA will help the industry to accelerate the deployment and take-up of similar wireless broadband networks so that consumers, working professionals,

110,400 last year. Demand for infocomm manpower has strengthened with 3,000 more jobs expected to be created this year. Indeed, there were about 5,700 job vacancies in the infocomm sector last year, which is more than double the 2,100 vacancies the year before, in 2004. Sir, this is a healthy sign of demand for infocomm workers. It shows that employment in this sector is continuing to grow, offering highly rewarding and fulfilling jobs for infocomm professionals and specialists.Malaysia, also recognise the importance of infocomm as a competitive advantage. They are also making aggressive investments to enhance their infocomm infrastructures and capabilities. So we cannot afford to take it easy just because our infocomm sector has done well. Just because we have a Singapore One that has served us well over the last decade or so, it does not mean that we can relax and take it easy. If we do so, we are going to be overtaken.connectivity demand in the next five to eight years' time.that is future-proof, cost-effective and which minimises technological risk. We will use a public-private partnership model to develop this National Broadband Network. The Government is prepared to consider some funding to kick-start the project and to ensure that this ultra high-speed network will be viable, affordable and sustainable over the longer term. The Infocomm Development Authority (IDA) will issue a Request for Concept within a month to seek ideas and suggestions from the industry for the National Broadband Network. The inputs from the Request for Concept will form the basis for a definitive Request for Proposal from private sector participants. IDA expects this Request for Proposal to be ready by the middle of this year. I encourage all interested parties, including existing telecom licensees, to respond to our initial Request for Concept.

businessmen and tourists can enjoy broadband connectivity away from office or home.

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IDA's Wireless Broadband Market Development Programme will support wireless Internet service providers to deploy mesh Wi-Fi and Wi-Max networks nationally for pervasive indoor and outdoor coverage in key catchment areas, such as in the Central Business District,

Sir, the development of a ubiquitous ultra-high speed wired National Broadband Network and a pervasive wireless network will transform Singapore into a "Totally connected, wired and wireless" Island. This will put Singapore firmly in the lead among competing countries such as South Korea, Japan and China that have also embarked on providing advanced broadband infrastructures.

In addition to next generation infrastructure, the availability of skilled infocomm manpower is also critical for Singapore to maintain our competitive advantage. Another focus under iN2015 is training of infocomm professionals with strong technical expertise in emerging and critical infocomm areas, as well as business domain knowledge such as in finance, healthcare, education and e-government. IDA has already allocated $120 million for its Manpower Development Roadmap which was launched in November last year to train more infocomm professionals in key target areas. I am pleased to inform this House that IDA will expand the National Infocomm Scholarship Scheme to attract and groom more talent. An additional $30 million will be allocated to fund 100 more scholarships in the next five years. The enhanced National Infocomm Scholarship Scheme will offer opportunities for study in overseas universities, as well as programmes jointly conducted by overseas and local universities.

Sir, the scope of iN2015 plan is not limited to infrastructure and human resource development. It will include many other exciting initiatives in interactive and digital media, education, financial services, healthcare, manufacturing and logistics, and tourism. It will guide IDA's strategies and programmes to develop our infocomm enterprises. The iN2015 Infocomm Masterplan will be finalised and announced in June 2006.

Sir, I will now address the specific questions of hon. Members. Mr Zainudin asked if the new Broadband Network would cause inconveniences to the public and whether IDA would pioneer R&D in infocomm or in the IT area.

While there may be some inconvenience, the benefits are well worth the trouble. Nevertheless, we will try our very best to minimise disruptions by coordinating roll out, where possible, with the deployment of the new estate upgrading programmes and new developments. Where there are new developments, we will try to coordinate our network roll out with the new developments. Where there are estate upgrade programmes, we will also coordinate with them. So we try to minimise the inconvenience.

In the existing housing areas, we will try out innovative construction techniques such as micro-trenching and surface ducting, so that this can minimise disruption and also, at the same time, help to reduce cost.

As for pioneering research and development (R&D) in infocomm, I agree that it is very important for us to create more proprietary intellectual properties among our infocomm companies. It is through such creation of intellectual property that we can give a competitive edge and also enhance the scope for our infocomm companies. For example, I just want to mention a local company, Trek

IDA will work closely with A*STAR and its research institutes to identify promising areas for infocomm research and to support critical and innovative R&D projects.

Dr Tan Boon Wan and Dr Tan Sze Wee have asked what are the measures to deepen Internet access, and what are our new targets for broadband penetration. Sir, as I said earlier on, today, about three out of every four households have computers - 74% of households have computers - with 52% of them already connected via broadband. With lower computer prices, even more families should be able to afford computers.

For the low-income families, IDA has a special programme. It is called Neu-PC programme. This programme offers subsidised PCs, not just the PC alone but it comes with a one-year Internet access package to help them bridge the digital divide. Since November 1999, 19,000 needy families have benefited from this Neu-PC scheme. We will continue to help such needy families so that they and, in particular, their children will not miss the new digital opportunities.

Increasing competition in the broadband market has also brought prices down by as much as 70% for unlimited access plans since 2001. This has led to an increased take-up rate. The Next Generation National Infocomm Infrastructure with the National Broadband Network will boost broadband penetration. I think a penetration rate of 85% is certainly possible by the year 2015.

Dr Ong Seh Hong would like to know whether we have invested wisely in IT. I think he was concerned whether there are any horror stories. I am afraid I would not be able to regale Members with horror stories because I think such stories are probably very few and far in between. That is a good sign. He wants to know whether we have a good IT governance framework and how can Government ensure value for money out of IT investments, both for public and private sectors.

Sir, the Government has developed, over time, an extensive and comprehensive framework for IT governance. For example, the Public Sector Integrated Governance Framework (IGF) has been developed to guide all our agencies in the planning, investment, deployment and control of IT within the public sector.

Our public agencies have also established internal Project Approval and Project Review Frameworks, with stringent checks to ensure that IT projects are indeed value for money investments. Ongoing projects are reviewed regularly to ensure that targets are, in fact, achieved, and that there should be no horror stories to tell.

Sir, in the private sector, professional groups, such as the Singapore Computer Society and the IT Management Association, contribute to raising the level of IT competencies and proliferating best practices amongst the IT professionals. At the corporate level, the Council for

Mr Loh Meng See sought clarification on our Infocomm 21 roadmap. He wanted to know how and what we have spent on this. Infocomm 21 was a strategic plan to take infocomm to the next level. It was launched in the year 2000. It set out to harness infocomm technologies to boost our national competitiveness and improve Singaporeans' quality of life. At its heart, the Infocomm 21 roadmap aimed to develop Singapore into a vibrant and dynamic global infocomm capital with a thriving and prosperous e-economy and an infocomm-savvy e-society. I would say that we have met this target. The way international agencies and consulting companies have ranked Singapore highly in infocomm, whether on IT or e-government, indicates that we have achieved the targets that we set for ourselves in the year 2000 with Infocomm 21.

To realise the Infocomm 21 vision, the Government had, at that time, set aside $300 million. As of now, I think about 95% of the budget had been disbursed or is already committed. The remaining amount, which had been set aside to help fund the multi-year National Infocomm Scholarships, is expected to be fully committed by FY2008.

Prof. Chin Tet Yung asked about data protection. I agree with him that we must take a comprehensive and a holistic approach. As he noted, on 13th February this year, I informed the House that the

As for unlawful or unauthorised surveillance by the use of technologies, we already have adequate safeguards in the Penal Code against such action or misconduct. However, we should also recognise that this is not purely a technology issue alone or that it is entirely a legal question that can be solved just by law alone. We have to understand that besides introducing a suitable regulatory framework and also raising the awareness on the use of technologies, we also have to continue with consumer education, so that all Singaporeans are more aware of the risks and that they are better prepared on how they themselves can help to prevent exploitation of their personal data.

Sir, the Inter-Ministry Committee tasked to study this matter will take a comprehensive and holistic approach in developing the appropriate personal data protection framework for Singapore. As Prof. Chin noted, I have indicated in Parliament that the Committee will complete its study and make its recommendations by the middle of this

Orchard Road area and in the new developments like One-North. The goal is to facilitate commercial wireless access at highly affordable rates in the initial years. IDA will help operators to deploy a more integrated wireless broadband network across different platforms and provide innovative content on their networks to attract more users. Details will be contained in a Call for Collaboration to be issued by the end of March with commercial services by third quarter this year.2000 International. This is a Singapore company which pioneered the very popular thumb drive which most people carry around with them these days. Today it is reaping the benefit of their R&D investment. I am glad to say that I met the Managing Director of Trek 2000 recently at the IT leaders' award ceremony, and he said that there are many more ideas that they are working on. They have many more intellectual properties that they are able to exploit. So our companies are not sitting around just making old products and selling what they have been doing so for the past 10 years. They are exploring, researching and developing new products, new ideas, and this will put them at the cutting edge.Corporate Disclosure and Governance (CCDG) provides guidance on corporate governance, which encompasses accountability and decision making on IT investment. So, on the whole, I can assure Dr Ong that our IT investments are well guided, well motivated and, certainly, bring about the results and achieved the targets that they set out to do.Government is already reviewing Singapore's data protection regime and assessing the suitability of the various data protection models. I would like to reassure the House that the Government recognises the importance and impact of data protection on Singaporeans. We cannot shut out new technologies. We cannot deny our entrepreneurs and our industries the use of new technologies, including technologies such as RID, which Prof. Chin mentioned. Yes, some of these technologies can be abused. Some of them can be misused. But we certainly should not shut our minds to these technologies or the potential that they offer to us just because there is a possibility of abuse. We have to strike a right balance between facilitating the adoption of new technologies and also protecting personal data and protecting personal privacy.year, and I expect it to be able to meet this target so that we can then proceed with the appropriate model that can be used to ensure that there is a proper protection of personal data in Singapore.

The Arts

Sir, we have been supporting efforts to promote awareness and appreciation of artistic, cultural and historical heritage of Singapore to Singaporeans and visitors. I believe that it is our hope that through appreciation of our heritage and culture, we will be able to foster nationhood, identity and creativity. May I enquire on the status of the progress in developing arts and arts appreciation?

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Sir, we have invested lots of time, money and resources to develop arts in Singapore. What is the progress attained so far? Are we able to

cause the necessary mindset and behavioural change of Singaporeans towards arts and its appreciation in general? How do we measure these changes and success?

Sir, I would like to know also how the new Singapore Art School will be contributing to the arts landscape and the arts sector. How is the vision of developing an arts belt progressing? What other new infrastructures can we expect to further boost the arts industry? Is the strategy of supporting the arts industry through grants and subsidies sustainable over the long term?

We have great opportunity to use our rich history, background and diverse cultures and make it an integral part of life in Singapore. Are we using these resources in the most effective manner to strengthen our national identity and the sense of belonging to Singapore?

The NAC and the National Heritage Board have often tried to promote and educate the public on the importance of culture and heritage appreciation. Late last year, the National Heritage Board announced an ambitious strategy over the next three years to strengthen Singapore's museum-going and appreciating culture, hoping to draw new audiences to Singapore museums and improve awareness and grow visitorship. We need to ask if the current efforts of enhancing the position of our heritage and culture are bearing fruit. How do we measure the outcomes?

Literary Arts

(In Mandarin): Mr Chairman, last year, I asked the Government to provide more grants to our local writers and associations. The answer I received was $325,000. Compared to the Government's grants in the other fields of performing and visual arts, this amount is like a drop in the ocean. As such, despite our performing and visual arts being dynamic and vibrant, the field of literary arts is often described as a cultural desert. I hope that the Government will substantially increase its grants to support and promote our local literary compositions and writers.

First, through sponsoring the publication and circulation of literary magazines to provide more space for our writers to publish their works. We are particularly lacking in space for regular publications. I suggest that the Government sponsor the writers' associations in publishing and circulating regular literary magazines on a monthly or weekly basis, or even subscribe to space in the newspapers for local writers to exhibit their talent.

Secondly, promote newcomers. We must make a conscious effort to promote new blood. I suggest the Government, the local writers' associations and the

Thirdly, we should sponsor our local writers' participation in literary camps and conferences overseas and organise international activities here to help them go international and widen their scope.

Mr Chairman, I look forward to an early conversion of our local cultural desert into a green pasture.

press jointly initiate some "Newcomers Awards", and there should be secondary school, novice, university and open sections. Moreover, the awards should be presented separately for the four official languages. In this way, we could be more flexible and effective in obtaining our objective.

ASEAN Culture

Sir, the ASEAN 2020 Vision sees an ASEAN community conscious of its ties in history, aware of its cultural heritage and bound by a common regional identity. It is now not a vision as such, but seems to be like a fading dream, if not a pipe dream. In terms of government participation, culture is always put on the backburner to political and economic issues.

For a very long time since 1978, there was only a Committee on Culture and Information (COCI) seeing into this culture aspect. Only in recent years, we have the Ministerial Meetings, and the first meeting was in 2003; second one, last year; and the next one, 2007. ASEAN is now nearly 50 years; next year it will be 50. COCI has made a statement assessing the tasks ahead. It says, "Cultural promotion and appreciation activities today are aimed at the younger generation. In spite of more than three decades of ASEAN cooperation, Southeast Asian people still have a long way to go in understanding and appreciating one's another culture." And in drafting what ASEAN is and how it is relevant to their lives, let me recount one example.

I went to a digital music and media show, and was very impressed with the youngsters doing all the digital music. So I asked one of them, "Can you reproduce music as if it were from the gamelan?" So the youngster looked at me puzzled and flustered. Finally, he said, "Yes, we do "LAN-gaming" as well." Yet the gamelan is one of the more recognised musical instruments in this region. I often wonder what he would have made of the Vietnamese musical instrument called the k'longput. I always suspected that he would say, "Yes, we would play digital golf as well and k'longput is a hole-in-one!"

Sir, the questions I have for the Minister are as follows: First, while accepting that MICA's main agenda is inward looking, and that it seeks to develop creative industries in Singapore, what does it see as its role in informing and promoting ASEAN arts and culture, especially to the young? Second, would he consider developing Singapore as an international hub for ASEAN arts and culture? I see this as a plus in economic terms as well. Third, can MICA endeavour to make ASEAN culture more newsworthy? Because I can see that our media reporters do not find ASEAN culture worth reporting. Finally, can MICA, together with PA, foster more people-to-people cultural exchanges? Understanding our ASEAN neighbours is of great value, not in the sense of personal edification but it makes great economic sense as well.

Museums and National Archives

Sir, we need to give more support to our Museums and National Archives to tailor more programmes that reach out to the masses and inculcate in Singaporeans a greater sense of history. I would like to mention especially the valuable role of our National Archives. I have visited it several times and I found the research

In contrast, the archives at Kew in Britain which I have also visited is a modern airy building, a state-of-the-art building, with large research areas, with proper lighting for reading and research. It feels like a library. It is like our new library in Orchard Road - very inviting. It also houses a free museum and a cafeteria. Coffee and tea are most important when one is doing research, and a boring one sometimes. It is generously funded. Every year, it holds an archive awareness campaign to show people how records in the archives are relevant to them and invite them to discover how enjoyable exploring archives can be. This is also a regular event in the US. And in the US, the archives there launched a new programme called "American Conversations" which involves a series of informal interviews with history experts, and which is open to the public.

Sir, in Singapore, I worry that not everyone fully appreciates the importance of archival records and sometimes with sad consequences. For instance, while I was researching on a biography and I needed to have access to the oral histories of various players, I found that the oral histories of key players like Dr Toh Chin Chye and Mr Ong Pang Boon were not recorded for various reasons. And one of them is that they believe that silence is golden. I think it is partly due to the lack of awareness of the role of oral history, understanding our past, and how

Sir, I visited the Old Ford Motor Factory's New World War II exhibition gallery and was excited by it. I saw this audio visual called the "Trials of War" and for the first time, I learned that the war trials in Singapore, which sentenced more than 100 Japanese to be hanged, were held at the site which is now our Goodwood Park Hotel. I go to the hotel, but I never realised that this is a historical building. I hope that more can be done to earmark sites in Singapore which capture our past and in a way that will make it relevant to the present and the future.

I also wonder whether our museums and archives are world-class, and what is the vision of MICA for these organisations. What plans do they have to increase their outreach and whether they can have a paradigm shift to make sure that our museums and archives try and relate the past to present and future ---

area quite cramped and not very welcoming for visitors. It has a feeling of an old storehouse. The building used to be a school. It is not purpose-built for modern archives. It is to the credit of the excellent staff there that the NAS has been able to deliver good service to the public, despite its cramped workspace and tight funding. it is necessary to give our oral history the role that it deserves in capturing our past.

Thank you, Ms Ng. Your time is up. Dr Sadasivan, can you reply, please?

Sir, I thank the hon. Members - Mr Zainudin, Dr Ong, Ms Ng, Assoc. Prof. Chin - for their comments relating to arts and culture.

Art expresses the passions, achievements and aspirations of a country. As Singaporeans, we share a common experience living in a young country, creating cultural space for itself within the region. This emerges in the works of our artists as they give expression to their inner creative impulses. We have developed an eco-system in Singapore that allows the development and expression of this creative energy.

Let me start with Mr Zainudin's question on our progress in the arts and culture, and give him some statistics which measure this progress. Over the last few years, the Government has invested substantial resources to develop our arts and culture. Today, we have a wealth of institutions such as the various arts housing facilities for local artists, Esplanade, Arts House at Old Parliament, and several museums including the Asian Civilisations Museum and the expanded National Museum now being completed.

There is an explosion of activity in the arts scene. Words are not adequate to describe this phenomenon but it can be experienced at the various arts events taking place year round. Statistics measure this phenomenon. Between 2001 and 2005, the number of arts societies and companies has grown from 506 to 600. On average, we can choose from 15 different cultural events every night. Last year, there were 590 visual arts exhibitions and more than a million ticketed arts performance attendance. Should any one of you retire, almost every day you can watch a visual exhibition during the day and a cultural performance at night that is different every day of the year.

Others have taken note of our arts scene. For example, the South China Morning Post commented in February last year that Hong Kong could boost its image as an arts hub if it took a leaf out of Singapore's book. We will continue to nurture our cultural ecology. I will cite three of our initiatives - one recently completed, another ready later this year and a third which is longer term. Just last month, our National Archives opened its facility "Memories at Old Ford Factory". This was the site where the British military forces in colonial Singapore surrendered to the Japanese on 15th February 1942. It is also a national monument. The permanent exhibition depicts the memories of personal

Ms Irene Ng asked about making archive materials more accessible to the general public. I agree that an easily accessible National Archives is important. Our approach is to provide accessibility through several means such as the National Archives Reference Room, travelling exhibitions, publications and e-services. More importantly, there are currently more than 900,000 archival records available for online public access from home. Efforts are being made to make more records available online. I have not been to the Kew building, but I am glad that Ms Irene Ng likes our National Library. Perhaps the National Archives can work with the National Library to make more records available to members of the public.

Museums collect and display our heritage. We share Ms Ng's view that museums should reach out to the public. Some may recall the long queue at the Asian Civilisations Museum on the last day of the "Journey of Faith" exhibition. This shows the public support and interest in museum exhibitions. The new National Museum, which will open soon, plans to reach out to the public through its invitation to all civic and cultural groups to propose innovative new projects for the museum. Last year, MICA had announced plans to convert City Hall and the former Supreme Court into a national arts gallery. This project will take several years to complete, and the public will be involved in this project.

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Prof. Chin advocated developing Singapore as a hub for ASEAN cultures.

experiences under Japanese Occupation, and would have been impossible without the many individuals who came forward to provide oral accounts of life during the Occupation. And I agree with Ms Irene Ng that we should increase our collection of records of oral history. He mentioned the Committee on

Culture and Information (COCI). I understand that is called "COCI" rather than "COKI". I agree with Prof. Chin. Singapore art and culture did not develop in isolation. It is an integral part of the larger regional art scene in this part of ASEAN culture. That is why the proposed national art gallery will display Singapore art in the context of Southeast Asian art. Let me give some additional examples of our efforts in promoting Southeast Asian art and culture, in particular those from ASEAN countries. The Singapore Art Museum collaborated with regional museums and collectors to put up the ongoing exhibition "Cubism in Asia". The Esplanade also organised a bi-annual Asian Arts Mart, and this has evolved into a "must attend" event that provides a good platform to showcase contemporary Southeast Asian art forms. Not too long ago, Singapore hosted the ASEAN Children's Arts Exhibition on Kindness. NAC and NHB will continue to include Southeast Asian arts in their programmes.

Art, heritage and culture strengthen our national identity and sense of belonging, something that Mr Zainudin highlighted. Hence, community involvement in art and heritage activities is important. For example, NHB has piloted a project "Community Trails" to develop heritage trails with constituencies, schools and CDCs. The participants will research and locate sites which the residents can identify such as the Kallang Gasworks. The Balestier-Moulmein and Jalan Besar Trails will be launched in conjunction with the Singapore HeritageFest 2006, and NHB is approaching other CDCs to develop more of such Community Trails.

Dr Ong has asked about the promotion of our literary arts, particularly in the Chinese language. Sir, literature thrives when authors have a passion to write, describe, explain and illuminate the human

MICA will continue to recognise and promote local writers and artists through awards like the Golden Point Award for writers and Young Artists Award. If you have too many awards, everybody will have several awards and, after a while, awards may have no meaning. While there is an argument for more awards, as suggested by Dr Ong, we must be careful that we do not create too many awards that no one knows what the award is for. But there is a pinnacle in the art scene. We have the Cultural Medallion. Since 1979, 86 artists have been conferred this prestigious award. I am pleased to announce that from this year onwards, the President of the Republic will personally confer the Cultural Medallions to recipients. This reflects the Government's desire to accord high level recognition to artists who have achieved excellence. A vibrant art scene and a vibrant nation go hand-in-hand. One cannot exist without the other.

condition. We cannot create great literature by just showering money. Would Shakespeare had written better plays if more money was available to him? Cervantes wrote Don Quixote in a debtors prison in La Mancha. Good literary works require great passion and not great finances. Nevertheless, the NAC provided about $270,000 in grants to literary artists in FY 2005. This money is available for publishing and they can write to the NAC for grants or publications. NAC takes a comprehensive approach, ranging from financier support to grooming of talent and organising events, such as the Singapore Writers' Festivals. In addition, NAC plans to organise a Literary Arts Professional Symposium in 2007 to bring together Singapore and overseas writers and industry players.

Knowledge and Information Services

Sir, to develop a knowledge community, our Library plays an important role in providing knowledge

However, there is another potential reservoir of knowledge and heritage waiting to be exploited in our very well stocked National Archives. The archives plays an important role as a safe keeper of our national history. Good archives like those in Great Britain and Australia are heavily utilised by academics doing research on their nation's history and ordinary citizens doing research on their family history. Government documents are open to the public for reading after a stipulated period of time, normally 30 years. I would like to urge the Government to release more public documents for reading and research. This would enhance our position as a knowledge hub, not only in terms of scientific research and development, but also in the humanities. Encouraging our people to find out more about their roots will also enhance their sense of belonging to Singapore.

On the building of the National Archives, I agree with Ms Irene Ng that yes, it is rich in content but poor in image. If we can compare the new National Library to that of the Archives and if I give our National Library a five-star rating, Archives will barely get three stars. However, it is more important to have a rich content rather than a better image.

and information services to the public. I would like to congratulate the Ministry on a very successful opening of the new National Library. Singaporeans nowadays do not only go to our library to borrow books or read newspapers. In fact, our libraries organise more events like plays, reading sessions, seminars and art exhibitions for the public. The library has become not only a knowledge hub, it has also become a venue of cultural exchange for Singaporeans.

Library 2010

Sir, I am happy that the Government is allocating new

Sir, there is no other person who can personify the love for books than the late Mr S Rajaratnam. I wonder whether the Government can consider naming the National Library to S Rajaratnam Library.

funds for the Library 2010 project. I just want to ask what can the public expect from this additional $118 million that has been provided for. I am also happy that in the area of knowledge and reference information materials, authenticity and trust is a virtue because we get a lot of information all over. But I am not very sure how accurate some are. I see that from the reference in the Budget book that this is the focus of the Reference Section of the Library. I just want to know whether the Reference Section is intended mainly for the scholars or they are also for the general public to use.

New National Library

Sir, the National Library is incurring the largest share of 36.1% of MICA's operating budget this year. This is partly due to the higher operating expenses for the new National Library. In fact, it is a big chunk of the MICA's budget.

Sir, the new National Library is a beautiful building, but it is still a bad idea to build such a grand glass building requiring high maintenance and operating costs. There is misallocation of resources, eg, the public area at the basement is crowded during peak periods, whereas the upper levels remain empty and underutilised at the Reference area. I hope that the space can be more properly allocated, such that there is a more balanced utilisation of space than the current configuration. The Children's Section could be brought to a different level.

Also, there is a public request for the library to increase the limit on the number

of children's books a person can borrow, without paying for the premium membership.

The Media

The publication of the Prophet Muhammad cartoons had led to angry protests from Muslims all over the world. Lives have been lost over this controversy. Singapore has an important lesson to learn from this incident.

Our media has been vigilant and sensible enough to avoid offending the sensitivities of our Muslim community. In Malaysia, the publication of cartoons led to the closure of the Sarawak Tribune, the longest serving English newspaper in Sarawak, the equivalent of our Straits Times. So this is a reminder for us that freedom of expression comes with responsibility, and this is especially so in the case of multi-racial and multi-religious Singapore.

Sir, our media regulators are going to be increasingly put to the test as our society opens up. The creative industry and the knowledge economy are being identified as the key sectors for future growth. We must impose as little restriction as we can to allow the creative users to flow. But at the same time, how does the Ministry propose to protect the privacy and security of individuals without discouraging innovation?

Sir, in reply to queries raised by Mr Seng Han Thong and a few others, I would like to say that our public libraries offer world-class service to Singaporeans. About 30 million people visited them each year to make 35 million loans. The libraries offer a wide range of books, audio visual

Mr Seng asked about the new programme of NLB to promote a knowledge community. The NLB will continue to enhance its offerings to meet the evolving needs of our community and to serve it better. This is the strategic thrust of the Library 2010 plan (or L2010). Formulated in consultation with library users through focus group discussions, L2010 is a five-year action plan to offer Singaporeans more comprehensive library services to meet the demands of the knowledge community where innovation and creativity are key drivers for progress.

NLB will expand its offerings beyond books, periodicals, other publications and audio visual materials to include more online digital resources. Library users will have more extensive and convenient access to knowledge and expertise. L2010 will transform our libraries into gateways to the world's resource of knowledge, information and learning for all segments of our society, not just scholars, but they include students, workers, professionals, minority communities, the unemployed, researchers, interest groups and others.

The new National Library will offer many of the L2010 services when these are launched starting this year. Since its official opening in November 2005, the new National Library has proven to be popular with Singaporeans. Since its soft opening in July last year, the new National Library saw 2.14 million visitors. This is a huge jump from 1.1 million visits to the old National Library at Stamford Road for the whole of year 2003.

Mr Chia asked about the maximum number of books a user can borrow. With 35 million loans a year, the NLB has to balance the desire to borrow more books

Mr Loh Meng See spoke about the etiquette of library users and what can be expected of the $118 million new library building to Singaporeans. NLB launched the "I Love My Library" Campaign early this year in the wake of increasing incidents of poor library etiquette. This is to inculcate greater sense of ownership of public libraries so that they would treat the library's collection as they would as their own belongings, and to extend due considerations to fellow library users, as libraries are public spaces. NLB has also provided rooms for groups that wish to have discussion without affecting other users.

Mr Seng Han Thong suggested allowing public access to materials at our National Archives via the libraries. This is a similar appeal made by Ms Irene Ng for the National Archives which the Senior Minister of State had earlier replied. But I would like to add that

materials and provide a collection of rare and historical publications for reference and research. with the need to ensure the availability of the NLB's collection to the large body of library users. The present loan of four items per user is reasonable. However, from time to time, the NLB had raised this limit to promote reading. For example, as part of the DEAR (or Drop-Everything-And-Read) Campaign during the year-end school holidays from November 2005 to January this year, the loan limit was raised to eight books per user. NLB will consider doing this on an annual basis.

records are available online and they are able to access them from home. This is better than providing access via the National Library. But efforts are being made to make available records online.

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I agree with Mr Seng that even though the National Archives may appear old, but the contents it offers can be inspiring, and we want the contents to be shared by Singaporeans through the easiest way, ie, online.

I would also like to clarify the point made by Mr Steve Chia on the wastage of space. Sir, our Library is one that will be responsive and adaptive to the needs of the users, regardless of their age group and interest, and their need for information. I think the new NLB building will provide the kind of facilities that would be useful to all Singaporeans. Judging by the public response to the new National Library, I am confident that this institution is well worth the investment. It will serve us well for many years to come.

On Mr Loh's suggestion that the new NLB building be named after our beloved co-founder and former Second Deputy Prime Minister, the late Mr S Rajaratnam, I would like to say that the passing of Mr S Rajaratnam is a great loss not only to those who are keen on reading books and the library, but it is a great loss to the nation. But naming an institution after him is a serious matter and requires greater study and serious consideration.

TV and Radio Licences

Sir, many in the public feel that the TV and radio licences should be scrapped. They say that as much as one-third of the air time is dedicated to commercial broadcasts. The revenue collected is phenomenal, especially now that the TV operator in Singapore is a complete monopoly and can dictate the price for advertising in their broadcasts. I understand that for a non-moving advertisement on TV comprising just a few seconds' flash will cost the advertiser at least $2,500. What more if the advertisement is a moving clip? The cost of the advertisement must be very high. The revenue collected by the TV operator is big enough to support its operations, including broadcasts of educational programmes. In any event, many TV programmes are repeats, especially the

popular Jackie Chan and other movies. Viewers are, of course, unhappy.

Mr Chiam, you have to stop at Jackie Chan. Mr Steve Chia, you have two minutes.

Sir, I have already given my reasons in the Budget debate for the scrapping of the radio and TV licences. I am now awaiting for the Minister's satisfactory reply.

Sir, I thank Mr Seng Han Thong, Mr Steve Chia and Mr Chiam See Tong for their questions and comments.

Mr Seng Han Thong had asked about guidelines for the media in Singapore, especially in the light of the Danish cartoon controversy. There are deep racial and religious tensions in the western world, as evidenced by the Paris riots and the Theo Van Gogh killing in Holland. In this combustible environment, the European media provocatively printed the controversial cartoons of the Prophet Muhammad in the name of freedom of expression. This sparked off violent protests resulting in death of dozens of people and further poisoning relations between Muslims and Europeans. This is a stark reminder that freedom of expression must be exercised responsibly.

Recently, three German editors whose media companies either printed the cartoons or supported their printing visited my Ministry. They told me that to print the cartoons was a historical heritage. I told them our historical heritage included riots caused by irresponsible media and we do not want to experience this again. In December 1950, during the Maria Hertogh court hearings, racial tensions were high in Singapore. The Singapore newspapers whipped up emotions that led to three days of riots which caused 18

Carsten Juste, Editor-in-Chief of the Danish newspaper Jyllands-Posten which first published the cartoons, was reported by The Telegraph to have said: "If I had known Danes would have been put in harm's way as a result of printing these cartoons, I would not have done it." There cannot be a more graphic acceptance that freedom of expression has to be exercised with good judgment and responsibility at all times.

Today, we have a respected Singapore media whose mission is to report news accurately and responsibly. Our media has helped to strengthen the resolve and resilience of Singaporeans in the face of intense economic competition, terrorism, global health threats, and social trends that go against our value system. There is currently no need to develop new guidelines, as our media has Singapore's interests at heart. From time to time, there will be criticism of our media, for example, in rankings by foreign media agencies or snide remarks by those who do not understand our society. Last year, Reporters San Frontieres based in Paris ranked our media poorly. Perhaps, those who did the media ranking did not live in the poor Paris suburbs where cars were burnt nightly during the riots. We must ask ourselves this question: do we want burning cars lighting up the sky like in Paris during the race riots last year? Even without COE, it is a terribly unnecessary destruction of property.

Sir, we should not apologise if the path we take deviates from that taken by others. We know our strengths and our weaknesses. The creative space for ideas

Both Mr Chiam and Mr Steve Chia have raised the issue of radio and TV licence fees which are used to support public service broadcasts. Besides being entertaining, PSB programmes are important in educating our people on Singapore's history and values, as well as bonding Singaporeans together. An example would be "40-on-40" shown on Channel 5 last year, which gave Singaporeans an insight into the significant national developments over the past 40 years. Beyond this, PSB programmes also cover current affairs, local sports, quality dramas, and educational programmes for children, all of which would otherwise not be commercially viable for broadcast. This wide spectrum ensures that the different needs of our society are looked after. They also draw wide audiences due to their local flavour. In addition, about 30% of PSB funds are used to acquire quality programmes for Central, Suria and CNA.

The collection of RTV licence fees is not unique to Singapore. Many countries, such as Germany, Japan and the United Kingdom, collect TV licence fees which range from $245 to $627 per annum. In Singapore, the fees have stayed at $110 per annum since 1994, despite rising costs to maintain high-quality PSB programming. Where possible, national broadcasters should strive to increase advertising revenues. I agree with Mr Chiam on that point. However, advertising revenue alone cannot support the current wide spectrum of programmes which cater to different groups of Singaporeans. The Government currently provides some funding to support PSB programmes of national interest, such as

deaths and injured 173 others. This is taught to our students. If any of our students become journalists, they will understand the importance of a responsible media. I told them that we have a responsible media in Singapore and our media has an important role in nation-building. and information can flourish without undermining fundamentals, such as racial harmony and social cohesion. The media has played a significant role in nation-building by educating and informing the public. Television does this through Public Service Broadcast (PSB). the National Day Parade telecast. Everyone stands to benefit from PSB programmes. The payment of RTV licence fees should be viewed as a partnership between the Government, the broadcaster and the people for the public good.

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Later, Mr Steve Chia. Mr Zainudin, you have two minutes.

Creative Industry

Sir, in line with the Economic Review Committee's (ERC) vision of a diversified entrepreneurial and globalised economy for Singapore, the ERC has identified the creative industry as one of the three new and promising service areas to promote besides education and healthcare. MICA are the stewards of the creative industry's development strategy and have formulated industry-specific blueprints, such as the Renaissance City, Design Singapore and Media-21, as guidance in the move forward.

The creative industry has consistently grown faster than Singapore's overall GDP in the period between 1986 and 2000. Growth in the creative industry has maintained a relatively high rate of around 12.9% per annum between 1995 and 2000, as compared to the 5.8% for the overall economy. With all the current initiatives in place, how is the growth rate and development evolving? Between arts, culture, design and media, what is our area of focus? Have we determined the optimum balance of the four sectors? Are there any new initiatives in the pipeline in store for us?

Sir, we are well aware of the desire of many countries and cities to develop their own creative industry. The competition for the search of talent and investment is stiffer now and will continue to be so. I

All these questions lead us to other important questions. Do we have enough manpower in this sector, and are enough jobs being created? How do we support arts institutions, such as NAFA, La-Salle and the like? Do we give them enough resources? Is there more that we can do to support such institutions?

would like to know, Sir, how successful are we in comparison to the other cities and countries that are also vying for the same investment pie for the creative industry.

Creative Imperative

Sir, at the last World Economic Forum (WEF) at Davos, I met Mr Samuel DiPiazza Jr, Global CEO of PricewaterhouseCoopers, USA, who noted that in his 30 years of experience, he has never seen such an incredible shortage of talented people across the globe and across a wide spectrum. Curious, I sought advice from one of my good friends and a fellow Young Global Leader, Mr Shai Aggasi, a young executive board member of SAF AG, which is one of the world's largest systems integrators, and also a member of our NRF Scientific Advisory Board. Shai has recently assembled a team of 25 of the world's top brains in the very competitive IT sector.

I had wondered what was his strongest persuasion. Was it money, promise of the good life or career development? Shai explained that, while all of the above are important, these guys already have the comforts of a good life and good pay. It would have been a mistake to treat these top talents as mere engineers or managers. They are obviously superbly talented and hardworking but, most of all, they are creative people who want to create and not

That conversation reminded me of another great man, ie, J F Kennedy (JFK). In the summer of 1961, a time of uncertainty at home and abroad, JKF proposed a "crazy" vision of putting a man on the moon by the turn of the decade. At that time, some sneered at the "unreachable" dream. But he was persuasive and, within two years and a huge R&D budget in space engineering and science, America saw at least 40 US-made satellites circling the earth, thousands of new companies, and tens of thousands of new jobs created. Space and related industries were generating new demands in investment and skilled personnel, and the best from all over the world came to fulfill that dream.

Back to Singapore, what is our big or "crazy" vision that will attract and retain the creative talents, both local and foreign? How do initiatives like "Cultural Capital" and "Digital Media Hub" contribute to making Singapore a vibrant, creative, eminently liveable place that talents will gravitate to? On the other hand, how can we ensure that this small geography would be liveable for both the extraordinary talent as well as the ordinary Singaporean? How are we engaging our young and old on this?

I understand that MICA is driving a multi-agency effort on the national branding and marketing of Singapore. So, what do we tell our business and leisure tourists about this global talent hub? How can tourism efforts contribute to this effort?

In short, is our idea big or crazy enough? What is our creative imperative? Do we have a timeline set?

imitate or follow the norms. Hence, he persuaded them with a single vision, ie, that they have a choice of living their lives perfecting someone else's invention, or they can become the inventor. He claimed that that one idea struck a chord with all 25 top talents, and he thinks that SAP is on the verge of a great surge forward.

Creative Community

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Sir, one of MICA's missions is to develop and promote our creative industries.

And by most accounts, the Minister and his team must be congratulated for having done an excellent job thus far.

Notable events during the last year include the Singapore Arts Show 2005, a Journey of Faith, exhibiting the treasures from the Vatican collections and Nonya Kebaya, a living art which allows the younger generation of Singaporeans to be exposed to heritage art. A noteworthy event for MICA in 2005 was the full scale launch of the Creative Community Singapore Programme which is meant, and I quote the Minister, "To provide more opportunities for Singaporeans from all walks of life to unleash and express their creativity and innovative spirit and I am looking forward to talented artistes being given additional opportunities to exhibit their creations."

Exhibition space has, for the most part, been confined to the central part of Singapore. The Esplanade, for example, has a beautiful forum where gifted artistes can share their talent with both Singaporeans and visitors who go to the Esplanade. I would like to ask the Minister if more could be done to bring arts to the heartlands and if his Ministry will support artistic expressions and creativity by ordinary citizens. And I wonder if, for example, the Minister would give his backing to an ad hoc exhibition of creatively designed depictions of pachyderms being exhibited along a quiet stretch of road, perhaps in the north-eastern part of Singapore, which will bring some cheer to residents over

there. Obviously, such depictions must not be offensive to any racial or religious group and not create a public nuisance. It must be done with the utmost of sensitivity to the feelings of residents. But if all the criteria were met, will the Minister support the forthcoming?

The Arts School

Sir, the development of the creative industries requires the nurturing of young talent, and opportunities must be given to the young to develop their talents in an atmosphere conducive to both learning and also to developing their innate abilities.

This is not a subject that is easy to balance and the fact that we are going to have an Arts School, I think, is a step in the right direction, but one must be very careful what we teach and who we take and who teaches in that Arts School.

The questions I would like to ask the Minister is, first, what sort of students will qualify to be students in this Arts School? How many of them will be chosen? How old will they be? How are they to be selected? I think parents are especially anxious to know whether their children will be eligible for selection because many parents, whether rightly or wrongly, believe their children are talented.

Second, what sort of curriculum is to be expected? Because, on the one hand, we want the children to have a proper formal education but, on the other, we must be flexible enough to allow them to display their talents to the maximum and to develop their talents to the maximum. How will this curriculum look and whether going into the Arts School would, in fact, enhance their education rather than be a stumbling block later?

Finally, the staff. What can we expect would be recruited to be the Arts School's staff members? Because it is very

necessary to have the right teachers so as to support the passion in the children. And I believe that artistic children are perhaps more temperamental than normal children. So, we need special staff to understand them and to cater to their needs.

Sir, with regard to the Arts School, I think this addition will make the education system in Singapore to be wholesome.

The Sports School was recently opened for operation and there were important lessons that could be drawn from the management of the Sports School. I wonder whether there are similarities and what are the differences that we can envisage in the running of the two different schools. I am mindful, as what Prof. Chin has mentioned, that the students may be quite different. But one common factor would be the role of the parents because it is important to get the support of the parents, especially in this area on developing the art talent of our students.

Like him - Prof. Chin who spoke before me - I am interested to know whether we will be inculcating the right values in these students because the output is really dependent on the beliefs and the value systems that we impart to the students, and the creativity and the outcome of it is very much dependent on what is taught and the values of the curriculum, the teachers and the students themselves.

The other thing I would be interested to find out is the kind of fees we are going to charge. Is it very much the same like the ordinary school system, or is it going to be more, and how much more? How distinctive do we expect it to be from the students gaining the experience

from the Arts School from that of the normal school system?

Mr Chairman, I would like to thank all the hon. Members who have spoken on creative industry, creative talent, creative community and the Arts School. I will respond to the various points that they have raised.

Let me begin with the creative industry. Mr Zainudin has asked for the growth rate and the prospect for the creative industry. In fact, as he has himself pointed out, in recent years, this sector - the creative industry, which comprises the arts, design and media - had actually grown faster than the overall Singapore economy taken as a whole. Value-added grew by about 7% for the creative sector compared to the 4% for the general economy and employment in the creative industry grew by 5.5% per annum compared to 2.3% for the whole economy for the period between 1995-2003.

In 2003, my Ministry launched the Creative Industry Development Strategy. This arose from the ERC's identification of the creative industry as a new area to drive the Singapore economy, a new area that can make significant contributions to our economy. We have budgeted about $200 million since the launch of the Creative Industry Development Strategy to promote this push into the creative industry. The $200 million is to fund the promotion of this sector between FY04 and FY08. I expect that with this additional input to promote the industry and also to develop capability within the creative industry, we should be able to maintain this space of having the creative industry growing at a higher pace than the general economy. So how do we want to do that? Our strategy is based on attracting global creative companies, enlarging our pool of creative talent, growing local creative enterprises and

Sir, in recent years, our local arts groups are receiving more and more invitations to perform at international events. So they are being noted. In the design sector, Singapore architects have begun to win international prizes and international recognition. They have also begun to win projects in the international arena. Many Singapore architects are now working in the Middle East, landing very big projects in the Middle East because of their design capability.

In the media sector, besides celebrated film-makers like Jack Neo and Eric Khoo, we have companies like the Peach Blossom Media, which had produced "Tomato Twins". This is the first Singapore-produced animation series. It was broadcast on Nickelodeon worldwide network. The company is listed on London Ofex market. It has sealed many co-production deals with partners in Korea, the Netherlands and the USA. So we can see that our local start-ups in the creative sector are, in fact, getting up and moving into the international arena. They have developed capabilities and products that they can be proud of. They are able to sell to international media networks and they are striking out, forging new partnerships with other creative enterprises elsewhere in order to leverage on other people's experiences and capability so that they can come up with even more innovative and persuasive products.

How are we compared to other creative cities? Can we compete with all the other cities that are attracting talent? I think Miss Penny Low asked these questions. I would like to say that we are able to compete and we are able to hold our own. For example, we have succeeded to attract several leading global design and

By coming to Singapore, these global creative companies, these global brands, have been able to create jobs for our creative Singaporeans, whether it is in the design or in the interactive and digital media sector. They have opened up new possibilities for Singaporeans. So what we need now really is more creative people. That is the key and Miss Penny Low is absolutely correct. At the end of the day, whether a company succeeds or falls by the wayside depends on the strength of its creative and innovative human capital.

I am glad to say that our polytechnics, art colleges and universities are all rising to the challenge to groom more creative

Recently, LaSalle-SIA College of Arts established the Puttnam School of Films. This was done in cooperation with Lord Puttnam of UK. In case hon. Members are not familiar, Lord Puttnam is the man behind such film hits as "The Killing Fields" and "Chariots of Fire". He has gone into a collaboration with LaSalle-SIA College of Arts to open up a film school here in Singapore. That means that we now have a new opportunity to train talented Singaporeans who are interested in film production.

supporting R&D in key areas and also finally to encourage or support our local creative enterprises to venture into the global market. creative companies to base some operations or aspects of their work in Singapore. BMW, a company that is well-known for its design and engineering, a global brand, highly sought after, has decided to locate their first Asian design centre here in Singapore. Lucasfilm has opened up a digital animation studio here in Singapore. Electronic game developers, like Electronic Arts from the US and Koei from Japan, have set up game development studios in Singapore. RGM Holdings from Australia was able to start up a US$100 million media financing fund here in Singapore. All these international players have come to Singapore. They have discovered the creative potential of Singapore. They have felt the buzz in the creative industry in Singapore. They know that we may not have all the talent that they need, but they appreciate the Singapore open-door policy towards attracting international talent will help us to overcome this shortage of domestic or local talent. We can complement and supplement our local talent with international talent. And so, they are attracted here. I would like to say, based on our recent experience, we have indeed been competitive. We have indeed been able to attract talent and also companies to come to Singapore. talent. And the Government is supporting them, giving them all the support that they need so that they can continue to groom creative talent, to seek out and enable our creative talent to attain a high level of excellence.

We also have a renowned institute like DigiPen from the US, in the area of interactive and digital media, wanting to set up a campus in Singapore and I think they have agreed to start up one here. So we can look forward to another institution that will train interactive and digital media specialists.

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In 2005, the Media Development Authority spent about $6.8 million and this year a further $9.9 million will be spent on capability development. These are initiatives that include scholarship, training grant, forum, master classes and workshops, to train and also to inspire our creative talent. In fact, more than 4,000 people from the creative industry have benefited from these initiatives launched by the Media Development Authority.

Mr Zainudin raised the question about R&D in the creative sector. I am pleased to inform him that the National Research Foundation (NRF) has identified Interactive and Digital Media (IDM) as a strategic R&D area. Creative talent and enterprises in Singapore will thus have access to the

So, to better promote the interactive and digital media and industrial design, we have also included these two clusters for existing tax concession which exempt 90% of royalty income from tax. This was announced by the Minister for Finance. More details will be available from 1st April.

We hope that these initiatives will encourage local entrepreneurs to develop and exploit more intellectual properties because, at the end of the day, as I said earlier on, for many of our companies it is creativity and innovation, the ability to accumulate intellectual properties of value which you can then exploit fully, both domestically and in the international market. That is how we will grow our creative economy.

To help our creative sector venture into the growing global market, MDA had organised local media production companies to participate in major international media markets, such as MIPCOM, Cannes Film Market and American Film Market. These had already yielded some early fruits. An example, Cubics International was able to sell Singapore's full length 3-D animated film, "Zodiac - the Race Begins", to 22 countries. This is their very first full-length feature animation film, made in Singapore, being distributed to 22 countries around the world. I think this is quite an achievement for a young company.

MICA is also helping local companies to enhance their product designs by pairing them with acclaimed international designers, including industrial designers Toshiyuki Kita, Architect Toyo Ito, BMW Group Design Director, Chris Bangle. I had the opportunity to meet both Mr Toshiyuki Kita, the industrial product designer and also Chris Bangle from BMW. What came across as the reasons for their wanting to be involved with our project to pair local companies with international designers through the Design Singapore Studio Scheme was that they were very excited about the creative talent in Singapore. They had the opportunity to interact and to meet with our students in our college of arts at LaSalle, NAFA, polytechnics, where they offer design courses, and they were very excited by the people they met who showed energy, determination and creative talent. So they wanted to work with these young people and we offered them this opportunity by pairing them up with established companies and also some internship for our younger students in the institutes that are providing design training. As a result, I think we are able to take the design capabilities in many of our companies to a new level.

I like to end this segment on the creative industry by thanking Miss Penny Low for her support of MICA's effort to promote and to develop arts and culture or, in her words, "cultural capital" of Singapore. I agree with her that there is world-wide shortage of creative talent. Apart from training, grooming, motivating our own creative talent, we have to make greater effort to attract international creative talent to join us in this industry. As I said earlier on, the fact that key players in this sector have found Singapore an interesting place for them to locate some of their business activities, suggests that we are making progress and headway and we will continue to promote our creative capability and the prospects of our creative industry so that we will

She pointed out that we also have to balance the needs of our citizens as well as the incentives for our international talent who are attracted by our vibrant creative sector. I agree with her entirely. She is absolutely right. An influx of creative talent will certainly help us to build up a strong and vibrant creative economy, which will open up many new opportunities for Singaporeans and it will also be critical in order to enable Singapore to remain relevant and competitive in this changing global environment. So I am confident that we will be able to achieve this balance of retaining our own creative talent by, firstly, training, developing them to the highest level of excellence that they can achieve, and then retaining this talent, and at the same time, supplementing our own creative talent with international talent to join us in this creative industry. I am confident that we will be able to achieve our vision of transforming Singapore into a creative hub and, at the same time, the best home for our people.

Mr Chairman, Sir, let me now turn to Mr Charles Chong on the creative community. He spoke about the Creative Community Singapore and how we launched this event with some fanfare last year. I would like to inform Mr Charles Chong that the scheme that we launched last year, Creative Community Singapore, had been very well received. We had received, in fact, a total of 159 submissions from the public, private and people sectors. So far, out of the 159 submissions, 30 had been approved for funding and more projects are likely to be approved for funding and to be implemented. So far, since the launch in July last year, seven projects have been completed. The completed projects have reached out to almost 20,000 people as participants or visitors to various exhibitions. The projects have also

Mr Koh Buck Song, the journalist, in his article in the Straits Times commented that, "Hype is the kind of corporate event for the community that can truly make a difference to the space for expression."

More community projects under Creative Community Singapore can be expected. For example, the project called "Bit-By-Bit" will provide mentorship to help community groups to produce mini-musicals. This is a value-chain of the whole process of going about producing musicals and this is working with the community group, the heartlanders, to give them an experience and a taste of what is involved to venture into creating a musical. Another project called "Moving Minds" will offer community entrepreneurship workshop modelled after the successful Stanford Technology Venture Programme. So there are many opportunities for projects under Creative Community Singapore that would involve our heartlanders, and our community organisations too.

This year, Creative Community Singapore will launch a second phase of

With regard to his specific request on whether my Ministry will support ad hoc exhibit of pachyderms in quiet parts of Singapore, we are always supportive of creative ideas, whether they are pachyderms or whether they are white or black pachyderms. We will look at these proposals and certainly if they have artistic merit, he can be assured that my Ministry will support.

Let me now turn to the Arts School, Mr Chairman. Sir, I am pleased to update this House on the progress of the Arts School. Prof. Chin Tet Yung and Mr Loh Meng See had raised questions on the Arts School and I will answer them.

Construction has started at the Kirk Terrace site from last month and the consultants are working hard to meet the targeted opening of January 2008. The Arts School offers a six-year curriculum, equivalent to through-train secondary and junior college education. What would set it apart? Prof. Chin was asking what is going to be distinctive about the Arts School and what would be taught? What will set it apart from the other schools is the incorporation of the principal art subjects, namely, music, dance, theatre and visual arts, into the academic curriculum. In planning the curriculum, the principal and her team consulted with artists and visited leading international arts schools. There are already many excellent examples of arts schools elsewhere. We do not have to reinvent the wheel. We can learn from their experience. These arts schools that the principal and her team have visited include the San Francisco High School for the Arts. I have also visited this school. It is a very interesting school with a very large

Dialogues with parents and students were also held to gather client feedback. Mr Loh Meng See highlighted some learning points from the Sports School on how to motivate students. For the Arts School, parents and students have told us that they want students to be challenged to think critically across discipline and culture and to pursue artistic and creative excellence. The Arts School will, therefore, provide students the opportunity to work with top practitioners of various artistic discipline in Singapore and overseas. The school will also build links with the community, neighbouring museums, the National Library and the Arts Centres to stimulate learning beyond the classrooms. As its graduating qualification, the school is planning to offer the International Baccalaureate Diploma. Parents appreciate its balanced, yet rigorous approach and its wide recognition by tertiary institutions here in Singapore and overseas.

Sir, we expect that our Arts School graduates will be well-equipped to pursue further studies in college, conservatory of music or university, both in the arts and in many other different fields. In fact, when I visited San Francisco School for the Arts, I met with the principal. He explained to me that nearly half of his students do not go into professional career in the arts, they went into many other things. In fact, he mentioned one of his recent leading students went on to Harvard to do international relations after graduating from the Arts School. So, the graduates from our Arts School will be future artists, creative professionals or, in fact, just well-rounded individuals, successful in many other fields, but with a strong education and a strong passion for the arts.

NRF R&D budget which is drawn from its trust fund, starting at $500 million and will be accumulated over the years, building to about $5 billion by the year 2010. So there are tremendous resources available to support R&D in interactive and digital media. Of course, that is not the only sector that will be supported by the NRF. The NRF is also focusing on environmental technology, water technology, infocomm sector, life sciences and many other areas. attract even more companies and also talent to join us. created 39 jobs and provided training to more than 800 Singaporeans involved in implementing these projects. Let me give Members an example. HYPE is one of these completed projects. It was initiated by Hewlett Packard in collaboration with the community to produce digital works with HP printer for display and sale in the Arts House Gallery. The proceeds from the sale did not go to HP. The proceeds from the sale went to the Business Times Budding Artists Fund to develop even more young artistic talent. This project was very successful, with about 720 submissions from across the community. Mr Charles Chong talked about the art from the heartlanders. This was an opportunity for the heartlanders to be involved in producing and creating art works.its marketing campaign, including a new local TV series to encourage community entrepreneurship. We have increased public awareness. We expect more projects and wider participation. population and very talented faculty to groom young talent. The team had also visited Stockholm Music High School and the Victoria College of Arts High School.

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Sir, the issue of admission criteria is important, as Prof. Chin has said. Who will be admitted to the Arts School? Interested students must meet the key criteria of artistic talent and potential. The School will assess their talent by audition, interviews and, if necessary, admission test. While artistic talent is obviously a priority for the Arts School, the School cannot be blind to academic performance. It will also have to consider the candidate's academic record and ability to fulfil the International Baccalaureate requirement.

For its admission assessment, the School will draw from an expert panel of local and overseas artists and educationists. We are taking this approach because we understand that in the initial years, trying to assess talent of young children at the age of 13 is not going to be easy. So we have to learn through experience. We will seek support or learn from the experience of people who have done this much longer than us to devise appropriate well-rounded method of trying to identify talent.

Sir, the School will work closely with our primary schools and parents to identify potential students starting from later this year. Although the School will only open in the academic year 2008, we want to start engaging the primary schools, students and parents to open up in their mind the possibility of the Arts School as an option for them to consider. It will also announce its school fees and admission details around that time. We intend to offer bursaries and scholarships to ensure that needy talented students will not miss out on the chance to go to the Arts School.

Sir, for its first intake, the School plans to admit 200 Secondary 1 and 200 Secondary 2 students. And in its steady state, the Arts School will have 1,200

As the School is part of our national education system, the vast majority of the students will be Singaporeans, but it will also take in some foreign students. The exposure to talented foreign students will add to the School's cultural diversity, and it will certainly benefit our young students in Singapore, to give them an exposure to talented and creative students from the region, in particular. Foreign students, however, will not receive the fee subsidy which the Government provides for Singaporean students. So they will pay full fees.

students, aged between 13 and 18. It will take about 200 students each year. With a six-year programme, we will have a student population of about 1,200.

We have quite a lot of time before the "guillotine" for clarifications. Ms Irene Ng.

Sir, the Senior Parliamentary Secretary and Deputy Chairman earlier said that content is more important in the Archives, not its image. I just wonder why this same thing is not said about museums and libraries. We aim for them to be world class, to have modern facilities and state-of-the-art buildings. It might reflect on our lack of appreciation of the role of our Archives.

I also want to clarify that, for me, what was more important - of course, rich content - but not image per se as much as what I said that it was a crammed building, it lacked facilities and that we want more people to come and access the rich treasure trove that it has within its walls.

The second point, if I may ask the Senior Parliamentary Secretary, is that the move to place more records online is something that all modern archives are doing. I hope he knows that we still have

Sir, I hope MICA will consider upgrading the building and committing more resources to our Archives.

to go down to the Archives most times to access and read the materials as we may not know what is relevant until we plough through the whole reams of stuff. And this was what I had done at Kew. I go online. I also identify the topics that I want but I go there and access the materials. I always wonder if researchers come to our Archives what sort of impression they would have of the kind of value that we place on our historical records. When I went to Kew, I had a very good impression of the British people that do value the role of their archives, equivalent to their museums and their libraries. And they give the funds that they needed and the buildings that they needed.

Sir, if we compare the history of Singapore and the history of the United Kingdom and how the two societies developed, there is a vast difference. If we go to London, there will be records for almost every old building. The British people are very proud of their heritage and they spend enough time, effort and creativity to preserve their culture and inheritances. Ours is a young nation, but we are trying very hard to develop our historical heritage for the benefit of our people.

Yes, I do agree that having an ambience for research in the National Archives could be helpful to draw more people. I think we are moving towards that direction and I note that the Member recognises the efforts that the National Archives had done for the Ford Factory where quite a number of our displays are being shown for the people to share. I am sure that we will be looking more into this as we discover more and more important icons and important places for us to use to educate our people.

Again, I would like to say that the online service is useful. Yes, one has to go to the Archives to do more serious research. But as I said, if the materials are available, we will share them with our people.

Sir, permit me to supplement what my Senior Parliamentary Secretary has just said about the Archives.

I would like to thank Ms Irene Ng for her comments and her interest in the Archives. Certainly, we will want our Archives to also improve and make progress as the years go by to offer better service to the people who need to come to the Archives. We will continue, first of all, to improve the online collection of archival materials so that people can browse through the online collection from the convenience of their home. If they, as Ms Irene Ng has said, still need to come down to the Archives to study the original document, we will try our best to provide better facilities, and we are doing this.

She mentioned that she visited the Ford Factory recently when we opened the new museum there. She would have noticed that there is a brand new annexe building next to the Ford Factory. This is, in fact, a repository for our archival materials, because we have run so short of space in the National Archives to store all these materials. We have to build this new facility there. With the decanting of some of our materials there, maybe there is hope that in the present National Archives there could be some room for us to upgrade and to improve so that visitors who need to come and study documents at the Archives itself could have a more conducive environment.

May I remind Members that they should make their clarification short and not launch into another speech,

so that we have more time for the answers and for clarifications?

Sir, I wonder whether the Senior Minister of State can clarify whether revenues collected for commercials are enough to support the operation of the TV operators, including education programmes. If so, whether it is justified for the Government to continue collecting TV licence fees.

The answer is no. It is not sufficient. For the English language broadcasts, the advertising revenue covers about 80% of the operating expenses. For Suria, Vasanthan, Kids and Arts Central, it covers about 29.1% of the operating expenses. For MediaCorp News, it is 30.9% of the operating expenses. So the partnership between the public, the broadcaster and the Government is necessary.

Clarification, Sir. The Senior Minister of State said that the programmes mentioned by him are not commercially viable. They are not because they are all propaganda material that the public is not interested in watching. Should not these propaganda materials be funded by the Government, or even by the PAP, just like how the old NKF actually funded their charity, and not paid by the people through the use of TV licence fees?

I am not sure whether Mr Steve Chia has seen Kids Central. If he has, I do not think it is propaganda. Otherwise, his definition is very broad.

Sir, I would like to ask the Minister what is the level of support we are giving to NAFA and LaSalle since we want to develop the talent and manpower. Is the recognition at a level of polytechnic funding equivalent to anywhere else around the world

where arts talent is valued even higher? May I have a clarification from the Minister, please?

Sir, as I said in my response to Mr Zainudin, the Government is giving full support to our arts colleges like NAFA and LaSalle. Both institutions are given polytechnic level per capita recurrent subsidy for students whose academic results meet the requirements for polytechnic entry. In other words, these students must meet this basic requirement.

The institutions also get ITE level per capita subsidy for students who do not meet polytechnic entry level. In other words, if they do not meet the full polytechnic entry level, they have the ITE level of subsidy.

So, on average, the arts colleges get about $10 million of recurrent funding per year. In addition, I also understand that NAFA and LaSalle each receives about $25 million and $65 million respectively of funds for their city campuses land premium, because NAFA is now in its new city campus. LaSalle is also building its new city campus. They each receive additional funding to cover both their city campus land premium and also building costs.

Overall, I must say that both art colleges do receive significant Government support and funding, which will enable them to play a bigger role in our effort to groom, nurture and develop even more creative talent among the younger generation.

Any more clarifications or questions? Mr Chiam.

Sir, on the Arts School, I believe the Minister said that the academic standards are as high as the one

taken by students at the Baccalaureate. If that is so, where is the time to train the students to specialise in the arts? They already spend so much time in the academic subjects.

Sir, the Arts School is not just a school to train students in the arts. As I said right at the beginning in response to Prof. Chin, the uniqueness of the Arts School is that it integrates the principal arts disciplines together with a full academic curriculum. The Member asked where would the students find the time for the arts. We are not the inventor of the concept of the Arts School. Many other countries have similar Arts Schools, whether it is in the UK, America, Europe or Australia. They have succeeded in integrating the arts disciplines with a full academic curriculum. As I said earlier on, we are not trying to reinvent the wheel. We will learn from the experience of others who have gone down this path before us. They have done well and established highly regarded Arts Schools, produced graduates who can gain admission to the best of the universities in their own country or anywhere else, and I think this model is useful for us. Sir, I am confident that our Arts School will be able to teach our students

a full academic curriculum to prepare them for the International Baccalaurete Diploma and at the same time develop their artistic talent to the highest potential.

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Two points of clarifications, Sir. I mentioned that with just one vision that he had, it is one simple vision, maybe not so simple, that inspires the whole generation of architects, scientific researchers, technologists and so on, to break through early impossibilities and opening up new horizons and imagination. I am wondering whether we need to also have a consistent but big and seemingly crazy idea to be put up, to message it, not only

to Singaporeans to inspire them, but also to the foreign talent who might be attracted by this creation. By the same token, perhaps art being something which is always associated with it being colourful and attractive, it could also be the same message that is put up through our tourism initiatives. Could the Minister comment on that?

Sir, I agree that we need inspiring ideas, we need inspiring examples, and we need heroes in our creative industry. So wherever we can, we will highlight these examples. One interesting example which I would like to mention to the House is this creation of Red Dot@Traffic which is entirely a private sector enterprise. For those of you who have not driven down Maxwell Road recently, if you take a drive down there, you will see directly opposite the very serious facade of the Ministry of National Development, a building painted in bright "fire engine" red, running the whole span of the block. Within this building is housed an interesting experiment called the "Red Dot Design Museum". The Red Dot by the way is not related to the little red dot title that has been given to Singapore before. The Red Dot refers to a German organisation that awards design recognition for good product design. There is a museum there which showcases past award winners of the Red Dot design competition and the building is being developed as a design hub. Red Dot@Traffic is being developed as a design hub for the creative businesses and entrepreneurs to do their business or start-up from there.

There are many exciting ideas going on in Singapore in the creative sector. In the media sector, I have already mentioned Cubix International and Peach Blossom Media. There are many other companies out there that are breaking new grounds, innovatively exploring all kinds of ideas and possibilities to enlarge their business and market share. We do

have in fact many such wild and crazy ideas. MICA, together with our creative industry development strategy group, is actively supporting some of these. We are also at the same time trying to encourage more wild and exciting ideas, not necessarily crazy ideas, to come from the bottom-up approach, and that is the raison d'etre for our Creative Community Singapore project, to give an opportunity for people with imagination, ideas, dreams that they want to achieve, dreams that they want to follow, to empower them to put their proposals to us. If they need funding, this is where Creative Community Singapore comes in. We are there to fund people with interesting and exciting ideas that have the potential to impact on our creative industry, community life and community bonding in Singapore. So there are many such opportunities. If the Member has more ideas, we will be very happy to consider any other suggestions from her.

Sir, I was wondering whether all this art buzz would feed into our thrust for creative industrial design as well.

I agree with Dr Warren Lee that industrial design is important. That is why just now, in my main response to Mr Zainudin and also Ms Penny Low, I spoke about what we are doing under the Design Singapore Studio Scheme. The Design Singapore Studio Scheme is in fact an initiative to promote and develop our industrial design or our product design capability. That is why we sought out international designers like Toshiyuki Kita and architects like Toyo Ito to work with our Singapore companies to go into product design, to lend their expertise in product design to our local companies and local designers. This is indeed an important area because it can help our manufacturing sector to come up with better design products that can be much more desirable and can capture greater market share. We understand the

imperative, and we are working on it. But the point I want to make is that we are very pleased with the fact that leading international designers have been happy to associate with us. They are prepared to come and support our Design Singapore Studio Scheme. So that is a very strong endorsement.

If there is no more clarification, Mr Seng, would you like to withdraw your amendment?

Sir, on behalf of Members who have spoken, may I thank the Minister, the Senior Minister of State and the Senior Parliamentary Secretary for sharing with us the many exciting views leading to more exciting jobs for Singaporeans and together we will see a brighter future for all. Sir, I beg leave to withdraw my amendment.

Amendment, by leave, withdrawn.

The sum of $384,246,650 for Head Q ordered to stand part of the Main Estimates.

The sum of $161,228,300 for Head Q ordered to stand part of the Development Estimates.

Head T - Ministry of National Development. Dr Amy Khor.

Housing Policy

Sir, I beg to move,

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

Sir, in defining HDB's role, the Minister had noted at last year's COS that, going forward, the Board must continue to plan and execute our home

For HDB to meet these objectives, it ought to undertake a comprehensive review of its rules and policies with the aim of rationalising and simplifying them so as to make them more easily understood by the average HDB flat buyer and dweller. It should also reduce any unwarranted rigidity in the system that makes it more difficult than it should for flat owners to deal with their properties in congruence with their life cycle needs, changing economic status over time, and their social aspirations or needs.

The HDB Rule book has not only increased in thickness over the years, but now also has many addendums like band aids due to the numerous exceptions that have been made to the rules to cater to the many circumstances that have arisen. Whilst I commend the HDB for showing compassion and flexibility in the application of its rules and policies, there is the broader movement in the public sector to cut red tape and unnecessary rules.

I would like to highlight two policies in particular that require review due to changing market circumstances.

Firstly, the HDB concessionary loan. The policy allows all first-time flat buyers and first-time upgraders to have access to the HDB concessionary loan, but not first-time downgraders. This two-bite of the cherry policy for HDB concessionary loans was implemented in 1997 as part of the Government's anti-speculation measures at a time when the property market was buoyant and speculation was rife.

Since then, the market has experienced a downturn and speculation has largely been curbed. Additionally, with the Government and even some finance practitioners now warning us against the dangers of over-consumption of property, why do we still need to penalise downgraders and not grant them the concessionary loan even though they qualify in all other aspects? Why deter people from practising prudence?

Instead of making exceptions to the rules for hardship cases, why do we not just equalise the policy and allow first-time downgraders to also enjoy a second HDB concessionary loan? According to MND, between 2002 and 2004, on average, about 12% of the total bank loan cases, or close to 4,000 cases, are downgraders and two thirds of the appeals for concessionary loans for 2004 and 2005 numbering some 1,000 cases were by downgraders. Hence, each year, there are a sizeable number of downgraders who are affected by this rule and the numbers could be more as others who wish to downgrade may have been deterred to do so by this rule.

Secondly, resale levy. This is a levy imposed on the sale proceeds of the first flat which is supposed to reduce the subsidy enjoyed on the second flat bought directly form the HDB. This works well under a rising market. However, HDB resale flat prices have fallen by more than 20% since the late 1990s. Hence, there are many who, if they sell their flat now, would suffer a loss. Even if this were not so, they might not have the cash to pay the resale levy for the purchase of the second flat since the gain from the first flat is low. This is a perennial complaint, but the Government's response has always been to return to first principles of why the levy was introduced in the first place. Sir, however right the policy intent may be at the beginning, the consequence in the end is possible hardship that, to my mind, negates the intent of the levy.

Sir, a good policy intent is not a sound enough reason for bad policy outcome. One way to resolve this is to give the buyer the option of paying for the levy either as a percentage of the sale price of the first flat or as a premium of the second flat which will cream off the subsidy for the second flat, which is the real intent to begin with. A second but perhaps more radical way would be to simply sell all HDB flats at market value pricing with the additional restrictions placed on the first-time buyers of new HDB flats, and give the first and second-time buyers of such flats different quantums of housing grant, with the housing grant for the first direct purchase higher than the second. There is no necessity to impose a levy since the differential for the two housing grants will reflect the fact that buyers of a second flat will enjoy a lower subsidy. In a way, this is already being done for DBSS flats and HDB's unsold flats which are being sold in the resale market. In these instances, qualifying buyers are given housing grants to purchase these flats.

ownership policies such that the HDB experience to the Singaporeans is a memorable and rewarding one. Among other things, this implies that HDB flats must remain affordable and that public housing policies are fairly crafted and implemented. These are compelling motivations in the next phase of Singapore's housing policy.

Sir, in recent years, more 2- and 3-room HDB flats are in greater demand. We also saw more downgraders than upgraders. May I ask the Minister how soon will he build these 2- and 3-room HDB flats and how many will he build in order to meet the present demand?

In the construction of these new flats, in view of our ageing population, will the Minister incorporate elderly-friendly features or lifetime designs that can be adapted as and when the needs arise? Will he also provide space on the ground floor of these HDB blocks for social purposes, such as childcare, student care or elder care centres? Will he also ensure the handicapped and elderly a friendly access environment for these new blocks?

Sir, will the Minister consider increasing the supply of HDB rental flats

More studio apartments and retirement homes will be needed to better accommodate the silver generation. Will the Minister consider releasing 30- or 40-year lease land to private sector enterprises to make retirement villages viable?

in view of our present shortage? Will the Minister make an exception on the HDB Joint Single Scheme for those with no immediate family members? It is very difficult for many singles to comply with this ruling by requiring them to live with complete strangers. Is it possible to build 1-room HDB rental flats or converting some flats to 1-room HDB rental flats in order to cater to singles with no family members to share their rental flats with.

(In Mandarin): Sir, on public housing policy, I have three questions and three suggestions.

Owing to a series of economic downturns and economic restructuring, some low-income families had no choice but to sell their flats to pay their debts. In fact, they came to a point where they were without resources. Even in such circumstances, they had to rent a place for their families to stay in. But according to the regulations of HDB, once you have sold your flat, you are barred from applying to the HDB to buy or rent another apartment within the next 30 months. They really did not know whether or not to sell.

Sir, I would like to urge the HDB to remove this regulation so that those who are forced to sell their flats because of financial difficulties will be able to rent a 2-room flat for their family to stay in.

Secondly, the HDB has announced that it will be building some 2-room flats for the public to apply. This is good news for

Thirdly, many of our young people are encouraged by the Government to become entrepreneurs and their educational level has gone up, their income is also higher. So now, when they get married, their combined income may be more than $8,000 which exceeds the ceiling imposed by HDB. I hope the HDB would raise the income ceiling for first-time applicants who are Singapore citizens, so that they will be able to purchase their first HDB flat, otherwise they would be deprived of the privilege of purchasing a new HDB flat.

those who are in financial difficulty. However, every day, when I travel to Jurong, I could see a lot of vacant 4-room or 5-room flats. I feel that the HDB should not just concentrate on building new flats. They should consider making full use of these vacant flats. Maybe they could be converted to 2-room or 3-room flats for sale or rent, so that these vacant flats will not be left unused. This is like killing two birds with one stone.

Mr Chairman, Sir, last year, MND announced the Design, Build and Sell Scheme (DBSS) which allows the private sector to design, build and market HDB apartments in selected precincts. I welcome this innovative scheme. It is an attractive scheme for buyers, as the resale levy has been waived.

May I ask whether a developer has been awarded a DBSS tender? Further, will the price of these DBSS apartments be kept affordable? The potential buyers are expecting good designs and finishes, better than the HDB norm, while the private developer may wish to maximise his returns. Will there be a mismatch of expectations?

Sir, under HDB rules, upgraders are eligible for HDB mortgage loans, but downgraders are denied HDB loans. This is rather irrational, as many who

downgrade are doing so out of desperation, as they are in financial difficulties. The banks may also not extend loans to them, especially if they are bankrupt. Will MND then review this and genuinely help the downgraders?

Mr Chairman, Sir, living in HDB estates is an important experience for Singaporeans. Like National Service, these HDB experiences have contributed immensely to the nation-building of Singapore. Interacting with neighbours of different races, customs, religions, and across socio-economic strata; deepening our understanding for one another's beliefs, customs and practices; lending a hand to help each other, celebrating our diversity and living as a closely-knit community - these are all valuable HDB experiences.

The current housing policy of HDB though is to avail new subsidised flats only to households with a monthly income of $8,000 or less. I agree that subsidies should go only to those who need them most. But, Mr Chairman, Sir, my proposal is for the policy to allow higher income households to also buy new HDB flats, say, 5-room or larger ones, but without subsidies. As many Members are aware, there is no scarcity of supply of the larger flats, unlike in the early years of the HDB. In fact, HDB has many unsold new flats, many of them in my constituency in Jurong West, as Mr Ang Mong Seng has pointed out. So, my proposal should not result in competition between income groups for the purchase of HDB flats.

Mr Chairman, Sir, it is important to allow more Singaporeans, especially young Singaporeans, to live in HDB estates. That way, more and future generations of Singaporeans can benefit from that very unique, special and common HDB experience that has proven to bind us as a nation.

Affordable Housing

Mr Chairman, Sir, I am pleased to note that the HDB will be building new 2-room flats to help those in the lower-income group to own their own property. This year's Budget has been sweetened by the news of the offer of an additional $20,000 grant in addition to existing housing grants. Can the Ministry provide more details on its building of the 2-room and 3-room flats - how many and where? I hope that the HDB, in its planning for the 2-room and 3-room apartments, does not build these flats in far-flung corners of the housing estates where the residents have to commute to get to the social amenities. If there are families which need help, these are the people who need it more than others. Help them by locating them closer to the markets, MRT stations and schools, so that they can save on transport costs. Will HDB consider to sprinkle the 2-room and 3-room blocks among the other bigger units so that there is a good mix near the town centre whenever opportunities permit? It will not be prudent to segregate the smaller flats in the periphery of HDB housing estates just because these buyers are paying less for their apartments.

Finally, in order for the applicants to know what are their chances of securing a 2-room or 3-room flat, will the HDB ensure that the data on the availability of these flats are released and are readily available, as well as on the number of people queuing for the flats?

Next, on loan for downgraders. I want to bring up the issue of helping the less fortunate people, especially to enable them to downgrade to a smaller flat. These are genuine cases of homeowners who are caught by circumstances beyond their control. In view of the restructuring of the economy, many found that they are out of job suddenly and they have to bite

Can the HDB be more flexible in its policy and give these flat owners a loan to downgrade? It is ironical that the HDB expects them to turn to the banks to borrow money. For one, many will now not qualify for a bank loan because their combined household incomes are lower, either because a member of the household has lost his/her job or is now doing lower-paid job or having irregular incomes. Their household income has thus fallen. I hope the HDB will respond with compassion. Will the HDB review its policy on granting housing loans to those who want to downgrade? In fact, many took up the second loan without knowing HDB's intention to cap the two loans in the first place. This policy has only been introduced to cap the upgraders but has serious implications on the downgraders.

Moving on to the elderly, we now have more than half a million of our population above 50 years old. What is the HDB's projection on the need to provide senior citizen housing, specifically, what type of housing for senior citizens? Are we having elderly villages, studio apartments, 1-room, 2-room flats or multi-generation flats? What is the number of flats required in, say, five years, or long-term, say, 10 years, for our elderly? What are the specific features of these blocks of flats? What about recreational spaces as the current ones for 2-room studio apartments are very congested and they do not have many big courtyard areas? Do we have more outdoor spaces for gardening, physical fitness, in addition to recreational ones for arts and even for mahjong?

I hope equal thought is given to the planning of flats for older people, as we do in the planning of new estates for our younger generation. At this point, I would

In conclusion, we can take pride of the strides that we have made for the early days of having to resettle squatters and providing opportunities for our people to upgrade. At present, most of our people, almost 90%, are housed in HDB flats. It is time to allow more choices of flats for our people. We must review our policies for housing, not only to encourage upgraders, but be open to allow our people to move to housing types suitable for their needs within their lifetime, even if it is to move to a 1-room, 2-room, rental or purchase flat.

the bullet, and some even to suffer the ignominy of downgrading. like to appeal to the HDB to spend more time in the R&D for lifts for our four-storey walk-up flats and not to wait till MDN has fitted out all the higher blocks of flats.

Sir, like Mdm Cynthia Phua, I would like to ask the Minister to provide details of the 2-room HDB flat development programme. What are the eligibility criteria and the pricing of these flats? To make these purchases more affordable, would the HDB consider shorter term leases, say, 60 years, and longer repayment periods? Will lower-income workers who currently own bigger flats and who are in financial difficulties be allowed to downgrade to purchase the 2-room flats without having to fulfill the debarment period and also to be given HDB concessionary loans?

Sir, I have two other questions. Some owners who took bank loans had their flats repossessed by the bank. Can urgent assistance be rendered to them to rent HDB flats? Finally, what is the progress of the study to help flat owners in difficulties to monetise their flats, ie, the reverse mortgage scheme?

Public Housing

Mr Chairman, Sir, like Dr Amy Khor, Dr Ong Chit Chung and Mdm Cynthia Phua, I am

Sir, currently, HDB only has policies promoting upgrading. If a person needs to downgrade, he is on his own - no second bite of the cherry, no HDB loans, even if it is only the second direct purchase from the HDB. Such policies were put in place in the age of high growth and when asset enhancement was the mantra of the time. However, it looks like those days are gone and will not come back in a very short time. HDB has already recognised this trend by reversing the building programme and reviving it to include 2-room flats. Yet, the rest of its policies are still oriented towards upgrading. I think it is time for the Government to review its housing policies as our population ages and as the economy matures. Our current policy to promote upgrading is like driving a car stuck in high gear. As the car slows down, it is time to down shift. But we cannot. If we do not, then the engine will sputter and die. I urge the Minister to review the HDB policy to allow downgrading as well as upgrading, so long the tenants do not violate the "two bites of the cherry" policy.

also bringing up the subject of downgrading by HDB tenants. This is not a new topic, as there were discussions in this House regarding the concept of reverse mortgages for retirees to fund their retirement. However, when such discussions arose in this House, the Government has always asserted that the private sector should take the lead. So far, proposals by the private sector and insurance industry have not been that advantageous to the tenant. The question is: why should the Government not take the lead in this area by facilitating HDB tenants to downgrade through selling their flats in the open market and then buying a smaller flat either from the resale market or from HDB directly?

Two-room HDB Flats

Sir, to help low-wage workers own their own

Firstly, when will HDB start building the 2-room flats and when is the completion date? How many units will be built? What is the price range and in which locations? As the objective is to make it possible for our low-income earners to buy their own homes, the HDB's pricing of these flats should be made very affordable. As a recent report shows, the prices of 2-room flats have gone up by 25% because of the surge in demand, particularly from singles.

Secondly, Sir, like my other colleagues, currently, I note that HDB is very selective in allowing someone who wishes to downgrade to a smaller flat because of financial difficulty to do so. This causes hardship and immense frustration to those who are affected and who struggle very hard to settle their debts. Can the Minister enlighten this House whether this policy will be reviewed to make it easier for those facing financial difficulty to downgrade to a subsidised flat and secure a HDB loan?

flats, the Low-Wage Workers Committee has recommended that HDB build more 2-room flats to widen the affordable housing options for low-wage workers. It also recommended that low-income families which are in difficulty and which want to downgrade to a smaller flat or even to subsidised HDB flats should be assisted to do so to alleviate their financial burdens. I would like to ask the Minister what steps are being taken to achieve these recommendations.

Sir, I give credit to the Government for restarting the building of 2-room HDB flats. Not every one can afford those bigger flats, despite the fake market price subsidy.

For varying personal reasons, not every one wants to or can even own the cheaper 2-room HDB flats to be built. The Government should not be over-zealous in its asset-ownership programme

to force every citizen to own properties. I hope the Government will consider booking some of these new 2-room flats for subsidised rental first to help those problem families until

they can afford to buy flats at a subsequent stage, that means, more rental units available.

Housing for Low-income Families

2.45 pm

Sir, the low-income housing grant which has been announced as part of the Workfare package is welcomed as it will make it easier for low-income families to own homes.

However, Sir, I am very concerned that some low-income earners might over-stretch their budget in a bid to own a home. This could worsen their already tight financial position. This is, in fact, the situation a sizeable number of home owners are in now due to the housing fever in the early to the late 1990s.

The very low-income households in the lowest 20th percentile may have very little, if any, extra money left after paying for all their household needs. This group should be especially cautious when deciding to buy a house. For them, their monthly debt service must be kept to a minimum and should preferably not exceed the monthly rental payments that they might already be incurring on their flats.

The normal rule of thumb of allowing monthly debt service at between 30%-40% of the household income would not be realistic for such cases. Hence, HDB should be more stringent in their credit evaluation criteria for these purchasers and advise them to be prudent.

Home ownership, for all its social and nation-building benefits, should not come at the expense of budgetary prudence. Perhaps, a lower ratio of monthly loan repayment to household income should be placed for at least the lowest 20th percentile income households to prevent over-consumption. I support the Ministry's current thinking to place an income ceiling for purchasers of the new 2-room flats to be built so as to allow the lowest income households to have priority over these flats. I would also like to urge the Ministry to build these flats in more accessible locations as the low-income households are highly sensitive to transportation cost. Furthermore, I would like to urge the Ministry to integrate these 2-room flats with other flat types to avoid the social stigma that might be attached to a precinct made up entirely of these smaller flats and to facilitate better social integration.

These 2-room flats should also not be too small to ensure liveability to both low-income couples as well as to those with, say, one or two children. Hence, they should be at least equal in size to the existing 2-room flats which are about 45 square metres or slightly larger. They could be built in a mix of locations in both new and mature estates to provide choice.

A good way to gauge demand for these flats would be to sell them under the BTO system. HDB could also consider offering some of the existing 2-room flats for sale to the sitting tenants, much like what has been done previously for the 3-room flats.

Mr Chairman, Sir, I think I am the only one who has asked for 10 minutes in a COS cut. I think the Minister should thank me for it because he would have more time to reply.

There are many low-income families who own an HDB flat but are struggling to

Although HDB is flexible in terms of granting deferment to the repayment of loans or the restructuring of the mortgage terms, the problem does not go away if these low-income families continue to be unemployed or under-employed, which is the case even when the economy recovers because these house owners are mostly the older workers who are also lower-educated. They are suffering from what we call structural unemployment.

There are three ways HDB can do to help these families.

First, let them include either their spouses or children as co-lessees, as the case may be, to help pay for the loan.

Second, many MPs have spoken about it, and that is to help them downgrade to a smaller flat.

Third, provide additional housing grants to these families, similar to additional housing grants announced by the Prime Minister in the Budget to help low-income families to own homes.

Sir, although HDB tries to help these families solve their problems, I find that the current policies are less than satisfactory. Let me cite examples and explain.

First, include either the spouse or children as co-lessees. I have appealed in a few cases, on behalf of my residents, to include either the spouse or children as co-lessees to help pay the mortgage loan. To me, this is straightforward and could solve the problem immediately. However, I am surprised at the reply I got from HDB which, while allowing the appeal, offers no help at all.

To substantiate what I say, let me show an actual HDB reply to an appeal to include the daughter as a co-lessee. First, to include the daughter, it entails the transfer of ownership from the parents to themselves plus the daughter. That means the parents have to sell the flat to themselves and the daughter. I have no problem even with that if that is a legal requirement. However, since it is a transfer of ownership, HDB then treats it as a new loan. And because the prevailing market value of the flat is low, the new loan works out to be smaller than the current outstanding loan. The outstanding loan owed by the parents is about $205,000 as shown here. The new loan is about $193,000. So there is a shortfall of $12,000. Since the daughter's CPF balance is only about $7,000, the family is required to provide a cash top-up of about $5,000.

May I ask the Minister: how is the family helped? If they can afford the $5,000, they would not have come to the meet-the-people session in the first place. So if they cannot afford the transfer, and the problem drags on, may I ask: is HDB better off? Is HDB still not owed the outstanding loan of $205,000 which has become problematic? The wise and pragmatic thing for HDB to do, in my view, is to let the family retain the same amount of loan before the transfer.

Second, some low-income families sometimes asked to downgrade their flats. This is one good way to solve their financial problem. However, upon selling their flat, Members know that HDB's current policy is to debar them for 30 months from renting or buying a second flat from HDB. Although HDB presently does allow appeals for hardship cases, it does so sparingly. Many of them were advised by HDB to rent a room in the housing market or to borrow from the bank to purchase a smaller flat from the resale market.

Third, additional housing grants. Sir, the Prime Minister said that these additional housing grants for the low-income families to purchase their first home will be a permanent budget allocation. This is good. However, for those who have already bought a flat but are struggling to pay their mortgage loan, they are left out. Dr Ong Seh Ong told me that he spoke about this in the Budget debate but he lamented that the Prime Minister did not answer this point. So I would like to bring up this point again. These are families who heed the call of the Government to own their home and worked hard to pay for it. But because of the structural unemployment that befalls us, they are now in a difficult predicament. Why can the Government not also extend the additional housing grants to them? A means test can be devised and administered. It can also be stipulated that the grants can only be used to pay part of their mortgage loan monthly. I think this will go a long way in helping these families pay for their flats. I hope the Minister can look into this and

Sir, I hope the Minister will address the three points that I have brought up.

pay their HDB mortgage loans. In fact, most of the HDB cases I received from my residents at the meet-the-people sessions in recent years were about their inability to service the loans. Sir, these low-income families who wanted to downgrade are doing so because they do not have money. And because many of them might be unemployed or under-employed, the banks would not provide them a housing loan. HDB's advice is therefore of no help at all. Many of them therefore dare not sell their flats because they are not sure if they can find a roof over their head. Can the Minister therefore review the policy? Clear guidelines can be set to allow renting or buying a second flat from HDB. We are told that HDB will be building 2-room flats in the future, and these flats would be ideal for those who want to downgrade. Further, if the family is downgrading by buying a smaller flat from the resale market, then HDB should give them a second loan, just like it will give to those who upgrade. see whether these families can be given such help.

Mr Wee Siew Kim. You have two cuts, take them together.

Housing for Displaced Parents

Much focus has been placed on our elderly in this Budget and the pro-family policy is also very clear. Unfortunately, my experience at my MPS indicates to me that there is still a group of elderly that needs special attention and help.

A typical scenario starts with the parents selling their flats and using the proceeds to subsidise their children's flats, even paying for part of the renovation and furnishing, all hoping to stay together. Their expectation is that the extended family will live harmoniously together ever after but then often, relationships sour. These parents find living with their children more and more unbearable or are forced out of their children's units.

These elderly have nowhere to turn to. Yes, we do not want to encourage dysfunctional behaviour if too easy an option is available but, without doubt, the objective is to ensure families stay together. However, let us be realistic and acknowledge that there are severe strife and tension within some of these families.

I would like to ask if we can provide some accommodation to these displaced parents and find a way to get their children to shoulder some responsibility perhaps through the Maintenance of Parents Tribunal.

Single Home Ownership Policy

The HDB has a pro-family policy for good reasons. However, we must

I guess people are single for many reasons. Some stay single because they have to shoulder the responsibility of looking after aged parents or siblings who are unable to fend for themselves. Others have not found their soul-mates. Being married, I may not know all the reasons. But whatever their reasons, they are all Singaporeans. Most of them are gainfully employed and they contribute to what Singapore is today. However, they do not enjoy some of the benefits that the married citizens enjoy. They feel that they are being unfairly treated. While some do support the pro-family policy, many feel that once they are past the age of 45 years old, the likelihood of them starting a family is getting smaller and smaller. So why should they continue to be penalised?

recognise that as a country ages, there is a growing number of aging singles.

Mr Wee, your time is up. Order. I propose to take the break now.

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

Order. I suspend the Sitting and will take the Chair again at 3.20 pm.

Sitting accordingly suspended

at 2.58 pm until 3.20 pm.

Sitting resumed at 3.20 pm

[Mr Speaker in the Chair]

Debate in Committee of Supply resumed.

[Mr Speaker in the Chair]

Head T (cont.) -

Prof. Chin Tet Yung. Five minutes.

Mr Chairman, Sir, before the economic downturn and restructuring, many Singaporeans who were holding decent and well-paid jobs went ahead confidently to buy larger flats at extremely high prices. At that time, HDB loans were easily made available to all Singaporeans who had a job. This made it easier for many to upgrade and buy larger flats. However, when the property market began to stagnate and prices of flats dropped appreciably, many found themselves trapped as they were servicing loans that were much higher than what their flats could fetch. This came as a shock for many Singaporeans at a time when everyone thought that property was the best investment one could ever make in Singapore. As years go by, we are now seeing Singaporeans caught in this property trap, that is, having bought high, they now have difficulties paying off their mortgage loans due to retrenchments, pay cuts and higher cost of living. They are having difficulties keeping their flats as their pay now no longer can support their instalments. But HDB's policy of two concessionary loans have remained, and they find that they are no longer eligible for a HDB loan. So these people have to obtain commercial loans, which are based on their ability to service their loans which, in turn, is based on whether they have steady and well-paying jobs as well as a clean credit record.

Now, we see two problems. If they sell the flat, they would have to sell at a much lower rate and many would need to top up substantial amounts to get rid of their flats, as Dr John Chen had vividly described just now. Where can they get the money? Secondly, if they are able to sell their flat and downgrade to a smaller flat, they would not be eligible for a HDB loan. They would have to get a commercial loan which, as we have said, is not easy to obtain. People who have to

In this instance, many Singaporeans were not forewarned about the potential losses when the property market turned downwards and they now have to face the prospect of homelessness, once the commercial banks repossess their homes. They would have lost their CPF savings as well. So, there are basically two initiatives I hope HDB can consider. The first, as many Members of the House have said, can HDB exercise some flexibility and help by changing their two concessionary loans maximum policy and provide a loan to those who are in this situation? Many of them who come to our MPS have said that they just want a loan. They do not mind if it is not on concessionary rate of interest. They just want a loan.

Secondly, if really the owners have no means to pay, HDB can provide them with a rental home at cheaper rates, so that they and their families can at least have a roof over their heads.

Finally, can the Government help by advising and persuading commercial banks to be more understanding of the travails of such families and provide flexi-instalments or refinancing flats, if possible.

Also, can we provide counselling for such families to tie up with all aid

Commercial Loans sell their flat at this juncture will have difficulty already of servicing their current flat due to loss of incomes or pay cuts. And, if that is the case, the banks would not loan them money. So they are in a bind. They are in a trap. The Government explains to say that Singaporeans have to be responsible for their own finances and not to over-commit, but harsh changes and measures should really be implemented only when Government has educated and prepared the people for the changes. I think there was no sufficient preparation. agencies because, at the moment, they are asked to go from one to another - CDC, HDB, MCYS, VWOs? Can we have a one-stop service to help them manage their financial problems when it comes to the loans?

Sir, when the HDB introduced its policy on commercial loans a few years ago, members of the public and the House voiced concerns that this would signal an increase in foreclosures on HDB flats. May I ask the Minister on a more specific point about the number of cases of banks taking legal action in court to repossess HDB flats in 2004 and 2005 and, in how many of these cases were the flats actually foreclosed?

The HDB, in showing some flexibility, did stipulate that only third-time direct purchasers are barred from HDB concessionary loans. This, in principle, allows citizens to benefit from HDB concessionary loans at some point in time. The problem is, as stated by my learned friend before me, at the time the policy was introduced, those who had already used their quota suddenly found themselves without a lifeline which they hitherto thought they had. In addition, a number of them who managed to get commercial loans were hit by the economic restructuring and crises.

May I ask the Minister how many of the foreclosure cases were due to the economic crises and restructuring? May I also ask the Minister what happened to the owners of foreclosed flats, bearing in mind that they no longer could borrow from banks and possibly even from the HDB to buy another flat? Is it not true that such ex-owners also face problems paying rents at commercial rates due to the financial problems that they face? To what extent is this a challenge and does this not undermine our policy of home ownership for all Singaporeans?

Sir, I would like to talk on this topic of reverse mortgage first raised by the Howe Yoon Chong Report in 1984 and also recently in the Report on the Aged that recommended the development of the reverse mortgage scheme as a means of monetising the home asset for the aged.

Sir, I first raised this topic in Parliament in my first speech in 1988 and, ever since then, several other Members of this House have also raised this topic. It is a topic that does not die and, with each year, the problem of the aged facing the retirement days becomes more urgent.

Reverse mortgage was piloted in the United States for 10 years since 1988. It was established as a programme under the Housing and Urban Development (HUD) in 1988. There is demand for this product by a category of people, those retirees who are 60. There is a need for this private sector participation but there is also a need for the Government agency to undertake what I would call an underwriting role. The Government cannot run away from this role, if such a scheme is to be a success. Such a scheme, if it is to succeed, is as much a task for the MND or HDB, as it is for the Insurance Commissioner. Performing a market risk balancer role is a legitimate role of Government, particularly so, as it can provide a safety net for the many senior citizens currently 65 and over, who have nothing much more besides the flat as their asset.

I am not asking for this risk underwriting role to be done for every house or every home category. It is not necessary. Private sector homeowners can sell away their properties and downgrade and cash out. But 3-room HDB flat owners have to wait 30 months, before they can rent.

Reverse Mortgage

And renting a 1-room flat is a very drastic way to

3.30 pm

Issues like age of the flat, mortality, age group, interest rate volatility and insurance rates can be factored. We can begin with 3-room HDB flats that have been fully paid. These are flats which the owners bought for $6,800 in the mid-60s and, today, can be sold at about $150,000 in areas like Queenstown, for example. At 20-25 year term, in terms of annuity, the monthly pay out could be computed, depending on the factors used, say, between $500-$1,000 per month. At an average of $700 per month, it is comfortable to sustain the elderly without medical cost, which is covered separately by medical insurance.

The post-war baby boomers are coming home to roost. The first one among them turns 60 this year. The wealth of the average Singaporean was built up in one generation - the legacy of the Minister Mentor, from third world to first world in one generation. It is a unique legacy. It is now time that we should imaginatively build on this to give hope and to make life more meaningful for the elderly Singaporeans. The average Singaporean's wealth is his HDB flat, after he has paid for all his children's education and other obligations. So, let us not tarry, and let us do something to build the safety net for him by showing him the meaning of home equity.

downgrade with other restrictive conditions. Even so, their rental housing is also subsidised and paid out of public funds. With a reverse mortgage, the home owner can continue to stay in the flat. He is accumulating debt to set off his equity - not a sin in financial management.

HDB Downgrading

Sir, HDB downgrading is a new phenomenon brought about by the confluence of the

I hope the Ministry can find more flexible approaches to meeting the needs of downgraders with financing and purchase options. One possibility is to allow buyers over the age of 60 years to purchase smaller HDB flats at preferential rates regardless of whether they have bought HDB flats before.

weak economy in the last few years and the ageing of owners of larger units. Their children have left the nest and they no longer need to have larger premises. Downgraders are adversely affected by our current two-strike rule. After purchasing two flats directly from HDB, the second one probably as a result of upsizing as the family unit is growing, they are no longer eligible for direct purchases from the HDB. Flats in the open market cost much more which they can ill afford to spend on as they are nearing retirement and have to conserve their funds for living and medical expenses.

Ethnic Integration Programme

Sir, I would like to ask whether it is possible to preserve the ethnic integration policy (EIP) of HDB while minimising the impact on the affected individual. I would like to state, at the outset, that I support the broad objective of the policy, which is to maintain a balanced racial mix in our HDB housing estates where some 90% of Singaporeans live.

Sir, under our current policy, limits are set for each ethnic group to achieve a balance of various communities in the neighbourhood as well as within a HDB block. Residents can sell their flats in the open market only to eligible buyers of similar ethnic group. Each year, about 300 flat sellers face problems in selling their flats because of this EIP. Yes, this represents less than 1% of HDB flat

I have come across a family in my constituency who has lost the head of household. As a result, the family could no longer afford to stay in their 5-room flat. Yet, because of this policy, they have a hard time finding a buyer. This is another MPS helper in my constituency who is facing bankruptcy but having similar difficulties in selling her 5-room flat. I am sure my colleagues in this House could come out with many more such examples.

Sir, unlike the Workers' Party, I do not propose that we do away with this policy, which has served Singapore well. Indeed, the EIP is the cornerstone policy to preserve the racial and religious harmony in Singapore through the HDB living experience, as mentioned by Mr Cedric Foo. My question is more a philosophical one. The EIP is meant for the good of the community. However, the cost is borne by the individuals affected. When the housing market is on the way up, the burden is bearable. Individuals just make less money when they sell their flats. Hopefully, if they were to buy another flat, they could also pay proportionately less as well. However, when the market is on the way down, like in the last few years, or stagnate like now, the loss would be substantial, as many would be saddled with negative equity.

Sir, since this policy is meant for the common good, would it be possible for the community to bear the burden instead of having the individual home owner to shoulder this burden of implementing the EIP? I hope the Minister could review this policy.

sellers, but I feel that we can do more to help these owners.

Sir, I would like, first of all, to thank the many Members who have spoken on public housing policy, led by Dr Amy Khor, Dr Lily Neo, Dr Ong Chit

Our public housing programme is one of the success stories of independent Singapore. Today, 84% of Singaporeans live in HDB flats, and out of this 84%, 95% of them own their own homes. No other country in the world has done as much for its citizens in this area, and I think this is something that we really should be very proud of. Owning a home has given Singaporeans an asset as well as a physical stake in the nation. It has also strengthened our social cohesion and our sense of belonging to this country. So, when an NSman does his National Service duty and does his incamp training, he knows that he is training to defend his country. He is also training to defend his family and his home.

We will continue to assist Singaporeans to own their homes. Let me touch on the three ways in which we encourage and promote home ownership. The first and most fundamental, of course, is that we price our flats affordably. In other words, we price them in such a way that most Singaporeans - up to 90% of Singaporeans - can own, at least, a basic flat.

Many Members have at various times, asked me, "What do you mean by affordability? How do you know that people are able to afford the flats?"

One conventional way of measuring affordability is to relate it to income. In other words, what percentage of their household income is used for housing? The accepted norm by banks and by other housing authorities around the world is that it is considered affordable if less than 40% of the household income is used for housing. This is known as the debt service ratio. And if the debt service ratio

What about Singapore? What is the situation here? Last year, those who bought their flats from HDB used, on average, 20% of their monthly household income to service their housing loans. In other words, we have a debt service ratio of 20%, which is considered to be very comfortable, in terms of servicing a housing loan.

Further, because we have CPF in Singapore, what this means is that most of our flat buyers can service their housing loans entirely from their CPF contributions, without touching their take-home pay. By "most", I am talking about 70% of flat buyers.

The second way in which we promote home ownership is to give generous subsidies to first-time citizen households. I do not know whether Singaporeans appreciate how much they get in total, in terms of the housing subsidies.

Let me elaborate. Those who purchase a resale flat can, of course, get a CPF housing grant, ie, either $30,000 or $40,000. Those who buy a new flat will enjoy an even higher subsidy. Now, as the Prime Minister announced in his Budget Statement, we are going to provide an additional CPF housing grant of between $5,000 and $20,000 to first-timer households who are earning below $3,000 per month. These are explicit and substantial subsidies. These are cash subsidies. And if we add it all up, assuming that a first-timer household is buying a resale flat, living near their parents, they get $40,000. If they are earning, say, below $1,500, they may get another $20,000. So it is $60,000. If we compare that with the price of a 3-room resale flat, we are talking about as high as 40% of the price of a 3-room

On top of that, if one takes an HDB concessionary loan to finance the purchase of his flat, he is enjoying an additional subsidy. How much subsidy are we talking about? If a person takes a $100,000 30-year loan and if he assumes a 1% interest subsidy, we are talking of a subsidy of more than $10,000, over and above the upfront subsidy.

Because we want to encourage social mobility, citizen families can get a second housing subsidy, which is known as the second bite but, of course, the second bite will be smaller than the first bite. And if they are upgrading to a larger flat, they can get a second concessionary loan - again, another bite.

Recently, the Department of Statistics (DOS) did a study on housing mobility of Singapore resident households over the last 10 years. It showed that of the estimated 354,000 households who changed residence during this 10-year period, more than 60% upgraded to a larger house type. This trend was particularly evident among the 1- to 3-room households. Over 80% of them had upgraded to larger housing types 10 years later. DOS will be releasing the study findings later. But what this shows very clearly is that our home ownership policy has succeeded in promoting social mobility among Singaporeans, giving them a chance to move up, giving them hope for the future, giving them a chance to own the home of their dreams.

The third way in which we promote home ownership is that we will continue to provide a range of housing options, so that Singaporeans can purchase a flat that they can afford, a flat that is suitable for them and for their families, ranging from

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Chung, Dr Wang Kai Yuen and many others. They have raised many important issues and I will address each one of them in turn. But, first of all, allow me to start from the beginning.is less than 40%, then usually we say, yes, that particular type of housing is affordable to that family.resale flat in a non-mature estate. And that is not all. the studio apartments - the smallest flats - to the 2-room flats, which I will elaborate on later, 3-room flats, 4-room flats, 5-room flats and up to the Executive Apartments. This range of options for Singaporeans allows us to fulfil our promise that 90% of Singaporeans can afford a home - at least a basic flat in Singapore.

Sir, let me now touch on the additional CPF housing grant which I mentioned earlier. The purpose of the grant is to help lower-income first-timer households build up their assets, to give them a stake in Singapore. Dr John Chen and a few others asked: why only first-timer households, why not give it to second-timer households, why not give it to those who are in financial difficulties? Sir, we have first-timer households who have not yet had a flat. We would like to encourage and assist them to get on to that first step of the home ownership ladder. As for the second-timers, ie, the people who have already owned a flat, there are many other ways that we can help them financially. The purpose of the grant is not to solve their financial problems. It is, as I said, a way for us to help the low-income particularly to build up their assets to own their first home.

To qualify for the grant, first-timer citizen households must satisfy the usual eligibility criteria for the purchase of a subsidised HDB flat, namely citizenship, family nucleus and non-ownership of private property. They will qualify for the additional grant whether they purchase a new flat from HDB or a resale flat with the existing CPF housing grant. In other words, if you buy a new flat, you are already enjoying an implicit subsidy. So you will get the additional housing grant on top of that. If you buy a resale flat, you will get two grants - the first grant and the additional grant. The lower-income households that are earning below

Dr Amy Khor cautioned that we should guard against some of the unintended consequences of low-income families, for example, not being able to pay for their mortgage instalments. I think this is a very valid concern, and I share her sentiments. We want to help low-income families to , as I said, get on the ladder of home-ownership. But we must also make sure that they are aware of the responsibilities of home-ownership, and that they are ready for the long-term commitment that comes with home-ownership, because it is indeed a long-term commitment. So I would like to repeat the message that I have constantly sent to all flat buyers, which is to remind them of the need to exercise financial prudence and to remind them to purchase a flat only if they can afford to and to choose a size that they can afford. They should take into account factors such as the stability of their household income and the projected financial needs of their household, because this may affect their future ability to service the mortgage. To drive home this message, HDB will provide all mortgage loan applicants with credit assessment and financial counselling.

For the purpose of credit assessment, HDB will assess household income based on the average income over a two-year period preceding the flat purchase. In addition, we will require at least one of the flat buyers to be in continuous employment for at least two years prior to

I expect 6,000 households, or roughly 40% of the first-timers, applying to buy HDB flats, whether new or resale, to be able to take advantage to qualify for the grant. This will go a long way towards helping them achieve their dream of owning their first home, and a stake in Singapore.

Sir, let me now touch on the issue of 2-room flats. PM announced in the Budget Statement that HDB would resume building 2-room flats in order to make it more affordable for low-income households. As Members may know, HDB stopped building 2-room flats for sale in the early 1980s, at around the same time that we stopped building the 3-room flats, because at that time, most buyers were opting for larger flats. Today, there are about 6,300 2-room sold flats in the market. In recent years, demand for 2-room resale flats has increased sharply, mainly from singles and second-timers. As a result, resale prices of 2-room flats have shot up, increased by 36% since 2002, when the market as a whole went up by about 6% or 7%. The DOS study, that I mentioned earlier, also showed that among those who shifted to smaller house types between that 10-year period, 1995 to 2005, a higher proportion of those in their fifties and sixties moved to 1- and 2-room flats compared to the younger age groups. This is not surprising because as our population ages, as life-cycle needs change, it is quite natural and in fact it is a wise thing to do, to right-size and move to a smaller flat. So it is timely for HDB to be building 2-room flats again. This not only will help the first-timer low-income households who may not otherwise be able to afford a flat, but it will also help the second-timer households who wish to move to a smaller flat for family life-cycle reasons or financial reasons.

Mr Othman Haron Eusofe asked whether they will be on shorter lease - 60-year lease. I presume Mr Othman feels that we can make the flat more affordable if we reduce the lease by one third, because there is land cost involved. This is really not the case. We are not able to proportionately reduce by one third, so the saving is really not that much. Like all other new HDB flats, we will be building the new 2-room flats and they will come with the 99-year lease. Because it will be a better store of value, and it will allow the owners eventually to convert the flat to cash one day.

To ensure that these flats cater to the target group, we will set a monthly household income ceiling. This household income ceiling for 2-room flats will be $2,000. This roughly corresponds to the 25th household income percentile, and it is between the $1,500 household income ceiling that we apply for subsidised HDB rental flats and the $3,000 which we apply for 3-room flats. Of course, those earn more than $2,000 should be able to afford the 3-room or even larger flats.

HDB intends to launch the sale of the first batch of 2-room flats in Sengkang, comprising about 90 units, under the

Dr Lily Neo asked whether these flats will have elder-friendly features. I will ask HDB to take this into account when we build the flats.

Mdm Cynthia Phua asked how MND intends to meet the needs of lower-income households and downgraders while the 2-room flats are being built. Mr Ang Mong Seng suggested that HDB convert some of the unsold 5-room flats in Jurong West into smaller 2-room flats. I am happy to inform them that we are going to do that. We will implement a pilot project and we will convert some of these unsold 5-room and Executive flats in Jurong West into either two 2-room flats or, maybe, one 2-room and one 3-room flats, depending on the size of the flat and the configuration. In this way, we will be able to meet the demand for these smaller flat types much quicker. I hope that we will be able to have the first batch of 100 converted 2-room flats available for sale and occupation before the end of this year.

Let me turn now to Dr Ong Chit Chung. He asked several questions about the Design, Build and Sell Scheme, or what we call DBSS, for short. Let me recap again for Members' information. Under the Design, Build and Sell Scheme (DBSS), the private sector is the one that will take over from HDB the entire

We launched the pilot DBSS site in Tampines last year. The tender closed towards the end of last year. There was very good response. The successful tenderer is likely to launch the sale of the flats in the second half of this year. What is the pricing? I do not know. Because as I said, the pricing of these flats will be determined by the developer. Of course, they will have to take into account the general market conditions, the conditions of the housing market as well as the conditions of the local market flat prices in the vicinity of their development. HDB's involvement will be in disbursing the CPF housing grant of $30,000/$40,000 to eligible first-time buyers because the flats obviously would be sold at market rates.

We will await the response from flat buyers to this pilot project before we decide whether and where to launch the next few DBSS projects.

$1,500 per month will receive the maximum grant of $20,000, because obviously they need the greatest help. This grant will be in addition to existing housing subsidies. It will be paid into the CPF Ordinary Accounts of eligible first-timer households. Similar to the existing CPF housing grant, flat buyers can use the additional grant to pay for their flat, including the downpayment. This will make it easier for eligible first-timers to purchase a flat. the flat purchase. Again, the purpose of this is for financial prudence, to ensure that the flat buyer has a steady income to service the mortgage loan. The new 2-room flats will be priced in such a way that they are affordable to first-timer households at the 10th income percentile, which is around $1,000 per month, based on DOS data. Of course, at this income level, they will qualify for the additional CPF housing grant as well. To keep prices low, the flats will be built in non-mature estates for a start. I hear the sentiments of several Members - Mdm Cynthia Phua, Mdm Halimah, and others - that we should bear in mind that the flats should also be scattered in mature estates. I agree that eventually, we should do that. But I think, for a start, let us build them in the non-mature estates. Build-to-Order (BTO) system by the middle of this year. The flats will be about 45 square metres in size. Dr Amy Khor said that it should not be too small. I agree. I think 45 square metres, and I have seen some of the 45-square-metre flats, is quite comfortable. I think it is a nice size. We will of course integrate it with the 3- and 4-room flats. We will not build stand-alone blocks because it is very important for us that all our HDB estates are mixed in all various aspects. We will finalise the flat pricing nearer the launch but, I repeat, we will ensure that they are affordable to the target group. development chain, meaning from tendering of the land to the design, construction and pricing of the flats. Why are we doing this? We hope that through private sector participation, we will be able to see more innovative flat designs, they will do things that HDB may not think of doing, we will give ourselves wider choice of flats and, ultimately, I hope better value-for-money for flat buyers.

Sir, let me now deal with a host of issues which touches on the public housing subsidy or, more precisely, the allocation of public housing subsidies. There have been many calls by Members for HDB to be more generous in its allocation of public housing subsidies to be more flexible, to be more understanding, and to give more assistance to many groups of people - downgraders, older singles who want to buy direct from HDB, elderly singles who want to live in HDB rental flats on their own, and so on and so forth. Mr Wee Siew Kim talked about displaced parents

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Sir, I really wish I could accede to all these suggestions, as I believe that all these groups have genuine needs to varying degrees. Unfortunately, this is not possible, because life is not so simple. It is always about scarcity of resources and how we allocate these scarce resources. I have attempted to set out three simple rules so that we can all be on the same page, as it were, when it comes to allocation of housing subsidies.

Rule 1: Serve the public good

Public housing subsidies serve important social objectives and reflect our societal values. For this reason, our public housing policies are pro-family and promote the strengthening of family bonds, and through the way we disburse public housing subsidies, we also aim to promote rootedness and social mobility among Singaporeans. And because we try to achieve these social objectives, we are able to justify using taxpayers' money to provide housing subsidies. That is Rule 1: serve the public good.

Rule 2: Give more to those who need more

Those who are in greater need of assistance will receive more. For this reason, first-timers who have yet to own their homes are given priority over second-timers. Similarly, families are given more subsidies than singles. It is not that singles do not get any subsidy, and I will elaborate on that later. But they will get less than families. Why? Because families need them more. Citizens get subsidies; PRs do not. So,

Rule 3: Remember that money is never enough

There is a limit to the amount of housing subsidies we can provide. For FY06, if Parliament approves, my Ministry will be given $1.24 billion to fulfil our mission, ie, "to create the best physical and living environment for building a vibrant city, a robust economy and cohesive communities." Out of this total of $1.24 billion, $878 million, or 71%, will be spent on public housing. We will use it to finance the various public housing programmes, including subsidies for sold and rental flats, CPF housing grants, upgrading, estate renewal programmes, and other major infrastructure projects. The bottom line is that increased expenditure in any one area means that something has to give in other areas. So, that is Rule 3: money is never enough.

Let me now, having set the three rules, see how it applies to the various specific suggestions that Members have made.

Mr Cedric Foo also suggested that we allow high-income households to buy new flats at market prices. Yes, I think that is a workable solution. In fact, HDB has indeed put some of the new flats on the market to be sold as resale flats at market prices. The response has been good and we will be considering doing more of this.

Mr Wee Siew Kim asked if we could allow older singles to buy flats directly from the HDB. I think what Mr Wee is really asking is that we allow singles to buy new flats at the same subsidised prices as families. Am I correct?

and older singles. He confessed that he did not quite understand the problems of singles because he is not single. But I thought he was single once! So he should understand. Rule 2: give more to those who need more. Mr Cedric Foo and Mr Ang Mong Seng suggested that we remove the income ceiling for the purchase of subsidised HDB flats so that even high-income households can enjoy one subsidy. I am all for as many people as possible living in HDB flats going through the HDB experience. But I think there has to be a limit, a cut-off. The current HDB household income ceiling is $8,000. What is $8,000? $8,000 means that almost 90% of households in Singapore can or are eligible to purchase a subsidised flat. So what are we talking about if we were to increase the ceiling? Should we subsidise the top 10% of households to purchase subsidised housing? I do not think so. By any standard, this is already extremely generous.

Yes.

Well, let me ask again: is this fair? Should we be giving the same level of subsidy to the singles as we do to the families? Rule 2 says, "Give more to those who need more". So, as families have more pressing housing needs, we will continue to give higher priority to families. But having said that, single Singaporeans have also contributed. I think we have to recognise that, and we are recognising that. And this is the reason why singles aged 35 and above, who have not enjoyed any housing subsidy, can get a CPF housing grant of $11,000 to help them to purchase HDB flats. So, with this, they are able to either purchase a resale flat or, if they want to, they can actually purchase some of the new 5-room and Executive apartments that were recently put on the market at market prices.

As I said, this was a pilot project. We sold about 100 of them in this way. Twenty of them, or 20%, were sold to singles using the housing grant. So, this is another way for us to recognise the contribution of singles, but calibrating our subsidies in such a way that we do not have parity with the families.

Let me now touch on an issue which many Members of the House have

Dr John Chen cited a case where the owners could not include their children as co-lessees to help service the mortgage loan because they did not have the cash to redeem the outstanding loan. I must thank Dr John Chen for making such a long speech, so that I can make an even longer one!

I have come across Dr John Chen's case in my own constituency, and I believe many other Members have too. The issue arises because it is important for HDB to now impose credit assessment on all its mortgagors. In other words, just like any commercial banks, for financial prudency reasons, HDB cannot simply give out a loan without looking into the ability of the family to repay that loan or without looking into or assessing the value of the flat which that loan is held against. It is simply unwise to do so. Indeed, some of the problems that these families face are because they were able to get loans that were higher than what they could prudently afford. Dr John Chen asks why do we need to impose a transfer of ownership just because we want to make the daughter a co-owner of the flat? The answer is because there are certain legal requirements that need to be met. For example, if you are using your CPF funds either as a lump-sum payment or for repayments, CPF Board requires

Why do we talk about a new loan? Why are we not giving the same loan as before? It could be because the value of the flat has fallen. As a result of the fall in the equity value of the flat, the new loan, which cannot exceed 90% of the valuation of the flat, is less than what the old loan was. Or it could simply be because the expenditure patterns or the incomes of the family are not sufficient to support the old loan. And this is the problem in the first place, ie, because the family was not able to service the old loan, that is why they came to see Dr John Chen at his meet-the-people session, and that is the reason why we are now looking at different ways to help. But the best way to help them may not necessarily be the way that they want us to help them.

One possibility could be for the family to sell off their flat, buy a smaller flat that is within their means. If the family wants to do that, HDB may be able to give them a smaller loan. Contrary to what Dr John Chen said - that the HDB sent a letter to him and said, "No, this is the only way out." - in most HDB letters, there is always a clause that says, "Can you please come and see us and we will discuss your problem with you?" I do not think any financial institution in Singapore is as reasonable as that. But, as a result of this discussion and the counselling that takes place, ways and means of helping the buyer can be found. The intention is to find a way out for such people but, as I said, the solution may not be the one that they insist upon. I think therein lies the problem in many cases. If they are able or willing to make some adjustments or sacrifices, I am sure we will be able to find a solution. Anyway, for this particular case, I will ask HDB to follow up with the family concerned.

brought up. They have asked for more assistance to be given to those who cannot service their mortgage loans and to facilitate downgrading, including elderly households who wish to downgrade for life-cycle reasons. I think Members of this House know that those who need assistance to tide them through temporary financial difficulties can get various financial assistance measures from HDB. There is a whole range of them. But just to name a few, HDB will allow the lessees to reduce or defer their loan instalments, extend the loan repayment period, or allow the payment of mortgage arrears by instalments. that you become a legal owner or part-owner of the flat, and that requires you to make a legal transfer. I recognise that, in some cases, where the flat owners are in severe financial hardship, for example, they have been retrenched or suffer a substantial pay cut, it may actually be better for them to either move to a smaller flat or even to a rental flat to help these households. Members have made many suggestions, eg, build smaller flats, review the HDB resale levy, provide additional HDB concessionary loans and more subsidised HDB rental flats, etc. I have already dealt with the building of 2-room flats earlier in my speech. Let me now address the other suggestions.

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First, resale levy. The rationale of the resale levy policy is simple. Our housing subsidies are limited. Our housing subsidies do not stop at one. To encourage mobility, we provide a second subsidy because we want to achieve a social good. But to maintain a fair allocation of public housing subsidies, we have to reduce the second subsidy, and this is where the resale levy plays a part. This is why HDB is able to give priority to first-timers who have more urgent housing needs.

The current levy system is such that the levy is computed as a percentage of the selling price of the first subsidised flat. For example, if you own a 2-room flat, the levy is 15% of the selling price of the 2-room flat; 20% for a 3-room flat; and 25% for 5-room and larger flats. This graded resale levy means that lessees in smaller flats, if they do their sums, will find that it is still worthwhile to move to a larger flat. Let me also say that those who do not buy a second subsidised flat from HDB need not pay any resale levy. They just keep the proceeds from the sale of their flat and all the profits thereof.

Many MPs have fed back to me that the resale levy policy is not quite fair in

We have reviewed the policy. We have taken into account all the feedback. Our conclusion is that the policy is still relevant. However, we will fine-tune the policy by setting the levy payable as a fixed quantum of between $15,000 and $50,000, based on the flat type of the first subsidised flat. Under the new policy, someone whose first subsidised flat is a 2-room flat, will pay a resale levy of $15,000. Those whose first subsidised flat is a 3-room, will pay a resale levy of $30,000; 4-room, $40,000; 5-room, $45,000; and Executive flat, $50,000 respectively, when they purchase a second subsidised flat. What all this means is that if you work it all out, in nearly all cases, second-timers will now pay less in resale levy under the new system.

To illustrate, if you sell a 5-room flat today, roughly at around $300,000, you would attract a resale levy of $75,000 under the current system, ie, 25%. Under the new system, you will pay a flat rate of $45,000, in other words, you would be paying $30,000 less. A 4-room flat, which is sold at $230,000, would translate into a saving of about $12,000, in other words, about $52,000 under the old system and $40,000 under the new system. A 3-room flat sold at $180,000 would translate into a saving of $6,000, because it is $36,000 under the old system and $30,000 under the new system. These are all ballpark figures. But I wanted to illustrate that with the new levy system, there would be significant savings. And also, as the quantum of the levy is fixed, it will give greater certainty to existing flat lessees who are deciding whether or not they want to move to a second subsidised flat.

Sir, let me now talk about HDB concessionary loans. Members have asked HDB to be more generous in providing additional HDB concessionary loans to downgraders. We have a policy that we will provide every household with at least one HDB concessionary loan. But for those who subsequently purchase a larger flat, we will facilitate their upgrading by providing them with a second concessionary loan. Why do we do this? Because we believe that social mobility is an important objective. We believe that for somebody who has moved into, say, a 2-room flat, it is important for him to hope that, one day, sooner or later, or when his family size grows or when his income improves, he will be moving into a 3-room or 4-room flat, or if the family does very well, a 5-room flat or even larger. I think this is an important objective and one that we will encourage. That is the reason why we are providing them with a second concessionary loan.

Members asked what about those who want to move to a smaller flat. Usually, owners who have sold off their first flat and want to move to a smaller flat would

Next, I move on to market rate loans. Mr Ahmad Khalis asked for some figures, an update on bank origination and the number of flats that the banks have repossessed.

Since January 2003, when we started bank origination, there have been about 70,000 bank loan cases for HDB flats. Most of these are, of course, for the purchase of resale flats because for the new flats, they can take an HDB loan. But there are some people who take a bank loan, even though they are eligible for an HDB loan, a very small percentage, because they may have a better package with the banks. As at 31st January 2006, the mortgagee sales of 190 flats by banks have been completed or are pending completion. I think you will agree with me that the number, at the moment, is not significant. It is less than 0.3% of the total bank loan cases. But, nevertheless, we will continue to closely monitor the situation and continue to do counselling, advise and exhort flat buyers to always exercise care when they purchase a flat using bank loans, and to be very prudent in the kind of loan that they ask from the banks.

For those whose flats have been repossessed by their banks, the HDB Branch Office will provide advice and assistance, if necessary. Of course, there are many options for the ex-lessees. And here, I want to emphasise again that every time they come and look to HDB or Government for assistance, they should, first of all, look at their own personal situation, at families, relatives or friends, to see whether they can get help in that direction as well. If they cannot, they will have to either rent a flat from the open market, buy a smaller flat or failing which, if there are extenuating circumstances, they may come to HDB to request for HDB rental flats. So there are many avenues for such people to try and get help. HDB is not the first avenue and, of course, it should not be the last. Prof. Chin mentioned some of these areas of help, whether it is the CDCs, VWOs or various Government agencies. He also

Let me reiterate once again - I do not want to sound like a stuck record - but I really would like to reiterate that buying an HDB flat is a long-term commitment. It is a financial commitment that all flat buyers need to be aware of. They have to exercise financial prudence and they should only consider buying a flat if it is within their means. They must take into account their household income and possible changes to their household income or even possible changes to the mortgage loan rates. Having taken all these into account, if they can still proceed to buy a flat and take advantage of our various schemes, then we would encourage them to do so.

Sir, let me now move on to another hot topic of Members - HDB rental flats. Many Members have spoken - Dr Lily Neo, Mr Ang Mong Seng, Mdm Cynthia Phua and Mr Steve Chia too. Dr Lily Neo suggested that HDB build smaller rental flats so that elderly singles can rent a flat on their own. Mr Ang Mong Seng asked if we can offer converted 2-room flats as rental flats and also to waive the 30-month debarment for those who wish to rent from HDB. Mdm Cynthia Phua wanted to know if we have enough rental flats. Mr Steve Chia suggested that we build more rental flats. Back to basics again.

many ways. One of the criticisms is that, given its objective of reducing the subsidy that second-timers enjoy on their second subsidised flat, why do we peg the levy to the resale price of the first subsidised flat? The revised resale levy policy will apply to future cases, in other words, those who have not yet sold their first flat and who have not yet bought their second subsidised flat. The cut-off date is today. As with all Government policy changes, the new resale levy policy will not apply retrospectively, in other words, those who have already sold their first subsidised flat but have not yet purchased their second subsidised flat. These people have signed an undertaking when they sold their first flat. It may have been many years ago. They signed an undertaking to say that they would pay a levy under the old policy when and if they buy a second subsidised flat. Again, I will ask HDB to look at each and every case of appeal if it comes in, exercise due flexibility and consider applying the new policy on a case-by-case basis to those in financial hardship. have substantial proceeds from the sale of their first flats. I know there are cases that this does not happen. But usually, this is the situation. And they can use these proceeds to finance the purchase of the smaller flat. So, as a policy, we will require those who need a loan to purchase a smaller flat to obtain a bank loan. Such an approach has allowed us to focus our attention on those who need more assistance, in this case, the first-timer households as well as the upgraders. I must emphasise, based on the global picture that HDB provides me, most households do not have any difficulty obtaining bank loans. But I wish to assure Members that MND and HDB will examine every appeal on its own merits and we will be as flexible as possible in cases of genuine hardship. Mr Ahmad Khalis also asked what can we do to assist those whose flats have been repossessed or are facing repossession. First, we have to accept that banks and financial institutions have their own rules and regulations and practices concerning how they deal with potential defaulters. But I know that they also have their own financial assistance measures to help mortgagors who are in difficulties. They tell me that they are not in a hurry to repossess flats. They would, first of all, try to work out a scheme of arrangement with the flat owners to try and make sure that they are able to solve their predicament in some way. I believe there have been some cases where they have worked out a satisfactory arrangement. So HDB flat-owners who are facing difficulties keeping up with their bank payments should, first of all, approach their banks for help. HDB will not and cannot intervene in such cases because it is a private matter between the borrowers and the banks. asked for a one-stop centre for all these. I thought this is what the MPS is for. They come to us and we are supposed to find an answer for them. We will continue to find various means to help them, but I urge Prof. Chin to exercise his ingenuity and to try and help his constituents. And if he still cannot, he can always write to me.

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Our public housing policy is based on encouraging home ownership. That is the reason why we price our flats such

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Let me assure Members that HDB has enough rental flats to meet the housing needs of low-income households who cannot afford to own a flat. But this is provided we maintain very strict eligibility criteria and guard against the entrenchment of those who can afford to own a flat but who decide to stay in a rental flat

I would also be very careful about making rental flats easily available for parents who have been displaced by their children. I do not think it is a good idea. Already, we are seeing many cases at our MPS of elderly residents coming to us and saying that they have been kicked out of their flats by their children. Much as we sympathise with them, if we have a policy where we make rental flats available for this group, I think we are going to end up with a greater social problem because we are going to encourage more children to chase their parents out of their homes. But, as always, there will be cases where they are in genuine financial hardship and this is why we take this approach of having a flexible implementation of some of our rules, even as we make those rules carefully and properly, in order to make sure that public housing subsidies are well allocated. So, in this case, as in many other cases, I will ask HDB to look at cases flexibly and where the merits of the case warrant, we will look at it favourably.

Let me emphasise that even as we provide rental flats to low-income families, we will continue to assist and encourage them to buy their own flats when they are

Finally, two last issues I want to address. The first one is reverse mortgage. Dr Wang Kai Yuen talked about the purpose of having a scheme such as the reverse mortgage scheme. He calls this a way to help the empty nester retiree households. Many MPs and many people have lamented that we suffer from this asset-rich cash-poor syndrome. I submit that it is better for us to have an asset-rich cash-poor syndrome than to have an asset-poor cash-poor syndrome. With an asset-rich cash-poor syndrome, we have a happy problem to solve - how we can help people convert their asset to cash at the right time when the cash is needed. Mr Chay Wai Chuen rightly pointed out that the flat is a store of wealth.

Recently, we released some DOS figures to show that, on the average, the net value of a flat is something like $138,000, and that is not a small sum of money. If we can find a way to convert that into cash in some form, then we would have provided a way for the lessee to live his retirement years in comfort. And we have done this over the years. We have put in place a wide range of options to help the elderly monetise their flats. We have built studio apartments which would allow the elderly lessees to sell their existing flat, buy a studio apartment and live comfortably and use the balance proceeds to purchase an annuity plan or other financial products. We have liberalised the conditions for the purchase of studio apartments last year. Studio apartment buyers need not top up their Medisave accounts. They can also

But what about the reverse mortgage? Mr Othman Haron Eusofe asked for an update on the status of our discussions with industry players on reverse mortgage. I am happy to inform him that we have been in touch with many industry players and, in fact, one financial institution is ready to offer such a scheme, and that is NTUC Income. I will leave it to NTUC Income to release the details of the scheme. I welcome other banks and financial institutions to also offer reverse mortgage schemes for HDB flats, so that our lessees can have more choices.

As these are financial schemes, they should be offered on commercial terms. The Government will not provide any financial assistance or guarantees to providers of such schemes. This does not mean it will not work. Yes, Mr Chay explained to us that in the US, the government or institutions like the Housing Urban Development Corporation (HUD) provide financial help. But I also know that in the UK, there are no financial assistance schemes given but the reverse mortgage has taken off. I am not sure whether the reverse mortgage scheme in Singapore will be very popular but this is another option which we can offer to our lessees. This is in line with the recommendations of both the Ministerial Committee on Low Wage Workers as well as the Committee on Ageing Issues.

We will work with industry players to facilitate the provision of such schemes,

Sir, finally, let me address Dr Wang Kai Yuen's comment on the Ethnic Integration Policy (EIP). Recently, I answered the Question in Parliament - I think it was Dr Amy Khor who asked the question - about the Ethnic Integration Policy. But I think it is worthwhile for me to reiterate some of the key points today because it is an important policy. It is an important pillar of our policy to maintain social stability and, yet it is one that the Workers' Party says should be scrapped because they feel that it is no longer necessary. When I answered the Question in Parliament I was hoping that Mr Low Thia Khiang would be around so that he could respond to some of the questions that I had. I see that he is still not around in this House as we are debating this issue. I am wondering whether the Workers' Party is having second thoughts about this part of their manifesto but, anyway, we shall see.

Let me state, first of all, very categorically that the EIP is still as relevant and necessary today as when it was first introduced in 1989. In fact, I would argue that at a time when our multi-racial harmony and social stability is under challenge, the EIP is even more critical. It has been effective in maintaining the ethnic balance in our HDB estates. Over the years, it has helped to lower ethnic concentrations in towns which have high concentrations of a particular race, whether it is Chinese in Sengkang or Malays in Bedok. Even with the EIP, 41, or 25%, of the HDB

The second point I would like to reiterate is that we apply the EIP policy consistently across all ethnic groups. For example, there are Chinese households in Tampines, my constituency, where the Malay limit has been reached, and the Chinese households are not able to sell their flats to a Malay household. Similarly, there are Chinese households in Whampoa/Kallang who cannot sell their flats to an Indian household, or Malay households in Bishan who cannot sell their flats to a Chinese household, because doing so will exceed the respective EIP ethnic limits. So I want to assure Members that we will review the EIP limits from time to time to ensure that they too reflect the ethnic distribution of our population.

The third point I would like to make is that most flat-owners who wish to sell their flats are able to do so without any difficulties, despite the EIP. In other words, the magnitude of the problem is not as big as many would have us believe. Less than 1% of the total resale applications received by HDB each year were rejected due to the EIP. There are about 30,000-35,000 resale transactions a year. Last year, we had about 300 appeals for sales rejected due to the EIP. So, with this large number of resale transactions, sellers who are realistic in their asking price should be able to find buyers from the eligible ethnic groups.

Dr Wang Kai Yuen asked whether we can do anything to minimise the problems faced by the people who are affected by the EIP. This is a very relevant question but, as I mentioned earlier, our experience

As for the prices, there is no conclusive evidence that the EIP has depressed prices, causing affected owners to suffer grave losses. We look at different prices across different estates for different ethnic groups, and the prices vary considerably depending on a whole host of factors. Some of these factors, obviously apart from market conditions, include factors like location, age, condition of the flat, facing of the flat, timing of the sale, urgency of the sale, and so on. So, when a home owner is not able to sell a flat at his or her expected price, it is due to many factors, apart from the EIP.

that the majority, about 90% of Singaporeans, can own their flats. But I think we all know that not everybody can afford to own their homes. We recognise that. And that is the reason why, to complement the Home Ownership Scheme, we have a Public Rental Scheme. Under this Public Rental Scheme we will provide 1- and 2-room rental flats to meet the housing needs of low-income Singaporean households, who cannot afford home ownership flats. The rentals under the Public Rental Scheme are heavily subsidised. For example, a subsidised 2-room flat is rented to low-income families for about $60. The market rental is about $480. If you compute this over a 10-year timeframe, you are talking about a total subsidy of over $40,000. What does this really mean? This means that HDB rental flats are another form of public housing subsidy. They have to be funded from the same public housing budget that we use to provide subsidies for sold flats, upgrading and estate renewal programmes, and so on. That is why we have very strict eligibility criteria for public rental scheme applicants, criteria such as ownership of private property or ownership of property earlier, family nucleus, income, citizenship, and so on. This way, we ensure that rental subsidies are given to those who really need them and who have not enjoyed their fair share of housing subsidies. because it is so cheap. We will continue to require singles wishing to rent a flat from HDB to share one with another eligible single. It is difficult for the singles to do so and, there have been persistent requests from many Members why we cannot let them live alone. If every single has his own flat, we will not have enough rental flats. The demand for rental flat is going to double immediately. We will require those who have cashed out of their flats to observe a 30-month debarment period before they can be considered for a rental flat. If we do not have the 30-month debarment, again I see a flood of applicants coming for rental flats straightaway after they have sold their flats. financially ready because this will enable them to feel that they too have a stake in this country and that they have not been left behind by our economic progress. And this is why we have introduced the additional CPF housing grant and why we are building 2-room flats. use their CPF savings to pay for the studio apartment after they have set aside cash for the Minimum Sum. Elderly lessees can also rent out a room or they can rent out the entire flat, if they have another place to go to, with their children, friends or whatever. The market rate for renting a room is about $250-$500, depending on location. Today, there are more than 500,000 lessees who are eligible to sublet their whole flats. so that elderly HDB lessees will have more options to monetise their flats to enhance their retirement adequacy. Whether HDB lessees will sign up for the reverse mortgage schemes is an individual decision that only they can take and, of course, they will have to take into account the terms and conditions that are offered and look at other alternatives that they may have. neighbourhoods have hit the EIP limits. So, I have no doubt that the ethnic concentrations would have been higher if there had been no EIP to place a cap on ethnic proportions. This would have serious repercussions on the multi-racial flavour of our housing estates, schools, shops, and so on. is that the number of people who are affected, who are really truly unable to sell their flats, is not a very large proportion, about 1% of the homeowners, and even those who are affected by the EIP are generally able to find buyers for their flats, even though they may take a longer time to complete their transactions.

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Sir, the EIP does impose a constraint on some sellers as well as on buyers. As a result, they need a longer time to buy or sell. We will continue to review the policy to try to minimise the impact of the policy, but the policy must remain. By maintaining a multi-racial environment in our housing estates - in our schools, shops, playgrounds - we maintain social stability, racial harmony and religious tolerance, and we keep Singapore safe, secure and prosperous for all races.

Sir, I would like to seek a point of clarification. Firstly, on the resale levy, I note that the new mode of computation is much clearer. It gives more certainty. But it still does not seem very logical or equitable. Because the rationale for imposing the resale levy is really to reduce the subsidy enjoyed on the second flat. I

Second point of clarification is regarding the concessionary loan. I would think that if we do not give the concessionary loan to first-time downgraders, are we not penalising them? Because many of them may be downgrading basically because of their social needs, or to reduce their financial burden. Although they are able to, they may actually be struggling to pay and they would just like to have a small flat so that the debt servicing is much more manageable. Why can we not just equalise and say that everybody who has a second bite of the cherry would get a concessionary loan? Otherwise, we might be sending conflicting signals, because we are now preaching prudence and, unwittingly, we may actually be sending the signal that if they upgrade, they can get a second bite of the cherry. But when they downgrade, they cannot.

My third point of clarification relates to the implicit or market subsidy enjoyed by first-time buyers of new flats purchased directly from HDB. Sir, the Minister said that this subsidy, if I am not mistaken, is much more than the housing grant given to first-time buyers of resale and DBSS flats. I would like to ask the Minister to clarify how exactly this implicit subsidy is actually arrived at. How are the new HDB flats priced such that the buyer will enjoy this significant subsidy? Given that new flats actually have a lot more restrictions than resale flats, by right, they should already be priced lower

want to know why HDB has not gone on the route of imputing the resale levy on the second flat, which was actually done previously. Because this will also take into account the fact that the purchaser may actually be buying a bigger or smaller second flat, and he may be enjoying a different quantum of subsidy, but HDB is pegging it on the first purchase. I would like to ask the Minister why is it that HDB has decided not to peg it against the second flat but to the first flat. than resale flats, all things being equal. After that, is there a further discount, which is presumably the implicit subsidy, given to these new flats? If it is so - and this is much more than the housing grant that is given - I would like to ask the Minister: does it mean that we are actually penalising first-time buyers of resale and DBSS flats, simply because they choose to buy resale or DBSS flats?

May I remind Members to keep their clarifications short?

Sir, the supply of 2-room flats is still my concern. Because what the Minister has quoted is that there will be only 100 units in the first year and, most probably, 90 units in the second year, because it will take about two years for them to be built. So, we are only talking about 200 flats. We have 84 MPs. If each MP has two cases a month, we are talking about 168 cases a month. Can the Minister tell us, for the next five years, what is the projection of the supply of 2-room flats?

Sir, I thank the Minister for asking the HDB to relook at the case I brought up, but I hope that he would not rule out providing the same loan amount to the family. I understand the need for credit assessment policy, and so on. But I think the policy should not be applied blindly. In this case, it is not a case of purchasing a new flat, but it is the same old flat. In fact, if it is a bank and if the bank assesses that the property value has dropped and if the houseowner is prepared to provide another co-owner to chip in and contribute to the loan repayment, I think the bank would welcome it. It will be an improvement to the quality of the loan.

What is your clarification, Dr Chen?

My point is that the Minister should reconsider this

case and exercise flexibility, so that the family will be helped. Otherwise, if the family was asked to sell their flat, it could be negative equity and the problem would come back to HDB. And HDB would be owed money and I do not think that is good for HDB as well.

Sir, I always like to start off with the last one first, as that is the one that I remember best. So I will respond to Dr John Chen first. He asked for HDB to be flexible. I have always emphasised to Members of this House that HDB is very flexible, but I cannot ask HDB to break the rules. In this particular case, if the total household income is insufficient to service the mortgage instalments on the existing loan, then I think it is really unwise - not just for HDB but also for the family - to take this loan. But I think the best way to resolve this is really for me to look at the specific case, go through the numbers with Dr John Chen and let us see whether we can come up with an amicable solution. But I would like to emphasise that the credit assessment policy is a sound policy. They are policies that would, in fact, benefit his resident in this particular case.

Mdm Cynthia Phua asked about the supply and demand for 2-room flats. Apart from the converted flats that we are going to do in the pilot project, we will also be doing some BTO projects in Sengkang for the 2-room flats. Altogether, there will be at least 150-160 flats. Will that be enough? We should wait for the response to these flats before we can gauge. It is really difficult for us at this stage to assess what is the true demand for such flats, because we have only had about 6,000 of these flats in the market and not many people are familiar with such flats. Only after we have priced them and put them on the market, and people are able to see what they are buying, then we will be able to assess the true demand for such flats. So, I would urge the Member to be a little bit patient.

Dr Amy Khor asked three questions. First of all, why do we not impose a premium on the second flat, instead of imposing the levy which is tied to the first flat type. When we looked at the resale levy policy, there were many considerations, not least of which was that we wanted a policy that is simple to administer, easy to understand and provide some certainty to the buyer. That is the reason why we fixed the levy amount.

If we put it as a premium on the second flat, not only do we have to depend on the future selling price of the second flat, but the levy payable on the second flat would also vary according to the flat type. It would range widely, depending on prices of the second flat. So it really comes back to this issue of uncertainty again. That is why we felt that it is better for us to fix the quantum. Of course, it makes sense today. It may not make sense in the future. But having fixed the quantum, as with other HDB grants, for example, depending on the situation, we may vary the quantum, up or down as the case may be.

The second clarification she sought was on concessionary loans. Why do we give concessionary loans for upgraders and not downgraders? As I explained, first of all, there is a public good. There is a social objective that we want to encourage, which is upgrading. We want people to be socially mobile to move up in life and the house is one way for them to demonstrate this.

Why do we not give it to downgraders? Again, it is because, for downgraders, monetising of their first flat

The third point Dr Amy Khor raised was this issue about implicit subsidies. How do we price our flats? The most important criterion in pricing of new HDB flats is affordability. We track affordability very closely. We track what are the various household incomes at various percentiles. We also track the market prices. We ensure that the price of a new flat is always at a discount to the market price of that similar flat, as far as possible. She knows, as a valuer, that it

What is the amount of this subsidy? It varies from place to place. It varies from time to time. The important criterion, as I said, is to ensure that there is affordability at various price points and at various flat types. And that is the reason why it is not possible for me to name a certain amount as the subsidy of the flat.

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Perhaps I should invite her to come and have a look at these flats as well, just to see what she thinks, whether they are going to be popular or not. which gives them a certain sum of money in hand will actually allow them to buy a smaller flat without any difficulty. This has happened in many cases. But because of the recent drop in HDB flat prices, we have come across many cases where even the downgraders are not able to have any cash in hand, because some of the time, the value of the flat is less than the loan. In such cases, HDB has looked at their appeals favourably. In most, if not all cases, they have said, yes. One of the criteria for the HDB to look at the second concessionary loan for downgraders is really to see whether there is any cash in hand after they have sold their flats. If the Member has any case where the person is able to show that he is totally wiped out by the sale, HDB would look at it favourably. So, it is not all no for all downgraders. There are many downgraders who are actually not in any difficulty at all. There are people who are downgrading from a 5-room to a 3-room flat. It is downsizing, right sizing, or whatever you call it, there is no shame involved. You are at the stage of your life where you do not really need a big flat. You want to move to a small flat. But that does not mean that the Government has an obligation to give you a second concessionary loan, because the proceeds from your first flat is sufficient to buy the second flat. That is the reason why, as a policy, we are not prepared to give a concessionary loan for the downgraders, but we are prepared to be very flexible and generous on a case-by-case basis. is not possible to have everything exactly the same. But as far as is possible, as far as the valuers can advise, we try to price the new flat at a subsidy to market price of a comparable flat.

As for the difference between a new flat and a resale flat, yes, they are different. Why do people buy a resale flat if they perceive that a new flat gives them better value? It is really up to the individual. Some people would prefer to live in a certain area, near to their parents. Some prefer to live near to their workplace. Some cannot afford to wait. For such people, the resale flat is a better option. Those who can afford to wait, those who are prepared to wait for their flat in the location of their choice and they feel that it is a better option for them, go for a new flat. Then, again, there are some people who say, "Look, I don't want the hassle of renovating my flat. I want to buy something that I can see and move in straightaway." Then you go for a resale flat. There are many, many different reasons why people choose one over the other. At this particular point in time, there are more or less the same number of people who buy a resale flat as buy a new flat, plus or minus 10%.

I believe I have answered the Members' clarifications.

Mdm Cynthia Phua, please make it short because we are running out of time.

Thank you for giving me this opportunity. The Minister

has mentioned about 150 2-room flats for the next two years. Does it include studio apartments because I have actually asked for housing for the elderly? This is not mentioned at all. We need to give hope to our elderly as well.

No, it does not include studio apartments. Studio apartments are a separate building programme. Yes, we are building more studio apartments as well to cater to the needs of the elderly. But it is not counted in the 160.

What is the number?

We have studio apartments that are available currently, about 100 over units which have just been built. There will be some more being built under BTO programme, another few hundred units in various parts of Singapore.

What is the overall number?

All in all, less than 500 at this moment. But, again, as and when we build new apartments either to house displaced SERS lessees or new BTO contracts, we will consider putting studio apartments in them as well.

Mdm Halimah, make it short.

Sir, I just want to seek a clarification from the Minister on the housing grant eligibility criteria for the low-wage workers, where the Minister said they must have worked continuously for two years. My question is this: you can have a person who has worked for a few years and he loses his job and then he gets a job for a few months, and he wants to apply for the housing grant. But he is not eligible because he is not working continuously. But it is not through any fault of his because he has

been retrenched. But he already has got a job, which he has just worked for a few months. Would the Ministry consider some flexibility for such low-wage workers so that they can qualify? Otherwise, they will have to start from zero base all over again, which is too harsh and too rigid for them.

I would like to assure Mdm Halimah that we will certainly be very sympathetic and understanding for cases where there is a break in the two-year requirement as a result of, say, retrenchment or some problems in the family. But why we have this two-year requirement is because we want to make sure that the family has some ability to service the loan that is going to come with the purchase of the house. So we think that the two-year employment history is a reasonable and fair indication of the employability of that particular family. But if there is evidence of employability and if they do not meet the two-year requirement for, as I said, some unforeseen circumstances, we would certainly take that into account.

One last clarification, please. Mr Wee Siew Kim.

I would like to make a clarification on the point of displaced parents. I support the pro-family policy. But in cases where the parents are already thrown out, I hope the Minister could find some accommodation first and later use the existing legislative or other instruments to get back at the irresponsible children.

Sir, if the Member is asking me for a policy on displaced parents, my position is that we will not provide housing for displaced parents as a policy. But if he is asking me about a specific case that he has, then I think we will certainly look at it.

Dr Teo Ho Pin, can you move to your next cut?

HDB Upgrading Programme

Sir, the HDB upgrading programmes, namely, the Main Upgrading Programme (MUP), the Interim Upgrading Programme (IUP) and Lift Upgrading Programme (LUP) have benefited many Singaporeans. Many older HDB estates have been rejuvenated with better amenities and improved living environment. Feedback from residents has been positive and many Singaporeans are urging the Government to expedite the upgrading programmes, in particular the Lift Upgrading Programme. Sir, I wish to ask the Ministry the following questions: (1) Are there plans to further expedite the LUP and IUP Plus Programmes? (2) Can the Ministry revise the selection criteria for IUP Plus Programme to include blocks completed between 1981 and 1990? (3) Can the HDB remove the $30,000 cap for the IUP Programme for each benefiting unit so that more flat owners can benefit from the programme?

Lift Upgrading Programme

Sir, it was announced that using the new technology for lift upgrading, the Government will save $1 billion on its Lift Upgrading Programme. Nonetheless, the Minister had noted that it is still too costly to extend the lift upgrading to the 190 blocks that are ineligible under the existing cost regime. Sir, I hope that the usual cost-benefit equation underlying this "nay" will take into account non-economic factors.

Sir, due to our ageing demographic profile and increasing expectations of Singaporeans, access to lifts at every floor is now considered a "must have" for everyday HDB living, and not an optional item. I would like to urge the Minister to consider extending lift upgrading to these

190 blocks. Since there is a $1 billion cost savings arising from the new technology, a small sum could be used to cross subsidise the Lift Upgrading Programme for these blocks. Otherwise, these blocks are destined to suffer from lack of resale demand, thus consigning them to a bleak future, unless, of course, HDB carries out its SERS programme.

Our ageing population needs a barrier-free environment to move about freely. So we build ramps, overhead bridges and escalators. These are all very fine. But for the old people living in high-rise buildings, they need to come down and they need the lifts, or else they will be house-bound. But in old housing estates, the lifts are rather old. They break down frequently and they do not stop at all levels. These old housing estates are actually housing all our old Singaporeans. For example, in my Teban estate, it is an old estate. The children have left them. They are all on their own. Their retirement funds are very low and they have hardly any cash. So we want them to pay for the lift upgrading. I feel that we must relook at this programme because they have made a lot of contributions to this nation. These are people who actually stood by us in the early years. Now, they have not much cash and they have been asked to make contributions. So I am asking the Minister to look at this programme again and see how best we can tailor the Lift Upgrading Programme to suit these people. I know we have new lift design, and so on and see whether, with this new design, we can cut down the cost and give them a better programme so that they do not have to contribute so much. Of course, if we can give them free as a gesture, that they have made so much contributions, it will be much better.

(In Mandarin): First of all, I would like to thank Minister Mah Bow Tan for accepting my

At present, this new technology is already used for some low-rise flats. The use of this technology reduces the installation time by one third and lowers the construction cost by some 20%. This is because the machine-roomless lifts do not need to have a machine room constructed on the roof top, and also lighter metal could be used to construct the lift well, instead of reinforced concrete. This will reduce installation time by about one-third. It also saves construction cost. As such, the residents will save on their upgrading cost and enjoy a brand new lift facility sooner than expected.

In other countries, this technology is being used on 18-storey buildings. The Minister has said that HDB will use the new technology in other flats in Singapore. I urge HDB to make full use of this new technology so that the Lift Upgrading Programme could be completed faster. Since it is a 20% saving on the cost, I would like to ask whether the Minister would bring forward the upgrading of all the lifts from 10 years to five years.

May I also know how many polling exercises have been conducted for the residents of the low-rise flats to decide whether or not they want to have lift upgrading and what has been the response so far?

suggestion at last year's Budget debate for HDB to adopt a new technology, the so-called machine-roomless lift technology, for the HDB Lift Upgrading Programme.

Sir, with the ageing of our older estates, more residents are asking for the Lift Upgrading Programme with greater urgency. I am glad that since the programme was started, many blocks of flats have their lifts upgraded. But to some, this is not soon enough. Last evening, an old lady came to my meet-the-people session (MPS) and she was